Some technology companies from countries like South Korea and China
have started to open offices in Mongolia,
focusing on software development rather than hardware production, and the
telecommunication and Internet market represents a small but growing sector in
the country. Government initiatives, like the e-Mongolia National Program
proclaimed in the mid-1990s, are helping spread Internet awareness and usage
throughout the country. There has been successful liberalization of all market
segments, partial privatization of the fixed-line incumbent operator, Mongolia
Telecom, and establishment of an independent regulator.

As a result, a number of telecommunications companies and
Internet service providers have been appearing in the Internet and phone
market, leading to increasing competition. MobiCom and MagicNet are the largest
cell phone and ISP operator in Mongolia
respectively. Intense competition is seen in both fixed and mobile telephony,
including local, long-distance, and international, Internet, VoIP, and VSATs.
Dial-up still remains the main way of Internet connection, although wireless
and broadband internet, recently introduced, has been developing rapidly.

The largest Internet Service Provider is MagicNet. The
company was founded in 1992 as a State owned Mongolian Data Company (MDC) and
privatized in 1994. MDC is to 90% owned by its employees and owns MagicNet as a
subsidiary. The second largest ISP is represented by MobiNet, launched in 2001
by Mongolia’s
first mobile operator, the Mongolian-Japanese MobiCom Corporation. There are
more than 10 other Internet services providers.

Despite Internet usage growing 1,000% in the past decade,
the volume of Internet subscribers in the country was a modest 10.9% by the end
of 2009. That may be compared to 1.1% in 2000 and 10.3% in 2007. The E-commerce
sector is developing, thanks to Government support and incentives.