Analogue telecoms are a thing of the past. In a country where, according to J’son & Partners, 28.81 million people now use mobile phones, and the general level of mobile telecoms is now at 19.85 percent, analogue companies have to think up new ways to develop their business if they are to keep making a profit.

Telecoms companies are trying to develop new types of business and keep making money out of their current activities at the same time. Alexander Sysoyev, general director of North-West Telecom, said there is quite a high level of competition today in the Northwest Federal District. "All kinds of telecoms services provided by both recognized and alternative operators are developing fast now," he said. "The number of registered licenses for the most profitable services, such as intercity and international calls, the Internet, IP-telephony and data transfer, is increasing."

Interregional company Dalsvyaz say it also makes a priority of developing new types of telecommunications services. The company plans to invest around $8.3 million in new activities in 2003 alone. This includes building and modernizing data-transfer networks to help develop card platforms, IP-telephony services and information services. Dalsvyaz currently earns only 9 percent of its income from unregulated services (the Internet, data transfer and so on).

Vladislav Ilchenko, deputy general director for business development at Dalsvyaz, said that the fastest growth is in providing Internet access and mobile-phone service. But the increased demand for mobile telecoms over recent years has not affected demand for fixed-line service. On the contrary, as new technologies have developed, demand for fixed-line communications has grown, and the market for international and intercity calls has broadened.

Igor Zabolotny, general director of Dalsvyaz, said that the ideal situation would be to have traditional services, mobile telecoms and new services all representing 30 percent of total earnings. The company hopes it will have reached this balance by 2010. This year, it has plans to build three data-transfer networks – in Khabarovsk Krai and Amur Oblast and on Sakhalin Island. Next year, they should be united into a single district network.

Many regional companies are developing transport ATM networks in an effort to make themselves more competitive. This is the case, for example, of Electrosvyaz in Kemerovo Oblast (a branch of Sibirtelecom), which completed and handed over to a state commission the first section of a regional multi-service network worth 55 million rubles. This network links the region’s biggest towns – Kemerovo, Leninsk-Kuznetsky, Byelovo, Kiselyovsk, Prokopyevsk, Novokuznetsk, Anzhero-Sudzhensk and Yurga. The network uses equipment from foreign producers such as Cisco Systems and RAD Data Communications, and also equipment from Russian supplier NTTs Natex.

Many regional companies are beginning to move beyond their region. Electrosvyaz will develop Baikal Bank’s network in Irkutsk and Chita Oblasts and Buryatiya. The company is the project’s general contractor and is co-ordinating all the subcontractors.

"This is a unique telecoms project given the distances in Siberia," said the commercial director of Sibirtelecom’s Irkutsk branch, Viktor Poleshchuk. "The experience of working with Baikal Bank will be used by telecoms people to build a similar network for the Pension Fund, tax-inspection service and other organizations in the Priangara area."

Many participants took part in the project to develop the Baikal Bank network, including Baikal Transtelecom, a regional operator of a railways fiber-optic main-line network, Golden Telecom, which has satellite-telecoms channels, Irkutskenergosvyaz, which operates the networks of energy company Irkutskenergo and Mobil Telecom (Buryatia).

Companies such as Kirov-based Lensvyaz and Center Telecom are building fiber-optic lines that can be used for city lines and main lines. Boris Lastovich, the director of the information department at Center Telecom, said that Voronezh company Svyazstroi-1 worked on the project, laying 960 kilometers of fiber-optic cable in 10 months. This rapid speed was made possible through using new technology that squeezes the cable into special plastic tubes. The network is designed as two closed optic rings. The west ring (Vladimir, Sobinka, Pteushky, Kirzhach, Alexandrov, Kolchugino, Yuriev-Polsky, Suzdal and back to Vladimir) began operation in December 2002. The eastern ring, which links Vladimir to the district centers of Kovrov, Vyazniky, Gorokhovets, Murom, Krasnaya Gorbatka, Melenky, Sudogoda and Gus Khrustalny, was handed over to the state commission on June 26, 2003. Tsentr Telecom said that the project cost 140 million rubles.

There are also prospects for international projects. Regional company Transtelecom and Uzbektelecom signed an agreement on mutual provision of telecoms services. These companies will be linked by a mainline digital network belonging to the Russian railways and by Uzbektelecom’s infrastructure. The railways network had earlier developed links to the networks in Belarus, Ukraine, Kazakhstan, the Baltic states, Finland, Mongolia and China. The new agreement will help increase its export potential. Uzbektelecom operates the largest network in Uzbekistan, offering various services including voice traffic, data transfer, TV and radio broadcasting and Internet access. Last year, the company obtained a license for mobile telecoms using the CDMA2000 1x standard in the 450 megahertz range (CDMA-450) throughout Uzbekistan and began building a mobile network with capacity for 150,000 numbers. This year, the company plans to launch a compact network in the Dzhizakskaya region.

Regional telecoms operators are actively moving into new markets these days. St. Petersburg operator PeterStar, for example, has announced plans to set up public Internet-access points at so-called "hot spots" such as cafes, shopping centers and airports. The project, called Worldwide Web City, has two parts – the development of wireless local mobile-broadband networks and the construction of stationary terminals with sensor screens.

PeterStar plans to invest around $500,000 in this program by the end of the year. The company will set up information kiosks at Megafon and Ford company salons. Peterstar’s first two terminals are in cafes in the Idealnaya Chashka chain. The company’s Marketing Director Yakov Pak said that the service would first go through a trial run and, then, be extended to all the chain’s cafes.

"For us, this is a way to make our clients more loyal, rather than to increase sales," he said. "We already have dozens of people a day going online from our cafes’ terminals."

The information kiosks give access to all Internet services, including e-mail and Web surfing. They are equipped with a Web camera, microphone and audio system, making it possible to record multimedia files and send them via e-mail. Once the service is commercialized, it is expected to cost 35 rubles for half an hour. The company has plans to later develop Wi-Fi zones and become the first Russian operator in this area, with an annual income of more than $55 million.

PeterStar representatives say that they think wireless access will appeal to businesspeople and tourists traveling with laptops or pocket computers. It opened its first two Wi-Fi zones at Pulkovo-1 airport and at the Grand Hotel Europe. According to ABN, access to the Wi-Fi zones will cost $7 an hour.

Many companies are developing services specifically for the end user, even though the retail market in the regions is not growing so fast. Two Yekaterinburg ADSL access providers have announced free connection programs. UralRelkom was the first to take this step, beginning free connection on the first day of summer. Until August 19, users could turn their fixed phone line into a high-speed Internet-access channel and save at least $500.

As a response, the firm’s competitor, Internet-Telecom, decided to launch a "super promotion" offering not just an ADSL channel for free, but also a modem, making a savings of around $1,000 for customers.