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SOME EASTERN EUROPEAN NATIONS STEP UP EFFORTS TO OFFER GSM

Eastern European countries and those of the former Soviet republics launched cellular services in the early 1990s using the Nordic Mobile Telephone-450 standard, an analog technology developed to operate at 450 MHz. Most nations initially selected NMT- 450 instead of Global System for Mobile communications because they lacked 900 MHz spectrum and because legal restrictions existed on exporting high-tech products to former Eastern bloc countries, explained the London office of Economic & Management Consultants International Inc.

Those restrictions have gradually loosened and 900 MHz spectrum has been allocated. As of last year, Hungary, Bulgaria, Estonia, Latvia, Lithuania and Russia had GSM networks in operation, said EMCI. Russia, Poland, the Czech Republic, Slovakia and the Ukraine are on track for licensing or should begin GSM service this year.

Hungary

Population: 10.3 million

Area: 35,920 square miles

About 42 percent of Eastern Europe’s total cellular subscribers are in Hungary, reports EMCI. With 235,000 cellular subscribers expected by year-end, penetration will reach nearly 2.5 percent in Hungary, said International Technology Consultants of Bethesda, Md.

Westel and the Pannon GSM consortium started offering GSM service in 1994, and have achieved 50 percent and 40 percent growth, respectively, since network launch, according to ITC. Hungarian telephone operator Matav and U S West International own Westel, which claims 110,000 digital subscribers. Westel also provides analog service. Pannon is owned primarily by a group of Hungarian and Scandinavian telecom operators. ITC said the cellular subscriber base has grown from 45,000 in 1993 to more than 200,000 in March.

Nationwide paging operators EasyCall Ermes Hungary and EuroHivo provide ERMES-based paging. The established Operator Hungaria runs on an FM-based system. Each consortia have foreign partners. EuroHivo estimates paging subscribers total between 100,000 and 150,000, said ITC.

Matav organized a contract valued at $100 million for Motorola Inc.’s WiLL wireless local loop equipment, to serve 200,000 people who previously had no telephone access.

Poland

Population: 38.8 million

Area: 120,728 square miles

About 13 percent of Eastern Europe’s cellular subscribers are in Poland, according to EMCI. The firm estimates Poland’s growth will exceed other nations and become the largest cellular market in the region by 2001, with 24 percent of the region’s subscribers.

Despite foreign ownership blocks in some telecom sectors, Poland licensed two international consortia-Polkomtel and Polska Telefonia Cyfrowa-to provide GSM cellular service. Both companies plan to start offering service this fall. AirTouch International is a lead partner in Polkomtel, while U S West International holds a large share in rival PTC.

Analog cellular operator Centertel is involved in a scrap with the Polish government. Centertel says the Ministry promised five years ago that the Centertel partners would receive a GSM license as a natural upgrade to its analog system. The government denies the promise and the dispute awaits third-party arbitration. Ameritech International and France Telecom each own 24.5 percent of Centertel.

ITC estimates Centertel had about 90,000 subscribers as of March.

PolPager, MetroBip, Telepage and EasyCall operate national paging networks and claim 40,000 total subscribers, reported ITC.

Trunked radio goes back 25 years for a number of municipal and emergency services, construction and transport. About 200,000 subscribers currently use dispatch services. DCS 1800 personal communications services is on the horizon, but the Polish Ministry has not yet announced licensing plans.

Czech Republic

Population: 10.4 million

Area: 30,450 square miles

The Czech Republic is the original land of Bohemia; the capital city of Prague was the cultural center of Central Europe in the 14th century.

When it became a free state in 1989, the Czech Republic began to aggressively pursue foreign investment and partnerships to improve its telecom sector. It launched an ambitious digital overlay network; overall, the investment level averages $24 per individual, or $1,820 per main line added, according to ITC.

Cellular operator EuroTel Praha has more than 50,000 subscribers on its NMT-450 system. It reported a growth rate of more than 70 percent in the last year. The system covers 83 percent of the territory and 95 percent of the population; it is designed to allow roaming into neighboring Slovakia.

The system is owned by SPT Telecom (the Czech telephone monopoly), U S West International and Bell Atlantic International Wireless.

The government has offered two licenses for GSM systems; one went to EuroTel and the other has gone to a consortium led in part by Germany’s Deutsche Telekom. Motorola Inc. is building the Radiomobil network, which will be launched in September and initially cover 65 percent of the population, with further buildout in the following 30 months that will bring coverage to 90 percent of the nation’s population. Siemens AG will supply the switching centers.

Slovakia

Population: 5.4 million

Area: 18,933 square miles

From 1918 until 1992, Slovakia was combined with the Czech Republic into Czechoslovakia. Both nations now are independent states. EuroTel Bratislava operates the cellular system in the Slovak Republic. The country’s NMT-450 system was turned on in 1991. GSM licenses are being offered by the government.

Bulgaria

Population: 8.8 million

Area: 42,855 square miles

Bulgaria ended 1995 with about 21,500 cellular subscribers, up 277 percent from a year earlier, according to the U.S. Department of Commerce.

Telecom restructuring began three years ago when the Bulgarian government separated postal and telecom activities into two joint stock companies, Bulgarian Posts Ltd. and Bulgarian Telecommunications Co. BTC remained a monopoly operator and formed operating partnerships in various wireless sectors.

Cable & Wireless plc of the United Kingdom owns just less than half in each of BTC’s nationwide paging and analog NMT-450 cellular operations, and in one of the GSM cellular companies, Mobikom. Mobitel is BTC’s other GSM provider, with shares owned by Tron AG of Austria and U S West International. Sprint Business, which provides value-added services and operates a mobile data network, is owned 60 percent by Sprint International, according to ITC.

Romania

Population: 23.2 million

Area: 91,699 square miles

Delays plague Romania’s cellular market. A tender for two national GSM licenses was scheduled to begin almost a year ago, but the Finance Ministry still is trying to determine licensing fees and appropriate concessions, said ITC. The firm reported analog operator Telefonica Romania started service three years ago and currently claims 3,500 subscribers. The U.S. Department of Commerce reports subscribers totaled 11,700 at the end of 1995.

Bel Pagette Romania SRL, RadioNet and Radiotel operate paging networks in Romania.

Russia

Population: 150 million

Area: 6.6 million square miles

The Russian Federation controls 75 percent of the land that was the former Soviet Union. At 6.6 million square miles, it is the largest country in the world.

Russia has struggled with the free market activities of trying to establish banks, commodity exchanges and wholesale distribution systems. Net industrial production has declined in recent years and the 1994 standard of living in Russia was only 30 percent of what it averaged in January 1991, according to ITC.

There are 10 million unfulfilled applications for basic telephone service, which translates into a 10-year waiting period for an average Russian to get a phone, ITC reports.

Thus, mobile phone use has skyrocketed since it was introduced in 1991. There are three cellular systems: a GSM network do
minated by Deutsche Telekom and France Telecom, an NMT-450 system operated by U S West Inc. and Millicom International Cellular and an Advanced Mobile Phone Service network run by FGI Wireless, Plexsys International Corp. and Vympel.

Russian cellular subscribers use two times as much airtime as U.S. customers. ITC predicts that digital pan-European GSM cellular networks will have 200,000 subscribers in Russia in 10 years, resulting in more than $1.5 billion in revenues for largely foreign-controlled operating companies.

AirTouch International turned down the chance to buy into the FGI AMPS operator earlier this year. Although AirTouch actively pursues international ventures, the company said the opportunity failed to offer shareholder value for the future. AirTouch then tried but failed to buy into a GSM license in the Czech Republic; it was defeated by Deutsche Telekom.

Russia’s mobile telecom market is characterized by numerous licenses and small, city-based networks, according to CIT Research Ltd. of London, which tracks wireless companies in Eastern Europe. Last year, the Russian government awarded more than 40 licenses for NMT-450 systems; it expects to issue another 40 licenses by 1997, CIT said.

Groups that have set up operations in Russia include AT&T Corp., Sprint Corp., Alcatel Telecom, Deutsche Telekom, Siemens, Motorola and L.M. Ericsson. Importing telecom equipment has been liberalized, ITC said.

Data networks as well as specialized mobile radio networks also are being implemented in Russia. San Diego-based Qualcomm Inc. is building digital cellular and wireless local loop systems valued at $24 million in the Chelyabinsk Region, using Code Division Multiple Access technology.

The nation’s four paging operators are AMT, Intermed, Radiopage and Vesso Link.

Ukraine

Population: 51.9 million

Area: 233,100 square miles

The Ukraine is still fighting many post-Soviet inefficiencies. There is one analog cellular system in the nation, for which operator Ukranian Mobile Communications has a 20-year license.

Bills must be delivered by hand to the 8,000 or so subscribers due to an inefficient postal system, according to CIT Research. About 15 percent of subscribers are disconnected each month due to fraud and bad debt, researchers said.

If bills are paid in cash, Ukranian Mobile may have to count up to 2,000 karbovanet currency notes because Ukraine lacks high denomination currency, CIT said.

Ukranian Mobile also has a 20-year license to operate GSM and PCS personal communications services networks when frequency is allocated. The government is expected to offer a tender for a second GSM license this summer.

Belarus

Population: 10.4 million

Area: 80,153 square miles

There is one system in Belarus, operated by the nation’s only operator, BelCel. CIT said BelCel originally was given exclusive rights to all frequencies, but researchers aren’t sure that situation will continue.

Although the subscriber base tripled in 1995, service is costly. To put it in perspective, consider that the salary of a Belarus university professor is about $50 a month on average -a phone costs between $400 and $1,800, or handsets can be rented for $35 a month, according to ITC.

BelCel is expected to drop prices at the end of 1996, but the service will still be unaffordable to a large portion of the Belarus population, CIT said.

Estonia

Population: 1.6 million

Area: 17,462 square miles

Estonia has made a connection with neighboring Finland that could produce revenue. Eesti Mobiltelefon, a venture of Estonian Telecom, Telia of Sweden and Telecom Finland started NMT-450 service in 1991, GSM service in 1993 and at the end of 1995, carried about 17,000 analog and 5,000 digital customers, according to ITC.

High roaming traffic is accommodated by Telecom Finland’s switch in Helsinki. Finnish-owned Radiolinja Estonia AS started GSM service in January 1995. The network is connected to Finland to acquire business and tourist consumers. At the end of last year, total cellular subscribers reached about 32,000, reported the Commerce Department.

Baltcom Estonia and Estonian Paging collectively claim 8,000 paging users; Baltcom is implementing ERMES technology into its networks presently, and Estonian Paging currently provides numeric, alphanumeric and tone-only service.

Latvia

Population: 2.8 million

Area: 24,946 square miles

The Latvian Mobile Telephone Co. launched GSM service about a year ago and currently claims about 2,000 subscribers. The company is an international consortium formed in 1992 to operate an NMT-450 network compatible with networks in Sweden, Denmark, Norway and Iceland, Baltic and Norwegian Sea neighbors.

By the end of 1995, analog subscribers exceeded 8,000, and total subscribers totaled 14,700.

Lithuania

Population: 3.9 million

Area: 25,213 square miles

GSM networks are operated in Lithuania by Omnitel, a group of Lithuanian and American investors-including Motorola Inc. with 38 percent-and international consortium Mobilios Telekomunikacijos.

Omnitel claimed 2,000 subscribers at the end of 1995, a number expected to have doubled by now. ITC expects Mobilios will grow to about 3,500 subscribers by mid-1996.

Formed by an international group of companies, UAB Comliet is Lithuania’s NMT-450 operator. The analog network started service started four years ago.

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