As CTO in one of Europe’s standout markets, Andrei Ushatsky has deployment challenges a-plenty in a complex country and with a World Cup looming. He talks to Graeme Neill.
With more than 10.5 million people celebrating in Moscow for 2018’s week long New Year celebrations, you can tell Russians take this holiday seriously. It’s a serious business for Russian operators too. Within its Moscow region, housing some five million subscribers, MTS’s mobile data traffic was an astonishing 45,000GB during the first hour of 2018 alone, 2.3 times that of the previous year’s first 60 minutes. To put it another way, you could have streamed a 4K video from January through to November by using the same amount of data.
Telecoms has been following the habits of New Year revellers for some time by simultaneously reflecting upon its past and looking ahead to the future. Depending on which part of the business you speak to, telecoms executives will either enthuse about the upcoming opportunities or fret whether they can adapt quickly enough to what lies ahead.
Andrei Ushatsky is the man MTS has tasked with bridging the old and new worlds. An MTS lifer, he joined more than 20 years ago as an engineer, working his way up through the company via Director of Operations and Maintenance and CTO of MTS Russia before becoming CTO and CIO of the Group. He is succinct when asked about the challenges MTS, and fellow operators, face within Russia. “It’s explosive growth of traffic, ever growing expectations and demands for speed and quality for that transmission,” he says.
That may be so but Russia is an outlier in the European telecoms market. On one hand, this summer’s football World Cup has provided a neat platform for 5G investment and demonstrations that has operators in other European markets envious. On the other, Russia amounts to one of the most complex markets in telecoms, stretching across 11 time zones and more than 17 million square kilometres. No easy task and one that requires an approach different to that of other markets.
Namely network sharing. MTS’s own LTE network covers about 50 percent of Russia’s population of roughly 144 million – potential customer numbers most operators would kill for, but one that underlines how much of a challenge building a network is. Ushatsky notes, with textbook understatement, that Russia is a “tough” market that requires new kinds of thinking. He says: “The most important thing is to choose the right strategy for network and IT... We have the same trends for traffic growth, data speeds and latency but there can be some limitations in investment.”
The bulk of MTS’s network sharing is with VEON, and launched in 2014. Work is ongoing at jointly building out LTE across 41 regions in Russia, covering some 50 million people. The agreement not only includes the sharing of core network and sites, but also combining both operators’ spectrum in the 2.6GHz band. Ushatsky says: “This allows us to not only economise on our spending, but build out more efficiently with the larger spectrum band.” A deal with MegaFon is a more basic partnership, he adds, covering infrastructure sharing across towers, fibre optic networks, as well as a network sharing agreement in Moscow’s subway.
Ushatsky accepts these projects are not without their downsides, with “parity in quality” between those sharing potentially a drag on financial performance, especially in a market with as low ARPU as Russia’s – MTS’s sits at around €4, which he says reflects the high churn of SIM-only deals. Nevertheless, it’s a competitive market, with Moscow government figures suggesting 1GB of data costs around a third of what it does in Barcelona or London.
He admits that success is more a question of pricing and services offered in those areas it shares with VEON. “There’s a SLA with our partner for the quality KPIs,” he says. “In those regions we can say we have the same quality. But of course we have the possibility to build additional individual sites. If one operator wants to have bigger coverage, it’s possible.” However, he is quick to add that MegaFon is MTS’s main competitor in Russia, not VEON.
Moscow’s subway network aside, there are few places where these companies play nice and he is keen to note that while the network sharing project with VEON covers roughly half of Russia’s population, it goes nowhere near large-scale deployments in major population centres like Moscow or St Petersburg. And network sharing is not the only answer to the coverage problem. MTS boosted its capabilities in the Urals region of western Russia by buying regional telco Bashkortostan Cellular Communication.
Russia’s mobile networks are set to be strained like never before at this summer’s World Cup, as more than three million fans are set to attend matches and five million to visit designated fan zones as they seek to catch a glimpse of Neymar, Ronaldo or Ozil in action.
MTS and its rivals had been given a glimpse of what to expect during the 2014 Winter Olympics in Sochi; dense mobile activity but ones with spikes as crowds react to what they are watching. Ushatsky is perhaps more aligned to the Winter Olympics than the World Cup – he plays ice hockey in his spare time – and he notes Sochi caused as much as a four times spike in the number of roamers onto its network.
But he adds that the World Cup is six weeks longer, across 12 cities, and will attract much higher crowds. He says: “The stadiums, in which the matches will be played, are active stadiums that often hold tens of thousands of fans, but we don’t feel that we are not prepared to handle the traffic.” The operator will largely use distributed antenna systems to meet demand.
He adds: “However, it is the World Cup, so we are expanding our LTE network in general, preparing it for increased loads, optimising the availability and quality of services at sites that will be used during the World Cup – sports facilities, fan zones, airports and railway stations, hotels, cultural and historical zones, etc.
“At many facilities where access is more difficult, such as stadiums or airports, we are working in partnership with other operators, based on sharing infrastructure cooperation. In preparing the network, we provide support for all GSM technologies used today.”
Then there’s 5G. For some years, Russian operators have been talking up the competition as a launchpad for next generation technology. MTS has been working with Ericsson since 2015 on demos and is also partnering with Nokia. Ushatsky is coy about what fans can expect from the World Cup, casually throwing robots, virtual reality and connected cars into the mix. When pressed on the specifics, he declines to comment further. The race to be first is one powered by secrets, it seems.
What events such as a World Cup or Olympic Games can afford an operator is justification to loosen the purse-strings, given the PR coup that such a sporting content can offer. Deutsche Telekom Group CTO Bruno Jacobfeuerborn recently remarked that massive infrastructure investment requires “massive events”. Ushatsky demurs when asked if the World Cup has made his in-tray that bit easier to deal with. He says: “We have a multi-year budget cycle, and we have long been investing in networks to accommodate both the natural growth of the market, as well as opportunities tied to events like the World Cup. Over the past year, in Russia, usage has nearly doubled, so our organic growth has overall been a greater driver of our interest in investment than something like the World Cup.”
The business case for 5G
While Ushatsky is coy about what we can expect from MTS this summer, he is more forthcoming about how he sees 5G panning out. With debate set to dominate this year’s Mobile World Congress, MTS’s CTO says he feels it will serve largely as a network for mission critical IoT services, less consumer and more enterprise focussed.
He jokes that while penetration of mobile services among consumers is “about 170 percent” in Russia, there is a considerable gap when it comes to mobility and its adoption by a wide range of different services. He says: “5G is a good opportunity to increase the [enterprise] subscriber base and provide services to machines and some industries and so on.”
MTS is of the camp that believes 5G will launch in 2020, with it hitting a mainstream across Russia from around 2025 onwards. This will coincide with wider plans the operator has to evolve beyond traditional telecoms through the likes of its bank. However, at this stage it is still in discussions with the country’s regulator about frequencies and rules for rolling out the technology. Ushatsky adds: “It’s difficult to calculate business cases at the moment because we have no clear understanding of how much we have to invest in 5G. But we understand that LTE-Advanced will support a lot of services for 5G.
“In our strategy we are planning to implement 5G in some particular areas, some hotspots for some industries. We are not planning to have the same coverage that LTE has. It will be an evolution for us and we understand that it’s a good way for our network to support LTE.”
It’s unsurprising to hear that the IoT will serve as a bridge for MTS between LTE and 5G with a €400 million network improvement project underway. It launched that in October last year as it looked to improve its 2G, 3G and LTE networks, as well as make them ready for LTE-M and NB-IoT.
The operator is focussed on the main LPWAN technologies, albeit with an intriguing spin on one. NB-IoT is the initial point of interest with work underway with all of MTS’s network equipment suppliers – Ericsson, Nokia, Samsung, Huawei and Cisco. In December, the operator launched a NB-IoT focussed Open Lab in Moscow, which Ushatsky says has two goals: “To provide the environment to trial tech solutions for our providers and to demonstrate IoT solutions and their implementation for potential consumers.”
2018 will see the trials and deployment of LTE-M technology, which MTS’s CTO says will complement its NB-IoT offering. He says: “We plan to test and begin to implement LTE-M technology on our network this year. LTE-M solutions can be used where the capabilities of NB-IoT solutions are not sufficient (for example, where speed up to 1MBps is required), but the cost of the device, battery life, and service availability is critical, for example, in smart home solutions, connected cars, telematics.”
Intriguingly, he floats the possibility of adding the unlicensed LoRa into the mix, or rather a derivative of it. He says the operator is viewing with interest attempts by Russian companies to produce “LoRa like” technologies, but declines to name them. He adds: “While our main strategy is to develop 3GPP IoT technologies (such as NB-IoT, LTE-M), we try to analyse all alternative technologies for their possible application for individual projects. We have not made the final choice yet.”
However, he notes Russian telcos in general have a challenge on their hands to kickstart the IoT market. He says: “It’s difficult to answer because from one side we have a big share of M2M market in Russia but this market is underdeveloped at the moment. The market is not mature and the problem is that other industries do not understand the business case at the moment. But from the other side, that’s a great opportunity for us to grow our revenue in the future.”
He laughs, replying “of course” when asked if operators are doing enough, pointing out the labs and a new IoT platform. But he is confident things can change quickly. He says it is pointless for MTS to have a five-year plan in place given the speed of evolution (instead, it has a three-year one). He adds: “For example, compare radio services 100 years ago, where it achieved penetration of 50 million people during 50 years. Pokemon Go achieved that in 19 days. Speed of penetration of services is very fast and of course operators have to be courageous to launch services that meet the expectations of our clients.”