One of the more enlightened Russian investments last year was when state-owned Khrunichev Enterprises became a founding member of Iridium, Inc. The Iridium global communications network is intended to provide cellular-style telephony to all areas of the world, regardless of whether or not they already have telephone connections.


Khrunichev's $40 million, 5 percent share of Iridium was invested by the state. The intention is to use the project to enable the Russian Federation to improve its own inter-city telecommunications. Providing the mammoth project gets off the ground, this will have been money very sensibly invested.


At last count, the Iridium consortium (which includes multinational telecommunication giants Motorola, Sprint, and STET), said the project will initially cost $3.5 billion. The first launches are likely to be in 1997. Khrunichev Enterprises last year was contracted to launch 21 of the 66 satellites which comprise the project.


The concept behind Iridium is that everyone in the world would be within range of an Iridium satellite, and would be able to connect to the world's public networks using a cellular-telephone sized handset. The system aims to bind together the world's cellular telephone networks and provide telephone connections to people even in the remotest areas.


There are serious questions about whether anyone in densely populated areas really needs this service. In Russia, however, the benefits of this kind of direct-to-satellite service are manifold. The great value to the Russian taxpayer of this $40 million investment is that Iridium could plug gaping holes in the telephone infrastructure, which would otherwise take decades to fill.


Outside the main cities and more populous regions in the western Soviet Union, settlements were very often established in completely virgin areas. Huge industrial plants were built from scratch; towns were built around an oil field or a mine; cities were built to support secret institutes involved in military and space research. Often these settlements had minimal contacts with the rest of the country.


This means that across the entire country there are hundreds of "population islands" lacking in long distance or international telecommunications. It will be well into the next decade before more than a fraction of the country gets new terrestrial connections. One by one the larger and economically more important centers will eventually receive satellite-based service. Companies such as Rustel, BelCom, Rascomsat and IDB specialize in this kind of work.


But only a service like Iridium would be able to reach those areas that are relatively inaccessible, or where there is a relatively small number of customers.


Wireless telephony has a special significance in countries where the existing terrestrial network is poor. It represents a means of expanding the amount of telephone penetration relatively quickly and cheaply before the slower process of laying cable can take place.Today in Russia mobile telephony is still in its infancy. There are only a few cities with operating cellular networks, while the biggest concentration of users is in Moscow and St. Petersburg. But with over 60 new licenses recently granted, the technology is set for a period of explosive growth.


Iridium would be able to turn dozens of relatively small mobile services into a nationwide network. A feature of the small networks' growth so far has been a very limited degree of co-ordination over industry standards, which could make conventional connections between them highly problematic.


Russia's $40 million investment was cheap at the price. As one player in a project that could put key elements of a global telephone infrastructure in place, Russia stands to gain directly from the economic activity Iridium will generate.





Robert Farish is the editor of Computer Business Russia. Tel: 265-4214 / Internet e-mail: farish@glas.apc.org