February 01, 2006

Cell Phone Mania

Food, Water and Cell Phones

Cell phones may not top food and water on Russians' list of vital necessities, but they might well place a tight third place.

Russia — young, capitalistic and always on the go — is distinctly mobile. Staying connected is becoming as much an obsession among Russia's younger set (and the not-so-younger set), as it is in the Western world.

Within the past year, cell phone penetration rose from 53.9 to 88.3 percent, according to ACM Consulting data, RIAN reports, indicating that there are now 128 million cell subscribers, versus just 78 million a year ago. Since ACM tallied cell phone users by number of SIM cards sold, the number is most likely inflated — many people use multiple SIM cards. It's not uncommon for Russians to have phone numbers for each city they visit regularly, say a Moscow and a St. Petersburg number. Hence, in some regions, cell phone penetration exceeds 100 percent. According to a more conservative, and a more realistic estimate by a national pollster, Romir Monitoring, Russian cell phone penetration is around 60 percent, still quite high. In rural areas with few landlines, cell phones are often the only means of communication, but, given lower income levels in rural areas, only 47 percent of village residents are said to have cells. In the more affluent cities, penetration is over 75 percent.

But for many Russians, just having a cell phone is not enough. Another part of being a Russian mobile-phile is having as expensive a phone as one can afford, perhaps one that is even more expensive than one can afford. One has to stay on the bleeding edge of fashion, after all. With a national median monthly salary of $300, Russians spent an average $165 on their cell phones, and they spend 70 percent more if they are buying on credit, according to several polls. The fashion-conscious typically upgrade their cell phones every three to six months, with upper middle-class consumers often spending around $400. There are no free-phone deals in Russia, as is common in the U.S. Similar to elsewhere in Europe, Russian cell phone operators mostly us a minutes-prepaid system, and phones have to be bought outright.

The market picks up on this demand. Last year, cell phones topped the list of Russian electronics imports, marking more than 20-fold increase in value vs. 2004, according to the head of the Federal Customs Service, Alexander Zharikov. The number of phones imported to Russia increased six-fold in 2005, with Samsung the undisputed market leader, with almost a third of the market, followed by Nokia (21.7 percent) and Motorola (19.8 percent).

Equipped with end-of-the line handsets, Russians, however, overwhelmingly ignore most services new phones offer, except SMS, another poll shows. Only one in ten Russians said they would use a cell phone to access Internet, or use mobile operator services, like weather forecasts, exchange rates or horoscopes.

In point of fact, SMS rules. Over two-thirds of Russians send text messages regularly, and, for people under 24, the number goes up to 90 percent. Providers capitalize on this addiction, launching SMS games, dating portals, competitions and paid SMS services. Some go crazy, like one Russian girl, who was reported to have spent over $1000 on text messages for her boyfriend around Valentine's Day. Others seek practical uses, such as the high school principal in Chelyabinsk who launched an SMS information service for parents to update them on their kids‚Äô grades and school absences. In one case, a policewoman in Krasnoyarsk, used SMS to lure a fraud suspect out with a flirty text message, eventually leading to his arrest.

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