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VimpelCom Eyes 2009 3G Launch in Moscow Despite Frequency Problems
11 Jun 08
As momentum for 3G builds in Russia, VimpelCom has indicated that it envisages service provision in Moscow as soon as next year.
Global Insight Perspective | | Significance | VimpelCom’s projection is notable as 3G frequency allocation in Moscow has to date been prohibited by the use of frequencies by military bodies, with no resolution to the problem in sight. | Implications | The inability to launch 3G services in Moscow is a blow to all three major Russian operators, given that the economic strength of the capital would ordinarily have made it the most obvious market for value-added service uptake. | Outlook | With each of the big three having now either launched 3G services or outlined plans for imminent launch, the technology is becoming prominent within the Russian mobile sector. The increasing use of data services and the growing popularity of broadband within Russia suggest that 3G uptake will be fairly healthy. |
Russia’s second-largest mobile operator VimpelCom is planning to launch 3G services within the city’s metro system and inside buildings in 2009. The network will become fully operational at a later date. The claims were made by company executive vice president Nikolai Pryanishnikov at the St Petersburg Economic Forum, reports Interfax. Earlier this month VimpelCom revealed that it was planning to launch 3G networks in 20 Russian cities during August and September (see Russia: 9 June 2008: VimpelCom Projects 3G in 20 Cities by September). Pryanishnikov has indicated that a trial 3G network has already been launched in St Petersburg, with another network being tested in Samara. Outlook and Implications - Moscow Frequency Allocation Problem Remains: VimpelCom’s promise of 3G provision in Moscow is high profile, but will not necessarily be easy to deliver. None of the country’s three 3G licence-holders have been able to obtain the requisite frequencies for 3G provision in Moscow, as such frequencies are currently being used for military purposes. Although negotiations have been ongoing to resolve this matter, no indication has yet been given that a resolution is imminent. However, VimpelCom is evidently confident that 3G provision in Moscow will be made possible during 2009. Interfax reports that the country’s other 3G licence-holders, Mobile TeleSystems (MTS) and MegaFon, have similar plans in place for the development of Moscow-based 3G networks. While the situation is the same for all three operators and therefore none is uniquely disadvantaged, the fact that they are unable to offer 3G in Moscow is a blow, as the city is the economic hub of the country and as such would ordinarily have represented the most obvious market for uptake of value-added services.
- 3G Growing in Prominence in Russian Mobile Market: After 3G licences were awarded in Russia in April 2007, momentum for service provision is now finally beginning to build. The country’s third-largest mobile operator MegaFon was the first to launch services back in October 2007, but within the last month MTS has begun offering commercial services and VimpelCom has provided a short-term timetable for the launch of its services. The announcement of plans for service provision in Moscow is further evidence of the growing prominence of 3G services within the Russian mobile market. MTS noted in its first-quarter results that the percentage of revenues from data services within its total revenue mix was increasing, and this bodes well for 3G uptake. The increasing popularity of broadband services across Russia is also encouraging for 3G operators, given that 3G technology provides internet download speeds at up to ten times the rate of GPRS and EDGE technology. The fact that typically only around 10% of Russian mobile users are higher-end post-paid customers will be of some concern to operators, but Global Insight nevertheless expects fairly healthy uptake, particularly once the issue of frequency allocation in Moscow has been resolved.
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