Russia Strives to Lead in 4G Telecommunications

Article  by  Dovilé DAVELUY  •  Published 25.03.2011  •  Updated 01.04.2011
Russan woman on phone
[NEWS] The Russian telecommunications industry has recently concluded two major agreements aimed at developing a nationwide fourth-generation telecoms network by 2014. The 4G technology offers higher quality and faster speed for Internet use than the older third-generation networks.
On March 3, 2011, the four largest Russian telecommunications companies and former fierce competitors VimpelCom, MegaFon, Mobile TeleSystems and state-owned Rostelecom agreed to join forces in developing a nationwide 4G network. They signed a deal with the wireless network provider, Yota, which will handle the roll-out of 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 [1]. Beginning in 2014, each of the four telecommunications companies working with Yota will be able to buy up to 20% of its shares at the market price.
 
Praising itself for its modernity and innovation, Yota is the first high-speed wireless network provider in Russia, and was established only three years ago. It currently services five cities: Moscow, St. Petersburg, Ufa, Sochi and Krasnodar, reaching a population of over 20 million people. In its press release announcing the deal, Yota promises that the first customers will be able to take advantage of the 4G network by the end of 2011. By 2014, the company expects to have 180 Russian cities and 70 million customers covered.
 
Attesting to the determination to put the agreement of the “Big4” into action, another important deal was signed on March 14, 2011 in the special economic research zone of Tomsk[+] NoteRussia currently has 24 special economic zones of four types: four research zones, four industrial zones, 13 tourist and recreation zones, and three port zones. These zones are an instrument for the creation of innovative infrastructure, and are aimed at developing the potential of the regions. The government supports such zones through lenient taxation and customs privileges, and lower land rental tariffs. From Special Economic Zones of the Russian Federation available at www.oao-oez.ru.X [2] between Nokia Siemens Networks, Russian nano-technologies giant Rosnano, leading Russian microwave telecommunication and measurement equipment manufacturer Mikran, and the administration of Tomsk region. The purpose of the agreement is to create a large common venture in charge of developing and building the fourth-generation telecommunications equipment, and the LTE stations necessary for the roll-out of the 4G network. Igor Kosov, the director of the JSC Special Economic Zones, claims that the choice of the special economic zone for the development of this project is great proof of the efficiency of the favorable economic environment for attracting projects related to innovative technologies, and transforming them into beneficial economic opportunities for the country.
 
The actors involved seem particularly delighted with the participation of Nokia Siemens Networks. Viktor Giunter, CEO of Mikran, claims in an article on the specialized Russian telecommunications website TassTelecom that the goals of the two companies are very similar, and that he expects a quick and efficient transfer of Nokia Siemens’ expertise on LTE technologies. The same article concludes that the cooperation of these companies will allow Russia to gain a leading position in the world in terms of the development of 4G infrastructure. The first LTE stations should start operating at the end of 2011, and by 2012 another 10,000 LTE stations should be ready; following this, companies could put up to 100,000 stations in place annually.
 
Even before the actual development agreement in the Tomsk special economic zone was announced, The Financial Times had remarked that analysts believed that by cooperating, Russians could quickly get ahead of their Western counterparts in rolling out the 4G network. The Information Technology Research Company Gartner estimates that it will take time for the 4G market to mature: while Russia wants to have a nationwide network by 2014, Gartner expects that only 3% of mobile devices overall will operate on LTE by then.
 
Joining forces and building common infrastructure is becoming increasingly common among telecommunications companies in various countries to offset high costs; Sweden and Norway are also building a shared 4G network, for example. The Russian endeavor is estimated at 2 billion dollars. The TassTelecom website put it bluntly in one of its headlines regarding the deal: “For the four, 4G four times cheaper.” Prime Minister Vladimir Putin congratulated the cooperation between the companies, claiming that the lower the investment cost, the more reasonable the service fees - and consequently, the greater the possibilities for the end consumers.
 
Communications Minister Igor Shchegolev also sees a win-win situation for all the parties in the recently concluded deals. By using the common infrastructure, telecommunication companies will be able to build the 4G broadband network faster and at a more reasonable cost, and consumers will have better-quality communication services sooner. He also emphasized that the development of the 4G network in remote areas would tremendously increase the quality of living by providing high-quality communication services for inhabitants, and by allowing the use of the newest technologies in various areas of public life, such as schools and libraries.

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  • 1. 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?
  • 2. Russia currently has 24 special economic zones of four types: four research zones, four industrial zones, 13 tourist and recreation zones, and three port zones. These zones are an instrument for the creation of innovative infrastructure, and are aimed at developing the potential of the regions. The government supports such zones through lenient taxation and customs privileges, and lower land rental tariffs. From Special Economic Zones of the Russian Federation available at www.oao-oez.ru.
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