sovamcccp@cdp.uucp (04/09/90)
Note from Andrei:
This file will update the status of telecommunications in the
USSR. Article will be published in some US magazines.
Warning! Copyright.
[Moderator's Note: Used in TELECOM Digest / comp.dcom.telecom and
affiliated or associated telecom echos, or newsgroups with the
permission of the author. Permission is given to reprint anywhere
TELECOM Digest is normally distributed. PT]
NEW TELECOMMUNICATIONS OPPORTUNITIES IN THE SOVIET UNION
Paul Falchi, Deputy Director General
SOVAM TELEPORT (Moscow)
and Director Marketing/Sales
San Francisco/Moscow Teleport
o Challenges in the Gorbachev Era
o Current Telecommunications Project
o Realizing New Ideas
o Leap Frog and Customer Applications
o Future is Bright for "Telestroika"
The radical political changes in the Soviet Union have
spurred new conditions and directions for economic transformation
and innovation. A dynamic political landscape has set the
framework for an evolution of the national and regional economies
to move to a mixed economy involving better conditions for
implementing telcommunications technologies and applications. As
such, European, Japanese and North American participation will
increase in the arena of engineering feasibilty studies,
international investment in facilities and manufacturing and joint
venture participation. Much commercial activity will take place,
as national economic policy is retooling from a military-oriented
emphasis to a consumer production direction.
800 services, telemarketing applications, answering machines,
photocopiers, fax machines and plain old telephone directories are
virtually nonexistent. All international calls placed from the
Soviet Union and many long distance calls withing the country must
be operator handled.
By the year 2000, the Soviet Union telecommunications
infrastructure will require massive investments to upgrade
antiquated network facilities. This new emerging market translates
into a lucrative, large and fast-growing potential for foreign
participation.
Challenges in the Gorbachev Era
The telecommunications market, in the Soviet Union, both in
terms of increased availability and improved quality, is facing
tremendous changes for both providers and customers. The Soviet
Union, today, has a very low penetration of telephones in its
urban and rural areas -- less than 10% of households in the
country have telephone sets. Of course, in major cities as Moscow,
Leningrad and Kiev, household telephone penetration is
significantly higher.
Serious supply constraints are to be found also, in switching and
transmission facilities. Some existing network facilities date
back to the pre-1917 Revolution period; for example, single copper
wire placed in 1907 by the Swedish company Ericsson, is till being
utilized. As of 1989, only two major facilities in Moscow utilized
modern digital PBX facilities.
However, even with serious supply constraints, some
interesting indications of tremendous market growth are emerging.
In the last few years, US/USSR telephone traffic has shown robust
activity. On the average, originating telephone traffic in the US
to the USSR has increased about 35% per year, and voice traffic
from the USSR to the US increased about 50%. Such growth compares
favorably to other market growth.
Annual Telecommunications Industry Growth
o US Long Distance Voice Traffic 10%
o US Enhanced Telecommunications Services 25/50%
o RBOC Local Telephone Traffic 5%
o International Voice Traffic from US 20%
o US/USSR Telephone Traffic:
Originating in US Terminating in US
35% 50%
Demand for telephone traffic between the two countries will
increasingly exceed capacity. This should result in growth of
traffic in the 50% per year range.
The Soviet Union not only represents a huge market but, aslo,
represents having a very low installed base of modern equipment
and telecommunications infrastructure.
This has prompted some perceptive and agressive responds by
Western firms, which even a few years ago would have been
impossible.
Current Telecommunications Projects
o MCI has set up a deal to set up a satellite-based system for
live video-conferencing between Moscow and US.
o AT&T is actively supporting increased telecommunications
circuits between the two countries by using the USSR's
Instersputnik satellite system for the first time.
o US West International and seven other international
telecommunications companies want to develop a trans-Soviet fiber
optic cable system linking Europe to Asia and the Pacific Ocean
region.
o Arthur D. Little, Inc., a management and technology consulting
firm, has formed a partnership to develop Soviet technology.
Realized New Ideas
SOVAM TELEPORT is an example of a small player recognizing
the immense needs, taking risks and initiative and finding a
market niche. In late 1989, the first Soviet-American joint
venture in telecommunications was formed by the All-Union
Scientific Research Insitute for Applied Automated Systems
(VNIIPAS) and the San Francisco/Moscow Teleport company, which
have been collaborating closely since 1984. The joint venture has
the financial support in the US from three leading businessmen -
George Soros, Alan Slifka, from New York, and Henry Dakin from San
Francisco. The Soviet parent, VNIIPAS, is the official record
carrier in the field of data communications, packet-switching and
various other computer/telecommunications projects. The new joint
venture provides the following services:
o Electronic mail between the Soviet Union and the US
o Direct PC to Host Computer Service between US and USSR (*)
o PC and Equipment Sales and Rentals
o Telecom Consulting
o Data Base Access
o Direct Digital Private Lines
Customer Applications and "Leap Frog" Possibilities
o The focus on telecommunications market should be two-fold:
1) provide rapid technology development and deployment; and
2) investigate market sucess in developing new customer
applications.
In other words, technology innovation needs to be directed with
very specicic customer benefits in order to gain widespread
acceptance. At the same time, creative efforts to introduce new
services, effectively, will require reorganization of unique
customer requirements, marketing approaches and specific customer
applications orientation.
o The Soviet Union has targeted telecommunications as one of
their development priorities. Professor Y.U.Gulyaev, chairman of
the Telecommunications and Informatics Committee in the Soviet
Parliment and Director of the Institute of Radio Engineering, is a
key proponent of the new role of telecommunications development in
the Soviet Union. The point is quite clear that as long as
customers have to wait years for a phone line and frequently spend
significant portions of the day trying to get through to one
another, it will be difficult to get other sectors of their
economies moving.
o However, in the great efforts to build modern a communications
infrastructure, there is a risk that a PTT, in the Soviet Union or
Eastern Europe, will try to mirror historical technological and
investment avenues provided by Western experience. The option to
follow the sequences of regulatory structures, network facilities
strategies and product/service provisioning may be shortisighted.
Countries such as the Soviet Union have the ability in many cases,
to leap-frog past business procedures in the West. For example, at
the technology level, a strong case can be made for implementing
mobile communications, instead of sticking to the traditional
practice of hard-wire connections. The cost savings of mobile
technologies and faster multiple applications possibilities are
quite exciting. Since there is no huge amount of network plant,
switches and transmission invested, to depreciate, new networks
are more attractive. For a society which desperately needs fast
consumer-oriented results, mobile communications provides
additional impressive strategic and tactical benefits. Some form
of deregulation and liberalization is very likely to be the
business context in the coming transition, with the help of
foreign investment, from ancient to modern systems.
Future is Bright for "Telestroika"
With the US beginning to pursue expanded trade agreements
with the Soviet Union, a growth umbrella will provide impetus to
telecommunications projects. In recent times, trade has hovered
between $1 billion and $3 billion a year. A massive increase in
US-Soviet trade may see annual trade grow to $10 billion to $15
billion, according to recent reports in the Bush administration.
Increased and improved communications will assist the exchange of
information -- personal, cultural, commercial and governmental and
thereby, improving global relations.
Although analog services dominate, strong potential exists to
leap-frog technologies and significantly up-date services and
introduce new customer applications. Private companies from
outside the USSR will be increasingly invited to both build and
opertate portions of domestic telephone systems. The Soviet
Union's PTT in this decade will concentrate on extending universal
service and drastically improving regional and national service.
Future expansion of specialized networks, bypass facilities,
value-added networks and enhanced services will create
opportunities for foreign operators and joint ventures.
=====EOF=====
Andrei