Despite the active development of public Wi-Fi spots, the question of its monetization and provision of high quality services are still crucial tasks for operators. J’son & Partners Consulting presents main results of the research: Public Wi-Fi Network Market in Russia.


Main Projects in Russia


Russian public Wi-Fi network market is actively developing due to regional implementations and large projects, major share of which is based in Moscow.




Largest projects have been implemented in Moscow, in particular, the construction of Vimpelcom network – 14.4 thousand access spots.


Key perspectives of Wi-Fi network operators are bind with projects implementation in government sector and city infrastructure. Department of IT (Moscow Government) – DIT, plays key role in Moscow’s Wi-Fi market development. DIT is managing Wi-Fi deployment projects in social sphere – in schools, universities, parks, pedestrian streets etc. (around 6.5 thousand access spots). Moscow Government is negotiating with operators for the implementation of CityWi-Fi project which focuses on coverage of Moscow with Wi-Fi networks as an alternative to cellular communications. In Moscow the highest demand on Wi-Fi is expected in 2018 during the World Football Championship.


Large projects are being implemented in public transport sector, in particular, in Moscow metro. Maxima Telecom is planning to install over 5 thousand Wi-Fi spots till the end of 2014, free access will be provided on all lines.


Federal Unitary Enterprise Russian Broadcasting and Alert Networks (RSVO) is expecting that the network will be launched in Moscow in the beginning of 2016. By this time, 3840 access spots will be deployed in the city center, later this indicator will hit 8 thousand all around Moscow.


Public Wi-Fi network – is open for paid or free access, not for individual use by private subscribers inside HHs or employees within the organization.


Managed (Operators) Wi-Fi networks – network of operators’ class, as a rule includes large number of access spots managed from one center, with an opportunity of software update, following the changes in parameters, access rules etc.



St.Petersburg and Regions


The market of managed Wi-Fi networks in St.Petersburg consists of over 1000 access spots, 10% of them have been installed in public places. Operators implement mostly “branded” Wi-Fi projects by B2C model with free internet access for users on a low speed. In most cases, providers offer services on their own, city budget do not cover these projects.


ER-Telecom manages the largest regional Wi-Fi network in Russia. Dom.ru Wi-Fi network includes over 5 thousand access spots (in cafes, restaurants, trade and business centers, banks, hospitals, education institutions and places for public leisure) in 56 Russian cities.


In general, volume of regional market of public Wi-Fi networks (thousand access spots per 1 large city) is much higher than the volume of managed Wi-Fi networks (several hundred spots). Small companies, as a rule, sign contracts with operators on provision of internet access, and provide Wi-Fi services by themselves based on not very expensive equipment.


Public Wi-Fi networks projects made by Russian operators cannot be compared to the foreign analogs, maybe only, Vimpelcom’s project – with over 16 thousand access spots Beeline Wi-Fi all around Russia, 90% of them are situated in Moscow. Although, same operators W-Fi projects abroad, as a rule, do not have more than one-two dozens thousands of hot spots, the expansion of which is being reached because of numerous partnership agreements.


Market Structure


According to J’son & Partners Consulting, in 2013 Russian market volume of managed Wi-Fi networks was over 1.5 bln RUB, where 70% - communication services and advertising, 30% - direct sales of equipment, its maintenance services, integration and revenue from equipment lease.


Unmanaged networks dominate in Russian public Wi-Fi networks, supported by legal entities – they provide free Internet access service to clients (B2B segment). Managed networks have around 40% by number of access spots (mainly large operators’ projects). Practically, almost all projects in B2C and B2G segments are managed Wi-Fi network projects.


HoReCa segment (Hotel, Restaurant, Café – hotel, restaurant, cafe) – is the leader by Wi-Fi penetration in B2B segment (not less than 40-50%) and the most fast growing segment in Russia. In general, penetration rate of Wi-Fi in B2B segment is not more than 10% in Russia, which proves high growth potential of regional Wi-Fi market.


HoReCa is still the most receptive market segment and will keep this position until 2018. In B2B segment 54% of revenue comes from public catering companies in Moscow, 27% - large hotels, 12% - trade and entertainment networks. In a short- and midterm perspective, HoReCa segment in Moscow will reach saturation by penetration, and operators will have to find ways how to keep revenue by offering of advertising, analytics and LBS-services in different combinations.


The highest growth rates on Moscow Wi-Fi market in B2B segment are expected in banking sector, restaurants, cafes, trade and entertainment centers, 2015 – 2018.


Public Wi-Fi network is considered as unmanaged if Wi-Fi router (or any other device, distributing Wi-Fi traffic) is being installed by end customer (legal entity), which receive only internet access services from operator (cable or wireless).


Market Volume and Forecasts



J’son & Partners Consulting’s forecast for 2015-2018: Public Wi-Fi networks market will grow with CAGR -5% and by 2018 market volume will be more than 290 thousand access spots. At the same time, the segment of managed access spots will grow twice faster than unmanaged spots (CAGR=7.1% and 3.2%, accordingly), also because of “nibbling” by operators of unmanaged hot spots. As a result, share of managed access spots will increase from 40.0% in 2013 till 47.4% in 2018. In 2015-2018 the market of managed spots will grow faster in B2G segment (CAGR=19.3%), while in B2B segment the growth will be unremarkable (CAGR=5.0%), and even negative in B2C segment (CAGR=-3.8%).



Revenue will grow faster in the managed Wi-Fi networks segment starting 2015, mainly because of implementation of large-scale projects in B2G segment (Moscow) and also, because of use of advertising model. In Russia Wi-Fi services market will increase from 1.17 bln RUB in 2013 till 1.75 bln RUB in 2018.


Key Tendencies


Leading global operators specify the following key drivers for operators Wi-Fi network deployment (in order of priority):


  • Increasing subscribers’ experience, customer loyalty etc.
  • Lower costs on networks’ construction and development;
  • Improving coverage inside buildings;
  • Opportunity to find new revenue sources.


B2B projects got the highest expansion in Russia – buildings’ owners pay for external Internet channel and service is free for end customers. Largest internet providers use Wi-Fi networks in order to increase subscribers’ loyalty, to improve subscribers’ experience and provision of convergent services of internet access. First large scale projects oriented on revenue from advertising start to appear. In a long term perspective active steps are expected in the segment of Wi-Fi analytics (see the chapter Business-models).


Drivers and Deterrents



It is important to mention that changes in regulations regarding Wi-Fi users’ identification can be considered as growth driver for operators, it opens new opportunities for advertising model. In particular, provider can offer B2B clients with unmanaged access spots to pass users’ authorization via “themselves” with further users’ exit on informational-entertainment operators portal (for example, Maxima Telecom in Moscow metro). New niche is practically forming on the market – solutions for users’ identification (see the Chapter Business-models).


Key Market Players and Their Strategies


Vimpelcom, ER-Telecom and MTS are the leading operators that actively develop Wi-Fi networks. At the same time, there are a lot of regional providers on the market, which had around 59% of the market by the number of access spots in 2013.


Vimpelcom has long term plans for access spots development in order to increase subscriber’s loyalty. B2B is the key sector for project monetization. It is planned to use several ways: from integration with clients’ web-sites, different authorization access schemes, advertising in access spots, implementation of Hotspot 2.0, Wi-Fi Offloading till analytics. Besides, it is expected the optimization of access spots by transit of low loaded access spots from residential districts to the massive spots (parks, stadiums, city centers etc).


Main monetization model used by ER-Telecom is a subscriber fee, which B2B clients pay for installed hot spots in their buildings. Same as Vimpelcom, ER-Telecom Wi-Fi network (with expansive subscriber base of fixed BBA services and widely distributed hot-spots) is a powerful tool for subscriber loyalty. Operator is planning expansion and modernization of Wi-Fi network for Wi-Fi Offloading services provision and also using advertising models and analytics, in order to increase profitability per one spot.


MTS is mostly developing commercial hot spots in B2C segment. Operator is participating in international FON project – over 13 mln access spots all around the world and several dozen thousands in Moscow. Besides MTS provides free Wi-Fi in over 40 Russian cities in public places (spots): bus stops and public transport, historical sightseeing, medical and educational institutions, sport objects, trade centers, cinemas, railway stations and airports, in terms of large cultural and sport events.


Megafon has relatively small amount of commercial B2C hot spots in crowded places (in particular, the service Green Zone Wi-Fi), and also offers services to B2B clients. Rostelecom is considering Wi-Fi mostly as a brand project, although it is developing Wi-Fi Homespot model together with paid access. Besides, operator is planning to use Wi-Fi in terms of government program for elimination of digital devide. For example, in Primorsky region, where there is no way to deploy fiber-optic network, it is planned to install satellite VSAT stations and organize spots for collective access and Wi-Fi spots.


Business-Models and Perspectives


Partnership between operators and shop owners (restaurants, cafes etc.) is one of the most popular models of cooperation in Russia. In this case, subscriber fee per legal entity for Internet access services is the key revenue. In the future, new revenue sources in B2B segment and business models will appear, when coverage will reach 100%/ for example, models based on advertising, analytics etc.


At the same time, paid model – payment per end customers, fall short in Russia. Users got used to free Wi-Fi (mainly in cafes, restaurants and hotels), and paid access is decreasing due to the development of speed networks LTE/LTE-Advanced. Business models such as Video on Top of Wi-Fi and Business Everywhere gained popularity.


Premium hotspots models look the most perspective, it is used on railway stations, airports, large hotels and other crowded places. The motivation to consume such service is a low quality of Internet in a free hotspot and networks’ overflow.


Wi-Fi Homespot model is very interesting, because the use of subscriber Wi-Fi routers is not only at home but also are available for external users (operator identifies the access policy to such network). This model allows to gain the number of access spots with lower costs (for example Beltelecom, Belarusian operator). But the question regarding the monetization of such network is still open. As a matter of fact, MTS uses such model and develop joined project with international FON network. According to J’son & Partners Consulting, the number of MTS-FON access spots is decreasing due to the low users’ activity and low level of revenue per one spot.


Meanwhile, new business models, such as free Wi-Fi access (advertising revenue) are appearing in Russia. This model is on early stage of development; on the other hand, this is a new revenue source in Russian WI-Fi networks for a long term perspective. The most profitable position have large scale Wi-Fi networks with high level of visitation and projects with segmented financial reliable clients’ base (auto houses, fitness centers etc.) and opportunity to integrate advertising with geo location services and analytics (trade and entertainment centers, etc).


On Figure 2 you can see the examples of advertising cases by Russian advertising agency for perfume salon network (start page introduces users to free Wi-Fi with seasonal discounts) and auto houses 2013 (placement of branded start pages). In general, lack of large scale Wi-Fi networks in Russia, comparable to foreign network, is decreasing the attractiveness of such projects for advertisers.



Maxima Telecom is implementing large scale project in Moscow metro. There is an interest in advertising among other large operators, in particular, by ER-Telecom. This direction will be developing, first of all, in large networks in Moscow, St.Petersburg and large cities with population of 1mln.+. However, share of operators’ revenue from advertising, will remain relatively small – around 4% in 2018 (data by J’son & Partners Consulting).


Changes in regulations regarding Wi-Fi access, such as Government Decree #758 dated 31st July, 2014 and #801 dated 12th August, 2014 will lead to appearance of new market niches. For example, the following services and users’ identification solutions have been announced (starting the end of October 2014):


  • «Managed Hot Spot» implemented by Enforta Company is based on cloud solution. It allows to organize a managed Wi-Fi zone and includes the method of users’ identification. The identification via mobile phone by sending of SMS with password. Service includes also implemented marketing instrument for promotion of client’s goods and services, i.e. welcome web-page with advertising and news while they connect to the Internet.


  • Corporate users, which have implemented the identification system “Chestny (Honest) Wi-Fi” will be able to minimize potential risks due to the stiffening Russian legislation regarding Internet access. According to developers, there is legal base for developing demand on such solution. “Chestny (Honest) Wi-Fi” is counting on commercial success in HoReCa sphere and utility services.


According to J’son & Partners Consulting the advertising based on Wi-Fi analytics with clients’ positioning will become a key driver for Russian public Wi-Fi networks development in a long-term perspective. The cost of such projects, which increase the attractiveness of trade centers for lessees, is relatively low. So, in most cases this sector will be a field for small targeted advertising agencies.


In general, according to the surveys of global operators the most important strategies for Wi-Fi networks’ monetization will be connected to mobile network offload (Wi-Fi Offload), geo-location services, analytics based on Wi-Fi users’ Wi-Fi networks and services for business. These are sphere, where services can be offered via Wi-Fi, the one that differ from basic access and which have additional value. Nevertheless, the question regarding the Wi-Fi networks’ monetization and quality of services remain the most complicated and critical aspects of public Wi-Fi networks.


According to J’son & Partners Consulting’s experts, Russian operators will not actively use Wi-Fi Offload till  2016. By this time, the capacity of 3G/LTE will be not enough. On the other hand, new ecosystem will be forming and there will be an opportunity to use global operators’ experience.


Detailed Results of the Research are Presented in the Full Version of the Report: Market of Public Wi-Fi Networks in Russia, Current State and Perspectives (128 р)



Terms and Definitions

1. Russian Wi-Fi Network Market

1.1. Key Wi-Fi projects in 2013-2014

1.1.1. Moscow

1.1.2. St.Petersburg and Russian regions

1.1.3. Sochi

1.1.4. Kazan

1.1.5. Krasnoyarsk

1.1.6. Other projects

1.1.7. Largest Russian Wi-Fi projects amid the foreign analogs

1.2. Wi-Fi Market Volume and Forecasts

1.2.1. Russian market in general

1.2.2. Market in Moscow

1.3. Russian Wi-Fi Market Structure

1.3.1. Russian market in general

1.3.2. Moscow Wi-Fi market structure

1.4. Current Ttendencies of Market Development

1.5. Drivers and Deterrents of Market Development

1.5.1. Scale projects in government sector, sport events and metro

1.5.2. The continuous growth in B2B segment

1.5.3. Increasing penetration of smartphones

1.5.4. Necessity in Wi-Fi Offload

1.5.5. Possible decrease of Wi-Fi use popularity due to LTE development

1.5.6. Decreasing growth rates of telecom market in general

1.5.7. Regulation changes in Russia (necessity to identify users)

2. Key Russian Wi-Fi Market Players’ Profiles and Wi-Fi Development Strategies

2.1. VimpelCom

2.2. MTS

2.3. Megafon

2.4. Rostelecom

2.5. ER-Telecom

2.6. Others

3. Current and Perspective Business Models for Development of Wi-Fi Networks: General Description and Commercialization Opportunities

3.1. Partnership with shops’ owners – restaurants, cafes etc. (free access for visitors)

3.2. Combined access (free access for fixed BBA operators’ clients, paid – for others)

3.3. Commercial hotspots (paid access for individuals)

3.4. Advertising model

3.5. Partnership with mobile communication operators in order to offload the data traffic (Wi-Fi offload)

4. Wi-Fi Networks’ Services for End Users (B2C, B2B, B2G)

4.1. Direct service for end users

4.2. Premium hotspot

4.3. Business everywhere

4.4. Video on Top of Wi-Fi

4.5. Managed hotspot

4.6. Additional services (VAS)

4.6.1. M2M

4.6.2. Sublease

4.6.3. Advertising

4.6.4. Integrated interface of networks’ access

4.6.5. Cooperation in retail trade center

4.6.6. Other services

5. Efficiency Estimation of Different Business Models and Expected Effect

5.1. Short analysis of capital costs, depending on chosen business model

5.2. Prerequisites for revenue gain, depending on chosen business model

5.3. Indirect profits (decreasing subscribers churn – fixed communication, etc.)

5.4. Preliminary efficiency estimation of researched business models

6. Competition on Mobile and Fixed BBA Market

6.1. Cable BBA Market

6.1.1. Internet access market volume and dynamics, 2010-2016

6.1.2. Internet penetration by types of connections, 2010-2016

6.1.3. Share of different cable BBA technologies, 2010-2016

6.1.4. ARPU in cable BBA segment, 2010-2016

6.1.5. Largest market players

6.1.6. Main tendencies and market perspectives

6.2. Mobile BBA Market

6.2.1. Mobile communication penetration rate by type of networks (2G, 3G, LTE), 2010-2016

6.2.2. The development of 3G and 4G

6.2.3. Largest players

6.2.4. Subscriber devices market: smartphones and tablets, 2010-2016

6.2.5. Main tendencies and market perspectives

7. Conclusions and Recommendations

7.1. Main Projects

7.2. Market Volume and Forecasts

7.2.1. Russia

7.2.2. Moscow

7.3. Market Structure

7.3.1. Russia

7.3.2. Moscow

7.4. Main Tendencies

7.5. Drivers and Deterrents

7.6. Key Market Players and Their Strategies

7.7. Business Models

7.8. Services for End Customers

7.9. Competition on Mobile and Fixed BBA Market

7.10. Recommendation

8. Annex

8.1. Homespot (Beltelecom example)

8.2. Banks

8.3. Hotels

8.4. Retail networks

8.5. Transport

8.6. Public food courts

8.7. Stadiums


List of Figures


Figure 1. Report prepared by DIT: Program of cities’ informatization

Figure 2. List of pilot Universities which will receive aid on Wi-Fi services provision in dorms in 2014

Figure 3. Total number of public Wi-Fi hotspots in UK

Figure 4. Forecast for public Wi-Fi market in Russia: number of managed and unmanaged access spots*, 2013-2018

Figure 5. Forecast for managed Wi-Fi networks in Russia: number of access spots, thousand pcs., 2013-2018

Figure 6. Forecast for managed Wi-Fi networks in Russia: operators’ revenue from access and advertising services*, 2013-2018

Figure 7. Forecast for managed Wi-Fi networks in Moscow by B2C, B2B and B2G, 2013-2018

Figure 8. Forecast for managed Wi-Fi networks in Moscow: operators’ revenue from access and advertising services*, 2013-2018

Figure 9. Public Wi-Fi networks structure in Russia: number of networks, 2013

Figure 10. Operators’ revenue structure – managed Wi-Fi networks, mln.RUB, 2013

Figure 11. Managed Wi-Fi networks in Russia: operators’ share by number of access spots*, pcs., 2013

Figure 12. Managed Wi-Fi networks in Russia: operators’ share by revenue from services, mln.RUB, 2013

Figure 13. Structure of Russian public Wi-Fi networks market by number of access spots by segments B2C/B2B/B2G, 2013

Figure 14. Structure of Russian managed Wi-Fi networks by number of access spots by segments B2C/B2B/B2G, 2013

Figure 15. Industrial Wi-Fi structure in B2B/B2G segment (selective), 1H2014

Figure 16. Share of BIG 5 on the market of managed Wi-Fi networks in Moscow by number of access spots, pcs., 2013 Figure 17. Industrial Wi-Fi market structure in Moscow, mln.RUB., 2013

Figure 18. Industrial Wi-Fi market structure in Moscow, mln.RUB., 2018F

Figure 19. The most frequently used type of internet access among smartphones holders in different countries in 2013

Figure 20. Shares of Wi-Fi and LTE of the total number of internet connection among LTE smartphones, based on Android, users

Figure 21. Dynamics of the number of Wi-Fi access spots and basic stations by China Mobile in the period 2009-2014

Figure 22. Monetization strategies of Wi-Fi networks by global operators

Figure 23. Share of paid hotspots in the world and USA, 2Q2013

Figure 24. Tariffs on access in Wi-Fi MTS networks in Moscow

Figure 25. Share of macro regions in deployment of new operators’ access spots in the world, 2018

Figure 26. Wi-Fi as part of possible Orange Business Everywhere Smart network

Figure 27. Architecture of managed hotspots deployment

Figure 28. Architecture of communication networks based on Moxa equipment with the use of Wi-Fi access spots and Mesh-network alongside the railways roads.

Figure 29. Cases of Moscow Mobimark agency with advertising in Wi-Fi networks Il de Beaute and auto houses ROLF

Figure 30. Architecture of Wi-Fi networks in Trade center with the use of access spots and Ruckus Wireless controller

Figure 31. Interactive map of ICSS-network Deutsche Telekom by international Wi-Fi roaming

Figure 32 Concept and solutions for WLAN networks, used for business case calculations

Figure 33. Cluster analysis of business models – construction of Wi-Fi networks

Figure 34. Volume of fixed BBA market in Russia in B2C segment, bln.RUB, 2010-2016

Figure 35. Dynamics of fixed BBA subscriber base in Russia in B2C segment, mln.HHs, 2010-2016

Figure 36. Penetration of home BBA in Russia, 2010-2016

Figure 37. Internet penetration by types of connection, 2010-2016

Figure 38. Share of fixed BBA technologies in Russia in B2C segment, 2010-2016

Figure 39. ARPU BBA dynamics in Russia in B2C segment, RUB/month, 2010-2016

Figure 40. Forecast of subscribers number (mln.) of different mobile BBA technologies in Eastern Europe, 2011-2016 (basic scenario)

Figure 41. Cellular communication coverage in Russia (2G, 3G, LTE)

Figure 42. Forecast of number of subscribers (mln.) and shares (%) of different mobile BBA technologies in Russia for 2018 (basic scenario)

Figure 43. Forecast of connections to LTE networks in Russia, 2013-2018

Figure 44. Smartphones market volume, Russia, mln.pcs., 2011– 1Q2014

Figure 45. Smartphones share in the total sales of mobile terminals, %, pcs., Russia, 2011–2014

Figure 46. Smartphones market structure by operational systems, Russia

Figure 47. Smartphone with LTE market volume, mln.pcs. Share of LTE smartphones of the total number of sold smartphones, %, 2012-2018

Figure 48. Forecast – smartphone market volume, mln.pcs., 2014-2018

Figure 49. Forecast – share of smartphones in the total sales of mobile terminals, %, pcs., Russia, 2014–2018

Figure 50. Tablet PCs market volume, mln.pcs., Russia, 2011 – 1Q2014

Figure 51. Volume of the Russian tablet PCs market by operational systems, pcs., 2011-1Q 2014

Figure 52. Forecast – Tablet PCs market volume, mln.pcs., 2014-2018

Figure 53. Wi-Fi Beltelecom network’s structure (paid access), 1H2014

Figure 54. Public hotspots – Beltelecom by subsidiaries, 1H2014

Figure 55. BarclaysFreeWiFi project based on British Telecom hotspot network

Figure 56. What advantages of the hotel are in most demand during the search

Figure 57. Average networks density, MByte/sec for 10 sq.m

Figure 58. Terms to reach breakeven of Wi-Fi project – stadium


List of Tables


Table 1. Wi-Fi market volume in Moscow in B2B segment, mln.RUB, 2013-2018.

Table 2. Estimation of business models efficiency.

Table 3. Subscribers base of TOP 10 BBA operators in Russia, mln.HHs, 4Q2013.

Table 4. Distribution by key communication operators, number of currently operating RECs, by types.

Table 5. Number of 3G base stations of Big3 operators and Rostelecom in 2010-2013, thousand stations.

Table 6. Some Wi-Fi networks on stadiums



This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.