Oleg Kravchenko: “I am sitting on the pipe, generating margin. Oleg Kravchenko: “I’m sitting on the pipe, generating margins Difficulties in using the revenue sharing approach

Recently, telecom operators have found themselves in a rather difficult situation: competition in the market is growing, the cost of tariff plans is constantly decreasing, and revenue is falling. At the same time, the marginality of classical voice and data services is insufficient for sustainable development. This trend is observed not only in Russia, but throughout the world. Operators, whether they like it or not, are often an "unlimited pipe", while revenues from providing subscribers with end services and services of partner companies pass them by. CROC, a Russian system integrator that also works with telecom operators, sees two main ways for market participants to further develop: optimizing and reducing infrastructure costs and expanding the product portfolio by introducing new proprietary services. How to achieve this?

Cost optimization

The high level of competition forces operators to invest in infrastructure development. Without this, it is impossible to provide high quality service and maintain customer loyalty. At the same time, this increases capital and operating costs (Capex/Opex), and affects the profitability of the business. There are several ways to reduce costs and TCO (Total Cost of Ownership). This is virtualization (rejection of physical equipment in favor of virtual capacities); partner models, in particular, RAN (Radio Access Network) Sharing (sharing of cell towers by operators); new ways of interacting with suppliers, for example, Network as a Service (network as a service), Software as a Service (software as a service); Revenue Sharing (implementation of high-margin services on the technological network aimed at customers of B2B, B2C sectors according to the no Capex / no Opex model with the division of income received with providers of such services). All this allows operators to optimize IT costs in the medium and long term.

I note that all participants in the telecom market, both global and Russian, each at their own pace, are moving towards virtualization. This allows operators, in addition to reducing capital costs, to ensure a high speed of launching new services and services for subscribers (Time to Market) by creating a single entry point for more convenient and efficient IT management throughout the wide area network. Moreover, virtualization allows you to avoid "vendor dependence", in other words, to become vendor-agnostic (independent of a particular service provider).

In our country, it has historically developed that equipment manufacturers are responsible for building the infrastructure of telecom operators. However, the new business paradigm requires a fundamentally different approach. Operators face the task of quickly and efficiently integrating a large number of IT solutions with a guaranteed high degree of reliability and fault tolerance. Efficiently, quickly and without stopping business processes, only a team that has unique experience in combining various types of hardware and software from numerous manufacturers can complete the task. In other words, such projects are impossible without the participation of system integrators with extensive expertise.

New Services

Operators are actively looking for additional profit opportunities and are starting to offer new services for B2B and B2C markets. Usually, providers concentrate on the services that are most relevant for their region. So, for example, in Asia they receive additional revenue from the provision of voice mail services, and in Europe, among subscribers, the service of storing data in a local secure cloud is in demand. However, operators are also developing in areas that are not typical for their business. In particular, in the US and Russia, telecom is taking its first steps in the banking sector, in other words, it is launching banking products linked to a subscriber's mobile account (for example, MTS cards, Megafon). A bonus for the owners of such bank cards is actually a single window for any transactions. The model of mobile financial services is very promising, but requires complex technological integration and business process reengineering.

There can be a large number of services and services that are atypical for the operator's business, but it is very costly for the provider to invest in their launch. Therefore, for him, interaction with technology partners using the Revenue Sharing model is the best way out.

The advantage of Revenue Sharing is that the operator does not need to create its own infrastructure for each service, this is done by the developer or integrator. The task of the provider is to ensure the delivery of the service to the consumer (“transport”) and the sale channel (sales channel). After the service is launched and offered to consumers, the operator and its technology partner receive a percentage of the additional revenue generated.

As our experience shows, the Revenue Sharing model is becoming more and more popular, regardless of the area in which it is applied. In particular, we are actively launching service projects for telecom operators based on Zeep products, which help generate additional revenue, and also, thanks to business intelligence tools, allow us to segment the subscriber database and bring new personalized products and tariffs to the market.

These projects are already successfully operating in more than 10 countries and their number is constantly growing. Zeep products are aimed at more efficient use of the operator's network, and, as a result, at improving the quality of services provided to customers.

A specific example is a real-time automated marketing and subscriber profiling system with additional subscriber alert functions. The system analyzes the state of each subscriber, providing the opportunity to use the services of a mobile operator, for example, in a state of lack of funds, intelligently completes events that have not taken place for any reason: attempts to call or use data services. Ultimately, the subscriber receives an understandable, convenient and up-to-date service, and the operator receives additional income. Such a service has a very simple logic for users, a significant economic effect for the operator and a rather complex technical implementation. At the same time, the entire infrastructure, integration, and ongoing support fall under the responsibility of CROC and do not require the operator to spend money on implementing solutions of this class.

The next step in the development of the Revenue Sharing model as part of the transition to a virtual infrastructure will be the creation by the operator of a single technological platform that will ensure faster aggregation, connection and launch of the services of various development partners that are relevant to users. This model will continue to be beneficial for the operator as well. will not require investment in development, and the development partner, because will provide them with access to consumers (an extensive subscriber base, the possibility of targeting, sales offices, etc.).

Bringing new services to market requires significant investment from all participants in the process, especially for small companies that provide final services. And here the task of the system integrator is multifaceted. It consists in consulting as part of the development of a financial model, and in the virtualization of infrastructure, and directly in an expert assessment of the attractiveness of launching services that are not typical for an operator.

Regarding the financial model, there are many ways to correctly distribute the initial investment. In particular, the world's leading manufacturers offer short-term and long-term project financing. For example, a program from Cisco Capital. Its advantage is that not only Cisco equipment and services fall under financing, but also third-party IT solutions from other vendors necessary for the implementation of projects.

Summing up, I would like to note that operators, in order to survive, have to not only offer an increasing range of services for consumers, but also develop new areas of activity for themselves. Projects are becoming more complex, technologically complex, and require the introduction of IT tools that are fundamentally new for the telecom industry. Their set is multifaceted. Today it is virtualization, partner models, tomorrow - financial services, cloud services for B2C, own platforms for IoT and "incubators" for promising startup developments, plus the creation of ecosystems with partners and manufacturers. By the way, an example of such ecosystems is the infrastructure of smart cities - San Francisco, Paris, created in partnership with Cisco, telecom operators and local authorities. The bottom line is this: within the framework of the IoT concept, a large number of devices (sensors, sensors, cameras, etc.) are connected to a single technological platform of the operator, which allows centralized management of urban infrastructure. This, of course, allows not only to reduce the city's costs, for example, for electricity consumption, but also to increase the level of safety and quality of life of citizens.

for useful materials.

Transactions vs. People

I'll start with the main idea. Businesses are divided into 2 categories:

• Where transactions are more important than people. Those who treat customers as "traffic", "crowd", "transactions". It doesn't matter to them who the buyer is. Sales of pieces are important, per unit of time. These include Auchan, large grocery stores, most online stores. Their main metrics are: revenue per month, pieces per month, average check, etc.
• Where people are more important than transactions. Those for whom it is important to keep track of each individual client. These are b2b sales, custom projects. Individual developments. Where a few customers bring the bulk of the revenue. In this case, the main metrics are: LTV, CAC of the client, project costs.

All competent startups start with “personal sales of solutions”, with manual sales. And only after some time they automate sales and move on to transactions. It also follows from this that even b2c products should be sold as b2b. Therefore, knowledge of b2b-sales is the basic-basics in general for everyone.

(on the right there is a button "subscribe" to my materials by email - in return you will receive several abstracts of the best books on sales)

By the way, according to IIDF statistics, the majority of successful startups also lie in b2b. Why? There, the check is higher, the margin is higher, and in order to survive, you need to work with fewer clients. For example, it is enough to manually serve 10-20 clients with a monthly check of 100 thousand rubles and reach a turnover of 1 million rubles. and profit from 500 thousand rubles. In b2c, for the same indicators, you need to serve from 1000 clients, which is very difficult to do at the start. The main disadvantage of b2b is a much longer sales cycle and more difficult to scale (fewer customers)

So, the main idea for a start-up project is to treat people as people, not as transactions. As Yegor Letov sang: "The word" People "is written with a capital letter!".

Sales funnel vs. Building a Community

I will continue the thought of transaction vs. People. For many, it has already become customary to think in a “sales funnel”. For example, we attract traffic of 1,000 uniques to a landing page, then we get 100 registrations (with a C1 conversion of 10%), and then after some time, 10 of these 100 people become buyers. With a classic eCommerce conversion rate of 1% of initial traffic.

With this approach, you think as if you have:

• millions of customers and they are all "cattle"
• they will never come back to you
• you can easily "lose" 100 sales and no one will know about it
• communications and service should be kept to a minimum

This approach is getting worse and worse. Even in large companies, it works only because individual sales are very expensive, transactions are much cheaper. It is strange why almost no one writes about this anywhere, but exactly the opposite approach works for startups.

You make the 1st manual sale to the 1st client. Unlike large companies, you can give the client much more service, personal attitude, and customer experience. So that he becomes not just a client, but a fan of your service / product. Next, you make the 2nd sale with your hands. Then the 3rd. At the same time, you do it in a very narrow segment, with high quality and in such a way that people start recommending you and coming back. This is how Facebook started on the Harvard campus, for example.

This is a very powerful and correct approach. I already described it somehow in the article “Only fans win”

With this approach, you think very differently:

• you have only 10-20 clients and they are all your loved ones, relatives and friends
• you still have to live and live with them, and you sell / bring value to them today, tomorrow and are going to bring value for a very long time.
• do each client with the highest quality, because everyone knows everyone.
• you can give maximum service and quality of communications

And only with the aim of reducing costs, you can start automating sales using the sales funnel approach.

I repeat the main idea - do not unnecessarily treat people as "traffic".

Basic concepts

CTR, % — ratio of clicks to impressions. Normally more than 1%. Good in advertising - from 5%. In display ads, it's usually around 0.1% or less. If it is less, then the advertisement is “not catchy”. Check the ODC formula, picture, and value proposition again. Or you are advertising to the wrong audience, too general, without targeting.

DAU/WAU/MAU — daily, weekly, monthly traffic

C1%, C2% - conversions from transitions to registration and from registration to purchase. The norm for C1% for good landing pages (Landing Pages) is from 10%. If less, then the value proposition is weak or incomprehensible. Or you are advertising to the wrong audience.

CPM (Cost Per Millennium), rub. - cost per 1000 impressions. Used in media advertising, in displaying banners.

CPC (cost per click), rub — cost per click.

CPA (cost per action), RUB — cost per application, registration (email, mobile, etc.)

CPO (cost per order), RUB — cost per order/application

CPS (cost per sale), rub — the cost for the actually paid order. Maybe a fix. amount or % of sales. Revenue share model (profit sharing)

CPI (cost per install), rub - the cost of installing the application

CPA (cost per acquisition), rub. - the cost of attracting a user (user) who performed a certain action. In order not to be confused with CPA (cost per action), in the future, CPA will be understood as the cost of attracting a user. Can be calculated using the formula = acquisition cost per period / number of users acquired per period (user)

CAC (customer aquisition cost) , rub - the cost of the buyer (buyer). It is usually considered as the sum of all costs that must be incurred to bring the user to the 1st purchase. Calculated as: the sum of all costs for pr, marketing, advertising, sales, salaries of managers, mailing costs, campaigns, etc. for the period / number of attracted clients for the period

COGS (cost of goods sold), RUB — the cost of 1 sale. Call center costs, SMS mailings, customer service.

LT (life time), months, years - the lifetime of the user, how long he uses your services

LTV (life time value), rub. How much revenue will the buyer bring to you over the lifetime.

ARPPU (average revenue per paying user), rub - the same as LTV, only for 1 year. To simplify for 1 year. ARPPU is usually mapped to CAC. If ARPPU > CAC, the economy converges.

ARPU (average revenue per user), RUB - revenue per user (by users we mean a registered user or an install in a mobile application) for 1 year. ARPU is usually compared with CPA (registration cost). If ARPU>CPA - the economy converges. It can be calculated as follows: revenue for the period / number of attracted users for the period

ROI (return on investment), % - return on investment over time. The ratio of revenue to costs in the 1st month or in the 1st year. In advertising, the ROI rate is > 300% per year.

AvPrice - average check. Calculated as revenue per period/number of payments per period.

APC (average payment count) - the average number of purchases per year per 1 customer

I repeat, it is important to understand which of these metrics are applied “in the context of an order, transaction”, and which are “in the context of a client”

CPC, CPS, AvPrice, Revenue are examples of transactional metrics. Where each specific person is not important.

CAC, LTV are examples of metrics that are collected for each specific client or cohort of clients (groups of clients with certain characteristics).

Retention Rate (retention rate, customer returns),% - the ratio of those customers who visited the site / installed the application on day number 0, to those who returned again on day number 1, 2, N. Usually consider the Retention of the 1st day, 7th, 30th day. An extremely important indicator.

Churn Rate (churn rate, customer base burnout),% - shows what% of customers stop paying. Calculated as “number of clients.

Churn Rate = (Number of dropped customers this month) / (number of customers in the previous month) * 100%.

MRR (Monthly Recurring Revenue) - regular monthly payments. Average monthly revenue. Assumed in SaaS subscription models.

Now let's move on to the profit formulas.

Case with transactions. House rentals

Let's take a project, a la airbnb, where people rent houses for rent.

How b2c-side works in the simplest case. We will consider weekly intervals:

Impressions. Impressions in YandexDirect (Imp, units per month) — we consider our main sales channel to be the YandexDirect context. To do this, we made a semantic core of 10 thousand target queries and through Wordstat and other services we saw that prefixes, for example, 10 rubles. per click in YandexDirect in Moscow, it is possible to receive 20 thousand impressions. This is the ceiling we hit in terms of the amount of traffic. In order to get more impressions/increase reach, we will need to either a) raise bids b) increase the number of queries/semantic core b) find more channels - Google, Facebook, Mail, etc.

Transitions/clicks. CTR. Having made a lot of ads, we will see that the ratio of impressions to transitions is an average CTR of -5% (which is very good, which means our ads are of high quality. The norm is not lower than 1%, everything above 5% is excellent) That is, out of 20 thousand impressions per week, we received 1 thousand unique visits. At a cost of 40 rubles. per click. That is, our CPC (cost-per-click) = 40 rubles, and the weekly budget for the context is ~ 40 thousand rubles.

Registration/Activation/Application- Next, our users register on the site with a conversion of C1,%. For example, out of 1,000 people, only 50 left an application, that is, C1% = 5% and the cost of registering CPA (cost per acquisition) = CPC / C1 = 800 rubles.

Returns/Retention— we will not consider this block for now, it refers to the return of old users through email newsletters, etc. So far, we are only considering the flow of new visitors.

Purchase - further, a person needs some time to choose, think, communicate with the owner via chat, and after that out of 50 applications, only 10 people. makes purchases, C2% = 20%. The cost of the buyer, CAC (Customer Acquistion Cost) is already 4,000 rubles.

Next, we take into account the average check. For example, 50 thousand rubles. for the weekend for the house (let's say we have elite houses costing from 25 thousand rubles per day). Of which the service takes 10% of the commission (fee), it comes out to 5,000 rubles. That is, the unit-economy (the economy of one transaction) we have such 5000 - 4000 = 1,000 rubles of profit, this is without taking into account the various costs for the call center, SMS - newsletters, etc.

The profit formula of the case "Rent houses"

Obviously, the profit formula (for a week, in rubles, excluding repeated purchases) will be as follows

In our example, 1 thousand visits per day * 5% left requests * 20% paid * 50 thousand rubles. average check* 10% commission. At the same time, the cost of a click is 10 rubles, and fixed costs for the office and call center, for example, are 30 thousand rubles. week. In total, the profit of such a project is 20 thousand rubles. per week (before taxes).

What metric should be improved first?

So, we took a case, got a profit formula consisting of 7 variables:

1. UserAcq
2. margin
3. Fix Costs

Attention to the question (!) - what metric is the "bottleneck" at this stage? What to take first of all? Increase conversion to payment (C2) or leads (C1), or maybe attract more customers (User Acq) or reduce cost per click (CPC)? What to focus on?

This is a very difficult question. More on that next time.

In the following parts, I will describe profit formulas, revenue drivers, and points of multiple growth for different types of projects (lead generators, marketplaces, classifieds, products, projects, communities, etc.). Follow and subscribe.

The usual model of the bank's relationship with solution and service providers no longer works. Mikhail Sverdlov, Head of the Directorate for Strategic Development of Information Technologies at UBRD, proposes to consider profit sharing as a natural partnership model that corresponds to the realities of the market.

A classic that has outlived its usefulness
The current market situation does not allow banks to think about significant investments in projects with vague ROI. But right now, more than ever, the financial sector faces more and more challenges that require immediate solutions. It is vital for banks to meet all these challenges head-on, without significant financial and time costs. And as we all understand, the classic approaches to organizing work within the company and in relationships with vendors also require significant rethinking. Nobody canceled the well-known triangle "Quick-Cheap-Quality" and the fact that vendors remain one of the important sources of both technological solutions and competencies for their application. But in order to keep pace in reality, it is high time for financial institutions to use lean technologies, non-traditional revenue sharing models for the sector, as well as partnerships with start-ups that can significantly optimize the costs of business processes and make the client happier.

Procreate structures within yourself or build close relationships?
Engaging in the creation and development of intra-bank divisions for all internal requests, which bankers have successfully done at all times, is now becoming an unaffordable luxury, and subsequent exercises to increase efficiency and effectiveness have not brought quick victories for a long time. This worked 5-7 years ago, and now almost all structures have already been brought into “sports” shape to the maximum. Therefore, for those who have not yet begun to look for resources to solve problems outside, it is time to quickly reorganize in order to be in time for reality. Yes, you can and should look at the startup market, but in order not to add colors and shapes to the already patchwork quilt of the IT landscape, it may be more appropriate to turn to vendors.

Rate of change and lost profits
According to analysts, many figures in the financial sector tend not to leave their comfort zone, because “we don’t need to rush, we will have time to build and launch all the necessary services and platforms on our own, we are flexible and technologically advanced, there is no reason to rush.” Unfortunately, this is an illusion. It was necessary to start launching new services yesterday.

Have you ever counted the losses from not launching a project on time? When preparations go on for months, then discussion, then budgeting, then agreement on goals, then agreement on plans ... And now, when all the project participants have already forgotten how it started, you, as a leader, are finally ready to start only the launch process project. Surely familiar.

Every day of delay is a lost profit, money that the business loses. And if you tie it to motivation and demotivation? And if employees are not ready to deliver results on time due to lack of competence, skills, time, resources or desire? Or is there no money for the project?

And why not do everything in such a way as to solve all these issues even before the launch of the project? This approach may not be the most universal, but it has allowed us to successfully implement 3 major projects over the past year. This is a new model of interaction with contractors - revenue sharing (profit sharing). This principle of interaction with external companies allowed us to launch these projects in a matter of weeks.

Revenuesharing as a new model of interaction with vendors
Banks would like to see more specifics and the willingness of vendors and partners to be responsible for the result, and not just sell. And for the result, not technical, equal to a simple installation of the solution, but for the result of the business, when the vendor subscribes to KPI in the money earned from the implementation of each technological solution.

The revenue sharing model makes it possible to ensure that the partner company is directly interested in optimizing the operation of the system and minimizing risks. Instead of paying for software at the start and burdening the budget, we pay a percentage of the profit from the implemented system. This allowed the bank to launch the solution without starting capital costs and start earning money from the first month of operation and solve the issue of further operation and related costs.

Advantages of this working model:

• Quick launch of the service and the fastest possible exit to the break-even point;
• Minimum implementation costs, limited by the payroll of employees;
• No staffing required;
• Platform support on the partner side;
• The partner is interested in the development of the system no less than the bank;
• Often there is no need for equipment;
• Minimizing the risks of "not taking off";
• No capital costs.

Minuses:

• Dependence on a partner;
• Lack of 100% control of the system;
• It is difficult to convince a partner to agree to the revenue sharing work model.

The disadvantages are easily compensated by the Security Council check and the right contract, as well as good project managers and process alignment.

Does this seem like a dream? We made it. Here are three cases.

1. Manage cash balances at ATMs
As early as 4 years ago, we had the idea of ​​implementing an automatic ATM management system based on daily statistics and machine learning. A mathematical model is being built for the flow and receipt of cash in each device throughout the territory of the bank's presence, today it is more than 200 settlements. The program would allow planning the optimal routes and frequency of departures, which would reduce the cost of collection, especially in remote areas. And due to the integration of data on payroll projects into the system, the bank's specialists were able to take into account the so-called "outliers" - cash consumption that does not fit into statistical patterns. At that time, nothing similar had been implemented on the market, so we began to defend the project and the budget. But there was a problem, no one was ready to subscribe to the project. Then we took responsibility and risk, launched the pilot, got the results of the pilot, they were higher than expected, but again, projects that save and optimize are more difficult to sell within the company than projects with actual profit. Then, together with our partners, we decided that we were implementing a project based on the revenue sharing model. The economic effect is more than 20 million per year, minus payments to partners, and the effect has increased in relation to the pilot, since the partners are directly interested in increasing it and modernizing the system. Win-win and Profit/

2. Mobile application with PFM and PUSH
In December, we launched the My Account app. Launched with a budget of 0 rubles 0 kopecks. During the first month, 5,000 active users and millions of rubles of savings on the marketing budget for communication with customers.

3. Outsourcing of churn modeling in the SME segment
Have you seen Bennett Miller's The Man Who Changed Everything? Highly recommend! The story that formed the basis of the plot took place in 2002 with Billy Beane, the general manager of the Oakland Athletics baseball team. He found himself in a hopeless situation - all the best players on the team were bought by other clubs. He had to assemble a team from scratch, while having practically no budget. Bean decided not to buy baseball stars and bet on Yale economics graduate Peter Brand, who suggested picking players using statistical analysis of their individual characteristics. As a result, the team won twenty matches in a row.

To build a high-quality and sustainable model, you need to have experience and expertise. For example, only 2-3 companies in Russia can do the model of outflow of customers of small and medium-sized businesses. Last year, we offered ten top analytics companies to build 5 models. The SME churn model was piloted by only two of them, and only one succeeded. And this is one of the most important segments and challenges of the banking business today.

And it is important to note that it turned out to build work with fashion designers, again according to the revenue sharing model. In our experience, modeling is the simplest and most understandable direction for starting and implementing a revenue sharing model with partners in a bank.

Digital transformation and blue oceans for service providers
For vendors who are ready to work on this model (90% of the work is on the side of the contractor): please note that banks may now need the following models:

• the likelihood of purchasing banking products (in order to minimize communication costs);
• cross-selling model;
• sales model for non-financial and commission products;
• SME customer churn model;
• model of the probability of customer exit from in-kind products.

Can you? And if you are ready to come to the bank and bring your sources of external data, then you are simply king! The niche is practically free. Why not a blue ocean?

Details of building effective interaction with partners according to the revenue sharing model Mikhail Sverdlov will tell on December 2 at the forum

Today, finally, it became possible to talk about the bold project of MTS and Beeline, which until recently had to be spoken of with the reservations "possibly", "presumably" and "rumored".

During a joint press conference between MTS and VimpelCom, which was also attended by a representative of the Russian Ministry of Telecom and Mass Communications, the operators spoke about their activities in the field of RAN sharing (joint construction and use of a cellular radio subsystem) and answered questions from journalists from leading publications.

For you - a summary of the meeting and individual comments, as well as reference materials.

The declared topic of the conference is "Development of the communications infrastructure in Russia and legal regulation of the industry". Participants: Deputy Minister of Telecom and Mass Communications of the Russian Federation Dmitry Mikhailovich Alkhazov; Mikhail Yurievich Slobodin, General Director of OJSC Vimpelcom; Andrey Anatolyevich Dubovskov, President of MTS OJSC.

Dmitry Alkhazov, Ministry of Telecom and Mass Communications

Increasing the level of accessibility of communication services for the population on the territory of our country with a continuous improvement in the quality of these services is our priority. We solve these problems in the field of regulation of the telecommunications market. At the same time, we try to adhere to the principle that implies that the increase in the availability of communications for the citizens of our country is achieved with the help of such regulatory methods that help industry entities to solve these problems, including by optimizing resources. In this case, I mean, first of all, investment resources. Some specific steps have already been taken, from a whole series.

First of all, I would like to recall our decision regarding the introduction of the principle of technical neutrality. In fact, now we can say that we have a pool of radio frequencies in circulation that can be used to build mobile broadband networks. Obviously, this measure is directly aimed at reducing operator costs associated with the construction of networks. Experience shows that the resolution of technical neutrality turned out to be extremely timely. This can be judged, if only because operators in 77 regions of Russia use this principle. (Note AB: in Russia, LTE networks operate in 79 regions, including the Moscow region and the Leningrad region).

From January 2015, literally in a matter of weeks, the method of paying for the radio frequency spectrum will begin to work, in which we have moved away from paying for each base station. Now the operator pays for the frequency band that is allocated to him. In essence, this measure encourages the operator to use the spectrum more efficiently. At the same time, the operator who solves the problem we need is not "punished with a ruble" - he builds all new base stations. Thus, the operating costs of the operator associated with the use of the underlying resource are fixed at a constant level. An increase in the density of base stations, an increase in the quality of services are not associated with additional costs.

You can also mention our innovations related to the universal service system. The range of universal services has been qualitatively expanded. Everyone remembers that over the past few years, the universal service has been 1.5 thousand payphones and several tens of thousands of "collective access points". Now, in addition to these two options, for the same budgetary funds, the universal service operator will be required to build Internet access points. This measure launched the construction of the largest FOCL system, qualitatively changing the level of development of fixed-line infrastructure in the country.

Another significant innovation in the field of market regulation, to which today's meeting is dedicated, is, in technical terms, RAN sharing. We have adopted a number of acts. Operators can now share one base station. This is aimed at a multiple reduction in the capital costs of operators for the development of mobile broadband network infrastructure. We expect the cost optimization capability to be one of the sources in the industry that will accelerate the development of networks in remote regions. It is gratifying that today we can state that the industry has transformed our achievements in the field of regulation into specific joint projects, into specific agreements and specific projects.

Mikhail Slobodin, VimpelCom

The title of our conference is boring. I would title it differently - a revolution has taken place in Russian telecom in terms of the efficiency of capital investments and cooperation between operators. A new page for integrating multiple players in the fight for cost savings has been launched. This is happening against the background of the macroeconomic crisis that we are witnessing, in particular, the growth of the foreign exchange rate. This is our, telecom operators, contribution to improving the country's balance of payments. The volume of investments in foreign currency that we pay to our vendors will be optimized. Undoubtedly, a team of our colleagues from MTS, the VimpelCom team, including the technical, legal and commercial block, did a great job here. This is, of course, the regulator's command, without which the necessary changes in the regulatory environment would not have taken place.

It took 10 months from the moment of the first serious meeting with Andrey (Dubovskov) until the actual switching on of the networks. I think that for such a complex infrastructure project, this is a very good result. This is just the beginning. Of course, this is a very long-term cooperation. Now the teams are getting used to and see how it works in interaction. Before that, there was cooperation between operators in the field of passive infrastructure - a much simpler variant of interaction. Now a big step forward has been made - technological, structural, organizational. We had to overcome the resistance of the commercial teams of each of the companies, which, as a rule, kill such infrastructure projects. Nevertheless, if you think about the prospects, this is the prospect of the Russian telecom - cost savings based on joint activities.

The volume of interaction between MTS and Beeline is 36 regions of the Russian Federation.

Note. AB: The companies didn't "announce the entire list", one can only guess which regions they are talking about. My guesses are listed below. An asterisk indicates assumptions that I am practically sure of, without an asterisk - a hypothesis

1. Altai Republic, MTS based on Beeline *
2. Astrakhan region, MTS based on Beeline *
3. Vologda region, Beeline based on MTS *
4. Republic of Dagestan, Beeline based on MTS *
5. Ivanovo region, Beeline based on MTS
6. Irkutsk region, Beeline based on MTS *
7. Republic of Ingushetia, MTS based on Beeline *
8. Kabardino-Balkaria, MTS based on Beeline
9. Kaliningrad region, MTS based on Beeline *
10. Republic of Kalmykia, MTS based on Beeline *
11. Kaluga region, Beeline based on MTS
12. Karachay-Cherkess Republic, MTS based on Beeline
13. Kemerovo region, MTS based on Beeline
14. Kirov region, Beeline based on MTS
15. Krasnoyarsk Territory, Beeline based on MTS *
16. Mari El, Beeline based on MTS
17. Mordovia, MTS based on Beeline
18. Murmansk region, Beeline based on MTS *
19. Nizhny Novgorod region, Beeline based on MTS
20. Novgorod region, MTS based on Beeline
21. Omsk region, Beeline based on MTS
22. Orenburg region, MTS based on Beeline
23. Oryol region, MTS based on Beeline
24. Penza region, MTS based on Beeline
25. Perm region, Beeline based on MTS
26. Pskov region, Beeline based on MTS *
27. Sakhalin region, MTS based on Beeline
28. North Ossetia-Alania, Beeline based on MTS
29. Tver region, Beeline based on MTS
30. Tula region, MTS based on Beeline
31. Udmurt Republic, Beeline based on MTS
32. Khabarovsk Territory, Beeline based on MTS
33. Chelyabinsk region, Beeline based on MTS
34. Chechen Republic, MTS based on Beeline
35. Chuvash Republic, MTS based on Beeline
36. Yaroslavl region, Beeline based on MTS *

Less likely scenarios: sign (-) doubtful version, sign (--) even more unlikely version.

1. Amur region, Beeline based on MTS (-)
2. Arkhangelsk region Beeline based on MTS (-)
3. Belgorod region, Beeline based on MTS (--)
4. Bryansk region, Beeline based on MTS (-)
5. Republic of Buryatia, Beeline based on MTS (-)
6. Vladimir region, Beeline based on MTS (-)
7. Voronezh region, Beeline based on MTS (--)
8. Jewish Autonomous Region, MTS based on Beeline (-)
9. Trans-Baikal Territory, Beeline based on MTS (--)
10. Kamchatka region, MTS based on Beeline (--)
11. Republic of Karelia, Beeline based on MTS (-)
12. Krasnodar Territory, Beeline based on MTS (-)
13. Komi Republic, Beeline based on MTS (--)
14. Kostroma region, Beeline based on MTS (-)
15. Kurgan region, Beeline based on MTS (--)
16. Kursk region, Beeline based on MTS (-)
17. Lipetsk region, Beeline based on MTS (-)
18. Magadan region, MTS based on Beeline (--)
19. Ryazan region, Beeline based on MTS (-)
20. Saratov region, Beeline based on MTS (--)
21. Sakha (Yakutia), Beeline based on MTS (--)
22. Smolensk region, Beeline based on MTS (--)
23. Tomsk region, Beeline based on MTS (--)
24. Tyva republic, Beeline based on MTS (--)
25. Ulyanovsk region, MTS without Beeline (--)

UPD: official list

Mikhail Slobodin thanked his colleagues from MTS, his colleagues involved in the project, noting that it was very difficult to find legal forms of interaction. As a result, an agreement several centimeters thick was drawn up based on the best international practices, taking into account Russian specifics. Mr. Slobodin considers his conclusion a real "breakthrough".

This was the end of Mr. Slobodin's speech. The host of the meeting asked him the question "how will the end consumer feel the results of the companies' activities under the contract?"

Answering this question, Mikhail Slobodin noted that as a result of cooperation between Beeline and MTS, the growth rate of penetration of LTE services will increase. In addition, "the less money you spend, the more you can afford to develop the network and improve the quality."

M.S.: Today we are facing a situation, and this is a big challenge for the industry, due to the fact that the capital expenditures of mobile operators and mobile broadband are largely pegged to the dollar. Now we are seeing a significant increase in the company's costs. At the same time, the company receives income in rubles. Income growth is declining. If inflation is taken into account, then incomes are even reduced.

Russia, as a country, should be proud that we have one of the most, if not the most efficient price of cellular services and mobile broadband access. Effective from the point of view of the ratio of costs of operators and the price of services. Today communication in Russia is very cheap. I'm afraid that the price level will be very difficult to maintain against the backdrop of growing costs for the operator. We partially compensate for the negative trend with this project, but it will not be possible to completely eliminate the problems with this project alone. Concluding the answer to the question, Mr. Slobodin promised that the consumers, thanks to the project, will receive higher quality services and possibly not at such a high price as it would be if it were not for the project. Only suppliers of foreign equipment will suffer from the project - they will get less operator money.

Andrey Dubovskov

We are also glad that all this is happening, we are satisfied, we will save CAPEX, OPEX. The freed up resources can be directed elsewhere. By the way, I want to note right away that this project is not directed "against someone", I have already seen some stupid headlines. What nonsense. We didn’t unite against anyone (note AB - he looks at Slobodin inquiringly, Slobodin throws up his hands - they say, and who could even think such a thing, smiles. And he adds slyly “someone really suffers, probably”, laughs). We could cooperate with some other company, as with Beeline. And VimpelCom probably doesn't mind. No one unites against anyone, everything is fine.

AB: Yeah, we got it. I remember how at one time MTS and Beeline unsuccessfully negotiated with Skartel, who pretended to be interested in cooperation with any operator that wants to work on the basis of its LTE network.

HELL. Dmitry briefly described legislative innovations in such an important area as telecommunications. What is being done now by the team of the Ministry of Telecom and Mass Communications, the regulator, had to be done earlier, back in the 90s. The idea, for example, of administering a frequency resource not at face value, but through the spectrum, was on the surface back in the 90s. I am very disappointed that this has not been done before. A large number of respected government officials have been replaced. For some reason, only the current team does such obvious things. We, as an operator, and I hope other operators will join this, are certainly grateful to the industry leadership. There is a real interest in the task assigned. Dear leaders, they work, as they say, not out of fear, but out of conscience.

What was worth back in the 90s to cancel the norm, according to which in each subject of the federation each of the operators must have its own switching node. I think that the industry lost a lot only on this, investing money where it would be possible not to invest it. And so on and so forth. We see a lot of positive changes in the regulator in the recent period. Including changes that allowed us to build a network together with our colleagues from Beeline.

M.S. One more comment. We certainly see positive developments. And, of course, I would like everything to happen faster and earlier. And one of the next things that can be compared to another step is spectrum sharing, which we expect in the first half of next year. This will allow us to optimize costs already at the technological level, as well as provide better quality services based on the combined frequency range. This is one of those innovative things that we expect to be adopted in the first half of 2015. And this is the next step beyond RAN sharing. Spectrum sharing will be in our country! And this is a direct increase in the efficiency of using the radio spectrum, i.e. extremely limited resource we have, it is the improvement of the quality of service.

Q&A session

Q: There was information from Mr. Slobodin that in the first half of 2015 we can expect the adoption of legislation that will make spectrum sharing possible in Russia. Mr. Alkhazov, as a representative of the regulator, will confirm this information and these terms? When will relevant laws and regulations be adopted?

YES. Answering a question about the bill. We, as an industry regulator, are "all hands for" this innovation. But we must understand that the laws are adopted by the Duma. We are just preparing. Of course, we are in favor of having the bill heard and adopted at the very first plenary sessions after the New Year. However, unfortunately, we cannot guarantee any deadlines for our Duma colleagues. We can say that what depends on us in terms of promoting this bill, in agreement with the relevant federal authorities that are involved in the process, we are doing what is called "day and night." Indeed, this innovation promises a better service, we need it. To be honest, this decision is long overdue.

Q: In connection with the RAN sharing project with VimpelCom, where Comstar provides TV broadcasting services based on the MMDS standard, what creates obstacles for the reuse of band 7 frequencies by LTE operators? Will you start to release these frequencies, or will it remain as it is now?

HELL. Answering this question, I would like to draw your attention to the fact that this does not currently have any practical, extremely negative impact on the development of LTE networks. Especially given the level of penetration, CAPEX, the speed of network development. Yes, the issue exists, it will be resolved. How? I won't say now.

M.S. We selected the territories according to the degree of readiness of at least one of the players. The model is this - one operator is in the lead and builds the entire infrastructure. The other only takes part in the use of this infrastructure. In 15 regions, MTS has leadership. In 17 regions - VimpelCom. For the leadership of MTS, territories were selected where we have not yet begun, for example, and colleagues have already begun development. And vice versa. Some regions started with a clean slate after they agreed on the division of efforts. The question of who will have the region was not the subject of much dispute. We mainly develop in regions where there is commercial feasibility, where the risks of non-repayment are low. The penetration of terminals with support for LTE is currently low. Comparing with the markets of a number of countries that are advanced in the field of LTE.
We estimate savings at the level of 25-30% CAPEX. And up to 50% for OPEX.

Q: How does the RAN sharing agreement provide for the separation of CAPEX and operating costs? Income? Will operating costs be distributed according to traffic or in some other way? How will the responsibility of the operators be distributed in case of some unforeseen expenses, for example, related to violation of the rules of operation?

HELL. Suppose there is a region X, where MTS is the leader and VimpelCom is the follower. Those. MTS built the entire LTE network in this territory. MTS subscribers are served in this network. VimpelCom subscribers are also served in this network. No one is in the position of a roamer or someone who is served on another network. Everything, as in a normal situation. Once every six months, we agreed to conduct mutual settlements. There will be payments from one operator to another for the operation of this network. Naturally, the entire responsibility for the technical condition, maintenance, and development of this network lies with the operator that builds this network. On the contrary, it will be where VimpelCom is building a network that we can use. I want to note that the agreement provides for the possibility for both parties to carry out some kind of complementary construction of network elements necessary for one or another operator, regardless of which of the operators in this region is the leader. For example, in region X from our example, if VimpelCom has a corporate client, the company can build a network segment for its client, which will be included in the MTS network. And vice versa in regions where VimpelCom is the leading operator.

(A.D. and M.S. preferred not to answer the question about the principles for calculating the amounts of mutual settlements, noting only that the conditions are "fair, mirror-like").

Q: Are you ready to invite Tele2 and MegaFon to cooperation within RAN sharing? What regions will remain with MTS and Beeline without LTE after the implementation of the RAN sharing project?

M.S. We will not run after any operators with invitations. In general, we, like Beeline, are open to any form of cooperation, if it can bring us benefits. If colleagues want to join on some conditions, we will consider it. For those regions where we are already cooperating with MTS, together with them, where we do not cooperate, we will consider independently. I think that now the demand for cooperation has increased significantly. That is why I said that next year we will witness even deeper integrations. Maybe not in this configuration, but in another. Just do not ask with whom we are now negotiating.

HELL. On the first issue, we are ready to cooperate with anyone and in any way. Everything is possible.
In terms of regions... we have 65 regions at the end of 3Q2014. Sooner or later there will be full coverage.

M.S. What can I add, we have about the same thing.

Q: How many base stations will be built within the framework of the RAN sharing project? Can cooperation expand to 3G base stations? GSM?

HELL. As part of the cooperation, I don’t remember the number of base stations. We have not announced this data. They are secret (half in jest). In general, the number of LTE bases we have is in the tens of thousands. (Note AB. MTS has 10900 as of 3q2014. According to RAN sharing, we are talking about up to 2 thousand "joint" base stations in 2014. Estimate by A. Boyko, MForum.ru).

M.S. The joint construction of 2G / 3G was discussed and we recognized it as inexpedient. 2G/3G networks are mostly built. Such a big gain, as in the case of LTE, cannot be obtained there due to RAN sharing. But then again ... everything in this life is possible.