In connection with the above – Kommersant
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The Ministry of Digital Development, together with the largest telecom operators, has prepared a preliminary version of the industry development strategy until 2035. Over the past ten years, its contribution to GDP has halved to a thirty-year low. According to the authors of the document, in the near future, market growth will be helped by the accession of new territories to the Russian Federation, the interest of developing countries in domestic solutions and the rejection of outdated technologies, including 3G. At the same time, the implementation of 5G may be delayed until 2030. Moreover, all civilian communication networks in the country will be initially “designed for the needs of public administration, defense, security and law and order.”
Kommersant got acquainted with the preliminary version of the Strategy for the Development of the Communications Industry in the Russian Federation for 2024-2035, which is being developed on behalf of Vladimir Putin and should be approved in 2023. The provisions of the document are supposed to be taken into account when developing and updating the Strategy for the Development of the Information Society in the Russian Federation until 2030, the Digital Economy national program and other documents. It is planned to use the budgets of state programs, local and extra-budgetary sources for financial support of the strategy’s activities. According to Kommersant, all major operators and Russian equipment manufacturers took part in the preparation of the strategy.
The Ministry of Digital Development told Kommersant that the project should be submitted to the government by the end of May, now the collection of “industry proposals” is underway. The office of the relevant Deputy Prime Minister Dmitry Chernyshenko reported that work on the document continues: “The working groups are adjusting the sections based on comments and are preparing for defense at the next strategic session.”
The project says that in 2022, investments in the Russian communications industry fell by 5.8%, primarily due to mobile operators, which form 38% of total investments and reduced them by 17.6%. The reason was the restrictions on the purchase of imported equipment, including base stations. In the last three years, the average investment of market participants was at the level of 550 billion rubles. in year. The investment rate (the ratio of investments in fixed capital to revenue) was 26%, which is higher, for example, than in the oil and gas industry.
However, according to the document, one of the key factors is the stagnation of free cash flow and EBITDA “due to the persistence of low prices for communication services and the exhaustion of organic growth opportunities.” The fall in the industry’s profitability leads to a decrease in its investment attractiveness and tax revenues; in general, over the past ten years, the contribution of communications to GDP has decreased by about half, to a thirty-year low. In 2022, the gross value added of companies in the segment amounted to RUB 1.1 trillion.
Among the prerequisites for restoring the investment attractiveness of the industry, the strategy calls for the expansion of the communication services market due to the accession of new entities to the Russian Federation, the interest of developing countries in Russian technologies, the transition to domestic equipment, the international transit of East-West traffic, as well as the refusal to develop a wide range of technologies , including obsolete ones, and focusing on their limited set.
The equipment of the LTE communication standard and earlier generations should be completely replaced on networks with domestic ones by 2023, and the use of the 3G standard will be completed in 2027 (this became known last fall, see Kommersant dated October 28, 2022).
At the same time, the timing of the introduction of new communication standards in Russia is postponed, it follows from the document: now the commercial operation of 5G and 6G-Ready networks will begin in 2030. 5G networks on domestic equipment will be deployed in all cities of the country with a population of over 100,000 people.
The roadmap for the development of communications, approved by the government at the end of 2022, said that already in 2023 about 100 thousand people in the Russian Federation will be able to use 5G based on domestic solutions, and in 2030 their number should increase to 50 million. In the world, 249 operators in 97 countries have already launched 5G networks, and the number of their subscribers has exceeded 1 billion.
Achieving the “declared ambitious goals,” the strategy notes, will require new principles for the interaction of operators with each other, with government agencies, as well as with participants in the transport and energy infrastructure. In 2035, there will be tools for “joint and dynamic allocation of frequencies between operators.” At the same time, the civil communication networks being created will be “initially designed for the needs of public administration, defense, security and law and order.”
Telecom operators generally support the strategy of abandoning unclaimed technologies, in particular 3G. MTS told Kommersant that they intend to turn off 3G networks gradually after 2025, as subscribers refuse 3G devices without LTE support: “Today, only 6% of subscribers use such devices, and we expect that the share will continue to decline in the coming years” . VimpelCom, Rostelecom, Tele2 declined to comment, MegaFon did not respond.
Most of the 3G frequencies have already been or will be converted for use in LTE networks in the near future, Alexander Sivolobov, deputy head of the Skoltech-based NTI Competence Center for wireless communications, notes: “But the issue of completely shutting down 3G looks more serious, since many devices, including equipment Internet of Things still depends on this network.”
Artemy Moroko, the founder of the telephony service for business SipUni, attributes the decline in the industry’s contribution to GDP and the stagnation of tax revenues to the fact that the tariffs of operators have hardly changed: “I think that there is every reason to index the tariff for the next few years.”
The traditional markets of Europe and North America, where mobile communications have high penetration, are also facing a decrease in the contribution of this industry to GDP, adds Alexander Sivolobov: Russia is no exception.”
Figures and shares of GDP in this context are misleading indicators, he emphasizes. “Communications should be considered not from the point of view of a percentage contribution to GDP, but taking into account the achievement of specific tasks of socio-economic development,” the expert explains. “Mobile communications, for example, are the basis for the digitalization of public services.”
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