One of the most puzzling problems for mobile network operators and vendors of mobile telephones in Eastern Europe and the former Soviet Union is how countries with very similar telephone infrastructures and similar telephone problems can embrace mobile telephony with such varying degrees of enthusiasm. Why, proportionally, do so many more businessmen in Budapest and Tallinn use mobile telephones than do their Moscow counterparts?
Mobile telephony is not by any means unpopular in Moscow. Moscow Cellular says it has around 9,000 subscribers, and the rival Beeline network says it has about 5,000. However, the numbers in Estonia and Hungary are of a different order. Estonia, a country of only 1.6 million people, now has 13,500 mobile telephone users. In Budapest on a single network there are now over 20,000 users.
Mobile telephones, and wireless communications in general, have great possibilities in Russia and Eastern Europe. In the whole region the fixed line network is of poor quality, and in many areas telephone penetration is poor.
Mobile telephony can be used as a means of supplementing city lines, which are often in short supply. It is also a form of insurance against congestion on city or international exchanges. As improving the fixed line network is costly and takes a long time, wireless systems can be used to provide connections immediately and more cheaply.
Though less prevalent, mobile telephones are no less desirable in Moscow than they are in Budapest. According to the Moscow City Telephone Network, the average waiting time for a new line in Moscow is about a year. In some of the Moscow suburbs, the wait can run three years. New city lines are available for businesses -- but at a much higher price.
For the car-bound businessman, a mobile telephone makes great sense: Moscow's traffic jams now bring whole sections of the city center to a crawl and no doubt destroy hundreds of meetings every day.
One explanation for the comparatively slower growth of cellular telephony in Moscow is that it has proved so difficult to deliver here. It took at least a year for the Beeline network to move from testing to commercial operation.
Last June, I wrote in this column about the imminent launch of Russia's first GSM digital telephone network here in Moscow. Mobile Tele Systems said it would launch the network in July and that it would attract 3,000 users by then end of 1994. The network is still not operating and now Mobile Tele says it will be at least May before commercial operation can begin. A spokesman for the company says much of the equipment needed to run the network is still being certified by the Communications Ministry.
Another reason for mobile's moderate growth in the city is that it is expensive. Moscow operators charge premium prices compared with most countries.
There are structural reasons for this. In Europe, mobile network operators have income-sharing agreements with their local telephone networks for calls which travel from one network to the other. In Moscow this has not happened. The result is that mobile operators here have to charge their customers for incoming as well as outgoing calls -- effectively doubling the cost of mobile telephony.
Also, import duties and taxes have made the sheer cost of getting the equipment into the country many times more expensive than in most countries in Europe.
But customers also have to be willing to pay these premium prices -- and unfortunately they are. Though there are plenty of people who use mobile telephones out of pure necessity, the devices have also become badges of the new rich. Many people are happy to pay for a status symbol, since in so doing they keep prices high and restrict the membership of their exclusive club. In this case, as in many others, high prices can be blamed on the "new Russians factor."
Robert Farish is the editor of Computer Business Russia
Fax: (+7 095) 198-6207, Internet e-mail: [email protected]
Mobile telephony is not by any means unpopular in Moscow. Moscow Cellular says it has around 9,000 subscribers, and the rival Beeline network says it has about 5,000. However, the numbers in Estonia and Hungary are of a different order. Estonia, a country of only 1.6 million people, now has 13,500 mobile telephone users. In Budapest on a single network there are now over 20,000 users.
Mobile telephones, and wireless communications in general, have great possibilities in Russia and Eastern Europe. In the whole region the fixed line network is of poor quality, and in many areas telephone penetration is poor.
Mobile telephony can be used as a means of supplementing city lines, which are often in short supply. It is also a form of insurance against congestion on city or international exchanges. As improving the fixed line network is costly and takes a long time, wireless systems can be used to provide connections immediately and more cheaply.
Though less prevalent, mobile telephones are no less desirable in Moscow than they are in Budapest. According to the Moscow City Telephone Network, the average waiting time for a new line in Moscow is about a year. In some of the Moscow suburbs, the wait can run three years. New city lines are available for businesses -- but at a much higher price.
For the car-bound businessman, a mobile telephone makes great sense: Moscow's traffic jams now bring whole sections of the city center to a crawl and no doubt destroy hundreds of meetings every day.
One explanation for the comparatively slower growth of cellular telephony in Moscow is that it has proved so difficult to deliver here. It took at least a year for the Beeline network to move from testing to commercial operation.
Last June, I wrote in this column about the imminent launch of Russia's first GSM digital telephone network here in Moscow. Mobile Tele Systems said it would launch the network in July and that it would attract 3,000 users by then end of 1994. The network is still not operating and now Mobile Tele says it will be at least May before commercial operation can begin. A spokesman for the company says much of the equipment needed to run the network is still being certified by the Communications Ministry.
Another reason for mobile's moderate growth in the city is that it is expensive. Moscow operators charge premium prices compared with most countries.
There are structural reasons for this. In Europe, mobile network operators have income-sharing agreements with their local telephone networks for calls which travel from one network to the other. In Moscow this has not happened. The result is that mobile operators here have to charge their customers for incoming as well as outgoing calls -- effectively doubling the cost of mobile telephony.
Also, import duties and taxes have made the sheer cost of getting the equipment into the country many times more expensive than in most countries in Europe.
But customers also have to be willing to pay these premium prices -- and unfortunately they are. Though there are plenty of people who use mobile telephones out of pure necessity, the devices have also become badges of the new rich. Many people are happy to pay for a status symbol, since in so doing they keep prices high and restrict the membership of their exclusive club. In this case, as in many others, high prices can be blamed on the "new Russians factor."
Robert Farish is the editor of Computer Business Russia
Fax: (+7 095) 198-6207, Internet e-mail: [email protected]
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