26 Aug 2011Russia Broadband Overview

Since the break-up of the Soviet Union, the Russian telecommunications sector has developed in a somewhat haphazard fashion. There have been some recent steps towards liberalisation, in particular in the long distance sector, but despite progress on this front gaining access to existing networks can still be problematic for operators. Due to the country's geography telecoms markets are highly regional, with only a few large national players.

De-monopolisation has not been completed, so local loop unbundling is not available to Russian alternative carriers. Unless they are spun-off from local PSTN incumbents like Moscow City Telephone (MGTS), all alternative providers have to build their own infrastructure.

During 2010, in the aftermath of the global recession, Russian telecoms sector grew slower than in previous years – annual growth in terms of revenue dropped to 6 per cent from 19 per cent in 2009 and 22 per cent in 2008. At the same time, in 2010 total capex in the telecoms sector grew by 29.9 per cent. Despite the recession’s effects on the purchasing power of the population, marketing budgets of the providers and availability of investment funds, in H1 2010 the fixed broadband customer base in Russia grew by a record 2 million. This growth resulted in 13.27 million subscribers and 25.5 per cent household penetration.

Mobile broadband has good prospects too. Like in many other countries, while fixed line penetration is falling (from 32 per cent in 2009 to 31.4 per cent in 2010), mobile penetration has increased from 162.4 per cent to 166.3 per cent during the same period. It must be noted however that mobile penetration varies greatly across the regions from 197 per cent in the North-western Federal District to 121 per cent in Northern Caucasus District. This is also the case with fixed telephony penetration – it varies from 38.2 per cent to 12.5 per cent across regions. There are also dramatic variations between urban and rural areas. These variations cause significant differences in broadband penetration rates, and the digital divide.