The Government Is Proposing to Expedite the Development of 5G Technology in Russia

4 february 2019

Vice Prime Minister Maxim Akimov talked about plans to set up a national committee for the development of 5G communications during a press conference at the Analytical Center.

"The Digital Economy national program is to be implemented through 2024 and it is vital that the Analytical Center as the Project Management Office for the program implementation should be aware of the issues related to the deployment of 5G communications, as well as of the plans of the state and key market players so as to be able to coordinate them. In this manner it should be possible to achieve all the targets of the program in due time," said the Head of the Analytical Center Vladislav Onishchenko opening the press conference.

The moderator of the event, a Deloitte partner, Anton Shulga, pointed out that for the time being experts do not expect to see fast growth in the number of 5G subscribers. "This is similar to the expectations about 4G. However, this year there are already 25 mobile operators around the world to deploy 5G networks commercially and by 2020 the number of such operators is expected to have doubled," he noted.

GSMA Director General Mats Granryd said he was sure that 5G communications were going to be used in all areas of life in conjunction with artificial intelligence and Internet of Things technologies. "5G as part of this combination will give us a more powerful data processing tool. It is also an opportunity for the community of the mobile operators to become even more innovative in their business models," he stated.

Deputy Chair of the Government of the Russian Federation Maxim Akimov talked about the goals the Cabinet of Ministers tries to achieve in this context.

"In order to achieve such an ambitious goal as the development of the fifth generation communications networks (5G), we need to tackle three principal challenges: financial, organization, and technological. We have already got the requisite competencies and experience to meet the first challenge, but when it comes to the second and third ones, involving the allocation of radio frequency bands for 5G networks, here coordination and transparent actions by all the players and the regulators should be of great help. In order to tackle these tasks effectively we shall ensure the state and business engage in an open and fair dialog," commented Mr. Akimov.

He noted that today the interest in the fifth generation communications technologies is a global trend; efforts are being made both in the West and in the East to build new generation communications networks.

"The introduction of 5G opens up mind boggling opportunities for the development of a broad range of the sectors of the economy and areas of public life and in this context the development of the 5G technology is a key priority in our infrastructure development efforts over the next few years. If we fail at this task, we will fail at other promising digitization efforts in the cities, in the recreation and entertainment industry, in autonomous devices, and in the digitization of production," the Vice Prime Minister stressed.

The Minister of Digital Development, Communications and Mass Media Konstantin Noskov added that his Ministry remained in constant dialog with the mobile services operators and that it had already formulated a conceptual plan for the development of 5G in Russia.

"The main problem both here and around the world is the allocation of radio frequencies for 5G communications. There are three ways that all countries are following to tackle this. The first option involves selling radio frequency bands through auctions; the second option is to create a state-controlled infrastructure operator. The third option is for all companies involved to set up a consortium to manage the 5G infrastructure," Mr. Noskov said.

According to him, the first and second option cannot be used in Russia, so the emphasis is currently being made on the third option. The Minister explained that in this case the mobile operators are going to be using the radio frequencies that are available today jointly and in accordance with the rules that they develop themselves. To that end, the Ministry of Communications is willing to give up some of its regulatory functions for the self-organization of this process.

"We have got the Big Four operators and there is some tough competition and that is the reason why we have got good quality of service and low prices and I am going to make every effort to ensure we always have competition in this country," Mr. Noskov summed up.

During the discussion, the Big Three mobile operators, MTS, MegaFon, and VimpelCom spoke out against the model with the centralized 5G infrastructure.

"Creating a centralized 5G infrastructure does not make much sense, since such a centralized system would be more vulnerable to malfunctions, information security threats, sanctions, and possible restrictions on the ability of the operators to manage their own networks, and competition. Furthermore, this model does not do anything to solve the issue of the allocation of the radio frequency bands needed for 5G networks," noted MTS PJSC President Alexey Kornya.

MegaFon, which had earlier announced the establishment of a joint venture with Rostelecom to develop the network, agrees with the notion that the centralized infrastructure would make no sense given the differences in how evolved the network of each operator is, said MegaFon CEO Gevork Vermishyan.

He did note, however, that the joint venture with Rostelecom his company had established, and which the other market players could potentially also join later on, can expedite the universal adoption of 5G by the telecommunications sector.

All representatives of the Big Three supported the concept of the Ministry of Communications that envisions the establishment of a consortium. "We are active supporters of the concept proposed by the Ministry. None of the other options are viable, really," said VimpelCom PJSC CEO Vasil Latsanich.

The Federal Antimonopoly Service of Russia supported the opinion of the three operators. "We agree that there is tough competition in the market and share the position of the Ministry of Communications that this state of affairs should be maintained. Establishing a single infrastructure operator is the worst of all the proposed solutions," said the Head of the Communications and Information Technologies Regulation Department of the FAS Elena Zaeva.

Rostelecom and Tele2, another mobile operator, suggested that the centralized infrastructure should be used to build a nationwide 5G network. "We took the first step towards that with MegaFon by setting up a joint venture. A frequency band should be allocated to this legal entity and a common infrastructure should then be built on that basis," believes Rostelecom Head Mikhail Oseevsky.

Tele2 is convinced that a national infrastructure operator can help the telecommunications market optimize spending on deploying the new communications standard. "The issue of allocating a sufficient frequency band to the new standard still remains unsolved. The state should take an active part in this process, as deploying 5G networks has direct benefits for the country seeing how the new communications standard can boost development not just in communications, but in the other sectors of the economy, as well. We need a nationwide 5G network for it to be profitable," said Tele2 CEO Sergey Emdin.

"We support ecosystems that make it possible to implement regulation both at the level of the regulator and at the level of the subjects with respect to the actual deployment of 5G networks," said Deputy Head of the Department of Information Technologies of the Government of Moscow Alexander Gorbatko.

The Minister of Information and Communication of the Republic of Tatarstan Roman Shaikhutdinov supported the establishment of a consortium. "Every region has a mobile operator with the largest market share and in this context we should be talking about the creation of a consortium based on the sharing economy, where all operators provide a resource to each other on the basis of civil law contracts, for which it is not necessary to establish a dedicated legal entity," Mr. Shaikhutdinov said.

Summing up the results of the conference, the Vice Prime Minister reminded the attendees that today Russia is a global leader in terms of the quality, price, and expansion of mobile communications and data transmission services. According to him, every effort shall be made to ensure the country remains a leader in this industry. "In order to achieve that we need to tackle the task of creating 5G networks at a completely new level and we need to set up a national committee for the development of 5G communications," Mr. Akimov said.

The Vice Prime Minister pointed out that it was yet too early to talk about any specific model for the development of 5G networks. "We should be able to agree a model within two to three months. We need to decide what we mean by a consortium: is it going to own the physical infrastructure or is it going to be a legal entity that has the right to the frequencies or is it going to be a coordination body, representing the Big Four mobile operators or other market players in the dialog with the state?," he explained.