Tuesday, October 23, 2007

Russian WiMAX – What is its Current State?

Russia is often perceived as an almost ideal market for wireless internet – large territory, low density of population, and high expense of building traditional telecom infrastructure.

The key factor had been low competition in the area of internet access. In many regions, dedicated broadband internet was not available at all. Even in places where it was, the tariffs were too high and it took much time to install the service. Traditional carriers lacked resources for CAPEX or the customer pool was too small for them, but investment still would have paid off at that time.

In Russia, wireless broadband, which is typically associated with higher tariffs than for traditional technologies, has surprisingly often been the only option for companies who needed a fast solution at an affordable price. A typical scheme of early BWA included installation of a couple of base stations to provide a city’s coverage. That made marginal costs of new customers very low, compared to installation of ADSL ports or optical cables, where there were too few customers. Small size and higher service coverage made WISPs more affordable and flexible than other players.

Cellular telephony has also enjoyed enormous success in Russia, in bringing telephony to areas where people often did not have any other means of communications (that does not mean these areas were rural – in many towns in Russia there were queues to install a phone). And now it has penetration levels higher than in North America.

The wireless industry players have anticipated the increase in demand and reacted quickly, being more flexible than traditional carriers. The industry, which was started by enthusiasts, has turned into a solid and largely established area, attracting the best managers, large marketing efforts, and large investment. Recent M&A created a few nationwide players with large resources for further development.

Nevertheless, there are factors that greatly affect further development. First, the assumption of great need for BWA in rural areas might not be exactly right. In such a large country like Russia, 70-80% of the population is living in urban areas and about 30 million people or 20% are concentrated around Moscow. So, in fact, the rural area is almost deserted and there are few potential customers there on either the residential or business side.

Second, the penetration of regular broadband internet almost doubled last year. ADSL connections became cheap and available in most regions – something that did not exist a year ago. Access speeds increased. Prices for dedicated wireline broadband went down significantly. Consumers have become more demanding.

Third, there is the negative influence of competing wireless technologies. Introduction of UMTS and earlier EV-DO constitutes a competitive threat from mobile telephony companies. Citywide Wi-Fi zones appeared and are taking mobile clientele too. Satellite internet became cheaper and appears a convenient way to establish connections in distant areas.
That most of the potential clientele live in urban areas strains the most precious resource – frequencies – which are often unavailable, as their allocation is based on subjective criteria. The military occupies precious parts of the spectrum, and many other users bring “noise” to the spectrum, making it hard to establish high quality communication.

What is still great in Russia is the economic climate, where many businesses are growing and wireless solutions are still in demand. For devices such as ATMs in shopping malls, these technologies are still quite convenient. The plans of the government to bring telephony services to small towns might be largely based on BWA. Introduction of WiMAX chipsets might completely turn the industry around, making WiMAX networks a great alternative to cellular networks. In our opinion, WiMAX’s future in Russia is in mid–sized towns, which have the right combination of advantages offered by the technology, needs of customers, and spectrum availability.

Selamat Datang di Blog WIMAX-INDO

Blog Ini di buatsebagai pencerahan tentang apa itu Teknologi WiMax, yang merupakan teknologi terbaru