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. Last Updated: 07/27/2016

Phone JV Vows to Compete

THE MOSCOW TIMESThe German-Russian joint venture MTS launched Wednesday a new $28 million mobile telephone network for Moscow, planning to compete with the city's three existing networks and undercut their prices, now among the highest in the world. "Our prices are even now the lowest in Moscow," said Klaus Hummel, manager of the principal German partner in the venture, DeTeMobil. "We are sure the accessibility of our prices will guarantee our success and other networks will lower their prices, too." MTS executives told a press conference Wednesday that, unlike other Moscow providers of mobile phone services, they would use state-of-the-art digital equipment that is even more modern than that currently used in Germany. But existing cellular networks did not support MTS' claims. MTS says it will charge 56 cents per minute, a $100 monthly subscription fee and $750 to connect a client to the network. Moscow Cellular, the city's biggest provider of mobile phone service, charges 60 cents per minute, $50 per month for subscription and $995 to hook up. The only noticeable difference is in the price of the telephones themselves. MTS uses Siemens phones costing from $850 to $1450, while Moscow Cellular's prices start at $1500. "Like any decent company, if a strong competitor enters the market we will change our prices," said Andrei Kalinin, sales manager at Moscow Cellular. "But we will not get into any dogfight or confrontation." MTS had earlier claimed that it would not start a price war on Moscow's exorbitantly expensive telecommunications market, but at the Wednesday press conference its executives stressed low prices as much as the competitive edge they feel their advanced technology gives them. Igor Nikolayev, director of MTS, said that his company hoped it would lure potential clients away from Moscow Cellular and two smaller companies operating in Moscow because digital mobile phone networks showed faster growth in Western Europe than older analog systems. "We are planning to compete with Moscow Cellular and we believe our services will be of better quality," he said, stressing that digital connections were generally clearer and more static-free than analog ones. Nikolayev added that MTS' network will be integrated into DeTeMobil's network in Germany with its 700,000 subscribers. According to Klaus Hummel, manager of DeTeMobil, Russian users will eventually be able to use their mobile phones wherever they go throughout the world. That may become possible within a year, he said, after MTS signs agreements with other providers on the use of mobile phones during travel, known in the industry as "roaming." According to Kalinin, Moscow Cellular already has "roaming" connections with Latvia and Lithuania and will establish them with St. Petersburg and Estonia next month. An advantage MTS claims to have over other networks is that their equipment is better protected from piracy, in which illegal users tune in to a frequency and make calls at subscribers' expense. Nikolayev said every user will have an individual access code recorded on a chip built into a plastic subscription card. Kalinin admitted that Moscow Cellular, which uses analog equipment, had had some problems with piracy, but that it was introducing access codes as well. "Besides, if a company uses plastic cards, these cards sometimes get faked," Kalinin remarked. Despite the high prices and strong competition, MTS officials said they planned to attract 7,000 subscribers soon after the network starts operating this month and then expand to accommodate 100,000 users by 1998. MTS belongs 38 percent to DeTeMobil, 10 percent to Siemens and 20 percent to the Moscow Local Telephone Network. The remainder is divided among three Russian firms: ASVT, M-Bell and TDSR.