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Voenteleсom went on the offensive

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"Osnova Telecom" and its co-owner "Voentelecom" associated with the Defense Ministry of Russia challenged "big three" and "Rostelecom". Although "Osnova" has already received no-bid federal permission to build 4G network in the range of 2.3-2.4 GHz, along with "Voentelecom" it intends to fight for the 790-862 MHz frequency, the most suitable for LTE. The main contenders for the resource previously stated that it would fulfill the needs of only four operators.

The fact that "Osnova" and "Voentelecom" (controls 25.1% of "Osnova", the rest belongs to the entrepreneur Vitaly Yusufov) intend to participate in tenders for LTE-frequencies, was confirmed yesterday by both companies' CEO Nicholas Tamodin. "It's good to build networks in large and populous cities using high-frequency range, and to cover large areas it's better to do so in the low range," - he explained.

Some frequencies have already been obtained by "Osnova". In September the State Commission for Radio Frequencies (SCRF) based on non-competition mode allowed it to build a federal network of 2.3-2.4 GHz (upper band), but on condition that the operator must be acknowledged as the sole possible provider of wireless internet for the Defense Ministry. Without it no license or frequency assignments wouldn't have been handed out. Also, the commission set for the contest four sets of frequencies in 790-862 MHz range, the winners of which should receive an additional resource in the range of 2.5-2.7 GHz.

Decisions of SCRF about the distribution of resource for the development of LTE is based on research led by 4G-consortium - the union of "Rostelecom", MTS, "Megafon" and "Vimpelcom", and they all were considered the main contenders for victory.

Today these companies declined to comment on plans of "Osnova Telecom" to increase their pool of frequencies. "Osnova" can build a network on technology LTE TDD, and the winners of competitions may proceed on LTE FDD, said one of the bidders. The latter should be more popular because it is being developed in the U.S. and Europe, while LTE TDD - only China.

"On the mass character of technology ultimately depends the range and availability of consumer devices, primarily mobile phones. Their presence has a direct impact on subscriber demand and future revenues of the operator", - explains the source of "Kommersant". According to him, now the world's 250 million people are in a coverage area of LTE-networks, but such services are used by slightly less than 100 thousand of them just because of the lack of mass market phones with LTE-support.

For "Big Three" it is not the first time to compete with "Osnova Telecom". This company was established in June 2010, its board of directors included former Defense Minister Pavel Grachev, Deputy Defense Minister Dmitry Chushkin, chairman of the board and Defense Minister Anatoly Serdyukov. Last summer, he asked President Dmitry Medvedev to allocate to the operator the entire available free resource in the range of 2.3-2.4 GHz and 2.5-2.7 GHz for the construction of a 4G network of dual purpose.

This infuriated MTS, "MegaFon" and "Vimpelcom". The three wrote a collective letter sent to the Minister of Communications Igor Shchegolev, Prime Minister Vladimir Putin and Dmitry Medvedev, asking them to distribute LTE frequency resources via transparent competition, tender or auction. According to the "big three", the creation of federal mobile network from scratch would take from five to seven years and will require an investment of $5-7 billion, a large number of highly skilled professionals whom new market players are missing.

So far, Roskomnadzor is developing conditions for future competitions in the frequency of LTE. Proposals are discussed in a special working group with representatives of mobile operators and industry organizations, including the "Voentelecom."

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