The expected introduction of new services in Russia, such as Calling Party Pays (CPP) and Mobile Number Portability (MNP), will not only create more choice for customers, but new opportunities for operators, Jere C. Calmes, VimpelCom Executive Vice President and General Director for Moscow, said in an interview with Prime-Tass' Russian Connection last week.

The appearance of new competition in the form of Mobile Virtual Network Operators (MVNOs) and the liberalization of Russia’s long-distance market will also provide not only an increase in competition for incumbent mobile operators, but prospects for growth, Calmes said.

VimpelCom, which recently re-launched its brand name, Bee Line, operates in 75 out of 89 regions in Russia, as well as in Kazakhstan.

As of February 28, the company’s total subscriber base amounted to 29.45 million users, according to AC&M estimates.

CPP, for one, should see greater mobile penetration, Calmes said. Although penetration has increased dramatically in some countries where CPP has been introduced, according to Calmes, it is not likely to have a huge impact in Russia.

“Usually CPP is followed by a great increase in penetration, but given the fact that mobile penetration in Russia is already climbing so fast, I don’t think it will have a huge impact in Russia. In most cases, operators don’t charge their customers for calls from another mobile operator,” he said.

According to the latest figures from AC&M, the penetration of mobile services in Russia rose to 58.9% as of March 31 from 56.3% as of February 28.

Russia’s mobile network currently utilizes the MPP (Mobile Party Pays) system, where the mobile operator bills its own subscriber for an incoming call from a fixed-line phone. CPP’s introduction will shift payment for fixed-to-mobile calls away from mobile operators and on to fixed-line operators.

If CPP is to have an impact, “the devil remains in the detail” of interconnect fees between fixed-line and mobile operators, Calmes said.

MNP, which allows subscribers to retain their number when moving from one mobile operator to another, could see the movement of customers between operators significantly increase, at least in the short term, Calmes said. Despite the danger of losing customers to other operators, mobile operators will look on the implementation of MNP positively, he said.

“It really depends on the details of how MNP is implemented. Firstly, it’s a very complicated technological undertaking, and, for example in the U.S., there have been a lot of problems with it because of that. In some parts of the world, the service carries a charge, and therefore there wasn’t a lot of churn (of customers between operators). So how it’s implemented is important,” he said.

“We think it would be a wonderful initiative because one of the biggest barriers that people have today in switching their operator is that they don’t want to lose their mobile phone number. When it (MNP) happens, I think Bee Line will net more customers than our competitors as we are confident that we provide better service," he said.

Telephone retailer Euroset announced Monday that it is to launch a Mobile Virtual Network Operator (MVNO) in Russia this year. MVNOs typically do not have their own network infrastructure or spectrum, instead renting Minutes of Use (MOU) from incumbent mobile operators for sale to customers.

Calmes said that it is hard to predict what sort of impact the imminent arrival of MVNOs onto the Russian market might have in terms of competition for VimpelCom.

“Euroset is a phenomenal distributor and great partner, but how they’ll do as an operator, I can’t say,” he said.

The appearance of MVNOs in Russia could provide VimpelCom with not only threats to market share, but also opportunities to develop and expand, Calmes said.

“One reason for using an MVNO is to let another operator go for a segment of the market that you're not strong in. I haven’t heard anyone’s strategy yet, but it’s certainly something we’re looking at for the future,” he said.

On February 18, the Russian government approved requirements for companies that want to get a long-distance telecommunications license.

Analysts said that Russian mobile operators may decide to apply for a license as well.

Calmes said that VimpelCom has not ruled out the possibility of moving into this section of the Russian market in the future.

“We haven’t applied for an LD license, at the moment there don't seem to be any time constraints, so we could very well apply in the future.”

© "Prime-TASS Russian Connection"