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. Last Updated: 07/27/2016

Phone Lines Crossed By Poor Management

Ten years ago if you wanted a new telephone line you contacted the local telephone station, they put you on a waiting list, (you probably helped the process along with a bribe), then eventually you got a telephone line.

Today, despite the large amount of investment now taking place in Moscow City Telephone Network, or MGTS, any organized way of distributing new lines has vanished.

Each local telephone station still controls the right to give out new lines. In theory if you wait long enough or have some kind of special need, you may get a new line. People waiting in line with no money, however, are rarely lucky. Paying under the table sometimes goes through third-party companies. For a hefty fee several Russian firms will provide you with your local city line (no questions asked -- and few answered).

Over the last few years MGTS has granted several joint venture companies the right to provide telephone services in Moscow. Some of these companies can provide city lines with full access to the local telephone network. As a rule, they are catering to businesses. Each has to pay MGTS for the right to lay lines, so they must generate a steady stream of revenue from lines they install. Customers have to agree to spend a minimum amount on inter-city and/or international calls every month.

Why MGTS granted so many companies the right to operate in the Russian capital has always puzzled me. A much more common model in a country short of cash or expertise is for the state monopoly telephone operator to form a single joint venture with a foreign company through which all investment and network development is channelled. That way there is a single point of contact for all customers needing new lines and a well-formed plan for upgrading the local telephone network. In return for being able to make profits from long distance calls, this partner is obliged to plow investment back into the city's telephone system. Why set up competing networks when the priority should be to get the one important one -- which we all have to use -- working properly? Instead of being encouraged to develop a resource from which everyone will benefit, companies are forced to focus on the richest customers just to be profitable.

Circumstances have recently pushed MGTS to make better use of one of its joint ventures. After numbers ran out in the Nikulino district of Moscow (along Leninsky Prospect), MGTS called on Comstar to help it issue new lines. Comstar is a joint venture between GPT of the UK and MGTS. It has now become the sole source of new numbers in Nikulino. Though residents of this district must pay an installation fee to their local telephone station, the issuing of all new numbers is now subcontracted to Comstar. All inter-city and international calls from these new numbers are billed by Comstar at its advertised prices and not by MMT, the state international operator. Unlike other Comstar customers, however, these subscribers do not need to spend a minimum of $150 per month on long distance calls. Comstar says it is negotiating with MGTS and MMT to see if the idea can be applied to other localities.

Why has it taken so long for MGTS to see the sense in this combination? Many of its regions are short of lines while Comstar, and other commercial operators, have numbers to spare. Freed of having to pay MGTS for the right to lay lines, these commercial operators could provide service to domestic subscribers at affordable prices. Sadly this is probably far too obvious for it to happen.

Robert Farish is the editor of Computer Business Russia. Fax: 198-6207, Internet e-mail: