June 27, 2005

Open source battles Microsoft in Ukraine

Author: Andrij Zinchenko

A battle for software supremacy within the public and private sectors of Ukraine has begun. Recently, the Ukrainian Parliament registered a "project of law" (the equivalent of a bill in U.S. terms) that may radically alter the manner in which the Ukrainian government procures software. If adopted, it will require government agencies, along with all state-owned or state-controlled companies, to give preference to open source software.

However, the proposed legislation still offers ample opportunity for competition by legitimate proprietary software. It requires giving preference to an open source product only when the open source feature set is analogous to that of a commercial product, and justifies using proprietary products if the open source counterparts are more expensive.

The open source project contains nearly the entire OSI definition of open source, translated into the language of the Ukrainian legal system. It stipulates that all source code developed by public authorities is to be of an open nature, constrained only by the requirements of national security. And the bill does not limit itself to just software. Among its key elements is the requirement for state authorities to incorporate open standards in their work. Another provision requires public authorities to open the source code of the software they develop, except in cases when national security considerations requires the contrary.

Social and economic ramifications of an open software policy

The adoption of the open source project is more than a software issue; it is critical to the well-being of the Ukraine economy. Today, more than 90% of the million-plus computers in Ukraine run pirated software. If we assume that the average cost of the software installed on these computers runs to at least a thousand dollars each, the funds that would be required to legalize all this proprietary software would run into the billions of dollars.

In addition, there are issues that extend beyond Ukraine itself. Specifically, Ukraine has declared its willingness to join the European Union and must therefore remove the stigma of being a violator of intellectual property rights by legalizing its proprietary software. Such a move could financially strangle the country. According to estimates by the Centre for Constitutional Studies, a Ukrainian think tank, the overall expenditures necessary to legalize the currently installed government and commercial proprietary software could cost the country as much as $523 billion. Those costs include both anti-piracy campaigns and license fees. The magnitude of the problem is clear when you consider that Ukraine's state budget for 2005 is just over $100 billion.

Proponents of the open source law point out, and rightfully so, that instead of wasting money on licensing proprietary foreign software, funds could be better invested into the local IT industry. It is easy to see why this logic makes sense, particularly when you take into account the potential burden of just acquiring the necessary Microsoft licenses.

To see why software piracy has taken hold and become such a grave problem, consider the income levels of most Ukrainians. In country's capital, a salary of $500 per month is considered excellent. That number drops to between $200-300 in the regional centers. Therefore, Ukrainians simply cannot afford legal proprietary software. Until recently, their only solution has been to opt for piracy, although now some are switching to open source.

The same logic holds true for the government. The country's budget is unable to provide the billions of dollars necessary to legalize software via licenses, given that trying to improve the social condition of its citizens has a much higher priority.

Simply enforcing harsh sanctions against the suppliers of pirated software, without giving those vendors a viable alternative, would result in the addition of thousands of Ukrainians to the unemployment rolls -- not to mention the ripple effects throughout the Ukrainian economy as falloff in demand for pirated software adversely affects peripheral industries, such as the CD recording facilities, and thereby aggravates an already difficult situation.

Switching to open source software would not only allow for a dramatic reduction in the number of intellectual rights violations, as is already happening in China and Brazil, it would also encourage the creation of new software jobs, an attribute that is in line with social policy priorities of the Ukrainian government.

The Empire strikes back

Microsoft responded promptly to the potential shift to an open source philosophy by announcing an agreement with Ukraine's Ministry of Education. Ukraine agreed to acquire 120,000 licenses for Microsoft Windows and 120,000 licenses for Microsoft Office by the end of 2006.

Needless to say, this announcement raised a lot of questions, the most important among them being the issue of why spend millions of dollars for poorly localized software when open source provides a wide range of Ukrainian-language software?

There is also the issue of secretiveness. Signed on May 1, the agreement with Microsoft was not made public until after May 20, and then only by a press release from Microsoft's representatives in Ukraine. Moreover, a copy of the agreement is available only at www.legalgovernment.org, a Web site that belongs to the software vendors' representatives.

The Microsoft agreement should attract the interest of the Ukrainian State Anti-Monopoly Committee, given that it not only creates a long-term monopoly by Microsoft, but also limits the number of service suppliers to nine official representatives of Microsoft in Ukraine.

The secretive negotiation process between Microsoft and the Ministry of Education continues to worry the Ukrainian open source community. Although the open source bill would give open source software a higher legal standing than the Microsoft agreement, it has yet to be officially adopted. Twice the open source project has been submitted to the Ukrainian Parliament and both times Microsoft's lobbyists were able to prevent its adoption.

According to the agreement with the Ministry of Education, Microsoft is to provide some significant rebates. I tried to determine the price at which Windows will be provided to state institutions, but representatives of Microsoft said that this kind of information can only be granted during a personal meeting. The only piece of information they made available upon my request is that the price for Windows XP will not drop below $150.

Among the principles set forth by the recent Orange Revolution in Ukraine were those demanding that the actions of government authorities remain in full and open view of the public. To many open source advocates, the Ukrainian government's IT policy remains veiled, thereby reminding them of the corrupt Kuchma regime.

Lobbyists and bureaucracy versus open source

Although to the Ukrainian open source community the issues involved are clearcut, the bureaucrats view the problem somewhat differently. For the most part the majority acquired their management styles during the Soviet era, and their current understanding is that computers equate to "Wintel." Another trait of the Soviet era, and inherited by the Ukrainian bureaucracy, is a fundamental lack respect for intellectual property, along with one of duplicity. For example, over 90% of the computers in government offices run pirated software. However, to appease the rest of the world, the government periodically organizes sanctions against software pirates by publicly crushing hundreds of pirated CDs.

Although the same attitudes towards intellectual property were at one time rampant within the business community, the situation has improved as a result of what is referred to as the "mask show" -- a software legality check that can result in the confiscation of all computers containing pirated software. Though not as common now as it was in 2004, the mask show still remains a threat to Ukrainian businesses using pirated software.

Many Ukrainian bureaucrats have a fear of change within their IT world because they themselves have not kept abreast of current developments. As such, they believe that they will not be able to compete with their younger counterparts and will therefore lose their jobs should the proposal to mandate open software become law.

At the same time, it's often hard to prove the existence of Microsoft's heavy lobbying against the open software bill in Ukraine. The facts stated in this article could be interpreted to be simply the result of inefficiency of government procurement policy. Yet it's also true that every public administration official involved with IT periodically receives a CD of "Microsoft solutions for government." Maybe that's just good marketing. It's harder to explain away the fact that some of the parliamentary documents opposing the adoption of the open software project contained text derived directly from Microsoft's official site.

The authors of the open source bill that may force the Ukrainian bureaucracy to make friends with Linux, Borys Olijnyk and Mykhajlo Syrota, represent the left wing of Ukrainian political spectrum. Syrota is also considered to be among the "founding fathers" of the Ukrainian Constitution of 1996. Now Syrota and Olijnyk may well become the founding fathers of a major shift in the way their country looks at IT.

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