Russia has made another step towards launching the fifth generation of cellular mobile communications (5G), as state-controlled telecoms operator Rostelecom transferred companies that tested the relevant technology to its subsidiary, Bashinformsvyaz.
What is significant about the deal is that the companies, which were assigned frequencies required for establishing 5G networks, will be subsequently transferred to a consortium of telecom companies, established by Bashinformsvyaz and major mobile phone operator Megafon.
Now the frequencies need to be tested for compatibility with secret services communication systems and those used by government agencies, after which they could be used by the consortium's members or, possibly, other companies, as well.
The deal included four companies, which Rostelecom acquired back in 2015 from the FreshTel group, linked to entrepreneurs Viktor Pinchuk and Suleiman Kerimov. At the time of the acquisition, they reportedly cost the state telecom giant RUB210mn ($3.2mn), but now, because of the frequencies attached, the price tag jumped to RUB6bn ($91.9mn).
The companies own frequencies in the 3.4 GHz to 3.5 GHz range, which will be vital for developing a 5G network.
The 5G consortium was established in February 2019 and currently operates under the name Digital for Business. Still, the government is yet to make a final decision on how to proceed with the 5G launch. So far, a consortium of several telecom companies has been mentioned as just one of possible solutions. Another one is the creation of a state-run operator specifically for 5G.
The ownership of frequencies is set to give the consortium some leverage, as the frequencies have already been tested for 5G, Russian business daily Kommersant reported, citing industry and government sources.
Back in 2017, Russia's state commission for radio frequencies allowed 5G testing with a use of frequencies in the range of 3.4 GHz to 3.8 GHz. Separately, Megafon was allowed to do testing using the 26 GHz range.
The tests were run in a dozen Russian cities that hosted the football World Cup matches last year, but requests for further tests were denied following demand from the secret services, according to Kommersant.
Although security concerns were cited as the reason, Russia's secret services may have vested interests in the 5G programme.
Earlier this year, the federal security service (FSB) reportedly submitted a proposal to the government that it should be put in charge of establishing a 5G network in the country.
Wary of using foreign-manufactured equipment in strategically important areas, such as telecoms since relations between Russia and the West soured in 2014 over the annexation of Crimean peninsula from Ukraine, FSB has been lobbying for local manufacture of 5G equipment.
Last year, the ministry of industry and trade and state-controlled tech giant Rostec announced that they are jointly preparing a programme for manufacturing 5G equipment, but there has been little progress so far.
Almost simultaneously, FSB announced a closed tender for developing cryptographic requirements for 5G networks and SIM cards, but its outcome has not been announced.
Unlike FSB's proposal to be put in charge of 5G development, which would lead to tight government control over the 5G network, the consortium established by Rostelecom and Megafon is likely to be much more flexible and possibly open to other players.
Currently, Rostelecom and Megafon, which acquired a smaller operator, Yota, in 2013, have an upper hand over other local telecoms when it comes to 5G prospects as they already own frequencies in the required range.
Still, 5G launch in Russia has been postponed several times, and experts say it is unlikely to take place earlier than in in 2022 or 2023.
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