Empowering the digital economy in CIS is all about modernising policy
By Mark Little, GSMA Intelligence
The first of the GSMA’s Mobile 360 Series of events in Russia for the CIS markets, tackled some home truths on spectrum availability in Russia. The-two day event in Moscow also produced several constructive suggestions for renewing regulatory approaches, laws and structures that could break down barriers to growth for the region’s digital economy.
Russia must legislate fast and effectively to ensure a 5G boost to the digital economy
Russian operators have voiced concerns, as 5G spectrum remains out of reach. The apparent lack of a roadmap for releasing harmonised spectrum in Russia is effectively putting ministers’ ambitious digital vision at risk. Leonid Osipov, Russia’s Deputy Director of the Presidential Experts’ Directorate stated, “the government was paying unprecedented attention to creating a solid foundation for the development of a digital economy”. Operators were happy to hear this, as they are looking for federal authorities to release over 100 MHz of harmonised spectrum to the industry for 5G to help build the ‘solid foundation’ called for by the government. But there are challenges: powerful incumbents are tying up bands slated for 5G; they include terrestrial TV, satellite communications, space agency Roscosmos, the Federal Protective Service (FSO) as well as the military. Operators are working hard to prepare for 5G but a drawn-out or confused path towards spectrum allocation and assignment for IMT services could see them loose momentum.
Lack of spectrum was one of the biggest challenges to empowering the digital economy raised at the event, but not the only one. Anna Serebryanikova, COO, MegaFon suggested “operators do not see sufficient use cases to invest”; Nadezhda Shevtsova, new-business director at Tele2 Russia, expressed concerns over IoT security and an uncertain return in investment as significant barriers to releasing value into the digital economy. Other speakers pointed to the challenge and cost of reorganising internal processes both to manage 5G networks and capture value through deployment of data analytics and AI. Finally, Kaan Terzioğlu, CEO Turkcell, said that in Turkcell’s experience, credentials management was key to oiling the wheels of the digital economy and suggested championing ‘digital sovereignty’ was an operatorresponsibility, while emphasising its effect on cross-border trade would need to be addressed.
Empowering the digital economy depends on much more than 5G alone
Empowering the digital economy in the CIS region will require far greater ‘heavy lifting’ by lawmakers than in many developed countries of the world. In the past legislation has tended to move slowly. Certainly, if the recent path of cryptocurrency bills through the State Duma are anything to go by “complexity and lack of consensus between state authorities on the issue of regulation” (Artem Tolkachev, Deloitte CIS) could slow legislative velocity.
If the Russian people, SMEs, and entrepreneurs are to engage more productively with the digital economy, federal authorities will need to address some structural issues. SMEs in the country account for just 20% of GDP and nearly 25% of employment. In the EU, these figures are 58% and 67% respectively . Only 5.8% of Russians of working age start their own business, the lowest among the BRICS countries, while in Brazil it is one in five . The digital economies of the CIS region are strongly reliant on the success of the ICT sector but to ensure more uniform and sustainable growth, lawmakers must encourage greater entrepreneurial engagement from their citizens. Economic legacies from the Soviet era could create a lag on the growth and distribution of the digital economy. Significant inequalities in wages especially between colder northern ‘oblasts’ and Moscow, where 40% of the digital economy is based, potentially restrict the discovery and migrancy of talent within Russia. Identifying influencing factors driving the digital economy that fall outside digital laws will need to be the next priority for federal authorities after solving the spectrum challenge. Words of common sense from Anna Serebryanikova at the event indicate a way ahead: ‘legislate on what we understand, not where we are still trying to understand’.