23 Mar '11
Oleg Kouzbit, Online News Managing Editor
Telecom Scartel is putting up $17.6m to launch in the Perm region one of Russia’s first 4G networks—a revolutionary mobile Internet service commercially operational in just 12 countries and growing rapidly. Already one of the world’s largest WiMax technology operators, Scartel is opening up a promising new market which presents a real challenge to Russia’s largest telecoms like MTS and Vimpelcom.
Russian telecom Scartel has unveiled its $17.6m 4G mobile broadband Internet for the Perm region. The decision to build one of Russia’s first 4G wireless regional networks and plug Perm into Russia’s prospective integrated roaming-free environment officially came nine months after Scartel got licensed for operations in the region. The firm’s new investment is in addition to an estimated $500m it has reportedly injected over the past five years in Russian-wide network upgrades.
According to Perm regional officials, the region will also pledge to provide ample support to raise additional capital to build up Scartel’s LTE FDD fourth gen broadband mobile communications over the next two years.
Scartel is a Russian developer and provider of mobile services based on 4G WiMax wireless fast Internet technology. It is part of Cyprus’ Yota Holding, which is 74.9% owned by Telconet Capital and 25.1% by Russia’s largest government-run technology corporation, Rostekhnologii.
Set up in 2007 in St. Petersburg, Scartel launched its WiMax program in 2008 by opening 2.5-2.7GHz IEEE 802.16e-2005 networks in Moscow and St. Petersburg first. It now operates in a number of large Russian localities as well as in Belarus, Nicaragua and Peru under the Yota brand. Its Yota client base in the company’s five biggest areas of presence (Moscow, St. Pete, Ufa, Krasnodar and Sochi) reportedly tops 750,000 people, making Scartel one of the world’s largest WiMax operators. It had sales of $140m last year.
WiMax goes global
4G WiMax is costlier compared to conventional Wi-Fi; however, a WiMax base station covers an area almost ten times broader than that of Wi-Fi (up to 10km). Scartel claims its Yota is “Russia’s first Mobile WiMax-based high-speed wireless Internet network that enables its clients to move around a city and still stay connected.” The technology allows its users to access the Web at up to 10MBit/s.
Yota Holding has been pushing for 4G WiMax telecom standards both in Russia and internationally. In 2009, it shook hands with the U.S.’ Clearwire and Japan’s UQ (both WiMax operators) on a cross-roaming procedure in their national Mobile WiMax networks. It was an expansion of their ongoing worldwide WiMax roaming development effort with Malaysia’s YTL, Pakistan’s WiTribe and Taiwan’s Vee Telecom and Global Mobile.
The operators have plans to launch in collaboration with local providers as many as a reported 480 WiMax networks in 140 countries, and stepping up its Russian effort by Scartel is part of Yota’s overall advancement strategy.
LTE gives a cutting edge
According to the Global mobile Suppliers Association (GSA, a representative body for the GSM/3G industry), more than 180 operators in 70 countries currently invest in LTE—a technology that experts say ensures the fastest mobile Internet services ever developed. LTE (which Scartel wants to build in Perm) is considered the most far-reaching of all 4G communications technologies, enabling users to download data at 326MBit/s and send it at 172MBit/s.
Only 17 global providers have already launched commercial LTE-based operations. Countries now covered include Austria, Denmark, Estonia, Finland, Germany, Hong Kong, Japan, Norway, Poland, Sweden, the U.S. and Uzbekistan, GSA reports.
In another report, GSA said as of mid-March 2011 there were more than a hundred consumer devices from at least 35 producers worldwide, which support fourth gen LTE technology—up 55% from what the Association reported just five weeks before.
Vying to ‘domesticate’ LTE
In Russia, LTE is already an area of fierce competition. Since mid-2010 government and privately owned telecoms alike have been contending for the 2.3-2.4 and 2.5-2.7GHz frequencies. Those include Russia’s Big-Three operators (MTS, Vimpelcom and Megafon) as well as Yota, national telecom provider Rostelecom, Russian Railways through its subsidiary Transtelecom, Rusenergotelecom and the Ministry of Defense-controlled Osnova Telecom.
The Big-Three and Rostelecom are believed to have agreed earlier this month to jointly buy 20% of Scartel and pool efforts with the company’s currently second largest shareholder, government-owned Rostekhnologii, to create by 2015 a leviathan in Russia’s cutting-edge up-scale telecom segment.
First out of the gate
For the Perm region, Scartel’s most recent $17.6m LTE broadband investment will mean a quantum leap from the conventional GSM (2G) standard to 4G WiMax. By comparison, MTS and Vimpelcom have begun to introduce 3G in just two cities of the area (Perm and Berezniki).
Scartel expects its two formidable competitors to ‘retaliate’ soon with their own 4G solutions; Ekaterinburg-based Uralsvyazinform, the largest telecom in the Urals area, is also said to have 4G plans for Perm.
The jury is still out as to whether regional mobile Internet users will line up for the faster but more expensive 4G service. But many experts feel that Scartel’s foray into Perm adds a whole new dimension of business communications and that early adopters and high-end users will flock to LTE.