NTS to Unite Country's Payphones

A new St. Petersburg subsidiary of state-controlled telecommunications holding Svyazinvest has been chosen to run a nationwide payphone system using a single type of calling card.

The Communications Ministry chose the National Telephone Network, or NTS, over Moscow City Telephone Network, or MGTS, and Moscow's Inkom-Taksofon. The ministry said the project -- to be carried out along with long-distance monopoly Rostelecom -- will require $43.9 million in investment and estimates the project will recuperate costs in six years.

Currently, dozens of different telephone cards are currently used across Russia.

The Communications Ministry and Svyazinvest began planning the unified system a few years ago. Although a federal commission approved the concept in December 2001, it had remained unclear which company was going to carry out the project.

NTS -- which Svyazinvest created in 2000 especially to service the project -- is planning to merge with St. Petersburg Taksofony, or SPT. The Communications Ministry will prepare documents needed to create a unified card-emission center by July 1, SPT general director Anatoly Afanasyev said in a statement last week.

NTS and SPT, which together operate 3,000 payphones and sells 100,000 cards per month, are significantly smaller than MGTS, which owns over 10,000 payphones and sells about 500,000 cards per month. However, Svyazinvest will have an easy time controlling NTS. The national holding and Telecominvest will fully own the merged company, while Svyazinvest has only a 23 percent stake in MGTS.

NTS has already started integrating regional networks, said Oleg Mikhailov, Svyazinvest's director of information support.

The losing operators do not understand why Svyazinvest is in such a hurry to create a unified payphone system and are skeptical about the success of the project, saying the holding will not be able to manage the project because it is too costly.

"The idea of a unified card may be a good one, but without serious investment it won't survive," said Arkady Semyonov, head of network management at MGTS. "The equipment in the MGTS card emission center alone is worth $500,000, and to create a center that would gather information from all of Russia demands much more money."

Furthermore, operators do not understand why Svyazinvest wants to create an emission center before solving a number of technological problems.

"Each operator uses its own equipment. In order to create some kind of single card, all the payphones in Russia will need to be unified, which is not realistic in the near future," said Alexei Kuznetsov, director of Inkom-Taksofon.

Indeed, operators are in no hurry to modernize their payphones -- at least not to NTS standards. And few of the other operators have heard of the joint project with Rostelecom. Even the technical director of Rostelecom, Pavel Alpetyan, said he had not heard of the project.

NTS may meet more obstacles, as other operators may not allow the distribution of a unified card.

"We will go for the unified card only if it is in our interests. It all depends on how much we will be paid to carry traffic on somebody else's card," said MGTS's Semyonov.

"Currently, operators that work with MGTS cards make a few times more than what SPT is proposing," he said.

Payphone operators, however, are not yet ready to stop producing their own cards.

"It will be possible to switch to the unified card in five to 10 years, but now everybody has their own emission volumes and their own business," said Inkom-Taksofon's Kuznetsov.

"The operators won't abandon their own cards," he said.