After years of strategic discussions, long bureaucratic processes, and unsuccessful attempts to launch 4G, 2012 promises to be the breakthough year for LTE deployment in key areas of Russian territory.
While three players – Scartel, Rostelecom and Osnova Telecom – had received their own frequencies for LTE deployment by the end of 2011, additional frequencies are expected to be obtained in 2012 by Rostelecom and by mobile operators MTS, VimpelCom, and MegaFon. Due to the complexities of frequency conversion, however, only Scartel, as along with MTS and MegaFon in Moscow, are likely to make new LTE networks available for commercial use before the end of 2012.
- Scartel’s switch from WiMax to LTE
Earlier this month, the launch of Russia’s first commercial LTE network in Novosibirsk, Siberia, by Scartel, came as a consequence of long awaited decisions from the State Commission on Radio Frequencies (SCRF) in September 2011.
A leading Russian WiMax provider operating under the Yota brand, Scartel received approval for deploying LTE in Russian territory in the 2.5 to 2.7 GHz frequency range (30 MHz band in frequency division duplexing, or FDD). Scartel already owned 35 MHz frequencies FDD in 2.5 to 2.7 GHz frequency range, but they were obtained for WiMax use and were dispersed through the range.
Although it has not formally adopted the principle of technical neutrality for spectrum allocation, SCRF agreed to replace these 35 MHz WiMax frequencies with 30 MHz LTE/FFD frequencies in almost the same 2.5 to 2.7 GHz frequency range.
- Moscow as an early battle field
As another consequence of SCRF’s September decisions, mobile operators MTS and MegaFon are set to compete with Scartel in Moscow. Both operators have been allowed to use 25 MHz band in time division duplexing (TD-LTE or TDD) in the 2500-2700 MHz frequency range in exchange for switching off their existing WiMax and MMDS networks in approximately the same frequencies.
- Tenders for nationwide frequency allocation in Q2 of 2012
The SCRF made some important clarifications in the state’s position regarding further LTE frequency allocation nationwide. Four winners will emerge from tenders for frequency allocation, receiving a 7.5 MHz band (2×7.5, FDD) in the 710-862 MHz frequency range throughout Russia.
These bands are currently used by the Russian Defense Ministry and the winners will have to finance their conversion, the cost of which has been estimated at no less than 56 billion rubles, or approximately $2 billion. However, as a compensation, the winning operators will receive an additional 10 MHz in the 2500-2690 MHz frequency range (2×10, FDD) and 7.5 MHz (2×7.5, FDD) in the 720-791 MHz frequency range for free in all Russian regions.
Initially scheduled to take place by February 1, 2012, the tenders have been postponed to an undetermined date, possibly in Q2 of 2012. The delay is due to legislative issues, said Mass Media and Communication minister Igor Shchegolev. But an industry source pointed out that the discussions with the Defense Ministry about conversion conditions are still ongoing, while the Association of Regional Operators has openly expressed doubts about the transparency of the entire tender procedure.
- The “co-opetition” of Megafon, MTS, Vimpelcom, and Rostelecom
Since technical and regulatory operations related to conversion will demand an unpredictable time, it is unlikely that LTE networks can be launched commercially in the 710-862 MHz frequency range this year. To accelerate things, Megafon and Rostelecom, the national telecom operator, agreed in late 2011 to deploy LTE jointly with Scartel. Rostelecom and Megafon will be able to use Scartel’s equipment and frequencies, offering their own LTE services as MVNOs. In exchange, Scartel will get access to the infrastructure, sites, channels and data-centers of both companies.
More ambitious synergies had been considered in early 2011, with mobile operators MTS, VimpelCom, and MegaFon, as well as Rostelecom pooling their resources in a single infrastructure joint venture with a common LTE network built by Scartel. Despite being endorsed by Prime Minister Vladimir Putin, the project failed because the mobile operators, notably MTS and others afterwards, disagreed on the valuation of the joint venture and refused to buy their stake of the joint venture at the proposed price.
MegaFon and Rostelecom consequently reached a different type of agreement with Scatel, as mentioned above, whereas MTS and Vimpelcom teamed up to develop common LTE infrastructure in remote in far and underdeveloped areas of Siberia, the Russian North and Far East.
- Clarified perspectives for Rostelecom’s regional network
The perspectives of Rostelecom’s planned TD-LTE network in 39 Russian regions, where it received licenses in the 2300-2400 MHz frequency range two years ago, have also been clarified.
Rostelecom has so far been unable to deploy its network due to the reluctance of military authorities to surrender the frequencies. Finally, last December, the Defense Ministry validated the frequency allocation for Rostelecom in the 39 regions but with a serious restriction regarding base station power. Details about this restriction have not been disclosed, but experts expect it will lead to the deployment of the network only indoors in some of the regions.
- GSM+LTE experiment for Tele2 Russia
After having been excluded from preparatory discussions, Tele2 Russia, the Russian subsidiary of the Swedish-based European telecommunications group, finally got a chance to participate in LTE operations. In December 2011, the Russian Ministry of Communications and Mass Media assigned the Radio Research and Development Institute (FSUE NIIR), an affiliate of the ministry, to conduct tests combining LTE and GSM in three trial areas before April 2012.
The tests will be conducted in cooperation with such regional operators as Tele2 Russia, probably SMARTS and others, to study how the two technologies could work when combined in the same band in the 1800 MHz frequency range.
- A military network by a military operator
In September, SCRF also allowed Osnova Telecom, a subsidiary of the Russian Defense Ministry, to build a nationwide TD-LTE network for military use in the 2300-2400 MHz frequency range, without any tender for frequency allocation.
- The hardware side
On the hardware side, Russia now has its own equipment production capacities with the launch in late 2011 of a powerful LTE base station production unit by Nokia Siemens Networks, in association with Micran, in Tomsk, Siberia.
In addition, last July, the Russian authorities began the accreditation of organizations to test and certify LTE equipment. Accredited organizations carry out tests of infrastructure related LTE equipment, either imported or produced in Russia, and issue certificates required for using the equipment in the country.
Equipment issues are far from solved, however, according to some observers. “Putting aside Moscow and, maybe St. Petersburg, LTE will remain a dream in the regions for the next five years, until equipment is made fully available,” Vladimir Evtushenkov, the owner of MTS shareholder AFK Sistema, said in a recent interview on Russian television.
Sources: Ministry of Communications and Mass Media, Vedomosti, ComNews.ru
