Rostelecom could subsidize telephones upon entry into regional mobile markets
MOSCOW. Dec 2 (Interfax) - OJSC Rostelecom is considering the possibility of using a contract model (with telephone subsidization) upon its entry into the regional mobile communications market, Rostelecom's Commercial Director for Wireless Assets Alexander Ragozin said.
Rostelecom has already begun to merge and rebrand its mobile assets, and it will start actively constructing new mobile networks next year. The company's plan entails creating 3G (UMTS) networks in Russian regions already possessing GSM networks, as well as building GSM networks in new regions.
Under the subsidized telephone contract model, the subscriber pays a small sum for the phone in exchange for committing to use the telephone and a particular operator's SIM card for a determined period. The user's monthly payments cannot be lower than a level predetermined by the operator, based on the cost of the selected telephone. Such a contract model is widespread in Europe, the U.S. and other countries.
Russia's major mobile operators have tried subsidizing telephones in such a form or similar forms, but the model did not catch on. The regulatory and legal base makes such a contract model difficult, MTS Retail General Director Andrey Klenin said. Russia's Federal Anti-Monopoly Service (FAS) prohibits the sale of one service on the condition of another, which is precisely what such a contract model entails. In addition, Russian operators' average revenue per user is substantially lower than that of European companies, and refunds for subsidized telephones can be slow in coming, he said.
Director of the Portable Electronics Department at Samsung Electronics in Russia Alexei Dorofeev said that subsidizing telephones is a question of whether the operators want to introduce such a model. Once the first operator begins actively using such a contract model, all the other operators will be pulled in, he said.
Besides building GSM and UMTS networks, Rostelecom intends to implement a project to develop communications in rural areas in 2012-2013. This involves constructing fixed wireless communications infrastructure with CDMA technology. Rostelecom counts on the government subsidizing the installation of CDMA telephones through a program for telephony in rural areas. Rostelecom President Alexander Provotorov said that if the government refuses to subsidize rural inhabitants' acquisition of such telephones, Rostelecom will have to shoulder the burden itself.