The landscape of digital technologies in Russia | INA Global

The landscape of digital technologies in Russia

Article  by  Dovilé DAVELUY  •  Published 12.03.2012  •  Updated 24.10.2012
Since 2000, Russia plans to becoming an information society, rapidly developing its ICT policies and infrastructure and growing into a European leader in terms of Internet and social media usage. However, country’s geographical vastness and the state control of the media present particular challenges.

Summary

Becoming an information society

 Russia’s place in the world would be largely dependent on its successful transformation into an information society.  
At the beginning of the new millennium, Russia had low levels of information and communication infrastructures and technology use. From early on, it also faced particular problems related to the country’s geographical vastness (17.1 million sq. km.) and its population size of 142.9 million, further complicated by regional differences in terms of cultural and religious traditions, historical heritage and intraregional economic disparities. Yet, the Russian state understood very well that Russia’s place in the world would be largely dependent on its successful transformation into an information society. Thus, it made the development of the ICT sector and its implementation in various spheres of public life one of its top priorities for the following decade, trying to fill the existing void with policies and programs, rapid infrastructure development and innovative solutions. Writing in 2002, Dmitry Mezensev, the chairman of the Advisory Committee on Information Politics for Russian Federation, declared that the development of a single information space is an extremely important task for the country in order for it to be able to fully participate in the building of a global information society. He further explained that the task implied equal access to information for all the country’s citizens, regardless of their territorial location, economic status, nationality and religious beliefs. 

In September 2010, the Ministry of Telecom and Mass Communications presented the Federal Program "Information Society 2011-2020.". The program builds and expands on various previously adopted regulatory documents and programs, such as the
Federal Target Program “E-Russia 2002-2010”, “E-Government” Project (2010)  and the conception of the country’s long-term socioeconomic development up to 2020. The program lists the following as its principal tasks :
 
· Raising the quality of life for all citizens and the development of businesses in the information environment
· Developing e-governance and increasing the efficiency of public administration services
· Developing the Russian ICT market
· Building the infrastructure for an information society and bridging the digital divide
· Guaranteeing security in the information society
· Developing digital content and protecting national heritage
 
The program sets ambitious goals for the country in terms of its development into an information society, and includes 22 indicators to measure its progress. For example, by 2015 Russia aspires to rank among the world’s 20 leading countries in terms of its readiness to become the information society, and among the world’s 10 leading countries in terms of the development of its information technologies. In 2010, the Economist Intelligent Unit ranked Russia in the 59th position out of the 70 countries assessed on their abilities to "absorb ICT and use it for economic and social benefit.". The report notes that Russia’s scores remain particularly low in the areas of connectivity, legal environment, government vision[+] NoteThis index will likely go up when the latest Federal Program adopted in 2010 is taken into account.X [1], and business and customer adoption. This represents a decline in Russia’s position, dropping from the 52nd position in 2006 to the 59th in 2008 where it has stagnated ever since[+] NoteThe Economist Intelligent Unithas been assessing countries’ e-readiness since 2000.X [2]

In the Program’s brief
implementation report for the year 2011, the Ministry notes that some of the key activities of that year included the development of e-governance and establishing the infrastructure for e-payments for governmental services, installing the system for the electronic exchange of information in bankruptcy proceedings, revising a law on digital signature that lifted the barrier preventing the widespread use of electronic signatures in business, and adopting a new law on a national payment system that regulates all types of e-payments.
 
Although it is too early to evaluate if the targets set in the Federal Program are too ambitious (2015 is indicated as a critical evaluation period), this latest set of directives provides a more coherent governmental vision and establishes concrete goals in getting Russia closer to becoming a true information society.
 
In October 2011, in Geneva, Russia participated in the ITU Telecom World gathering[+] NoteITU Telecom is a part of ITU, the United Nations Specialized agency for information and communications technologies.X [3] together industry leaders, government heads and digital innovators. Under the patronage of the Ministry of Telecom and Mass Communications, eight Russian companies, including the national telecom services provider Rostelecom, showcased their latest developments and concluded business deals under the slogan "Towards information society.".
 
Rostelecom took advantage of this international gathering to present the latest developments in Russia’s e-governance system. It has been a sole contractor under the Program "Information Society 2011-2020" with regard to the development of infrastructure for the electronic government. Russian Telecommunications Minister Igor Schegolev explained that Rostelecom was chosen because it possesses the most extensive network[+] NoteThe company has 80% market share in domestic fixed-line telephony services, and owns a nationwide fibre backbone network, spanning 160,000 km, connecting to both domestic and international operators. From Rostelecom: Russian roulette..X [4]. It launched the e-government portal gosuslugi.ru in December 2009, and an updated version in May 2011. Since its launch, the portal has reportedly registered  more than 150 million page hits. Unlike the first version of the portal, the new one is accessible through all kinds of devices, including tablets and smartphones. Soon it will also be available via special terminals known as "infomats", 500 of which will be installed across Russia by 2015. The main persisting issues with the government’s portal, The Moscow Times notes, are slow speed and quality errors in its performance. Despite these problems, projects focused on modernizing Russia’s governance system via new technologies seem to be one of the current priorities in the country’s journey to becoming an information society.
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A promising telecommunications market

 Mobile telephony currently represents the largest part of the Russian telecommunications market. Given the country’s geographical vastness and interregional differences in terms of ICT infrastructure development, the Russian state and its telecommunications companies have been looking for solutions to bring information communication technologies within everybody’s reach. For example, currently, fixed-line broadband accessibility nationwide stands at about 35 %, and the overall Internet population penetration rate is approximately 42.8 %. Wireless services and mobile telephony are thus particularly important. The telecommunications services’ market in Russia increased from approximately $35 billion in 2009 to $42 billion in 2010 (17.3 %), according to the report “Telecommunications Market in Russia 2011. Development forecasts for 2011-2015from a market research company PMR. The report suggests that mobile telephony currently represents the largest part of the Russian telecommunications market. In line with this, the state-owned Rostelecom has announced itsambitions to provide nationwide cellular coverage to the country by 2015, as the fixed-line telephony side of business has been slumping in recent years. Although Rostelecomno longer holds a monopoly over the Russian telecommunications market, with other companies, such as VimpelCom, MegaFon and Mobile TeleSystems (MTS) competing for a market share, it remains a crucial player. In early 2011, Rostelecom merged with the state-run company Svyazinvest’s seven “mega-regional” subsidiaries in an attempt to create a unified national platform providing fixed-line telephony, broadband and mobile services across the country, and, in this way, reaffirmed its status as Russia’s biggest integrated telecommunications company.
 
The 2011 report on the telecommunications market also notes that the provision of access to the Internet has represented the country’s most dynamic and fast-growing segment in recent years, rising by 30 % from 2009 to 2010. The growth has been driven by the increasing penetration of fixed-line broadband and the rapid expansion of 3G networks, as well as the operators’ active promotion of mobile Internet.
 
In 2011, Russia also announced its plans to develop a nationwide fourth-generation telecoms network by 2014. In March, the four largest Russian telecommunications companies and former fierce competitors VimpelCom, MegaFon, Mobile TeleSystems and Rostelecom agreed to join forces in developing a nationwide 4G network. They signed a deal with the wireless network provider Yota, which should handle the rollout of a high speed network based on LTE technology[+] NoteLong Term Evolution (LTE) technology is currently one of the most likely candidates to be officially recognized and implemented as 4G technology by the telecommunications industry. It provides faster connection and higher quality for customers. For providers, it allows for more users and more data circulating on the network at the same time. From What is LTE technology ?.X [5].

Rostelecomand Yota reaffirmed their willingness to cooperate by signing
another agreement in December 2011 stipulating that Yota grant Rostelecom access to its LTE network, and in exchange, that Yota be able to use Rostelecom’s network infrastructure for data transmission. At the end of December 2011, Yota started testing the LTE network in Novosibirsk in Siberia, where it currently has 63 bases, a number that should increase to 150 by March 2012

It is worth remembering, however, that the state holds a tight grip over the promising Russian telecommunications market, and has declared that only local players can be awarded contracts to build infrastructure. Furthermore, there is some speculation that these deals, pushing for LTE network sharing that can keep the costs down, have been imposed on Russian telecommunications companies and are not voluntary. Observers also note that an important barrier to the development of the LTE network in the country is the fact that radio bandwidth is already used by military communication systems and the investments in conversion are considered to be very high. Thus, while infrastructure underdevelopment and growing demand for ICT-enabled services make Russia a market with great potential for growth, the lack of spectrum use and availability due to regulatory restrictions, alongside close government supervision, may hinder the quick development of LTE in the region.
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General internet usage patterns

Despite the intraregional differences in terms of easy Internet access, overall, Russians are active Internet users. In September 2011, Russia became the European leader in terms of Internet user numbers, with 50.9 million unique online visitors, according to the report from the market research company ComScore. It was the first time Russia surpassed Germany with its 50.1 million users. The same report details that in September 2011, an average Russian Internet user spent 22.4 hours online, a few hours less than the European average of 26.4 hours, and more than 10 hours less than the European leaders – the British, who spent an average of 35.6 hours online. The Moscow Times qualified the report’s results as an encouraging milestone in Russia’s digital development, but also as “natural” given the country’s size.

 
Russia has seen a tremendous growth in Internet usage over the past few years. Since 2008, it has added almost 10 million new users, rising from 41 million to almost 51 million, falling slightly short of the marketing research company eMarketer’s forecast, which had anticipated almost 55 million users for 2011 based on the 2008 data. It projects 61.9 million users in Russia by 2013. Despite these overestimations, Igor Shchegolev said in October 2011 that he strongly believes Russia will become the largest Internet market in Europe in the near future.

eMarketer, February, 2009
 
However, while Russia leads in terms of numbers of Internet users, it still lags in terms of penetration rate. Given Russia’s huge population and geographical vastness, it is not surprising that the 50 million current Russian Internet users account for a population penetration rate of only 42.8 %. Underdeveloped ICT infrastructure remains the main obstacle to the full blooming of the Russian digital market. Major regional differences exist regarding broadband penetration and digital usage habits. According to the Russian Public Opinion Foundation’s report from spring 2011, 28 % of Russian Internet users remain concentrated in the Central region that includes Moscow, followed by the neighboring Volga region with 19 %, the South Caucasian region with 14 %, Siberia with 13 %, and the Northwest region that includes St. Petersburg with 12 %. More provincial regions have much lower rates: 9 % in the Ural region and only 5 % in the Far East region of the Russian Federation. The growth of broadband access in these more remote regions should contribute to the continuing growth of the Internet market in the country as a whole.

The urban-rural digital divide and differences in terms of usage among different regions can be explained by the cost of Internet connection. In large cities, such as Moscow, St. Petersburg or Yekaterinburg, where the broadband penetration rate is close to 100 %, an unlimited broadband connection costs $10-$15 per month; in Novosibirsk, the price is $30 per month, and in Murmansk, it comes to $120, according to the report “Internet’s New Billion,” from Boston Consulting Group. The limited availability of fixed-line broadband and the announced plans to roll out the high-speed 4G telecoms network across the country by 2014 makes Russia particularly well suited for Internet usage through mobile devices. In 2011, the number of mobile Internet users in Russia reportedly increased by 19 % – a trend that should accelerate in the future.

Communication and emails are the two most popular online activities among Russians, followed by a search engine use. In December 2011, the three most consulted web pages were all social networking sites: VKontakte, Odnoklassniki, and Moi Mir. Yandex.ru is the most popular Russian search engine. Russians use Internet primarily as a means of communication, while entertainment and business, the important online activity drivers in other European countries, remain secondary. However, Leonid Delitsyn, a consultant at the Russian investment firm Finam, suggests that as broadband access rises, so should online business. About 21 % of Russian Internauts currently shop online, and in 2010, the Russian Internet advertising market volume represented $598 million.
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Social media usage

Russians are worldwide leaders in social media usage. ComScore reports that in August 2010, about 74.5 % of the Russian online community visited at least one social networking site. Moreover, the average Russian Internaut spent 9.8 hours per month on social networking sites, more than double the worldwide average of 4.5 hours.

 
The fact that Russians use the Internet mainly for communication purposes seems to at least partly explain the avid consumption of social networking sites. Liudmila Novichenkova, Marketing Communications Director for marketing company Synovate in Russia, describes Russian social media users in the following way: “They seek communication and good company rather than informational isolation. They are very active and want to be connected all the time. They are trying to get all the advantages life can give using both the Internet and social media to be well informed.” Furthermore, Russian Internet observers and bloggers note that the popularity of the sites such as VKontakte is certainly due to an easy access to free and high-quality streaming of pirated video and audio content. Finally, in the context of the state-controlled print and broadcast media, Internet and social networking sites represent alternative platforms of information flow and exchange of ideas, turning Russians from passive into active news consumers. Social media have also enabled ordinary citizens to engage in political and social activism in a country that remains under a tight authoritarian grip.
 
However, it is worth noting that much of the Russian social media landscape is controlled by a single oligarch, the world’s 35th richest man, Alisher Usmanov. He has the principal stake in the Digital Sky Technologies that own a big share of VKontakte, a majority in Mail.ru (Odnoklassniki and Moi Mir) and a significant minority of shares in internationally owned Facebook, Twitter and Zynga. He is also the owner of the Kommersant publishing house which, among others, publishes the respected business daily Kommersant. Such a situation of monopoly poses a threat to media freedom, especially considering Usmanov’s friendly relationship with the state power.
 
VKontakte is currently the most popular social networking site, with 23.4 million active users that spend an average of 20 minutes per day on the site, according to TNS data from August 2011. Established in 2007 by Pavel Durov, VKontakte, which is often defined as the Russian equivalent of global giant Facebook, has seen its member base grow steadily.

TNS, Aug. 2011
 
In February 2011, on his blog, Durov announced the “invite only policy” for Vkontakte’s new members. This move, Russian social media observers and bloggers say, represents, among others, an attempt to increase the site’s market value and strengthen its position against its competitors.
The world leader Facebook has less than half as few members in Russia, with 10.7 million users who spend only 3 minutes per day on the site on the site. While Facebook is also lagging in countries like Brazil and China, Russia is seen as an important stepping stone to boost its more than 500 million worldwide users, Synovate’s Trend Tracker 2011 study suggests. But the competition from popular local networking sites, including VKontakte, Odnoklassniki and Moi Mir is tough, and is further enhanced by the language barrier.
 

Facebook certainly has an international allure that local sites lack, and its follower base is reportedly more cultivated and urbane than that of VKontakte, which counts a great many high school and university students among its users. Moreover, Facebook secured deals with wireless carriers Beeline and Mobile TeleSystems to provide mobile applications early on, and also offers more professional tools for businesses.

VKontakte nevertheless keeps innovating to raise its professional standards and satisfy increasingly savvy Russian Internauts. It adopted some anti-spam policies – spam is often pointed to as a major issue of VKontakte – and in April 2011, introduced the possibility to open professional business pages and launch video advertising campaigns. Facebook also cannot compete with local sites, including Vkontakte, regarding pirated video and audio materials, as it is bound by international copyright laws. Yet, as VKontakte is planning to be listed on the public stock exchange by 2012, it will most definitely need to revise its free access policy to copyrighted materials. 
 
Odnoklassniki is the second most popular social networking site in Russia with 16.5 million users that reportedly spend 25 minutes per day on the site, or five minutes more than an average Russian social media user spends on VKontakte, and 22 minutes more than on Facebook. Established in 2006 by Albert Popkov, the site mostly focuses on photo sharing and rating, live chat, and more recently, games and video and audio streaming. Its main followers are somewhat older than those of VKontakte – 25 to 35 years old. Many of the early users have now switched to more modern and sophisticated VKontakte and Facebook, leading Leighton Peter Prabhu, a partner of Interstice Consulting LLP, to conclude that in the future its market share should gradually decline.

TNS, Aug. 2011
 
Both Odnoklassniki and the third most popular social networking site, Moi Mir, are part of the Mail.ru group largely owned by Usmanov. Moi Mir reaches 18.9 million users for an average of nine minutes daily. It was launched in 2007 and mainly attracts users through its integrated email platform. Prabhu predicts that Odnoklassniki and Moi Mir, which he describes as having a standard social networking site’s features without any distinguishing characteristics, may soon be consolidated into a single social networking site.

The popular microblogging site Twitter also appeals to certain Russian Internauts, a population that is more educated and cultivated, and politically and socially active.
According to Yandex.ru, there are currently over one million Twitter users in Russia, with more than 37,000 tweets written in Russian daily. In April 2011, Twitter announced that it had added Russian and Turkish to its language repertoire. 2011 saw the coming out of the first Russian guidebook on how to use Twitter, called On Social Networking Sites. Twitter - 140 Symbols of Expression (В социальных сетях.Twitter - 140 символов самовыражения), written in sentences of 140 signs or less[+] NoteEllen SOROKINA, Yulia FEDOTCHENKO, and Ksenia CHABANENKO, В социальных сетях.Twitter - 140 символов самовыражения, 2011.X [6]. In October 2011, the Russian daily Kommersant announced that Mail.ru is planning to launch its own Russian microblogging site, which should represent a serious competitor to Twitter in the near future.
While Twitter has been used to successfully launch various social and political protests in the country, the state and the president Dmitry Medvedev have also been among its active users, and have kept a close eye on social media. For example, in the aftermath of the contested Russian parliamentary elections of Dec. 2011, the political protests on Twitter were allegedly swamped by spam. The BBC further reported that VKontakte was also "contacted by Russia's Federal Security Service and was asked to shut down groups in which some wanted to turn the protests violent.". This example demonstrates the limitations of social media as vehicles of social and political activism in a country where the print and broadcast media are equally controlled. It additionally showcases what Evgeny Morozov has called "the dark side of Internet freedom" in his book[+] NoteMorozov, E. 2011. The Net Delusion: The Dark Side of Internet Freedom.X [7], released in early 2011, which discusses, among other issues, the misuses of the Internet by the Russian state.

Avid social media consumers, Russian Internauts seem to take full advantage of these novel tools for communication, networking and social activism, even though e-commerce is lagging behind. However, given the government’s control of the mass media, the Russian powers may gradually increase their surveillance of social networking sites, especially as their popularity and potential impact on the country’s social and political life increase.
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Search engines, Yandex vs. Google

If Vkontakte is often referred to as the Russian Facebook, Yandex, the most popular search engine in the country, is often called the Russian Google. In the third quarter of 2011, Yandex reported a 62.7 % average monthly share of the search market in the country. In certain months of 2010-2011, Yandex reached as much as 64 % of search engine traffic, whereas Google reached a peak in May 2010 with 36 %, a number that has since dropped, according to ComScoredata.
 
 
In May 2011, Yandex was listed on NASDAQ raising $1.3 billion through its initial public offering (IPO) – the biggest U.S. Internet listing since Google Inc. went public in 2004. Google still remains a strong worldwide search engine market leader, but in an analysis of the results from the last quarter of 2011 for various search engines, Andy Atkins-Kruger, the editor-in-chief of Multilingual-search.com, concludes that the Chinese Baidu is experiencing the fastest growth, followed by the Russian Yandex, especially in markets where Internet penetration is relatively low, and where Google seems to have definitively lost its battle against the two biggest local search engines.
Yandex introduced its services in Turkey in September 2011. While it had already been operating in other Russian-speaking countries – Ukraine, Belarus and Kazakhstan – Turkey represents the first step in fulfilling its ambitions to become a global player. Yandex CEO Arkady Volozh explained their strategy of expansion in Turkey in the following way: "Instead of just localizing our services for this country, we custom-built an entirely new product – tailored specifically to web users in Turkey.". He also added that the company expects to make a broader use of these technologies in the future.
This localized model may be Yandex’s biggest advantage vis-à-vis Google. Analyzing Yandex’s success in the Russian market, Igor Ashmanov, the Russian IT expert, suggests that "profound localization has been one of Yandex’s key strengths, including local language support and a rich local content (including maps, schedules, traffic, movies and news).". And it is certainly worth remembering that Google’s worldwide expansion was greatly facilitated by the virtual non-existence of competition in many countries without local search engines, where Google simply filled the void. Thus, while Google can be expected to continue its monopolistic dominance in Anglophone markets, the more localized approach adopted by Yandex (and Baidu[+] NoteHere you can find a brief overview of Baidu’s international expansion plans.X [8]) may very well work in local markets with other languages. Taking into account the clear ambitions of international expansion both from Yandex and Baidu, Atkins-Kruger concludes that the "search engine war" is far from over.
 
The Search Engine Warzone Map
 
Its international ambitions aside, Yandex has also been expanding the range of its services for Russian consumers, hoping that these can also be exported outside the domestic market. In September 2011, it launched a mobile search service for mobile applications, Apps.Yandex.ru. The search works on iPhones, iPod touch and Android-based phones, finding and ranking Russian language applications. It was the Yandex’s first service where the mobile version preceded the desktop one. In October, it signed a deal with Samsung to have Yandex’s search engine preinstalled as a default search engine on all Samsung bada-powered Smartphones for the CIS countries. And in November, Yandex announced another partnership with Nokia, Samsung, HTC and Microsoft to become a default search engine on all upcoming Windows phones. As is obvious from these latest developments, Yandex has its eyes set on the mobile market that is especially promising in Russia, given the vastness of the country and low penetration rates of the broadband Internet. In a press release, Tigran Khudaverdyan, Head of Web Portal and Mobile Services at Yandex, reaffirms that "The mobile sector is one of our key priorities. We are developing and have introduced various mobile applications for all major platforms.". So far, Yandex has developed a range of mobile applications, such as Yandex.Maps, Yandex.Mail, Yandex.Metro, Yandex.Trains, Yandex.Market, and more. With these new services, Yandex seems to have good chances of further enhancing its leader position in the Russian-speaking world, and most likely, further afield.

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Photo credits :
- Antom Fomkin / flickr
- Social media landascape in Russia : n_grey / flickr
- The Search Engine Warzone Map : Webcertain

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  • 1. This index will likely go up when the latest Federal Program adopted in 2010 is taken into account.
  • 2. The Economist Intelligent Unithas been assessing countries’ e-readiness since 2000.
  • 3. ITU Telecom is a part of ITU, the United Nations Specialized agency for information and communications technologies.
  • 4. The company has 80% market share in domestic fixed-line telephony services, and owns a nationwide fibre backbone network, spanning 160,000 km, connecting to both domestic and international operators. From Rostelecom: Russian roulette..
  • 5. Long Term Evolution (LTE) technology is currently one of the most likely candidates to be officially recognized and implemented as 4G technology by the telecommunications industry. It provides faster connection and higher quality for customers. For providers, it allows for more users and more data circulating on the network at the same time. From What is LTE technology ?.
  • 6. Ellen SOROKINA, Yulia FEDOTCHENKO, and Ksenia CHABANENKO, В социальных сетях.Twitter - 140 символов самовыражения, 2011.
  • 7. Morozov, E. 2011. The Net Delusion: The Dark Side of Internet Freedom.
  • 8. Here you can find a brief overview of Baidu’s international expansion plans.
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