Cellular communications in the medium term may become free for users, MTS President Andrey Dubovskov is sure. Operators may make money through partnerships with other companies or advertising

MTS President Andrey Dubovskov (Photo: Yuri Mashkov/TASS)

“I think that in the future, in the medium term, we [operators] should not take money from customers. We should not live on the money that the client has to pay to satisfy his communication needs. This includes cellular communications, streaming, whatever. Everything we give him should be free,” said MTS President Andrei Dubovskov, speaking on May 31 at the Telecom-2016 conference.

When a client has money in his pocket, he always pays for something, in particular 1–1.5% of his salary for cellular communication services, Dubovskov explained to reporters. “In principle, we are ashamed to take this 1–1.5% of his salary from him. Sooner or later he will not pay us,” the MTS president is sure.

Dubovskov found it difficult to answer the question of how operators intend to make money in the future. Perhaps through partnerships with other companies, perhaps through advertising, he suggested. “That’s why I say there will be no telecom. Partly no longer,” Dubovskov said.

Making money from customer fees for services is still important for operators, says MTS Vice President of Marketing Vasil Latsanich. “What is important to us is the amount of money we receive from the client, from which we build our investment capabilities and business efficiency,” he said. According to him, in Russia in recent years the volume of these funds has not grown for mobile services and has decreased for fixed-line services. For example, the cost of a minute of conversation, a megabyte of traffic (108 times over ten years), and SMS messages among operators fell, Latsanich noted. Declining revenue from customers means that with inflation and the depreciation of the ruble, companies are reducing efficiency, he says.

Beeline already provides subscribers with a similar product: 200 MB of free traffic per month for tablets, Anna Aibasheva, a representative of VimpelCom (Beeline brand), told RBC. “We see the future in selling to corporate clients services based on operators’ knowledge of the client, in particular RTB advertising. With successful development, some basic services may become free,” she noted.

In recent years, the cost of telecommunications services has decreased significantly, and the services themselves have become as necessary as, for example, electricity or gas, says MegaFon representative Yulia Dorokhina. According to her, many subscribers today choose package tariffs of the “all inclusive” line, thanks to which they save significantly. Since June 6, MegaFon has reduced prices for Internet roaming abroad by more than a hundred times, but it is now impossible to make mobile communication services completely free, says Dorokhina: to develop the network and improve the quality of communication, the operator must invest heavily in infrastructure development and creation new products and services, so refusal to pay for services is not possible.

“MegaFon adheres to the strategy of “effective growth” and sees the main potential for business development in mobile data transmission and its monetization by providing additional or new services for subscribers, as well as the development of innovative products related to the company’s core activities, for example, M2M, mobile advertising, cloud solutions,” says Dorokhina. An additional driver for the monetization of mobile data is the development of content services (video), a wide range of affordable devices with 4G support, as well as favorable tariffs, she adds.

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A Tele2 representative declined to comment.

MTS President predicted free cellular communications in the foreseeable future