The head of the Federal Communications Agency (Rossvyaz) Andrei Beskorovayny told Vedomosti that the agency has prepared proposals for clearing frequencies in the 1800 MHz range and is ready to submit them to a meeting of the State Commission on Radio Frequencies (SCRF) in November. “According to our estimates, there are free frequencies in almost all regions of Russia, except perhaps Moscow and St. Petersburg,” Beskorovayny said. According to Rossvyaz, an operator needs about 75 free channels for a cellular network to function properly. Thus, Beskorovayny believes, each region has a frequency resource sufficient for the work of “one or two operators.”

Rossvyaz plans to issue frequencies in the 1800 MHz range on a competitive basis, since we are talking about a limited resource. Beskorovayny found it difficult to guess what the conditions of these competitions will be. According to him, this will become clear after the government issues a decree on the procedure for holding competitions for limited state resources, a draft of which has long been sent to the government by interested departments.

Many regional operators are interested in free frequencies in the 1800 MHz range, but first of all they will help the second largest Russian mobile operator – VimpelCom. It will be able to close the last gap in the network coverage of the territory of Russia – it does not cover 11 regions of the Far East (including the Koryak Autonomous Okrug), of which the main ones for business are Primorsky Krai and Irkutsk Oblast. Its competitors – federal operators MTS and MegaFon – have practically no “blank spots”. The press service of MTS only noted that the company is interested in any frequencies in the Penza Oblast.

According to Mikhail Umarov, VimpelCom's public relations director, his company has approached the regulator 36 times over two years with a request to issue a license for the Far East. However, it was refused citing a lack of available frequencies, which VimpelCom considered unfounded. "It is gratifying that the regulator has determined that there are frequencies in this region. This coincides with our findings after conducting research," Umarov noted. He believes that VimpelCom should receive priority rights to satisfy the application. "We will seek a license for the Far East by any means necessary," Umarov emphasized. According to calculations by Oksana Pankratova, an analyst at iKS-Consulting, this would have given VimpelCom an additional 200,000-250,000 subscribers, or several tens of millions of dollars in revenue, in the first year of operation.

Rossvyaz has nothing against VimpelCom. “We want these frequencies to be received primarily by operators who have already gained authority in the market, in particular, VimpelCom could very well work in the Far East,” says Beskorovayny. At the same time, according to his data, the State Commission on Radio Frequencies received 34 applications from operators, and only seven were rejected. “The rest are waiting for free frequencies to appear,” Beskorovayny clarified.

In addition, the DAMPS-800 standard operators are waiting for frequencies in the 1800 MHz range, which must migrate to the new range by 2010. According to the president of the Association-800, Yuri Dombrovsky, there are still several operators who have not received a license, and in several regions, operators have received insufficient resources for network development. He believes that Rossvyaz has prepared proposals in a timely manner and in the near future, all companies included in the association will be able to fully satisfy their needs for frequencies.

Analysts also believe that free frequencies may be of interest to subsidiaries of Svyazinvest and the Volga operator SMARTS. The expansion of Svyazinvest's regional cellular networks may significantly change the value of their cellular business, as well as increase the attractiveness of Svyazinvest as a whole, notes Aton analyst Nadezhda Golubeva. According to Yuliana Sokolenko, Deputy Director of the Information Support Department of Svyazinvest, the holding's subsidiaries are interested in expanding the territory for providing cellular services. In particular, VolgaTelecom is interested in the Samara and Penza regions, and Sibirtelecom is interested in the Novosibirsk, Tomsk and Chita regions.

But SMARTS has a different opinion. According to Gennady Kiryushin, CEO and co-owner of SMARTS, most mobile operators do not need the 1800 MHz range. “We have enough of this resource, but we lack frequencies in the 900 MHz range. Experience shows that a dual-band network is needed for effective operation,” Kiryushin says. He believes that the regulator has put operators in unequal competitive conditions by not giving frequencies to all of them for building networks in two ranges. VimpelCom is also interested in free frequencies in the 900 MHz range. According to Umarov, the operator lacks them in the Northwest and the Urals.

Rossvyaz is ready for cleanup