Telecommunications is, beyond any doubt, the most important part of infrastructure of any country's economy. The level of development of telecommunications can serve as a criterion for evaluation of the economic development of a country.

The aim of this report is to provide an overall assessment of the current situation in telecommunications in the Russian Federation and to analyze possible ways of development of this industry now and for the future under conditions of economic reforms currently underway.

I. STATUS OF TELECOMMUNICATIONS IN THE RUSSIAN FEDERATION

The main components of the telecommunications industry are:

- local public service telephone networks; - trunk (long distance) and international telecommunications; - telegraph communications and data transmission networks; - television and radio broadcast; - postal service; - civil construction industry for telecommunications facilities; - credit-and-finance establishments; - industry-bound system of higher and medium educational institutes for training personnel.

The number of people employed in this industry is about 1,000,000.

The Russian Federation occupies the 6-th place in the world in the number of installed telephones (21.2 million), and the 4-th in Europe (see table 1 of the Appendix). Regarding the number of installed telephones per 100 inhabitants Russia occupies the 30-th place in the world and the 21st - in Europe.

About 15 million. applications have been registered on the waiting list from those wishing a residential telephone installed in their flats; in other words, about 50-60 million. persons are waiting for a telephone to be installed in their households.

The local public service telephone networks have about 33.5 thousand exchanges in operation with a total capacity of 22 million. lines. Crossbar exchanges are predominant (about 70%), digital exchanges make about 17%, and the rest of exchanges are of step-by-step type. The proportional part of the digital data transfer system is about 53%. The overall length of fiber-optic cable lines is extremely small -- only 1744 km.

The local telephone networks are all automatic. The growth rate of telephone lines is about 1 million/year.

On the trunk telephone networks about 1.2 billion telephone calls per year are placed. In USA this figure is about 68 billion, in Germany - 12.6 billion, in Italy - 7.5 billion (see table 2 of the Appendix). About 76% of customers can make use of automatic trunk telephone service, but only 23% of them live in rural areas.

The network has automatic trunk telephone exchanges with the total capacity of 200000 channels of primarily crossbar switching system. Quasi-electronic and digital exchanges make about one third of the total number of the exchanges.

The trunk network has about 270000 communication channels in operation, of which 65% are based on cable lines, 30% - on fradio- relay lines, and only 3% - over satellites.

The total length of trunk telephone channels based on digital transmission systems is extremely small:1.1% of the overall length of the channels. Fiber-optic cables have not yet achieved wide- spread application. At the same time, the long-distance telecommunications networks of the Russian Federation have in operation the longest cable and radio-relay telecommunications lines in the world (9.5 thousand km).

International telephone traffic totals 41 million calls per year. This is the equivalent of 0.24 calls per inhabitant per year; for comparison, the respective figures for some other countries are as follows: Switzerland - 34.40; Holland - 15.03; Germany - 9.15; USA - 3.36 (Table 3 of the Appendix).

The international telephone telecommunications are organized so far through the only automatic international exchange in Moscow. About 4000 international telecommunications channels are used to provide international calls.

Access to international telephone networks is made via satellite channels of such international organization as "Intersputnik", "Intelsat", "Eutelsat", next through the network of terrestrial channels passing through the territory of Belorussia and Ukraine, then over a radio-relay passage to Finland from Estonia and at last through the submarine cable line from Hakhodka to Japan.

Mobile radiotelephone networks are functioning in 90 cities of Russia and have about 20000 customers. These networks are founded on an out-of-date analog radio system called "Altai". Cellular phones are available only in Moscow and Saint-Petersburg. Data about the number of subscribers of cellular mobile radiotelephone networks in some countries of the world is given in Table 3 of the Appendix.

In the Russian Federation a combination of telegraph channels, switching centers, stations and substations provide to subscribers telegraph service, telex services and also facsimile transmission of newspaper pages over telecommunication channels. The network of the internal Telex has more than 70000 subscribers, the International Telex network - about 5300 subscribers. The International telex network is completely isolated from the Internal Telex network and utilizes the only international switching station in Moscow. (See Table 3 of the appendix).

The Russian Federation has not yet created a unified network for data transmission; there are only a small number of dedicated networks established in the framework of private and joint enterprises.

The postal service of Russia processes and delivers yearly over 28 billion newspapers and magazines, 4 billion units of written correspondence, about 171 million parcels and 56 billion ruble's worth of money orders and pensions. By the number of postal deliveries per annum the postal service of the Russian Federation occupies the second place in the world after the USA.

For transmission of radio and TV broadcast programs and for provision of telecommunications channels the telecommunication satellites of the types "Gorizont," "Ekran" and "Molnia" are used. Besides that, the international exchange of TV programs with 40 countries of the world is made through the "Gorizont" satellites in the "Intersputnik" system.

The development of the telecommunication industry in the past was to a great extent dependent on the usage of imported equipment delivered from East-European countries for hard currency appropriations allotted by the Government. Up to 65% of equipment for the local telephone network was imported, for TV and radio broadcast the figures were 30%, and for international telephone network - 15%.

The delivered equipment was obsolete and did not meet the requirements of the world standards. Beginning in 1991, due to the lack of hard currency, the deliveries of equipment practically come to a stop. The national industry does not manufacture at present electronic switching equipment with SPC, fiber-optic cables with attenuation of less than 0,2 dB/km, digital radio- relay lines and digital transmission systems with the transmission rate of more than 140 Mbit/s. II. OUR PRIORITIES

For a successful implementation of the economic reform in the country, it is vitally important to have a highly reliable, ramified world class telecommunications network.

The Ministry of Posts and Telecommunications considers the following directions of telecommunications development in the country as priority directions:

1.International telecommunications development.

The major projects in this field for the nearest future are: construction of a fiber-optic submarine cable line Copenhagen- Kingisepp with continuation to Saint-Petersburg and further on to Moscow over a digital radio-relay line.

The construction of the line has already begun. In parallel to this the construction of three international telephone exchanges is going on, two in Moscow and one in Saint-Petersburg with the total capacity of about 10,000 channels. The commissioning is planned for the end 1992 - beginning 1993.

The next step in this direction is the construction of a fiber-optic cable line Palermo-Istanbul-Novorossiisk with continuation over the digital radio-relay line passing via Rostov-on-Don to Moscow with construction of an international exchange in Rostov-on-Don. The intended completion of the Project is in 1994.

In addition to the international telephone exchanges being constructed now it is also planned to build international telephone exchanges in the following cities: Ekaterinburg, Novorossiisk, Samara, Vladivostok, Novgorod. The implementation of these projects will, in our view, cover the most urgent needs of Russia for the international telephone telecommunications.

We also plan to start establishing an unified packet- switched data transmission network an access to the international network. In is primarily the Russian banks, stock exchanges and commodity exchanges that will make use of the services of this network.

2. Development of cellular systems of mobile telecommunication. Currently the cellular networks of mobile telecommunications are in operation in Moscow and St. Petersburg. Both networks had been constructed by the joint ventures and operate in the frequency range of 450 MHz.

In future this type of communications should be developed for more advanced range of 900 MHz. In nearest future the mobile cellular networks operating in this frequency range should be constructed in Moscow, St. Petersburg and Samara.

3. Enhancement and digitization of trunk and local telephone networks.

It is necessary to reconstruct fully the trunk telephone network. Only 76 % of the trunk network is automated due to the application of obsolete technical facilities. 18% of region centers of the Russian Federation don't have automatic trunk telephone exchanges providing the automatic telecommunications for the subscribers of these centers. 9% of the intra zonal circuits are aerial ones.

Up to now there are step-by-step exchanges and aerial circuits in the operation on the local telephone networks. Due to the absence of required equipment the full-scale telephonization of sparsely populated and difficult to pass regions of Siberia, the Far East and the Far North is not yet completed.

4. New telecommunication services development.

The Ministry of Posts and Telecommunications of the Russian Federation encourages the construction of dedicated and outlay telecommunication networks within the framework of private and stock companies for the commercial structures and businessman.

Together with the traditional telecommunication services we should develop the new services, using the modern technologies. These services will be composed of satellite systems using the VSAT technology and direct TV broadcasting via the telecommunication satellites.

III. OUR POLICY.

Since it is well known that the telecommunication networks are an integral part of the market economy of the state, the Russian Ministry of Posts and Telecommunications is going to pursue the following policy of reforms in telecommunications:

1. Flexible rates for services.

2. Introduction of free rates with the expansion and extension of economic reforms.

3. Construction of dedicated telecommunication networks for the market structures of the economy.

4. Sharing of telecommunication enterprises.

5. Privatization of telecommunication enterprises if necessary and required.

6. Creation of stock companies and private telecommunication companies, including the companies in which foreign capital is invested

7. Attraction of advanced foreign technologies in the field of telecommunications as a basis for the construction of modern telecommunication networks.

8. Creation of a production industry for the perspective telecommunication facilities, attracting foreign capital and advanced technologies.

9. Attraction of foreign partners for the development and examination of conceptual projects. General plans for prospective development of the telecommunication networks.

10. Russian technical specialists trained in the field of telecommunications in the training centers of foreign countries at the expense of these countries.

IV. OUR NEEDS

In whole, for the fast development of the Russian Federation telecommunication networks, the Ministry of Posts and Telecommunications believes that the most productive way is acceptance by the seven industrialized countries of the decision concerning the launching of the special-purpose program of technical and financial support for Russia in the field of telecommunications.

The Ministry of Posts and Telecommunications desires to attract foreign investment for the realization of telecommunication development projects described in the Section II of the present report and also for some other projects.

Appendix

Local telephone networks of some countries of the world

Table 1

CountryPopulation Total number ofProportion (%) of milliontelephone sets,telephone sets in millions per 100 persons

USA.7.6 53.34 Japan .1 53.2.24 Germany.6 29.4.43 France.1 26.5.26UK.2 25.5.58 Italy.5 21.2.97 Russia.1 21.2.00 Spain.8 11.8.40 Sweden.5 5.7 67.85

Annual number of trunk and international telephone calls in some countries of the world Table 2

Country Number ofNumber ofNumber of trunkinternational international telephone calls,telephone calls,telephone calls billionmillion per 1 person in a year

USA 68.5.2.36 Germany.3.3.15 UK *** France *** Japan * .8.35 Italy.5.6.20 Russia.2.0.24 Holland .3.5.03 Switzerland.5.0.40

Number of telex users and mobile cellular network subscribers in some countries of the world

Table 3

CountryNumber of telex Number of cellular users per thousand subscribers per thousand

USA.7 .0 Japan*.0 Germany.4.6 France.6.5 UK*.0 Italy.7.0 Spain.1.8 Sweden.6.0 Switzerland.2.7 Russia.3less than 1.0

*- information is not available