While the Russian cellular market has claimed its 3 millionth subscriber, operators are struggling to keep their customers from defecting to rival companies.

Moscow Cellular Communication Company (MCC), which operates the analogue NMT-450 standard, has the most to lose and is also proving most active in encouraging subscribers to stick around.

Under serious pressure from GSM operators and aiming to lure new clients, MCC is offering unlimited tariffs. For $310, subscribers get a Benefon Dragon cell phone, a Moscow phone number and two months' unlimited calls within Moscow.

Experts say the firm's marketing skills are proving effective in retaining customers who might otherwise be keen to transfer to one of the big GSM operators.

MCC spokesman Alexander Manoshkin said the firm has more than 100,000 subscribers, making it the fourth Russian cellular operator after Mobile TeleSystems (MTS), VimpelCom and St. Petersburg's North-West GSM.

"Our company is profitable, and average monthly revenue per user is $43. We put a stress on a special segment of users who pay quite a lot of money and prefer to speak without limit on their phones using our unlimited tariffs," he said.

But Andrei Braginsky, a telecom expert at Renaissance Capital, said that while MCC is doing its best, the NMT standard doesn't have much of a future. "The growth of MCC has probably already stalled," he said. "But it occupies its own corporate niche; it is positioned well in it and can hold it."

VimpelCom operates both GSM and DAMPS standards and has a similar problem with its DAMPS network. Fewer customers are signing up for DAMPS, and the firm, which operates the Bee Line brand, is looking for new ways to market DAMPS.

VimpelCom's DAMPS may end up competing with NMT in terms of special tariffs, experts say. "VimpelCom will probably make considerable steps in offering more attractive DAMPS tariffs," said Renaissance's Braginsky.

Meanwhile, MCC's NMT network has an advantage over GSM in that it has already paid for itself. Aton analyst Nadezhda Golubeva said the system is unique because MCC profits from the network while spending almost nothing on it, whereas VimpelCom and MTS are funding enormous investment projects as they set up new GSM base stations and penetrate farther into the regions.

"However, the NMT standard is doomed to be squeezed out of the market eventually," said Golubeva, adding that MCC could turn to the digital GSM 400/800 standard as a way to survive.

The firm has announced tests on GSM400/800 in Moscow early next year, and said it will decide how to move forward shortly after that.
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In Russia's wide, open spaces, satellite phones can be indispensable. And mobile communication firm GlobalTel slashed prices Dec. 5 in a bid to attract more subscribers to its satellite package.

With outgoing calls charged at $1.19 a minute and incoming at $0.99, the offer could prove attractive for those who are frequently beyond the range of cellular networks in remote territories.

GlobalTel's satellite phones cost $899 and $989 and weigh 0.37kg. The firm is partly owned by international consortium Globalstar and partly by Rostelecom, exclusively providing Globalstar satellite communication in Russia.

"Cellular communication in Russia has its potential customers," said Renaissance's Braginsky. "But due to its spacious territory, Russia can't be fully covered by cellular networks, while satellite communication is available anywhere in the world. There are oil-industry people, geologists, sailors, military personnel and other groups of people who find it useful."

"Certainly, we don't compete with cellular operators," added Yekaterina Yekimova, GlobalTel senior manager. "We work in different fields and try to find our own target audience." The company has gained about 500 subscribers since sales started in October and plans to boost that figure to 10,000 next year, officials said.

While predecessors have failed in Russia, experts say GlobalStar is a realistic project with lower prices and flexible marketing.