Unauthorized Thuraya Users To Extinct in September

Thuraya plans to launch an earth station in Russia

Leonid Konik , Vedomosti

“ТМ SAT”, the exclusive satellite telecom provider of Thuraya in Russian Federation, plans to launch a Russian earth gateway. This earth station is intended to become the first one outside the Thuraya home network located in the UAE . As soon as the station is launched, unauthorized Thuraya users in Russia, outnumbering the licensed subscribers more than eight times now, will find it unbeneficial to continue using satellite telecom services illegally.

Vedomosti, No.149 (1189), 20.08.2004

According to “TM SAT” CJSC Chief Executive Nikolay Prokhorov, at present his company is serving only about 1.000 subscribers, while the actual number of Thuraya subscribers in Russia who purchased their SIM cards from Thuraya providers in other countries is over 8.000. Mr. Prokhorov says that besides official exclusive service providers, there are about 40 "non-exclusive" representing companies that are allowed to operate in the countries where their activity is not considered contradicting international laws. In Russia such providers need to be licensed by the Ministry for Information and Communication.

“Most of unauthorized providers are offshore companies, however there are some resellers from Kazakhstan and Ukraine. They do not provide telecom services, but only sell SIM cards to Russian subscribers. In our Russian network such subscribers are served as roamers,” — says Nikolay Prokhorov.

At present the difference between “authorized” and “unauthorized” Thuraya subscribers in Russia is insignificant: all traffic is routed through the earth gateway in Sharjah (UAE). “As soon as we launch a new gateway in Russia, this difference will be considerable: “authorized” subscribers will be charged cents for a minute, while “unauthorized” ones will have to pay several dollars”, — says “TM SAT” Sales Director Valery Munka.

The switch for Russian earth gateway has already been installed, now it is being tested. It is located at Moscow International Telephone Station #9 (MITS-9); the satellite equipment is to be installed in Dubna, Moscow oblast, at Satellite Telecommunication Center “Space Communication”. The equipment is produced by Huawei Technologies, China (the switch), and Hughes Network Systems, Inc, USA (satellite segment equipment).

Hughes Network Systems CEO in Russia, CIS and Baltic States Konstantin Larin confirms that Hughes will install and launch satellite telecom equipment in Dubna by the summer of 2005. The cost of Thuraya earth station in Dubna is about $20 million. At present the project is financed by “TM SAT”, however in future the company intends to use credit resources.

“TM SAT” has planned the project into two stages: launching of earth station is scheduled for September 2004, the satellite equipment in Dubna – for the summer of 2005. Valery Munka mentioned that the earth station will enable “TM SAT” to provide subscribers with Russian telephone numbers and to perform billing. CBOSS Association was selected to supply the billing system for 50.000 subscribers, according to a tender held in July 204.

“TM SAT” expects growth of subscriber base after launching the earth gateway. Previously, the telecom provider was licensed to serve only 1.000 subscribers, while since this summer the license has been expanded to 50.000, providing for rapid subscriber base growth. According to a source in the Ministry for Information and Communication, one of the conditions of the license expanding was establishing an earth gateway in Russia. “TM SAT” intends to triple its subscriber base by the end of 2004, up to 3.000 subscribers.

The new earth station and the expanded license will allow “TM SAT” to efficiently compete Russia's leading satellite telecom provider “GlobalTel”, the exclusive operator of global satellite telecom network GlobalStar in Russia having 16.000 subscribers. “I don't think the earth station will enable “TM SAT” to boost subscriber base growth. I'd say, the company is forced to build the station, as per its operator license”, — says “GlobalTel” CJSC Deputy Chief Executive Yaroslav Baranov. Mr. Baranov admits that “TM SAT” may face increasing subscriber base if it cuts down the prices, which is unlikely, for “it will take millions of dollars to install and launch the earth gateway, and the company will need to recover the expenses”.

According to Scientific Research Institute of Radio, in 2005 the number of satellite telecom subscribers in Russia may approach 0,35-0,7% of the population (0,5 – 1 million subscribers). “If satellite telecom companies are able to offer the services at competitive prices, by 2015 the satellite telecom subscriber base will be about 4,5 million people”, — says a source in the Institute.

“Russia is already a “satellite paradise”, as the rate of attracting new subscribers, as well as the traffic, are much higher than world's average rates. Specifically, Russian subscribers of Inmarsat make only about 5% of its total subscriber base, while generating over 17% of its total traffic”, — says satellite telecom market expert Sergey Rizhikov, “Rizhikov and Partners”.

Thuraya was established in May 2001. By August 2004 its subscriber base has grown to 237.000 users, with average revenue per user (ARPU) over $90. For now Thruraya has one satellite covering Arab East, Europe, European part of Russia, and Western Siberia. The company plans to launch another satellite to cover Eastern Siberia, the Far East, and 16 Asian countries. A Thuraya satellite phone now is about $500-750.