Russia Lags Europe in 5G Deployment

Europe was an early adopter of 5G with Swiss telecom operator Sunrise deploying the continent’s first 5G network in April 2019. By the end of Q1 2021, 5G had been deployed in more than 30 European nations with most of them having multiple 5G operators. However, despite being Europe’s biggest market, Russia is lagging behind its counterparts. Out of all the operators in the country, only MTS has deployed 5G, that too in a limited capacity in the capital region. Others are still in the testing phase.


Counterpoint Research Russia 5G Phase

Among multiple obstacles faced by Russia’s operators in 5G deployment, the primary one is also the foundational one — allocation of the right spectrum. Operators are demanding C-band (3.3GHz-4.2GHz), which is considered the most ideal for 5G around the world, with the available equipment widely supporting it. But this band is occupied by Russian government agencies and the military. Deploying the network on other bands would be costlier as the equipment would have to be manufactured separately for this. As a result, companies would not be able to achieve economies of scale. The operators claim that their expenditure will not pay off till 2040 if they do not use the 3.5GHz-3.8Ghz band.

Moreover, the 4.4GHz-4.9GHz band is being used by NATO for aircraft recognition systems, which would get impacted if Russia decides to use the same band for its 5G services. Russia shares its border with five NATO countries.

The issues regarding 5G are so crucial that Tele2, Megafon and Beeline had to create a joint venture, New Digital Solutions, to overcome these obstacles. The JV, which got the regulatory approval in February 2021, will work to obtain the 694MHz-790MHz, 3.4GHz-3.8GHz, 4.4GHz-4.99GHz and 24.25GHz-29.5GHz bands.

Another factor that is causing the delay is the government’s concerns over security when using foreign equipment. The government has asked the operators to use domestic software and hardware from 2024 while deploying 5G. However, the operators think this will not be cost-effective as domestic partners are not available in sufficient numbers.

Considering all these factors, it is unlikely that large-scale 5G deployment would be possible in Russia for the next two to three years.

However, despite this, 5G smartphone shipment are on the rise in Russia, growing 39% QoQ in Q1 2021. Over one-fifth of the devices shipped in Russia in Q1 2021 were 5G capable, according to Counterpoint Research’s Market Monitor report for Q1 2021.


Counterpoint Research Russia 5G Shipments

The share of the premium smartphone segment, where 5G has become a standard offering, is increasing in Russia. At the same time, thanks to relatively new entrants like realme, 5G has been trickling down to the $300 and below segment.


Lack of spectrum and not-so-friendly regulations are slowing down 5G deployment in Russia. The customers seem to be willing as 5G capable phones are already fetching buyers, and this would be something operators can leverage upon once they start rolling out 5G services.

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