Global Insight Perspective | |
Significance | Corbina's investment in Moscow will amount to US$25 million, with up to US$35 million to be spent on the deployment of broadband networks in other regions. |
Implications | Corbina is not alone in rolling out broadband networks in Russia. Golden Telecom and Comstar have also continued their projects of network deployment, as competition in the market intensifies, particularly in the capital Moscow. |
Outlook | With plenty of room for further broadband uptake and with migration from dial-up, competition in the broadband sphere is likely to continue, in the regions as well as Moscow. |
Alternative operator Corbina has announced plans to continue its investment in Russia's broadband sector in 2007. The operator, which also offers fixed-line and mobile services, will invest from US$43 million to US$60 million next year, according to Prime-Tass, with the exact amount depending upon whether "administrative" issues can be resolved. Senior vice-president Alexander Malis has disclosed that US$25 million is to be invested in broadband deployment in the capital Moscow, while investment in other regions will range from US$18 million to US$35 million.
Earlier this year Global Insight produced a special report on the emergence of broadband as one of the biggest growth markets in Russia's telecoms industry (see Russia: 30 August 2006: Broadband Metrics—Russia's Multi-Technology Broadband Market). Since then the market has continued to grow apace, and Corbina is one of several independent local exchange carriers (ILECs) which have invested in network deployments and regional acquisitions.
Outlook and Implications
- Corbina's Broadband Targets: Corbina's broadband project in Moscow began in November 2006, with the deployment of 5,000 kilometres of fibre-optic cable (see Russia: 17 November 2005: Corbina Telecom Announces Moscow Broadband Investments). The operator has to date connected around 20,000 houses in Moscow, signing up some 120,000 broadband users. Malis has stated that Corbina is targeting 300,000 Moscow users in 2007, with the number increasing to around 500,000 by 2009. Despite the financial outlay, however, Corbina appears to have missed the target it set 12 months ago, of 180,000 users by November 2006. This could be attributed to competition in the market and failure to meet deadlines, rather than lack of demand for broadband in Moscow. Beyond the capital Corbina has begun broadband deployment in St Petersburg, Yaroslavl, Kaluga, Tula, Volgograd, and Orenburg, with plans for network construction in a total of 12 cities and complete coverage in 5.
- Competitors on the Russian Market: Corbina is not alone in maintaining a proactive approach to broadband deployment. Golden Telecom has announced that by the end of the third quarter of 2006 it had deployed 2,700 Wi-Fi nodes in Moscow, offering internet access at 54 Mbps to 600,000 Moscow households. Golden Telecom's Wi-Fi project aims eventually to cover 3.9 million Moscow households. The operator also intends to migrate its 393,000 dial-up users to broadband, with a target of 400,000 subscribers by 2010. Meanwhile, Russia's largest regional broadband provider, Comstar UTS, saw subscribers to its "Stream" broadband service rise 70% year-on-year in the third quarter of 2006 to 303,534. The operator has reported that average revenue per ADSL line (ARPL) in its residential segment, in the first nine months of 2006, is US$20, and this matches the ARPL figure predicted by Corbina for 2007.
- Growing Trend for Wireless Broadband: Increasingly, Russia's broadband operators are exploring the opportunities presented by wireless broadband roll-out (see Russia: 23 November 2006: Synterra Planning Further WiMAX Roll-Out in Moscow, Russia: 24 October 2006: Regional Operator New Telecommunications Planning WiMAX Launch, and Russia: 27 September 2006: Enforta Consolidates in Wireless Broadband Market). This issue is particularly pertinent to Corbina in Moscow, as it has become frustrated about its inability to access the last-mile infrastructure owned by Moscow incumbent MGTS. Corbina has therefore begun rolling out Wi-Fi networks in the capital, with 126 Wi-Fi hot spots currently in operation and a figure of 1,200 hot spots targeted in 2007. Again, however, this indicates that the operator has failed to achieve its aim, outlined in November 2005, of 1,200 hot spots by March 2006. Corbina has also applied for frequencies in the 2.5-2.7 GHz range, which would enable it to offer WiMAX service at speeds of up to 75 Mbps. Plans are in place for WiMAX deployment in the 15 largest cities in the Russian part of Europe, including Moscow and St Petersburg. Corbina already provides pre-WiMAX services to corporate clients in the 3.5 GHz and 5.2 GHz frequency bands, in the Central Federal District, and is likely to target a similar customer base should the State Radio Frequency Commission grant the WiMAX frequencies. Wireless broadband may also see growth in regional, rural areas of Russia, where there is little developed last-mile infrastructure and buildings are not concentrated within small areas.