Russia’s Transport Transformation

As mobile data usage skyrockets, operators jettison E1s for faster, more cost-effective Ethernet. By Lynnette Luna

The U.S. and Western European mobile markets receive much of the attention when it comes to mobile data consumption, and China and India are typically singled out as vastly untapped mobile broadband markets. But north of these emerging markets sits Russia. With a

land mass nearly twice the size of the U.S., Russia is on the cusp of explosive growth in high-speed wireless data services. Indeed, its operators may very well overtake their peers abroad in rolling out 4G networks. Many Russian operators are gearing up for growth by

deploying HSPA. Despite a global economic crisis that lingered throughout 2009, mobile broadband growth has surged in Russia. Pyramid Research estimates that revenue from mobile data there reached $951 million in 2009 and forecasts revenues of $1.5 billion in 2010 as the economic recovery continues.

“Russia’s telecom market offers considerable opportunities

for vendors and investors,” said Deniss Radcenko, senior analyst with Pyramid Research. “Operators are heavily investing in mobile broadband and, in line with this, upgrading their 3G networks in order to compete in the vital mobile data segment.”

The 3G Boom Several trends will drive explosive revenue growth through the end of this year, Radcenko said. A spectrum shortage had limited the country’s largest

operators — MegaFon, MTS and VimpelCom — to providing indoor 3G service in Moscow. However, in December 2009, regulators authorized them to substantially expand their outdoor services throughout the capital city. These 3 operators operators continue to aggressively roll

out 3G networks across the rest of Russia. For instance, VimpelCom recently launched services in its 400th town, Radcenko said. Meanwhile, MTS, Eastern Europe’s largest mobile operator,

recently announced plans to spend up to $1.6 billion on 3G network upgrades in Russia in 2011. It anticipates mobile data to exhibit the fastest growth in its mobile business, with a com- pound annual growth rate of 41% between 2009 and 2012.

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