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The Russian Government will bring High speed Internet to the Arctic for 65 Bln RUB

The Russian Government will bring High speed Internet to the Arctic for 65 Bln RUB

Thursday, November 19, 2020

The Ministry of Transport, Rosmorrechflot and a number of Federal State Unitary Enterprises (FSUEs) have begun to construct a high-speed cable line to the Arctic. “Megafon” and Cinia have a similar project in plan. Experts are skeptical as to whether the region has enough clients to feed both projects.

The news that the Ministry of Transport, the Federal Agency of sea and river transport (Rosmorrechflot) and FSUE Rosmorport have initiated the construction of a transarctic fiber optic cable line from Murmansk to Vladivostok came to RBC from the general director of FSUE Morsviazsputnik Andrey Kuropyatnikov and the head of UPT Group of Companies Alexey Strelchenko. FSUE Morsviazsputnik is   an enterprise within the jurisdiction of Rosmorrechflot and has been chosen to be the operator of the project. UPT is engaged in the construction of international communication lines and is the main contracting organization of the project.

A Rosmorrechflot representative has confirmed the involvement of the Agency in the project. According to the statement from the Agency this project is being rolled out in accordance with the President’s decree on the “Development strategy of the Arctic Zone of the Russian Federation and ensuring national security until the year 2035”.

The capacity of the new cable line should be 52-104 Tbit/second, the length of the line to be over 12.5 thousand kilometers not taking into account the branches to be constructed to the communities along the cable route. According to the statement of Alexey Strelchenko the idea of this project has been under discussion for many years, however the construction contract was only signed in 2019. At the moment the companies involved in the project have completed the sea and technical research along more than half of the anticipated route, finalized the construction of the cable landing station in Teriberka and have begun the design of similar stations in Amderma and Dikson. It is estimated that the first part of the cable line from Teriberka to Amderma will become operational in 2021 whereas the entire project is expected to be finalized in 2026.

The parties interested in the existence of internet in this region and the main competitors of the new cable line are highlighted in the material from RBC.

Why is the internet necessary in the Arctic? The presentation in the possession of RBC shows that the new project, among other things, will:

Enable the development of the port infrastructure along the North Sea Route;

  • Enable the creation digital infrastructure for the production and transportation of hydrocarbons in the Arctic region, resolving the problems of geological exploration;
  • Enable the connection of arctic regions and the far east regions of Russia to the new connection line whereas at the moment the only satellite internet is available in these regions.

The document shows the project value to be of 65 Billion rubles. According to Andrey Kuropyatnikov, these funds will be supplied by the government, however they do not include any opportunities for international involvement and additional expenditure by the internet service customers to build connection lines to communities where the internet will be in demand. There is no target to recoup the costs of the project, however the maintenance and further development of the cable line should be financed from funds received from commercial customers. Alexey Strelchenko has pointed out that the main aim of the project is to resolve social targets such as the connection of governmental and administrative institutes and the supply of people with internet services. According to the statement from Morsviazsputnik the possible connection of the new cable system to existing international ones is already underway but does not specify with which companies.

Andrey Kuropyatnikov has explained that apart from governmental interest, high speed internet in the Arctic is of importance to geological exploration – for the transfer and analysis of vast amounts of data, for the facilitation of the IoT, cloud services, quantum communications for companies engaged in oil and gas exploration and natural gas processing in the region. “Projects related to the transportation of energy resources may arise at a later stage, at the moment the government is actively discussing the creation of container transportation line through the North Sea Route which will require data transfer for cargo processing among other things” stated Andrey Kuropyatnikov. Also, the project participants are ready to supply any data centers to be built in the Arctic with internet access.

Last week, on the 10th of November, the specialized council within the Federal Council proposed to create a number of data centers in the region. It is expected that the construction of these data centers will be at the expense of private business enterprises, however in order to ensure their profitability these projects would need governmental support along the lines of administrative and tax measures, partial subsidizing from the federal budget. The construction of tens of data centers are envisaged in order to facilitate strategic projects related to the development of the Arctic region including the North Sea Route. Experts point out the absence of high-speed data transfer channels among the main hurdles of the project realization.

Other parties interested in the development of data connections in the Arctic In 2019 the “Megafon” company agreed with the Finnish company Cinia on the creation of an international consortium for the construction of a transarctic connection cable with a length of 10 thousand kilometers from Helsinki to Tokyo. At the moment studies are being conducted for the construction of the network. “Megafon” valued its’ investment in the project at $0.8-1.2 Bln (60-91 Bln Rub at the current exchange rate). The main objective of this project is the transit of traffic from Europe to Asia. However apart from the construction of the subsea fiber optic cable connection line the project also includes the planned construction of branches to on-shore landing points that will provide connectivity to the customers of the Arctic and the Far east.

The general director of “TMT Consulting” Konstantin Akilov has pointed out that the shortest route from Europe to Asia is through the Arctic which is why the project will enable the least possible delay in data transit. “The relevance of such projects (for the construction of data connection network in this region) is also linked to the fact that the North will continue to develop and that this is an area of strategic interest for Russia” – said Konstantin Akilov. In his opinion, the Ministry of Transportation’s cable line can compete with the Megafon cable in the part of data transit from Europe to Asia, as well as with other Russian and international data networks that pass through the Indian ocean. “There are only so many customers in the Arctic and should the Mintrans cable engage the servicing of government entities the question remains as to which customers will be left for the Megafon cable to profit from” – noted the head of “TMT Consulting”. RBC has sent an information request to “Megafon”.