WiMAX traffic boom for Yota

After launching its free pilot mobile WiMAX service in November 2008 in Moscow and St Petersburg, Yota reports that around 500TB of traffic is traversing its network every month.

“This is more than twice the amount of traffic delivered by all the mobile operators in Russia put together,” says Dennis Sverdlov, Yota CEO, speaking at the WiMAX Forum Congress Asia event held in Singapore this week. “On average, users download 9.6GB every month, which is twice the amount of typical ADSL and cable customers, and more than a hundred times of GSM customers.”

Yota has deployed 1,600 Samsung base stations so far, and they are packed together fairly densely in the urban areas – on average, around 800 metres away from each other.  To achieve the high network capacity, Yota has invested heavily in a fibre-optic backhaul network and data centres. Of the $300m ploughed into the network so far, Sverdlov says that 80 percent has gone on the backhaul, with only 20 per cent on the RAN. Yota has allocated another $170m for network investment this year.

To stimulate even greater usage of the WiMAX network, Sverdlov believes that WiMAX-embedded devices will be key. Last week, Yota announced the availability of 31 models of embedded notebooks and laptops, supplied by a total of six PC manufactures.

Yota also offers the world’s first dual-mode mobile WiMAX/GSM touchscreen handset-the HTC MAX 4G-manufactured by HTC, a Taiwanese PDA and handset supplier. The device is capable of seamlessly roaming between Russia’s GSM networks and Yota’s Samsung-supplied 802.16e base stations. The HTC MAX 4G gives Yota customers the assurance of nationwide voice coverage to complement the data services they can access when in reach of the Yota network. It does mean, though, that HTC MAX 4G owners will receive two bills: one from the GSM provider and one from Yota. Voice calls will be free, however, if they remain on the WiMAX network.

The HTC MAX 4G, carrying a price tag of around US$1,200, is the most expensive mobile handset in Russia (iPhones retail for around $1,000). But Yota offers much cheaper WiMAX devices as well. Customers can purchase either a USB dongle or an express card, both supplied by Samsung, for around $130 each.

Sverdlov  expects, however, that the $130 price tag will come down significantly once  customer volumes increase.  At the moment, Yota is signing up 500 customers per day, but that number is increasing by 49 per cent each month. “The dongle price can come down to $60 once we are signing 1,000 customers a day, which will encourage even faster take-up,” says the Yota CEO.

And in March 2009 Samsung and Yota announced the introduction of what they claim is the first ‘4G’ ready netbook (mini-notebook) in Russia. A modified Samsung NC10 netbook, the new device has a built-in mobile WiMAX module plus software to connect to Yota’s 802.16e network. The NC10 retails for around $600.

Headquartered in St Petersburg, Yota is the brand name of Scartel LLC, which, in turn, is owned by WiMAX Holding Ltd. The company holds between 20MHz and 40MHz chunks of spectrum in the 2.5GHz band across Russia. It acquired much of its spectrum assets through the purchase of MMDS (multichannel multipoint distribution service) operators but it is currently illegal in Russia to use 2.5GHz for commercial point-to-multipoint and mobile data communications. Yota, as well as other 2.5GHz spectrum holders in Russia with Mobile WiMAX ambitions in this frequency band – including big guns Comstar and Synterra –  can still offer data communication services, but only if they don’t charge for them. In smaller cities and towns (populations under 100,000,) the Russian regulator does allow 2.5GHz operators to charge for data communications, but this doesn’t help Yota as it is targeting Russia’s larger cities.

The situation is far from ideal from Yota’s business case point of view, and clearly the regulatory bottleneck has not eased as quickly as Sverdlov had originally anticipated. At the beginning of March, Yota announced it was extending its free trial period until 31 May, which was originally due to end 1 April. But Sverdlov is confident that the regulatory hurdles will be overcome so commercial service for consumers can begin on 1 June. Yota says it has already launched commercial point-to-point data communications for corporate customers on 1 April, the date it originally intended to do so.

“We need 200,000 [paying customers] to break even from an operational point of view,” Sverdlov told WIMAX Vision earlier this month. “We can achieve that number this year.”

Yota has the backing of Rostechnologii, a non-profit state corporation that supports Russian technology-focused enterprises. For an undisclosed sum, Rostechnologii purchased a 25.1 percent stake in WiMAX Holding on 1 November 2008. The remaining equity in WiMAX Holding is held by Telconet Capital Limited Partnership, a private investment fund. The state involvement in Yota (via WiMAX Holding), combined with a lack of transparency related to Telconet investors, has led to some speculation that Yota has received favourable treatment from the regulator, particularly as it has been able to install so many base stations for widespread service deployment before any official approval has been given for commercial data services at 2.5GHz.