VZCZCXRO6664
RR RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
DE RUEHMO #3339/01 1901159
ZNR UUUUU ZZH
R 091159Z JUL 07
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 1916
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHZN/EST COLLECTIVE
RUEHLN/AMCONSUL ST PETERSBURG 4290
RUEHVK/AMCONSUL VLADIVOSTOK 2239
RUEHYG/AMCONSUL YEKATERINBURG 2542

UNCLAS SECTION 01 OF 02 MOSCOW 003339 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR OES/STC (DAUGHARTY), EUR/RUS (SIKKORA, GREENSTEIN), 
EB/CIP/MA (GIBBS) 
 
E.O. 12958: N/A 
TAGS: EINT ECPS ECON TINT RS
SUBJECT: Moscow Wi-Fi: Hotspots Amid an Internet Trend 
 
MOSCOW 00003339  001.2 OF 002 
 
 
¶1. SUMMARY: Internet in Russia is slowly gaining ground across the 
country, albeit impeded by limited provision of broadband service 
and lack of personal computers.  Wireless and high-speed Internet is 
taking hold in larger cities such as Moscow and St. Petersburg. 
Wi-Fi hotspots are increasingly visible throughout Russian cities. 
As disposable income grows, even more users will acquire computers 
and access to the Internet.  END SUMMARY 
 
---------------- 
Regular Internet 
---------------- 
 
¶2.  In March 2007, there were an estimated 23.7 million Internet 
users in Russia (representing 16.5 percent of the population 
according to Internet World Statistics). This was up by 664.5 
percent compared to 2000.  Internet use is highest among students 
(51 percent), top managers (45 percent), and qualified specialists 
(41 percent). 
 
 
¶3.  The number of broadband subscribers in Moscow passed the 1.2 
million mark in the first quarter of 2007, as reported in 
Kommersant, quoting the research company IKS Consulting.  This 
represented a 15 percent increase in comparison with the fourth 
quarter of 2006, equivalent to 160,000 new customers.  Forty percent 
(600,000 households) of all home Internet users in Moscow connect 
via dial-up, according to the business newspaper RBK (Russian 
Business Consulting).  Half of these users are reported to be 
satisfied with the service.  Almost 30 percent of dial-up users in 
Moscow, representing approximately 150,000-170,000 potential 
customers, say they would switch to broadband if it were available 
-- which, due to technical issues, it is not. 
 
¶4.  Analysts predict that Internet providers should expect their 
customer numbers to rise continuously, as the Internet penetration 
rate in Moscow has just reached 30 percent.  It will take 
approximately three years to reach a market saturation point of 
70-90 percent.  Corbina Telecom (a domestic alternative 
telecommunications operator) predicts that within two years some 90 
percent of all Internet connections in Moscow will be 
broadband-based. 
 
¶5.  Dial-up Internet in Moscow remains slow and difficult.  With the 
advent of high-speed Internet connection, many websites have 
upgraded their graphics, pictures, and fonts to be compatible with 
broadband or high-speed Internet use.  Dial-up users are left 
waiting minutes, sometimes hours, for websites to load -- many of 
which never do, according to anecdotal reports.  Newer model 
computers capable of high-speed Internet operation are less 
productive than they could be due to shortcomings with Internet 
access. 
 
¶6.  The use of laptop computers in Russia is limited.  They are an 
expensive purchase and are primarily used by businessmen and 
students.  The Russian Internet Forum, which held a conference April 
5-6 in Moscow, was attended by over 1,000 Internet entrepreneurs and 
computer specialists, almost all of whom brought their own laptops. 
Many Russians either own one household desktop computer, or they 
access the Internet at work.  Older model computers are not 
compatible with high-speed Internet because they cannot process 
information quickly enough. 
 
 
----------------- 
Wireless Internet 
----------------- 
 
¶7.  Wi-Fi has become increasingly popular throughout the country in 
recent years.  Wi-Fi is an example of Wireless Local Area Network 
(WLAN) where users with wireless capability are able to access a 
network.  Requiring no plug or cord, wireless Internet is quick and 
convenient.  Wireless Internet works like an invisible bubble.  If 
individuals are located within the bubble, they can connect so long 
as they have the correct password and computer capability.  A 
wireless card located within the laptop or desktop computer will 
enable a user to access wireless Internet.  Depending on the 
environment and usage patterns, wireless Internet varies from user 
to user.  Desktop computers are more likely to be on a wireless 
network if they are in a large, public Internet caf or in a 
residential setting.  Mobile settings, such as busy restaurants and 
cafes, are more likely to be used by clients with laptops. 
 
¶8.  Moscow has the highest concentration of Internet access in the 
country.  Currently, 61 percent of all Internet hotspots -- venues 
that offer Wi-Fi access -- are located in the capital city.  Many 
other cities within Russia have hotspots also: Saint Petersburg 
 
MOSCOW 00003339  002.2 OF 002 
 
 
(106), Novosibirsk (37), Yekaterinaburg (34), Tolyatti (28), 
Vladivostok (24), Izhevsk (23), Rostov-on-Don (17), Samara (17), 
Chelyabinsk (15), and Perm (13).  Thirty-two percent of the hotspots 
in Russia are free of cost; however, many areas in Moscow require 
payment. 
 
¶9.  There are approximately 290 total hotspots within the city of 
Moscow serviced by a few providers.  There are 206 wi-fi hotspots 
supported by the company Yandex in Moscow (www.yandex.ru).  Most of 
the Yandex-supported hotspots are in restaurants or cafes (173) and 
usage is free with the purchase of food.  Yandex hotspots are also 
located in car dealerships (11), movie theaters (5), beauty salons 
(5), and a shopping complex (1).  Additionally, Internet cafes are 
scattered throughout the city.  They charge per hour or per amount 
downloaded. 
 
¶10.  A select few metro stations have wireless Internet available 
within the station itself; however, this is mainly for the use of 
Internet via mobile devices such as Internet-enabled telephones. 
Currently, Comstar's wi-fi service is available in three underground 
metro stations - Okhotniy Ryad, Teatral'naya and Ploschad' 
Revolyutsii. There are currently 21 hot spots covering an area of 
two square kilometers, including waiting halls, passages, escalators 
and entrance halls. Tunnels between stations are not yet covered by 
this network. Comstar claims that the network capacity allows for 
the simultaneous access of 48 users at a speed of 128 Kbps, and that 
it plans to increase network capacity following increased demand for 
the service.  Service is pre-paid per minute through MTC SMS 
services or pre-paid wireless Comstar cards.  Mobile phones in 
Russia are cheaper and more accessible than mobile phones in the 
United States; Internet providers are already looking to a future of 
Internet-ready mobile phones. 
 
¶11.  Another company, Golden Telecom, has also launched wireless 
Internet services around the center of Moscow.  Certain areas of the 
service are free to access; other areas require subscription to the 
Golden Telecom service. 
 
¶12.  COMMENT: Wireless Internet in Russia is just beginning to come 
on-line, but appears to have a bright future.  The number of 
Internet users continues to rise across the country.  In order to 
promote computer literacy, the GOR, through the Ministry for 
Information Technologies and Communications and the Ministry of 
Education and Science, has instituted a new program to provide every 
school in Russia with computer access by the beginning of the 
2007-2008 school year.  Additionally, the government hopes to put 
computers in every town (mostly in the Post Offices) in order to 
reach a broader audience.  The increase in disposable income will 
provide more citizens access to computer technology via home 
computers and personal laptops. 
 
BURNS