Russia's national program for digital economy stumbles

Russia's national program for digital economy stumbles
Russia's ambitious programme for digitalization of the economy is running behind schedule
By Vladimir Kozlov in Moscow September 4, 2020

Russia's ambitious programme for digitalization of the economy is running behind schedule, and progress in several crucial areas have been slow.

Only one target out of 10 stipulated by the programme for the second quarter of this year was implemented.

Meanwhile, several major areas where the digitalisation scheme was expected to make a substantial impact are apparently struggling.

In particular there is little clarity when it comes to development of fifth-generation mobile networks (5G) in the country, one of the flagship projects under the auspices of the digitalisation programme.

Russian Mobile TeleSystems (MTS) received the first 5G licence in Russia for the 24.25-24.65 GHz band, Vedomosti daily reported on July 28, but previously 5G development came to a standstill when operators and the government failed to reach consensus on frequencies that should be allocated for new networks. While operators are demanding the 3.4GHz to 3.8GHz band for 5G networks, law enforcement agencies, which currently use it, have been vehemently opposed to the idea of relinquishing that frequency band.

Government officials admit that there is an impasse on 5G prospects. "A road map for stimulating investment [in 5G] cannot be agreed upon because operators want more support than what we can offer them at the moment," Oleg Ivanov, deputy communications minister, was quoted as saying be Kommersant, adding that the law enforcement agencies' stand on the issue makes the project uncertain.

Meanwhile, a source in a top Russian mobile phone operator was quoted by Kommersant as saying that there is no "acceptable dialogue" between operators and government agencies. In addition to the frequency band issue, the source mentioned issues with operators' access to the wholesale electricity market and sites for building telco structures alongside major highway and railways "due to bureaucratic reasons."

Experts predict that an acceptable solution that would allow a broad based roll out for 5G development in Russia is unlikely to be found before 2021. Subsequently, running frequency band contests and signing deals will take more time, and, as a result, operators will be able to plan investments in 5G no earlier than in 2022. This means that consumers won't get satisfactory 5G coverage earlier than in 2023.

Nothing goes according to plan

Meanwhile, a project for combining all services provided by state agencies in one cloud platform is running behind schedule. Similarly, a project for establishing mobile connection on all federal-level highway has stumbled.

Another target on the government check list that has not been met is a public platform for managing intellectual rights. In another embarrassing revelation, no progress has been achieved on the creation of a nationwide land registry, a project that has been advertised for quite a while.

Similarly, the government has failed to work out a list of measures to support local manufacturers of telco and cable equipment, and sources for funding a versatile satellite information system have not yet been found.

The only planned item for the April – June period that has been implemented is a concept for covering the country's transport infrastructure with networks suitable for data transfer, involving the locally developed space-based satellite navigation system GLONASS.

Funding issues

The Russian digitalisation programme is expected to be implemented through 2024, with a total value of the scheme set at RUB768bn ($10.5bn), of which the federal budget is expected to provide RUB423bn ($5.8bn), and the remaining RUB345bn ($4.7bn) should come from private investors.

The government has not yet said how much of RUB48bn earmarked for 2020 it will actually provide this year, but it's already clear that state of the economy, hit by the coronavirus (COVID-19) pandemic, won't allow authorities to come up with the full amount.

Despite the Russian government's eagerness to pursue the digitalisation programme, the scheme is quite likely to fall prey to the overall economic meltdown.

 

 

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