Moscow's 3G Rollout Delayed Again

VedomostiVimpelCom, which operates under the Beeline brand, is investing heavily to expand into the broadband market.
Owners of 3G handsets wanting to use the new technology in Moscow could be in for a long wait, as the military has again delayed freeing up the necessary frequencies in the capital, said Alexander Malis, VimpelCom's director for broadband development.

All three 3G license holders -- MTS, VimpelCom and MegaFon -- have already deployed the technology, which allows Internet download speeds of up to 10 times faster than GPRS or EDGE, in other cities across the country.

VimpelCom, the country's No. 2 mobile operator, has deployed and tested the technology in more than 15 cities, including St. Petersburg, Vladikavkaz and Magadan, but a military prohibition of the necessary frequencies may stymie the project in the nation's capital, Malis said in an interview.

"First, the military promised to free the frequencies by Sept. 1 this year. Now, they said it would be first quarter of next year," Malis said. "The excuses given varied from time to time, but the probable reason is that those making the decision lack any sense of urgency."

The financial crisis could provide a rare opportunity for VimpelCom to penetrate deeper into the broadband markets, Malis said, adding that the company will spend "hundreds of millions of dollars in 2009 to build a bigger broadband network across the country."

"The current crisis would incapacitate smaller players and free up a market niche we couldn't have dreamed of a few months ago," Malis said.

The economic downturn has already shaved off at least 30 percent from future capital investments of smaller companies, he said.

"Before the crisis, many players borrowed heavily to expand their market shares, and now those companies will not be able to compete as they are burdened with heavy debt," he said.