The heads of Russia's three biggest mobile providers have urged government leaders not to award next-generation frequencies to inexperienced upstarts, business daily Vedomosti reports Friday.
In a letter to Prime Minister Vladimir Putin last week, the chief executives of OAO Mobile TeleSystems (MBT), VimpelCom Ltd. (VIP) and OAO Megafon said granting frequencies to "newly formed small companies" would bring "negative consequences for the vast majority of the population of Russia, our companies and the state as a whole."
The Big Three singled out Osnova and Red Telecom for criticism, arguing that neither has enough capital at its disposal to ensure timely build-out of a so-called 4G network. The market leaders say Osnova and Red would have to spend as much as $7 billon over five years or more on their part of a national 4G network.
MTS, VimpelCom and Megafon insist they alone have the experience and deep pockets to handle the task and should be awarded 4G frequencies through the government's competitive auction. According to their argument, if newcomers get the frequencies, they're likely to resell them to the big operators anyway, which would delay delivery of 4G services to users. With that in mind, they asked Putin to order "further work to develop a precise, transparent approach to the allocation of radio frequencies."
Putin's spokesman Dmitry Peskov told Vedomosti on Thursday that he couldn't comment on the matter.
Also called LTE, for Long-Term Evolution, 4G is a mobile-network standard that's more advanced and up to 10 times faster than conventional third-generation technology.
The authenticity of the letter from CEOs Mikhail Shamolin of MTS, Yelena Shmatova of VimpelCom and Sergei Soldatenkov of Megafon was confirmed by all three companies. A representative of one of them said the Big Three is stepping up efforts to draw attention to the issue by appealing to Russia's leadership.
The CEO trio sent a similar missive, dated July 6, to the minister of communications and mass media, Igor Shchegolev. That appeared to be a response to news that Defense Minister Anatoly Serdyukov had asked President Dmitry Medvedev in late May to support the formation of Osnova as a privately held mobile-broadband operator using the 4G standard across Russia. Medvedev replied by instructing subordinates "to make all necessary decisions in conjunction with the Communications Ministry in the prescribed manner."
In Russia, slices of the cellular spectrum are allocated by the State Commission for Radio Frequencies, an interagency body that Shchegolev heads. A week before the commission's most recent meeting, on July 15, the Defense Ministry proposed that the Communications Ministry consider behind closed doors "questions related to carrying out … the instruction of the president." But the request couldn't be taken up: By law, the commission's agenda had been set three weeks before the meeting. Shchegolev said his ministry continues to discuss 4G-frequency allocation and "will see what happens with Defense."
The matter of 4G frequencies will be decided by August, Shchegolev has said.