For Russia, a $13B Price Tag to Beat Brazil in Mobile

Photographer: Andrey Rudakov/Bloomberg

A mobile phone user in front of a photographic panel of the Peter and Paul fortress in St. Petersburg, Russia on June 20, 2013. Close

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Photographer: Andrey Rudakov/Bloomberg

A mobile phone user in front of a photographic panel of the Peter and Paul fortress in St. Petersburg, Russia on June 20, 2013.

It's a big country with a big problem.

Russia, the world's largest nation by land mass, faces an enormous logistical challenge in building wireless systems that can deliver mobile data service to all 143 million residents.

The mobile speed there was just 0.15 megabit per second last year, compared with 4.53 megabits for Canada, according to a study by Cisco Systems. No wonder just 10 percent of handsets in Russia were smartphones.

Those numbers place Russia ahead of only Indonesia and India in Cisco's mobile rankings of the 20 speediest countries. But that low standing is now translating into a buying boom in networking equipment in Russia. As Bloomberg News reported Monday, Russian wireless carriers OAO Mobile TeleSystems, OAO MegaFon, VimpelCom and OAO Rostelecom have committed to spend 420 billion rubles ($12.9 billion) on faster networks by 2019.

No doubt, the fourth-generation networks will improve the quality of mobile service. But it may barely move the needle on Russia's global ranking.

While Russia's percentage of smartphone users is projected to triple to 30 percent of all handsets by 2017, the country's ranking is expected to remain the same. And while mobile speeds are expected to reach 2.55 megabits per second, about 17 times faster than in 2012, Cisco's report has the nation only surpassing two more countries -- Argentina and Brazil.

As Russian operators commit to big investments in the country's mobile infrastructure, the rest of the world is hardly standing still. In South Korea and the U.S., smartphones are projected to make up nearly 100 percent of all handsets in four years, and mobile speeds are seen surpassing 17 and 14 megabits per second, respectively, according to Cisco.

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