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Russian 3G licenses set to be issued by end 2001

date: 30 March 2001, source by: totaltele.com

Third-generation mobile licenses could be issued in Moscow and St. Petersburg at the end of this year, according to a report in the Russian newspaper Vedomosti.

The Ministry of Communications is said to be working on an award process and it is thought likely that Russia will not have a competitive auction. Further, the newspaper indicates that the Ministry will award two UMTS licenses in each of the seven federal regions.

Alexander Krupnov, president of the Russian national association of 3G operators, is quoted as saying "the doors to 3G are open to all - whether foreign operators, those Russian operators already in business, or those who intend to invest in the development of new networks."

There are already three companies interested in offering 3G services in Moscow, MTS (the Sistema and Deutsche Telekom joint venture), Vimpelcom (Telenor has a 25% stake) and Sonic Duo (which has Sonera as a backer).

However, there is a stumbling block to a fully open process. The article goes on to say that the vice president of Vimpelcom, Sergei Avdeeva, estimates the cost of launching a full-scale 3G service in Moscow at US$500 million. Obviously, such high costs could be a barrier to entry for Russian companies and it is reported that Yuri Pavlenko, of the Ministry of Communications, has called for the exclusion of foreign operators not partnered with Russian firms.

Aside from cost, the main problem with 3G in Russia is expected to be the lack of free spectrum. Frequencies will have to be converted from their present use if sufficient spectrum is to be available.

The cost of a license has yet to be specified. However, it may be that a license in Moscow will cost around US$3 million, with St. Petersburg slightly cheaper at US$2 million and regional licenses pegged at around US$1 million. Companies interested in acquiring a license are said to already be preparing trials of the ground equipment, with MTS ready to launch its trial zone, which will have four base stations, in April.

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