Last year saw the number of high-speed broadband internet connections in Western Europe rise by 44 percent, bringing the number of households using high-speed Internet connections up to 7.8 million.

But, in Russia, where only an estimated 10 percent of the population are regular Internet users, the broadband market is only just beginning to take shape.

Simon Baker, a telecoms and Internet specialist at analysis company IDC, said there were two distinct markets, the business market and the domestic market.

"The business side of the market is developing quite fast, and that’s the area where broadband has been more successful," he said. "But I’m sure the consumer market will catch up as connections are expanded and improved and prices start getting more reasonable."

"Broadband" is itself an expansive term. Definitions vary, but it can be taken to mean any "non-dialup" Internet connection of a speed greater than 64kb per second. By these generous criteria, say consultants J’Son & Partners, Moscow has 64,000 broadband users in a market worth $11.4 million. They add that, in Moscow, Internet penetration hovers at around 22 percent.

F A C T B O X BROADBAND LEADERS Country Broadband penetration by population (%) South Korea 19.3 Hong Kong 12.1 Canada 9.7 Taiwan 7.2 Belgium 6.3 Sweden 5.4 Iceland 5.2 USA 5.0 Denmark 4.5 Singapore 4.4 Source: International Telecommunications Union They say the broadband market could develop rapidly over the next few years. They estimate that in 2005 there will be 561,500 broadband users in Moscow, conditional on certain market developments.

"We really need some consolidation on this market," said Jason Smolek, senior consultant at J’Son & Partners. "At the moment, there really isn’t much choice, access is fragmented, and pricing is very high. People are paying too much for services that are already becoming commonplace elsewhere."

Moscow’s main premium Internet operator, MTU-Intel, which operates the Tochka.ru brand, offers 128 kilobytes per second access on a separate channel that is available to anyone with a standard city telephone link. Once you’ve paid the $100 initial charge plus the $20 per month rental fee, you pay $0.19 for every megabyte of data transferred.

The faster ASDL connection, one of the main broadband standards, is currently only accessible from certain households in Moscow, and, according to the Tochka.ru Web site, access costs an initial $199 plus $60 per month plus $0.16 per megabyte of data.

There are number of local operators of high-speed connections, such as Timiryazevo Online, which operates in Timiryazevo. Their service costs $130 for the connection, $10 per month and $0.15 for every megabyte after your first 50. The catch? You have to live in the Timiryazevo region on specific streets.

MTU-Intel has started turning more to the consumer sector, but the pricing of broadband options rules out the quick creation of a mass market, the company’s commercial director, Alexander Tepper, explained.

"According to research we have seen, only 20 percent of regular Internet users have an income of more than $500 a month," he said. "It’s a Catch 22 situation – without any prospect of widening our client base prices will be slow to fall, but the high prices prevent us from developing an effective client base."

But it’s not just pricing that matters. J’Son and Partners says that more sophisticated marketing and services are needed to bring broadband to the masses.

"There is a need for companies to combine broadband technology with more specialized content," said Smolek. "That has been a big encouragement to broadband growth elsewhere."

He also said firms needed to focus more on marketing – for example, to the plethora of new high-rise building springing up around Moscow, which tend to have high-income tenants.

Future development of the broadband market is also constrained, however, by politically related factors, claims IDC’s Baker.

"There are restrictions on the amount of competition, and companies that are historically part of the state apparatus [such as MTU-Intel] tend to get preferential treatment," he said.

"For technical reasons, MTU-Intel can also offer a better connection in terms of quality and speed. They have privileged access to the existing network and can exploit a greater number of direct links between different points on the network," he added.

IDC estimates there are currently 10,000 broadband users across Russia, a number he said may double over the course of this year.

"In most countries privatized utilities have become the engines for growth of the broadband sector, and have attracted able competitors offering similar services," he said, "but that hasn’t happened in a big way here."