But the past 12 months have seen a major change in the telephone networks of Russia's two largest cities. In Moscow and St Petersburg international calls are now available to hundreds of thousand of homes and business and mobile telephony is available to anyone who can afford it. The result is that competition is driving many companies to start investing in the rest of Russia.
One reason for improvements in Moscow and St Petersburg is that US-based Andrew Corporation and its numerous Russian partners have laid fibre optic cable around the city's metro systems (it is now working on a similar project in Kiev). Fibre optical cable is the best modern method for carrying telephone traffic, and it has potentially huge capacity.
So far no other Western companies have followed Andrew Corporation's example. 'Fibre is very expensive and I don't see any competition on this side for a while,' says John Gerun, business manager of Andrew International. 'The quickest and most realistic way to get service to Russian cities is by satellite.' In fact Russia is so vast and the telecommunications infrastructure so poor that until at least the end of the decade satellites rather than cables will be the primary method for extending telecommunications.
Andrew Corporation's satellite venture, Rascomsat, has a licence to provide telephone services to anywhere in Russia east of the Urals. Mr Gerun says the venture is concentrating its efforts on Russian cities with 3 million to 4 million inhabitants. 'Initially we aim to put a satellite antennae into locations large enough for there to be enough customers who can pay. Having a satellite downlink will help local services to develop in a kind of spiders web around it. This in itself will create the economic impetus for someone to later run fibre to a city,' he says.
Rustel is a joint US-Russian venture with a slightly different approach. It specialises in providing international connections to pockets of business and industrial customers in rural areas and smaller cities. In the Soviet Union settlements tended to be built around natural resources, but were left isolated from the rest of the country. Today many of these places are still economically viable but suffer from a lack of transport or telecommunications connections. 'We go into an area and invest in infrastructure which can immediately be used by businesses and industry,' says Jim Hickman, general director of Rustel. 'Right now it's not necessary to provide international connections for everyone there because honestly most people in these areas have no reason to want to call abroad.'
Yet Russia's secondary cities are also benefiting. Until this year the Russian Ministry of Communications had not granted any licences to regional telephone authorities to provide international services, as it was determined to preserve the monopoly of Rostelecom, the state international and inter-
regional carrier. Yet now they are forming companies with foreign partners, and for the first time people in these cities are able to make trouble-free calls to Moscow or abroad. Rustel, for example, has now established services in the Ural cities of Perm, Ufa, Kras and Tyumen, and this year it hopes to open another in Ekaterinburg.
A company specialising in the remotest of locations is the US firm BelCom. It supplies Western oil companies with international satellite connections, often in regions where there are no telephone connections at all. BelCom is particularly keen to increase its activity in the Asian republics of the former Soviet Union, where it has a large proportion of its customers. In April it held meetings with all of the heads of the Communications Ministries in Kazakhstan, Uzbekistan, Kyrgyzstan, Tajikistan and Turkmenistan. According to Ian MacNeil, marketing and sales manager at BelCom, the company hopes to become the international operator for all of these countries by creating a satellite network linking them. The situation in these countries is particularly ripe for such services as the existing telephone network is even worse than in Russia and as newly independent states they want to organise international communications which do not depend on Moscow.
A less niche-minded company is New York-based SFMT. It has raised dollars 100m in debt and equity from US and European investors based on a vision of how it will blend the services of two Moscow companies of which it is co- owner with an ambitious plan to connect hundreds of other Russian cities. The idea is to build an inter-city network which both shadows and connects with the existing state system. At the centre of the SFMT plan is Rusnet - a joint venture between SFMT and its local and foreign partners.
During 1994 the Rusnet network will be extended from Moscow to Tyumen, Krasnodar, Vladivostok, Novosibirsk and Ufa, using a combination of five new regional satellite earth stations and some existing cable connections. Next year a further 10 cities will get satellite connections, increasing to 25 in 1996. Complementing these will be VSAT stations (smaller satellite antennae called Very Small Aperture Terminals). By 1996 125 locations will be reachable by VSAT. Responsibility for the success of this ambitious project rests on the shoulders of Henry Radzikowski, chief executive officer of SFMT for the Commonwealth of Independent States. He says there is little doubt about the need or the market for telecommunications services; the key to success in Russia is to actually make your plans happen. For anyone with several million dollars to invest he advises, 'In Russia you don't invest if you don't run the network - and if you don't know how to run a network, don't invest.'
The author is editor of 'Computer Business Russia'. Tel/fax: (010-7 095) 265 42 14 e-mail: farish@glas. apc. org.