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Gray Thuraya Subscribers to Disappear in September
When Thuraya deploys a land-based station in Russia
by Leonid Konik
In a month TM SAT, an exclusive service provider of the Thuraya satellite network in Russia, will launch a Russian gateway. The land-based Thuraya station will be the company's second station in the world and the first one outside the United Arab Emirates (UAE). Besides cheaper Thuraya services for Russian users, this new deployment might lead to a curious result: economic elimination of «gray» Thuraya subscribers who exceed the number of «white» subscribers in Russia by eight times.
comnews.ru, 20.08.2004
TM SAT General Director Nikolay Prokhorov told ComNews.ru that the company served 1,000 subscribers, although the total number of active subscribers in Russia was about 8,000. These additional Thuraya users bought SIM cards from foreign service providers. You can tell a «gray» number by the first two digits. Such numbers start with digits other than 53 (TM SAT subscribers have numbers such as +88 216 53 хххххх). «Besides exclusive service providers, Thuraya has about forty non-exclusive representatives with the right to operate in international waters. They are located mostly offshore, but there are also firms from Kazakhstan and Ukraine», — says Nikolay Prokhorov. «Their activity in Russia is harmful to our users, because they do not serve Russian subscribers. From our point of view, holders of such numbers are just common roamers». According to ComNews.ru, the right to operate in «international waters» allows operations in any part of the world where such operations don't contravene local legislation (for example, these providers cannot operate in Russia because they need a license from the Ministry of Communications).
So far, tariffs for «gray» and «white» Thuraya subscribers differ, but only slightly. In either case, the traffic goes through a gateway in Sharjah, UAE. For example, a call from a Thuraya satellite terminal to a fixed or mobile number in Russia costs about $0.90 (VAT included) for all callers. «As soon as we deploy our station, everything will change», — said TM SAT Sales Director Valery Munka to a ComNews.ru reporter. «All gray subscribers will have to use expensive international roaming». He says that white subscribers will pay several cents for each airtime minute, but gray subscribers will have to pay several dollars.
The switch for Thuraya's Russian gateway station is installed in Moscow at the international telephone exchange #9 (MMTS-9), and the satellite part of the station will be deployed in Dubna (Moscow region) on the territory of the Federal State Unitary Enterprise «Space Communications». The equipment vendors are the Chinese Huawei Technologies (switching system) and the US Hughes Network Systems, Inc. TM SAT signed a contract with the latter for the delivery of equipment for a TM SAT space segment in June 2003 (see ComNews.ru news 19 June 2003). Konstantin Lanin, Director of Sales (Russia and NIS) at Hughes Network Systems, confirmed that Hughes would deliver equipment for the station's space segment in Dubna within the preset deadline, and the station would start operating in summer 2005. The projected cost of deploying the land-based Thuraya station in Dubna is estimated at about $20 million. So far, the project has been financed by TM SAT but in future, the company is planning to use credit facilities as well.
TM SAT has divided the project into two stages. The land part of the gateway will be commissioned in September, whereas the space segment will start operations in summer 2005. Valery Munka says that the land part will allow the company to give subscribers Russian numbers, to perform billing (instead of translating bills received from the UAE into Russian) and to organize voice prompt systems in Russian. Nikolay Prokhorov told ComNews.ru that the billing system vendor for the project, according to a tender held in July 2004, would be CBOSS. The billing system will support 50,000 subscribers. A spokesperson for CBOSS's PR group told ComNews.ru about the finalization of the contract with TM SAT and added: «It is a very interesting project for us because the Thuraya network unifies satellite and GSM communication. We participated in the TM SAT tender and are very proud that they chose us».
By launching the gateway, TM SAT intends to increase its subscriber base. For a long time subscriber base growth was limited by a license that permitted the company to serve a maximum of 1,000 subscribers. This summer the operator extended its license to 50,000 subscribers, but a high-ranking source in the Ministry of Communications reported that there was a verbal agreement that the license could be expanded in exchange for building a gateway station in Russia. By the end of 2004, TM SAT is planning to serve 3,000 subscribers, in other words, within just several months the company is going to increase its subscriber base by three times.
With its new station and license, TM SAT will be able to compete on an equal footing with the key player in this segment — GlobalTel, the exclusive operator of the GlobalStar satellite network in Russia. The Executive Marketing Director of GlobalTel, Svetlana Salnikova, told ComNews.ru that the company served more than 16,000 subscribers. All the traffic goes through three Russian gateway stations, near Moscow, Novosibirsk and Khabarovsk. The Deputy Director General of CJSC GlobalTel, Yaroslav Baranov, told ComNews.ru that. «GlobalStar and Thuraya use different technologies, though we are of course competitors. I don't think that deploying a new station will increase the number of TM SAT subscribers. TM SAT has to build this station because it is required by the operator's license.» Yaroslav Baranov admits, but does not believe it likely, that if TM SAT considerably cuts the tariffs it can attract more subscribers. «They will spend several tens of millions of dollars to build the gateway station, but they will have to return the investments before lowering the service tariffs,» — he says.
The State Radio Research Institute (NIIR) estimates that satellite penetration in Russia is currently about 0.35-0.7% (or 500,000-1 million subscribers) in 2005. «If services are provided at competitive prices, the satellite subscriber base in Russia will reach 4.5 million subscribers by 2015 and the penetration will be 3%,» — says a NIIR spokesperson.
>«Russia is already a satellite paradise, because the customer attraction rates and service usage considerably surpass those in other parts of the world. For instance, Russian Inmarsat users, accounting for about 5% of total subscribers, generate more than 17% of the company's traffic,» — says Sergey Ryzhikov, a satellite expert from the company «Ryzhikov & Partners».
ComNews.ru Dossier
The satellite system Thuraya managed to avoid the fate of other similar projects. Iridium, ICO, Teledesic (and GlobalStar in early 2002) went bankrupt and their shareholders lost about $14 billion. Unlike its predecessors, the Thuraya network operator — Thuraya Satellite Communications Company from United Arab Emirates — does not aspire to global coverage and only launches satellites to cover a few high-margin regions. Thuraya was founded in 1997 by a consortium of Arabic telecommunication companies and foreign investment institutions. Thuraya's commercial operations started in May 2001, and the company now serves 237,000 subscribers with the ARPU exceeding $90. At present, the Thuraya network uses one satellite covering Arabic countries, Europe and part of Russia: the northwest, south, center, Ural and Western Siberia. In June 2003, a second satellite was launched to cover Eastern Siberia and the Far East, including 16 Asian countries (China, Japan, Malaysia, Indonesia, Singapore and Thailand). The second was launched within the Sea Launch program by Zenith rockets.
