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Russia is facing a dilemma that has affected the spectrum policies of many economies - whether to let experienced operators expand wireless availability, or encourage new competition. The main three Russian cellcos are dismayed at president Dmitry Medvedev's belief that new spectrum should be opened up to new entrants so that 4G services are spread more widely than 3G between different operators and business models. In particular, they are keeping a wary eye on the rising mobile ambitions of landline incumbent Rostelecom which gained licenses in the first tranche of 4G auctions. A second wave of auctions around 2.5GHz will be held later this year.

According to Russian business newspaper Vedomosti, Medvedev has told the minister of communications, Igor Shchegolev, to draw up plans to distribute '4G' licenses on a broad basis. This could speed up development of new services in Russia, which is one of the world's largest potential markets for wireless and broadband, but whose development has often been delayed by bureaucracy. In particular, localized carriers could be encouraged to bring access to rural areas, which are vast but sparsely populated in the highly urbanized country. Medvedev also hopes smaller players would introduce innovative web offerings and support government and industrial applications.

However, as the US and other countries have discovered in the past, new operators can be financially unstable and inexperienced, raising the risk that spectrum goes unused or new services fail.

Of course, Medvedev's proposals are encountering fierce opposition from the big three, MTS, VimpelCom and Megafon. The newspaper reports that they have all written letters to Shchegolev and prime minister Vladimir Putin arguing that only they have the cash and expertise to handle the roll-out of LTE in Russia. This will not stop them lobbying for state support in the financing of LTE, though. Medvedev argues that national LTE will cost far more than 3G because he wants it deployed as much as 10 times faster than the sluggish pace of 3G, in order to support fixed as well as mobile broadband. This may require state financial support, which in turn will increase his negotiating power over the cellcos. Last week Vedomosti reported that Osnova Telekom, 25% owned by Russia's Defense Ministry, is willing to help build the LTE system.

The Russian press says that potential new spectrum bidders are already making themselves known. They include Rusenergotelekom, a new firm formed last October and controlled by energy investor Grigory Berezkin, who also owns a blocking stake in national landline operator Rostelecom. This company is getting increasingly active in wireless services and has said it will increase its influence and revenue streams by supporting new mobile entrants in order to boost competition.

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