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Russian Communication Satellite Networks Set to Expand
10 September 2007
Russian Communication Satellite Networks Set to Expand

Russian Communication Satellite Networks Set to Expand
Will Greatly Expand Russians' Access to Internet and Other Communications Services

Satellite communications in Russia is a rapidly growing and increasingly profitable business. As the average Russian's salary continues to grow, Russians are spending more and more money on such modern necessities as information and communications technology and services ranging from wireless communications to Internet access. The following information, reprinted from Russian Telecom Newsletter with permission, show just how this growth is occuring. Russian Telecom Newsletter is published by USRCCNE member Information Gatekeepers on a monthly basis.

Russian Space Communication and Gazcom to Launch New Satellites

In September and December 2007, FSUE Russian Space Communication, Russia's largest satellite operator, will launch two new satellites. Its competitor Gazcom will launch its two satellites in 2008.

As the market has a significant lack of satellite capacity, this resource build-up comes right on time. Yet, the overall deficit will not be covered by these four launches, as the market demand is much higher.

GAZCOM’s satellite coverage zone encompasses Russia, Europe, Asia, the Middle East, and North Africa. The company has 5 orbital positions, and currently has three satellites: Yamal-100, 201, and 202. In November 2008, two new satellites — Yamal- 301 and Yamal-302 — will be added. These satellites are produced using credit means (the first Yamal was financed by Gazprom itself). The payback period for each satellite is five to six years, while it serves 14 years. Payback depends on speed of filling the transponders. And Gazcom is not worried about its client base: currently the operator serves 150 Russian companies, including Rostelecom, Orange (Eqauant), Set Telecom, and Moscow Teleport. Many companies have already requested upgrades of their transponder capacity, reserving space on new satellites.

Already, most of the new satellite capacity has been booked by clients. Russian Space Communication will also launch satellites this year. The operator also uses project financing. The launch of the Express -33 satellite is expected in September 2007, while a new Express -44 will be launched in December 2007. The period of guaranteed satellite life is 12 years, while recuperation of investments takes three to four years. Due to enormous demand 75 percent to 80 percent of the capacity on some of the satellites has been booked, with some as high as 95 percent.

Express -33, which will replace Express AM-11, is ideal for digital television and radio broadcasting in the Siberian region, as well as regional communications, commentd Set Telecom’s general director, Sergey Pekhterev.

Russian Internet Content Market, 2007, from iKS ConsultingIt will not be suitable for federal operators, as it is practically unreachable from Moscow. The second satellite, Express -44, is in a much more competitive spot, Western Europe, and will not be of much interest to Russian telecom
companies.

One of Gazcom’s satellites, Yamal-302, will be very popular with Russian telecom and television broadcasting companies. This type of satellite can bring to the operator some US$200 million during its orbit life. Set Telecom's top manager believes that currently Russia is a "seller's market."

The satellites set for orbit will only help to improve the situation for about one or two years; there are so many large projects in Russia that require great capacity in the near future, such as a national school Internet program, where some 10,000 VSATs will be deployed; telemedicine; and HDTV development projects.

According to FINAM, the demand for satellite capacity in Russia is growing 15 percent to 20 percent annually.

Siberia to Get SkyEdge Broadband Satalite Network

Gilat Satellite Networks Ltd. announced that it has been chosen by one of Russia's largest telecom operators, Sibirtelecom, to provide a SkyEdge broadband satellite network.

The SkyEdge network, comprising more than 1,200 VSATs, will be used to bring telephony and broadband Internet services to remote communities throughout Siberia. The network will be developed by Russia’s leading satellite service provider, Joint- Stock Company Global Teleport. Gilat has been working closely with Global Teleport to develop a number of major communications networks within Russia. Global Teleport recently added a SkyEdge Hub to its facilities in Novosibirsk to serve the Siberian region.

By deploying Gilat’s SkyEdge solutions, Sibirtelecom will fulfill its Universal Service Obligation (USO) to meet the modern telecommunications requirements of Russia’s rural communities. Gilat's SkyEdge solution will enable Sibirtelecom to expand services to remote areas quickly, seamlessly and affordably. Over 1,000 SkyEdge VSATs will be deployed in schools, businesses and public call offices in Siberia. The network will also include 125 SkyEdge VSAT Gateways that provide high-speed mesh trunking and IP connectivity.

One of the important requirements for Sibirtelecom was the support of both mesh and star topologies on the same network by Gilat's SkyEdge hub. Mesh voice calls have better voice quality, require lower space segment costs and enable a simpler network architecture that complies with the regulatory requirements in Russia. Star topology is preferred for Internet traffic only. The complete SkyEdge solution will enable Sibirtelecom to provide services of tollquality telephony and broadband Internet connectivity to the region’s most remote locations.

In addition, at Sibirtelecom's request, Gilat developed an integrated solution to monitor and prevent un-authorized use of telephony traffic from Sibirtelecom’s public payphones.

Erez Antebi, CEO of Gilat Network Systems, said, "This agreement is the latest example of Gilat's ability to bring dependable telephony and broadband Internet services to citizens in the Russian Federation in a costefficient manner, regardless of geographic location.

We will apply our innovation and experience to help Sibirtelecom meet the demanding USO requirements specified by the Russian Telecommunication Ministry and Svyazinvest, Russia's largest telecommunications holding company wholly owned by the Russian government – thus improving the quality of life for citizens in Russia's rural areas."

As part of its commitment to the Russian market, Gilat recently launched a new Russian language web site, available at www.gilatnetworks.com.

About Russian Telecom Newsletter
The Russian Telecom Monthly Newsletter will serve as your guide on the latest developments in the Russian telecommunications and IT market. For the past five years, the Russian ICT (information and communication technologies) market has demonstrated some exceptional annual growth, averaging 25 percent. Based on data from the Russian Ministry of Information Technologies and Communication, last year the total ICT market size (including electrical communications, IT sector, and post) surpassed US$40 billion. In 2006, telecom sector revenues grew 26 percent and reached US$29.6 billion. In the meantime, foreign investments in the Russian telecom sector have doubled. While Russian mobile communication is still an exciting market, the Internet and fixed communication services sectors have flourished in the past two years. With the issuance of 3G licenses and booming broadband Internet consumption, the sector is destined to grow further.

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