Moscow 3G gets the go ahead

Russian mobile operators got the go ahead to provide 3G service in Moscow this week. As subscribers sign up for the service, analysts say the technology will drive profits for operators.

The launch of Third Generation mobile telecommunications in Moscow comes more than a year after it appeared in other regions of Russia.

MTS, Megafon, and Vimeplcom won the license to operate 3G in the country back in 2007. But Moscow has been off limits because the Ministry of Defence had exclusive use of the frequencies. Vimpelcom CEO, Boris Nemšić says that leaves some catching up to be done.

“We've waited for this a long time and we've got permission for up to 1,000 base stations in Moscow. This will be all together 1,500 until to 2012. Roughly 16% of our customers have a 3G phone, and these are the typical first users. On top of that, we've sold a couple hundred thousand 3G modems – which can work simultaneously and 2G and 3G networks.”

The Big 3 have equipment already in place and are ready to activate coverage through their base stations. 3G service is currently available in the metro and some indoor locations. Outdoor use will be possible after municipal authorities give their approval, which is expected to happen later this month.

Moscow subscribers are being offered special tariffs to take advantage of high-speed data services, according to Alex Kazbegi, Head of TMT Equity Research, Renaissance Capital.

"European operators make about 30% of their revenues from the value of the services. Russia makes about 15 – of which most of it is pure sms and not much of the content and data traffic. So the 3G obviously will enable that amount to increase."

The government is keen to avoid future embarrassing delays to implementing new technology. Ironically, 4G is already available within Moscow city limits. But far more devices are compatible with 3G, and there'll be more bandwidth available. So the advent of 3G in Moscow could finally launch widespread mobile networking in Russia.