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Russian Ministry of Defense fights back for its frequencies for Joint Staff

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Plans of "Scartel" (brand "Yota") to launch the first LTE network in Russia are facing the interests of the Ministry of Defense. As "Kommersant" found out, frequency of the operator are eyed by the Ministry to meet the needs of its General Staff.

The frequency argumentwhich focuses once again on the military is being solved byVladimir Putin, Russian Prime Minister. A request has been filed by the head of "Russian Technologies" (controls 25.1% of "Scartel") Sergei Chemezov.

"Scartel" received in September a permission from the State Commission for Radio Frequencies (SCRF) to build Russia's first network of LTE standard. Nevertheless, its pans have stumbled upon the Defense Ministry, "Kommersant" was told by a manager of large telecom operator, which was confirmed a source close to the Ministry.

Two weeks ago the head of "Rostechnologies" Chemezov wrote a letter to Prime Minister Vladimir Putin asking him to contribute in solving this conflict, say sources of "Kommersant" in the government. The letter has the resolution of Prime Minister which enables the head of Ministry of Communications Igor Shchegolev and his counterpart from Ministry of Defense Anatoly Serdyukov to resolve the situation according to the September decision of SCRF. It decided that, in contrast to the "big three" and "Rostelecom", which will compete for the frequency bands 791-862 MHz in the 2.5-2.7 GHz only in next year, "Scartel" may be given such a permission and get started to build the federal LTE network even now. The operator was allocated by the bandwidth of 60 MHz instead of existing 70 MHz, which are scattered throughout the range. Areas of 2500-2530 MHz, 2620-2650 MHz are engaged now by various civil and military structures, depending on the region. In Moscow, Ministry of Defense Systems are operating in the area including 2630-2650 MHz range(see table).

Also permission to build a 4G network in the range of 2.3-2.4 GHz was granted to "Osnova Telecom" (belongs to structures of the Ministry of Defense and businessman Vitaly Yusufov), but with a condition that it will receive a status of the only provider of wireless Internet access for the Ministry of Defense.

As it turned out, part of the spectrum granted to "Scartel" is eyed by Ministry of Defense, which needed a resource for "the needs of the Joint Staff," say two "Kommersant" sources familiar with the contents of the letter. "Russian Technologies" declined to comment, as did the Defense Ministry. Source of the newspaper close to that governmental body says part of the frequency range allocated to "Scartel" was used for the needs of military radio services. How this situation may be resolved, he does not know.

Frequency assignments are given by Roskomnadzor after obtaining approvals from the Ministry of Defense and the Federal State Unitary Enterprise "General Radio Frequency Centre." Representative of Roskomnadzor Michael Vorobiev yesterday confirmed that the applications of "Scartel" about a number of regions for the electromagnetic compatibility expertise are now being discussed with the Defense Ministry, but so far only positive decision is carried out for Novosibirsk region.

"The decision on the development of LTE is granted by SCRF and it requires very complex and coordinated action. Also a special attention from government agencies is involved. All the emerging issues are addressed by us in working order," –told "Kommersant" "Scartel" CEO Denis Sverdlov.

The sole shareholder of "Scartel" –"Christiva Holdings Limited"–is controlled by "Yota Holding". 74,9% of "Yota Holding" is owned by the fund "Telconet Capital", 25,1% - by "Russian Technologies". Provides services of wireless Internet access on mobile WiMax (data transfer at rates up to 10 Mbit / s) in Moscow, St. Petersburg, Krasnodar, Sochi and Ufa. Yesterday, the operator launched the network in Belarus. In the first quarter revenues amounted up to 1.09 billion rubles, the subscriber base - 731.5 thousand people.

Just recently a partnership of "Scartel" with "Rostelecom" and "Megafon" was concluded. They did not settled for waiting for competitive tenders and agreed with "Yota" on the exchange of infrastructure. "Scartel" will get access to the sites (where base station are located), telecommunications and data centers of "Rostelecom" and "MegaFon". Instead, the operator will allow these companies to provide services on its 4G network via scheme MVNO (model where company sells mobile services under its brand through a network of a mobile operator).

Allocation of even a small part of the spectrum belonging to Ministry of Defense may affect the future of networks of "Scartel".

"Existing technologies allow" Scartel" to build a network using a discontinuous range of frequencies (in the case the part of spectrum will be given to the Ministry of Defense .-"Kommersant"), but the CPE is not able to work in such networks", - insists a source of "Kommersant" in the telecommunications equipment manufacturer. In addition, the quality and speed of LTE-signal depend on the width and continuity of the spectrum.

The first LTE network in the world was created at the end of 2009. "Scartel" announced its intentions to build a similar network in Russia in the spring of 2010, and in August launched LTE in test mode in Kazan. But a day after it had to put it off on orders of Roskomnadzor, which said that the company has no right to use frequencies issued for WiMax for LTE.

Lack of approvals from Ministry of Defence has already caused disruption of the period of construction of4G networks of "Rostelecom". The company won the frequencies of 2.3-2.4 GHz in 39 regions in competitive tenders in February and March 2010. By the terms of the license operator had to launch the network into commercial operation in August or September this year, but could not do so - the Ministry of Defense has issued the necessary approvals just a few days ago (see "Kommersant" on 28 November).

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