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"The number of satellite dishes increases", "Vedomosty" newspaper

Very Small Aperture Terminals ("VSAT") are perhaps the only solution to provide telephony to hard-to-reach territories of Russia (the North, the Far East regions and Siberia). Russian Satellite Communications Company ("RSCC") intends to become a major player on Russian VSAT market.

To become a VSAT network operator, one needs to equip the ground control center with proper hardware, to lease satellite capacity and install VSAT dishes. A satellite receives signals transmitted by the dishes, amplifies them and retransmits back to the Earth. Each VSAT station is capable to serve up to several hundreds of final users or to transmit traffic of one major corporate customer, for instance Internet-provider.

The volume of global VSAT market has already exceeded 600 000 stations, while tariffs are reduced rapidly. According to VSAT Forum, current tariffs are $ 0.03 - 0.17 USD per minute. Russian VSAT market is 0.3 % of the global market with respect to the stations installed. 2000 stations are operated in Russia. Central Bank of the Russian Federation uses 40% of the stations deployed in Russia. All in all, 30 VSAT-networks are operated in Russia. The average cost of one VSAT station amounts to $6000 - 7000 USD. NEC Corp. and Hughes Network Systems are major suppliers of the equipment.

Mr. Boris D. Antoniuk, Director General of RSCC, said last week that his company intends to revive Russian VSAT market significantly. This year deployment operation of multi-service data network across Far East Federal District will be commenced by applying VSAT technology. "Vostokinfocosmos" company will execute the project. RSCC is one of the founders of "Vostokinfocosmos" company. The project requires investments in the amount of $32.89 mln USD. It is supposed to finance the project by credit institutions. This issue is currently under discussion with Sberbank, Vneshtorgbank, European Bank for Reconstruction and Development.

The network of the Far East Federal District will comprise 2500 - 2700 VSAT stations. Each station will serve settlements with the population of about 3000 residents. At the same time RSCC does not need to rent satellite capacity, as the company possesses the largest satellite constellation.

RSCC believes that the number of VSAT stations will increase up to 50 000 stations by 2007. Other experts consider these plans to be audacious. According to Mr. S. Vasilevskiy, Technical Director of "Ramsatcom", "Annual increase in number of VSAT stations is 100 - 150 station units today. One has to put 8000 stations into operation annually in order to meet the RSCC plans".

The high cost of license to operate station facilities is major obstacle in VSAT market growth. Mr. Boris D. Antoniuk, Director General of RSCC, complains, "Registration fee of a dish is $ 6000 - 8000 USD, while it costs about DM 400 in Germany." Consequently, such projects have weak return on investment in Russia. Mr. A. Moskovko, manager of Moscow Radio Center for System Integration (NEC Corp.) added, "These projects are profitable only if there is a solid customer, for instance oil and gas company". "Ramsatcom" starts to work with a major customer, for whom a network of 200 dishes will be deployed. "Ramsatcom" possesses only 3 Earth stations (in Kaliningrad, Tol'yati and Khabarovsk) today. According to Mr. F. Krupnaynskiy, Marketing Director of "TeleRoss", "TeleRoss" company is also planning to extend its network approximately by six times (up to 300 stations)".

RSCC will not be confined itself to "Vostokinfocosmos" project. Currently RSCC is participating in a tender to deploy communications networks for the purposes of rural schools. Ministry of Education holds the tender in the framework of "Development of common educational environment within 2001-2005" Federal Program. Telephone connections must be provided to 31 000 rural schools located to the east of the Urals. The amount of the tender is not disclosed by RSCC and Ministry of Education, but 2002 state budget provides for 1.969 bln rubles to finance the whole program. According to Department of Info Technologies of Ministry of Education, the tender terms do not specify technology to provide telephony to the region. RSCC offers to use VSAT technology. Rural schools are located in such extremely hard-to-reach areas, that laying of fiber-optics is more expensive in this case than setting-up of connections via satellite.

"Vedomosti", 23.04.2002

Press