Russian Federation Broadband and WiMAX Market Analysis and Forecasts 2008-2012 Second Edition

Abstract

This report contains data and analysis on the current opportunities and challenges presented by the Russian BWA/WiMAX markets. The report also provides forecasts of key Russian markets up to 2012. We conducted an in-depth review and analysis of the top ten BWA/WiMAX potential service providers , spectrum activity, and overall regulation. The report also analyzes the competitive environment.

• There are over 200 BWA operators in Russia, with more than 300 networks.
• Russia' s BWA equipment market will see greater consolidation, with marginal players leaving the market or losing market share. Top-4 players will control 75% of the market. Alvarion remains the market leader, but will be losing ground to Motorola in the next few years.
• About 70% of the incremental BWA equipment installed in 2010 will support the 2.5 and 5 GHz frequency bands.
• By 2012 there will be at least two national BWA operators (which will cover 80% of the regions).
• Mobile WiMAX applications in the 2.5 GHz band will be approved in 2009. To provide mobile WiMAX nationwide will require an operator to hold a given frequency throughout the country.
• Broadband penetration remains very low. Nevertheless, large penetration of mobile phones will facilitate switching to broadband, as users become accustomed to everyday applications (MMS, mobile email).
• Many WISPs are reluctant to switch to WiMAX -certified BWA equipment, as they find it incompatible. This enables Russian vendors to continue selling equipment that is non-certified.
• Mobile WiMAX must offer much lower prices to be competitive, as penetration of conventional broadband technologies is rapidly rising (though still at a low level).
• Low PC penetration, excessive bureaucracy, and high CPE costs are growth of the Russian BWA market.
• Many projects in the 2.5 GHz band are almost frozen because(1) "mobility" is not permitted; (2) frequency bands have not been allocated; and (3)the devices are not yet available.
• BWA projects are still considered high-risk investments and therefore have difficulty in raising capital.
• The aocumulated WiMAX subscriber base in Russia will reach 4 million in 2012.
• BWA / WiMAX combined equipment market size will reach $320 million in Russia in 2012, representing 5 times today' s market size.
• WiMAX subscribers will dominate BWA subscribers by 2012 and constitute around 75% of the total subscriber.base. The majority will be residential users and SOHO/SMEs.
• In 2012, the Central and Volga macroregions will have the most BWA subscribers - 200,000 and 150,000, respectively.

The research was conducted through two m ain channels:

Maravedis always strives to provide its clients with a new and unique perspective of the industry, based on its own research. To ensure that we add value to the information already available to stakeholders in the industry , we reviewed most of the market research available on broadband wireless access in Russia, including

• ITU Statistical Yearbook 2006
• The World Bank Development Indicators 2007
• Numerous articles

Primary research is a lengthy but indispen sable process for market research because it yields data neither biased nor distorted by intermediaries. As part of this research, Maravedis conducted interviews with the following:

• All service providers listed in the report
• The Regulatory Authority
• National account managers and other key represe ntatives of equipment vendors active in the Russian market

The survey took place from August to December 2007 and involved discussions with product managers, marketing managers, regulators, technologists , and sales people at various organizational levels.

In creating analytical models for the market estimation, both top -down and bottom-up approaches were used, depending on circumstances and the information available.