FINAL REPORT: DEFINITIONAL MISSION TO AZERBAIJAN:
AZERCOSMOS – AZERSPACE-2 FEASIBILITY STUDY
August 07, 2013
Space Partnership International
37
3.8. EVALUATION STRATEGY
The Contractor shall recommend how USTDA should evaluate the effectiveness of its funding for this
activity. Specifically, the Contractor shall recommend benchmarks to measure whether the activity helped the
proposed project move towards implementation and helped the Project Sponsor achieve its goals, timelines,
and expected accomplishments based upon industry standards. The Contractor shall recommend where this
information could be gathered. The Contractor shall address the following questions, at a minimum, within
the Evaluation Strategy: (1) what is the proposed project implementation timeline; (2) how will the project
likely be developed (Engineering, Procurement and Construction, Turnkey, Build-Own-Transfer, Build-Own-
Operate, etc.); (3) what potential difficulties may the Project Sponsor encounter during project
implementation and how can these challenges be mitigated;
What regulations, if any, should be in place before the project can be implemented; and
What other entities must authorize or approve the project for implementation.
The timeline of typical satellite systems commences upon receiving the authorization from the ITU
to use a specific orbital slot. Only once a slot is obtained can a satellite owner finalize its technical
design, coverage areas, and business plan. Furthermore, depending on the complexity of the
satellite design, the construction of a satellite can take from 2.5 to over 3 years. Additionally, the
procurement process chosen can also take as much as a year before finalizing the satellite contract.
The President of Azerbaijan stated in his speech that Azercosmos would launch its next satellite by
2016 to take into account the time traditionally required to build and launch a satellite. To meet that
date, Azercosmos needs to issue a satellite RFP and finalize its negotiations with the ITU no later
than December 2013.
Azercosmos is currently in discussions with several satellite manufacturers to obtain preliminary
support and ideas on how to optimize its next satellite design and services. In parallel, Azercosmos
is in discussions with a half-dozen third-party orbital slot holders and hopes to down-select to three
options by fall 2013, with the intent to finalize negotiations by December 2013.
The Azerspace-2 project is to be developed as a traditional procurement and construction
implementation. Azercosmos intends to issue several RFPs, including one for the satellite for on-
ground delivery at the launch site; one for launch services; one for ground equipment; and one for
insurance brokers. We believe Azercosmos is currently favoring Telecomm Strategies, a U.S.-
based consultant, to support its ITU filing and third party orbital slot negotiations.
For reasons stated above, Contractor believes that the FS funding should begin immediately per the
timeline outlined in the Section 3.5 Budget (timeline of proposed work package activities: 12
weeks). We understand from the Azercosmos legal counsel that Azercosmos will need to request
permission from MCIT to conclude the grant agreement with the USTDA. MCIT will forward the
request to the Cabinet of Ministries, which in turn commences the process for the domestic
procedures required in connection with such request. We understand that the duration for this
process is approximately two weeks.
FINAL REPORT: DEFINITIONAL MISSION TO AZERBAIJAN:
AZERCOSMOS – AZERSPACE-2 FEASIBILITY STUDY
August 07, 2013
Space Partnership International
38
3.9 DEVELOPMENTAL IMPACT
The Contractor shall identify which development impact measures — listed below — may result from the
USTDA funded activity, and/or project. The Contractor shall identify how the proposed USTDA activity and
project will result in the development impact, and explain how the impact can be measured when the USTDA
activity is completed and project is implemented.
1.
Infrastructure & Internet Development
2.
Technology Transfer and Productivity Improvement
3.
Human Capacity Building
4.
Market Oriented Reforms
5.
Other
The definitions and guidance for each of these will be provided by the COR and/or Program Evaluation
Office.
Since it became an independent state 20 years ago, Azerbaijan was able to leverage its position in
the oil and gas industry to help build its economy as well as develop strong regional ties. Soon after
it became independent, the government realized that it needed to develop a strong economic
diversification plan to eliminate its dependence on oil and gas. The government expects that the
revenues generated from national and regional ICT projects carried out in accordance with
government programs and strategies will catch up with revenues from Azerbaijan’s oil and gas
reserves by 2025.
One of the main strategies, initiated in 1993, was to take steps to establish ICT as a priority sector.
This has already started to pay off to the extent that ICT has become one of the top national
programs of the country. The more recent creation of a regional fiber hub in Baku, and the
introduction of the Azercosmos programs, has enabled the country to become a major player in the
European, African, Middle Eastern, and Central Asian telecommunications markets. The
government further expects that its fledgling space program will provide value beyond its borders
by helping to eliminate the digital divide in less developed regions of Europe, Africa, and Central
Asia.
Resultant Impact
Contractor believes that the following development impact may result from the USTDA-funded
activity and resulting Azerspace-1 project:
Infrastructure Development
The primary components of Azerbaijan’s telecommunication’s infrastructure include Azerspace-1,
fiber cable
17
, backbone, and regional fiber hub (known as the "Transnational Eurasian Information
Superhighway”, or TASIM). While the national mobile network
18
reaches up to 99% of the
17
Delta Telecom is AZ’s largest fiber operator and has external fiber-optic connections with Russia via
Trans Telecom and with Turkey via RosTelecom.12 (Indirectly, Delta Telecom serves Georgian users
because a local ISP, Trans-Euro Com, buys international traffic from Delta and carries it by fiber to Georgia.
18
The major mobile operator in the country is Azercell with more than 35% MCIT participation. Holds ~
57.6% of the market share in mobile telecommunications with a network covering 80% of Azerbaijan's
territory and 99.7% of the populated area.