The Telecommunications Sector in Russia

In some ways, the Russian telecommunications industry is a paradox. Parts of the industry are highly competitive – the number of operators in this market is in the thousands – but the existing regulatory regime is weak, particularly in ensuring access to essential facilities, and the longdistance market is dominated by the company Rostelecom. In spring 2001, experts from OECD countries met with senior Russian officials to discuss their experiences with regulatory reform in telecommunications. The issues discussed include tariff reform, promoting universal service and ensuring access to non-competitive services. Traditionally, in Russia, prices for local fixed telephone service have been held very low, leading to a shortage of supply and significant cross-subsidies from long-distance services. The cross-subsidies from long-distance services are being eroded by new entry, leaving local operators unable to expand the network to meet demand. As in other Russian industries, tariff rebalancing is essential, while putting in place programmes to ensure access to telecommunications services in remoter areas. Competition could be deepened and broadened through a stronger and more effective system of access to the remaining non-competitive services such as local loops.