MOSCOW-Russian wireless carriers, which this year considerably expanded their client bases thanks to radically decreased prices, registered a major average revenue per user (ARPU) decrease from more than US$215 two years ago to US$36 for one Russian carrier this year. Therefore, carriers have launched a search for new income, which brought them to the wireless Internet with m-commerce prospects.
In September, major carriers Mobile Telesystems (MTS) and Vimpelcom announced Wireless Application Protocol (WAP) projects. However, so far the market is restricted by a lack of WAP telephones and a small number of subscribers ready to pay for new services. Carriers said the current wireless Internet rush hour begins right after midnight when costs fall to US$0.03 per minute and average connections last three minutes. In September, MTS had slightly more than 2,700 WAP clients out of its total 870,000 customers.
WAP services have received contradictory predictions in Russia. While carriers insist it is an evolutionary step toward an advanced information society, some experts fear the new technology is a vendor conspiracy to force new phones on customers and new equipment on carriers.
In the meantime, carriers continue to push the new technology as major investments have already been made. The operators are trying to keep pace with the world trend of moving toward data services and convincing more users of the benefits. Shagit Reznikov, MTS director for new technologies and services, noted carriers must act like teachers and explain WAP opportunities to the “students.” The latter are mostly believed to be wealthy businessmen.
Official optimism from carriers prevails. “We are making an emphasis on e-commerce,” Reznikov said, commenting on an agreement with Port.ru to run a WAP site.
However, he complained project development is stalled by a lack of WAP telephones. MTS is now offering only the Nokia 7110 and Ericsson R320 WAP-enabled phones, and a future alternative is a soon-to-be-released subscriber identity module (SIM) card with a built-in WAP browser from Gemplus. The cards turn each modern GSM handset into a WAP terminal.
MTS and Port.ru are going to offer the mail.ru site, which will allow clients to read and send e-mail from their handsets. They are also planning m-commerce via torg.ru. Clients will have a chance to order any commodity to be delivered to homes, while payment will be included in the carrier’s wireless service invoice.
Vimpelcom offered a similar project, however, the operator decided to act without a partner. It created a subsidiary, Beeonline.ru, with services that allow subscribers to see flight schedules, news, weather forecasts, traffic information, the ruble exchange rate and other data, as well as make purchases via handsets.
Moscow Cellular Communications (MCC) is also developing its WAP services.
However, independent wireless experts are less optimistic about WAP prospects in Russia than operators, saying the market is limited so far, and WAP will soon be replaced by third-generation (3G) technologies. They assess at present only 6 percent of subscribers in Russia use short message service (SMS), while the number of WAP users is even smaller. Experts said WAP development is restricted not only by a lack of phones, but also by the phones’ high prices and small screens, along with slow connection times.
Mikhail Lysak, the director of the WAPgate.ru project, estimated in September there were more than 3,000 WAP subscribers in Moscow, 1,000 in St. Petersburg and 200 in the rest of Russia, mostly the industrialized cities of Samara, Ulyanovsk and Krasnodar. “At present, they provide up to 4 percent of the total proceeds of the carriers,” he said.
But Lysak tried to sound upbeat and predicted the number of WAP clients would reach 35,000 by year-end, as the current 3,500 WAP users appeared only in four to six weeks of WAP operation. He said there are already about 50 WAP-supported Web sites in Russia.
Anton Pogrebinsky from the Moscow office of J’son & Partners telecom consultancy is less optimistic about WAP prospects. “We believe the WAP market is limited in Russia. The talk about a WAP boost will end soon, and carriers will switch to a faster GPRS technology,” he said.
In early September, MTS announced a trial launch of its General Packet Radio Service (GPRS) network based on Motorola’s GSM dual-band technology, which will provide subscribers with high-speed access to the Internet and mobile data transfer. The commercial launch is scheduled for December.
Vimpelcom President Joe Lunder said his company is ready to launch commercial operation of a GPRS network in the first quarter of 2001. The network has passed necessary trials and is practically operational. However, Lunder said it is appropriate to start network operations after GPRS terminals are certified in Russia at the end of the year.
