Russia’s Telecommunications Challenges Continue

By | June 12, 2006 | Europe, Feature, Telecom

Russia’s satellite sector is promising, but not when it comes to manufacturing telecom satellites.

Teal said in its recent report on the geostationary satellite market that as many as 176 new satellites will be launched in the next decade at a cost of $28.3 billion.

But Russia’s sole manufacturer, NPO-PM: The Applied Mechanics Research and Production Association remains focused almost exclusively on domestic customers looking for low-cost solutions. NPO-PM’s foreign contracts have not extended much beyond the production of a Sesat satellite for Eutelsat, which was launched in 2000. NPO-PM also is fulfilling an Iranian order from Sohreh, and the manufacturer is expected to win an order for Vietnam’s Vietsat.

Satellite Service Opportunities

But the picture does brighten when you look at the internal demand for satcom services. Neil Pole, Raydne‘s director of sales, said that the expansion of telecom’s infrastructure within Russia throughout the next few years will be driven by legislation passed in 2005 titled Universal Service in Communication. Under this legislation, every village in Russia with more than 500 citizens should have a phone and every village with more than 1,000 citizens should have a phone and Internet access. The rollout of the programs is expected to take 10 years.

A major part of this infrastructure rollout to fulfill these demands will be by terrestrial connectivity. However, there is still a significant satellite communications element required for the more remote regions. Preliminary calculations indicate there are about 30,000 villages that require phones, and a further 20,000 villages will require phones and Internet. In total 50,000 remote locations will require a VSAT station, Pole said.

In addition, state-owned Rostelecom will lose its near-monopoly in providing long distance telephone service, thereby allowing competition. The outlook for Russia’s market is changing as would-be alternative long-distance operators confirm their future plans. According to Oleg Malis of Corbina Telecom, his company has never made a secret of its ambitions to obtain a long-distance operator license, and hopes to get it in the near future. These arrangements are expected to take shape in the next 18 months, and Rostelecom is likely to compete on this market with Transtelecom, Interregional Transit Telecom (MTT) and Golden Telecom.

This should put an end to the monopolies, which will be required to provide subscribers with telecom lines for installation of broadband equipment by any alternative operator. Moreover, the monopolies will be required to allow all alternative operators to install network interconnect equipment and secure non-discriminatory access to their exchanges, upgrading them if necessary at their own expense.

Previously, the monopoly providers required alternative operators to upgrade their communication equipment as a pre-requisite to interconnect, at a cost running into tens or even hundreds of thousands of dollars. From now on, alternative operators will have to pay only for actual work performed at the point of connection, such as joining two wires together.

Satellite Options

Russia has three satellite communications systems in place: Globalstar, Inmarsat, and Thuraya, that will be ready to take advantage of the opening of the market, and each brings different strengths to the market. Globalstar provides almost global coverage and is the only satellite system available in Russia to offer federal phone numbers, making it easy for callers to reach satellite numbers. Inmarsat is the leader among personal satellite telecoms systems in terms of high-speed data transmission. Thuraya satellite services complement overland cellular networks. Coverage includes Europe, Northern Africa, Middle East and India.

Today, the national operator of civilian telecoms satellites is the State Enterprise Space Telecommunications, Stec.com, also known as Sputnik Telecommunications Entertainment Co. The company, founded in 2003, was made one of Russia’s first officially sanctioned operators of satcoms in 2004 by the Ministry of Communications, and the country is beefing up its own satellite capabilties after the country did not launch a single commercial telecom satellite from 1996 through 1999.

The commissioning in August of Russia’s fifth Express-AM geostationary satellite completed the implementation of the "Program for Renewal of the State Grouping of Satellites," part of Russia’s "Federal Space Program for 2001-2005." As a result, the capacity of Russia’s telecoms satellites then in orbit increased by a factor of 3.5. The program cost the Russian government about $770 million to build and launch five new satellites orbit.

Yuri Zaitsev, an expert with the Russian Academy of Sciences Institute of Space Research, reports that "in 2007, another two Express-AMs will be launched, with more transponders aboard. The "Federal Space Program for 2006-2015" calls for 15 new satellite launches at a pace of one or two per year.

–Gordon Feller

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