Broadband Access Growth Twice Lower than Expected due to Recession in Russia

I have already mentioned here that recession has actually turned to be a positive factor of growth for the internet industry in Russia with advertising budgets definitely migrating online more than we could hope for and with people using internet more than we expected, especially to find new jobs for those who were left unemployed in the middle of recession.

But while overall the situation can certainly be described as pretty positive for the industry, there’s one aspect that seems to be hurt – and that aspect is growth of broadband internet subscribers. Yes, I know that for the vast majority of my readers it may be hard to imagine that there are still people using dial-up access at home but this is exactly the situation here in Russia – and for some people it will last longer than we hoped to.

Of course we all started with some kind of dial-up and then slowly migrated to DSL modems and even purchased WiFi routers later on but there are still regions in this huge country where broadband access is priced ridiculously enough for people not to even consider switching from dial-up.

And today we get to know that some more people will still have to stick to their dial-up modems for some more time. Previously the experts from J’son & Partners forecasted growth rate of 50-60% for the number of broadband subscribers in Russia but this forecast has been changed now and the growth rate is expected to be twice lower than initially expected as the number of subscribers will only grow by 29% by the end of the year. This growth will bring the number of broadband subscribers to 14.3 million people.

The analysts are unhappy about the projected figures simply because they expected to have much better rates as in 2006 and in 2008 the number of broadband subscribers simply doubled compared to the respective previous years. But now that carriers have cut or totally stopped investments in regional expansion outside of Moscow and Saint Petersburg due to the recession, the growth rate is obviously lower than what everyone hoped for.

And while this year recession is to blame for the deterred growth of the broadband market, in the subsequent years we will still see less impressive growth numbers (far from doubling the number of subscribers) – but it will be due to market saturation that will be reached by 2013 when broadband access will be available to 70% of urban households.

But even in the degraded situation of the recession the financial aspect seems to be less hurt anyway. It is interesting that the broadband market will still grow faster than the number of subscribers – by 39% compared to 29% growth of the number of subscribers. As a result, the broadband access market volume in 2009 will amount to approximately $1.5 billion.

All in all, I’d hope that given the slightly improving financial environment in Russia (and internationally) our operators will resume their investments and we won’t lose the rates of growth dramatically – and people will begin forgetting what dial-up is after all. At that I can’t help but point out the fact that growth of the number of subscribers by 29% is still tremendously huge and you will hardly find many industries that could demonstrate such a rapid growth anywhere in the world – which still makes me feel proud for the internet industry in Russia.

Via (in Russian)