The idea that we are several years behind the developed countries is firmly fixed in the public consciousness. Now, the international TC companies are surviving through hard times. May be we are going to pass through the same crisis?

Leonid Reiman: In Russia, we’ll hardly have this kind of a crisis. It is possible to analyze  the reasons of the crisis in the West. They are blunders in relation to sale of licences for mobile communication of the third generation, they are scandals with the auditors, they are “overheating” of the IT market.   As far, as luck would have it or not, the Russian market is yet not at such level of development for such crisis events to appear.

New technologies appear so quickly that old investments have no time to pay. Can we have a crisis in result of this sort of “controversial” essence of high technologies?

Leonid Reiman: Unlikely, since no such processes are observed in the world. The liberated markets have such mechanisms which allow to neutralize such irregularities – new technology frequently is profitable at the start, then we have a decline to unprofitability. To such mechanism may be referred the “universal servicing” mechanism that is used in all world countries and supports the economically unattractive territories, cutting down at that on the operators’ investment risks. (The “universal servicing”  is a package of communication services guaranteed to any citizen.  For this it is planned to launch a special reserve to which all operators should allocate part of their profits. This reserve will compensate the loss to operators rendering the universal services.  - Ed.) I hope that with the adoption by the State Duma of the changes and amendments to the law “On communications”, we shall introduce this mechanism, and the risk of a crisis will be minimized.

The “universal servicing” is one of the most widely discussed subjects in the market.  You mentioned this mechanism introduction as something definite. But when passing this law “On communications” through the State Duma there were some problems in relation to “universal servicing”. What this the reason of this counter-opposition?

Leonid Reiman: There is no special counter-opposition. Different deputies have different opinions.  This mechanism is new for our market, though it is available in quite a number of countries. But as far, we have different opinions of this mechanism. This mechanism is oriented above all at the communications development in the village, in hard-to-reach regions, where its is expensive to create an infrastructure.  The idea is to attract to this mechanism commercial operators. The opponents say: “Why launch any special mechanisms? It is better to wait till the population is capable to pay for installation of telephone lines.” Perhaps, this theory has a right for existence. But experience shows that in this case the deadlines are just incommensurate. The ‘universal mechanism” mechanism allows to solve the problem in 2-3 years.

Your arguments are understandable. But it is also possible to understand commercial operators – why a Moscow cellular company should pay for development of communications somewhere beyond the Polar circle? Theoretically, these companies can be pressed, of course.

Leonid Reiman: In general, I’m not a proponent of pressure. Firstly, the figures on infrastructure development in the regions, for instance in the Moscow region, say that a company, having reached a certain level, understands that it should think not only of highly profitable projects, but to launch a solid infrastructure. Secondly, when you say that somebody has to pay, please don’t forget that thus is a “double-edged” process. It is possible to pay, but on the other hand – to receive. A lot of companies, including major cellular operators, develop infrastructure, suffer loss and receive no compensation.   But if the “universal service” mechanism begins to work, they will be able to receive compensation for the infrastructure operated with loss. If we take not a fragmentary, but a complex view of the situation, we’ll understand that the mechanism is profitable to many.

Not so long ago a Duma workteam engaged in consideration of amendments to the law “On communications” just crossed out the chapter on “universal services”. What’s your forecast of the further fate of this law?

Leonid Reiman: In the near future we’ll continue to work with the Duma committee for energy, transport and communications that is engaged with the law. The committee will form the text of the law that will be brought for the second reading. In result of work with the committee, we’ll receive a position of a group of deputies responsible for this law in relation to all of its component parts and chapters.

At the initial discussion of law, time-based payment for telephone talks gave rise to a lot of discussion, but later the “universal services” distracted the attention. Are you satisfied with the law formula on the payment methods?

Leonid Reiman: We’ve been working out these formulas with the deputies separately.

That is a subscriber will have a right of choice between the subscriber fee and time-based payment. Won’t that create problems for communication companies that are still controlled by the state?

Leonid Reiman: Any company should have an option of choosing more profitable forms of interaction with their clients. For instance, cellular companies present various tariff plans both for the fixed and for time-based payments. In the final count, we aim at presence on this market segment of the same number of forms and payment methods.

Yet nobody knows how the law will change by the time of the second reading. And the amendments may be different. If they are pronounced by the president, their weight is much more. Has the president’s opinion reported at the start of the year complicated the State Duma work over the law process?  

Leonid Reiman: In accordance with the regulations, the president has his say on all the laws considered in the Duma.  And the law “On communications” is no exception.  Quite naturally, the president’s opinion is a guide to action for us.  The president’s remarks have been taken account of in the law text.

There is a reverse side to reformation in communications area. Live people are always behind the thunderous reports. State-owned companies now enter the market – in result, people may turn out to be in the streets.  Is a social explosion possible?

Leonid Reiman: The branch has long worked according to market laws, the competition is very high. Therefore, the Svyazinvest companies have found themselves in a difficult situation. These companies should live and work according to the market laws. The new version of law “On communications” is oriented at that. If the companies will work in equal conditions, then people will also find themselves in equal conditions – from the point of view of payment and conditions of work. As for possible reductions, the companies, of course, aim at higher effectiveness. But new services appear, and their introduction requires people. I don’t think we’ll have a social explosion here, apart from that, we are in close interaction with the trade-unions.

There is one more branch in your competence, in which the reform, in my opinion has not started yet. How will the Russian post reform progress? When will it be liberalize to the same degree as, for example, communications?

Leonid Reiman: We’ll have to wait long for this kind of liberalization in the market of post services. But in other countries too, there aren’t many positive examples of liberalization. The post reform started considerably later than the communications reform. But still it is marching ahead. The government has approved the reform concept, forms a single state enterprise “Post of Russia”, the employees’ wages are growing.

But from whence the money for all that?

Leonid Reiman: The basic source will be a paid postal exchange. It actively develops. In money terms, the post profits are growing. Post should become a center where people can get all services in a package. Send, receive money, pay for goods, connect to the Internet. All this will become a means of receiving funds for the post development.

One of good ways of attracting the funds is funding and sell of part of the structure to the investor.

Leonid Reiman: The question of funding the post will arise with time. But this is a question of long-term period.

Now the possibility of Russia’s joining the WTO is actively discussed. Is the branch ready?

Leonid Reiman: From the point of view of mechanisms already active in it, the branch is ready for that? But Russian communications branch is not totally ready for joining the WTO from the point of view of its scale.  Even the largest Russian companies are several times less than the international corporations.  Apart from that, some market segments – in the first place, remote communications, have not completed their transition to the market adjustment mechanisms, and some more time is required for these mechanisms introduction. Then there will be no contraindications. Our principles of joining the WTO include restriction of competition in remote communications sector for a five-year period.

There’s been a long talk of these five years. When will they start?

Leonid Reiman: This period is not directly related to Russia’s joining the WTO, and it started in late 2000.   In two years, I think, we’ll be ready to remove this restriction.

The quality of cellular communications have become a rather popular subject of late. The cellular operators try to justify themselves and say that the number of their network failures is within the norm. People in the streets say the reverse. Where’s the truth?

Leonid Reiman: We would sooner provide support to the people in the streets and tell them that cellular companies not always meet the established quality indicators.

Is it possible to estimate, to what degree they “not always meet”?

Leonid Reiman: We have long been analyzing the quality of cellular operators and present the results of research to themselves, demanding from them higher communications quality.   Since these companies are quoted in the stock market, we, in the first place, try to interact with them, and they themselves adopt measures. At the same time, in the whole number of territories, including Moscow, the communications quality at times does not correspond to the criteria set for cellular networks. But Moscow is a rather “hard” territory, as it has the largest network both in terms of its volume and the number of users. Therefore, though it is not so simple for the operators to set this territory to rights, we demand that they establish the necessary quality.

Is it possible to expect any other sanctions from MCI?

Leonid Reiman: The deviations are not so large as to apply rigid sanctions.

Aren’t we going to expect a communication-quality problem in St. Petersburg during the festivities for its 300-years anniversary, aren’t we going to have there an IC catastrophe?  To what degree are your ministry specialists involved in this “advanced construction site” of our century?

Leonid Reiman: The challenge there is rather involving. We need to build an additional infrastructure for the festivities sites, and apart from that, a good deal of mobile telephones will be working on a limited territory. Giprosvyaz has developed a special project for boosting of the network capacity. All the newly-formed infrastructure will remain in the city, so that the citizens will only benefit.

The Minister was interviewed by an Izevstia observer A.N. Latkin.