Author`s name Alex Naumov

Megafon launches first 3G network in Russia

MegaFon is Russia’s first mobile operator to launch its IMT-2000/UMTS (3G) network. The company has launched the first portion of the 3G network with the data transfer rate of up to 3.6 Mb per second that will cover St.Petersburg and part of the Leningrad Region. The other biggest mobile operators in Russia, MTS and Beeline (JSC Vympelkom) say they will also launch 3G in the nearest future. The amount of investment is to make up billions of dollars.

MegaFon’s network in St.Petersburg will cover the central part of the city, the area of Vasilevsly Ostrov, the railway stations, the airports of Pulkovo-1 and Pulkovo-2 and the suburban town of Pushkin. Now the network includes 30 basic stations built using Nokia Siemens Networks equipment.

The coverage is not yet enough for full-value revenue service. However, MegaFon clients with mobile phones supporting 3G can enjoy services available in the 3G network. Access to the Internet through 3G is to be paid at GSM prices. The operator has not yet created any new offer in this connection.

MegaFon Director General Sergey Soldatenkov says that in the framework of the company’s license the operator plans to build 3G networks in 16 regions of the Russian Federation by 2008. Earlier Soldatenkov had stated that the company would invest about $1 billion into creation of a 3G network all over Russia.

In April 2006, Russia’s three leading mobile operators won tenders for getting licenses to sell 3G services. All the three operators plan to invest similar sums into building their 3G networks. MTS and Vympelkom are making their 3G networks ready for launching and getting all necessary licenses.

Vympelkom plans to have a commercial launching of 3G in several Russian cities in the middle of 2008. According to Vympelkom director general Alexander Izosimov, the operator’s investment is to make up about $300-350 million in 2008. MTS plans to launch a 3G network in 26 cities of Russia in the middle of 2008. The company will build its 3G network in Moscow and the Moscow Region with Nokia Siemens Networks equipment. According to MTS President Leonid Melamed, MTS will invest about $1 billion within the next three years in development of its networks.

3G networks provide better Internet access thanks to a higher data transfer rate; they also allow transmitting video data that can be used for watching video, television, making a video telephone call, etc. Experts say that broadband access to the Internet is to become the most popular service as soon as 3G networks are launched.

Russian mobile operators carefully consider the experience of European operators in launching 3G networks before starting their own networks. Hutchinson was one of the first European mobile operators to start 3G services but the services could not unfortunately cover the company’s expenses on the network. At that, British operator Vodafone was a better success when started providing such services in half a year after Hutchinson. Today, Russia has rather good conditions for launching 3G networks. At that, mobile operators say that the companies need a well worked business model for launching 3G networks.

Vympelkom press secretary Yekaterina Osadchaya says that launching a portion of the 3G network by MegaFon gives no commercial advantage to the operator, it rather works for the company’s image. It is known that other biggest mobile operators of Russia also have licenses for launching 3G networks and the operators are to enter the market with the same project in the nearest months, the expert adds.

Analyst Anna Kurbatova is sure that launching the 3G network will bring image advantages rather for MegaFon clients not for the company itself. It is unlikely that the project will help MegaFon win clients of the other operators over to its side.

The new project has demonstrated that MegaFon has a really strong technical basis. Development of the 3G network is one of the operator’s essential perspectives.


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