Our take...
Broadband infrastructure roll-out in Russia has been very uneven. Moscow's and St Petersburg's markets, and to a lesser degree those of other major cities, are highly fragmented and very competitive due to abundance of small companies offering fiber-based LAN broadband, though there are signs that consolidation is underway. There is no evidence of significant WiMAX uptake, although WiMAX broadband for corporate clients is quite a widespread proposition. St Petersburg and Moscow markets are particularly well served with WiMAX services offered by Synterra, Golden Telecom, Start Telecom, and Moscow's incumbent Comstar UTS among others. WiMAX operator Enforta serves over 40 Russian cities and has a strategic partnership with backbone operator TransTeleCom.

Residential WiMAX offers are less common. However in 2007 Synterra Group, whose subsidiaries include backbone operator RTComm.RU and a number of B2B internet and telephony service providers, launched project "Regional mini-networks WiMAX". The idea of the project is to recruit local partners to operate last-mile WiMAX infrastructure utilizing Synterra's 5.6-5.75GHz spectrum licence and backbone capacity. The target markets are small cities with population under 100k (over 120k localities), where residential broadband offerings are very limited.

Screen Digest believes that WiMAX broadband is potentially a lucrative business proposition – especially in the more remote regions of Russia, since WiMAX infrastructure is easier to roll out than fixed-line. However, Virgin's strategy of entering the Russian market does not take full advantage of this: a number of the regions where Virgin Connect services have been rolled out are already well served by a host of alternative operators (especially given the push to develop extensive last mile FTTP infrastructure in regions outside Moscow initiated by Golden Telecom in 2007).

At the same time, in scarcely covered regions, which should lend themselves to WiMAX deployment, high charges for backbone capacity remain a significant impediment to the proliferation of local alternative operators. Backbone providers, in the process of rolling out their own consumer-facing broadband services outside of Moscow and St Petersburg, offer discounted rates to their subsidiaries or affiliated ISPs. For example, at the launch of its "Regional mini-networks WiMAX" programme in April 2007 Synterra's representatives disclosed that companies that joined the programme would be charged about 15 per cent of the market price for backbone traffic. This sort of 'favoured nation' affiliate deal has the potential to put significant pressure on Virgin's intention to compete on price given that the company has not announced any similar affiliate deals.