MOSCOW (WiMAX Day). The vast territory of the Russian Federation poses a formidable challenge to any telecommunications network. In an effort to jump-start the deployment of WiMAX throughout the expansive Russian territory, WiMAX provider Synterra proposed a partner program to companies that can build networks in the small regions around Russia.

Speaking to a rapt audience at the Wireless Broadband 2007 conference in Moscow last week, Synterra CEO Vitaly Slizen said that after several years of working in Moscow, the Synterra business model has proven itself viable. However, expanding its network to the many regions of Russia would consume far too much of the company’s time and capital. Slizen proposed that “WiMAX would make a very interesting market that can earn a lot of money for small and medium size businesses throughout Russia.”

Essentially the core of the Synterra proposal is that regional companies can operate WiMAX services on an MVNO basis, using Synterra radio frequencies. The regional company would be required to purchase and install the local base stations, and thereafter be responsible for the marketing of the service.

In this scheme, Synterra would provide the regional operator with full support for service development, technical and regulatory assistance.

Furthermore, Synterra would help to drive traffic to the regional operator. In fact, the company needs these regional operators to fulfil its obligations to the Russian Federal Agency for Education, which awarded a contract to Synterra last year to connect 53,000 regional schools to the Internet. The tender contract, worth a reported 3 billion rubles (US $116 million), was awarded to Synterra subsidiary RTKomm.

The “last mile” carrot
Complicating the roll-out of WiMAX services in the outlying regions of Russia is “last mile” access to the Internet. Synterra operates a massive backbone in Russia, however the company lacks regional local access.

What Synterra propose to regional operators is wholesale pricing for Internet access of $5 per Gigabyte, compared to a wholesale price of $30-40 per Gigabyte. For companies that have access to local customers, and the capital and infrastructure to launch a network, “this is the main carrot” Slizen said, providing low-cost connectivity to the Internet backbone.

Using such an MVNO model for WiMAX services is Russia can be a compelling business. It will allow small companies to build businesses on the back of Synterra’s spectrum holdings, and offer Internet services in regions where otherwise there might not be an alternative means of access.

Yet there remain hurdles to this business model. Slizen acknowledged that no doubt there may be regulatory obstacles to overcome, however if realised, Synterra will be one of the first operators offering MVNO solutions for WiMAX.