Ian & Stuart's Australian Mac: Not for Sale/Another.not.for.sale (Australia).iso/wide open road/GreenNet/russian-nets-october-1992.txt

Text File | 1994-07-03 | 140KB | 2,617 lines

Russian Telecommunications
After the Revolution:
New Perspectives on Infrastructure
Creation - Autumn 1992


- a study by Gordon S. Cook Jr.



 1992 by Gordon Cook,


Gordon Cook
COOK Network Consultants
431 Greenway Ave,
Ewing, NJ 08618
USA

CONTENTS:


Introduction:
Building the Russian Marketplace - October 1992    3

New Economic Classes    3
Service to the Customer -- an Unfamiliar Idea    5
The Voucher Program -- Teaching the People Capitalism    6
Entrepreneurship    6

Chapter 1:
The Fiber Optics Conference -- High Tech on Lake Ladoga    8

The "Fiberization of Russia"    8
Fiber MANs in Moscow and St Petersburg Subways    10

Chapter 2:
Financing Network Infrastructure    11

The Emergence of Rinaco    11
Rinaco's View of the Evolution of Relcom    11

Chapter 3:
International Networking for Russian Researchers and Educators    13

Academic Networking at Mathematics Section of the Academy of Sciences    13
Russian Access to the Internet -- A New American Policy Muddle    13

Chapter 4:
Business Communications -- Russian & American Straws in the Wind    15
A Few Steps Towards the Modernization of the Communications Environment    15
Transinform - A Communications Joint Venture in Search of New Friends    15
American Operators in Russia:  US West    16
AVisit With MCI    17

Chapter 5:
Russian Computer Networks:  Where Are They Six Months Later?    18

Sovam Teleport    18
Relcom Matures and Splits    18
Demos    19
Glasnet    19

Chapter 6:
Whither Russian Policy?  The Role of Min Sviaz    21

An Interview at the Ministry of Communications    21

Chapter 7:
Some Concluding Thoughts on the Enigma of Russia    23











CONTENTS (concluded)


Appendix A:
Rinaco Self Described    25

Appendix B:    27
A Policy Paper by Arkadi Golubkov


List of Text Boxes

Politics and Economics:
A Russian Physicist Reports to American Students    4

What Russians Can and Can't Own    5

Invest Rubles:  Receive Dollar Dividends!    9

Israeli Company Sells in Russia
Router that it Claims Outclasses the Cisco AGS+    14

Sovintel Gets 6.5 million EBRD Loan     19

SomeTechnical Details on Relcom
TCP/IP Hardware and Software    20



List of Figures

Figure 1:  WHY?  Asks flier for Billy Graham Rally    7

Figure 2:  A Map of the Trans Siberian Line    10

Figure 3:  An Advertisement for the Relcom Stock Offering    12

Figure 4:  Moscow Business Telephone Guide    17

Figure 5:  St Petersburg Telephone Directory Announcement    22


INTRODUCTION
Building the Russian Marketplace - October 1992

Russia, in October 1992, is in chaotic transition from the disastrous effects
of 74 years of Communist Party rule. While Lenin still rests in his Mausoleum
in Red Square, he has been largely forgotten.  The line to view his embalmed
body -- once more than a mile long -- has understandably vanished.

Wandering by the Square one day at the end of my October visit, I saw that the
Square was closed because the Mausoleum was open.  So on a whim, I decided to
visit.  There was no wait because there was no line.  I was able to stand for
a minute or two inside and carefully scrutinize the leader of the 1917
revolution. Lenin looked thread bare, almost as though -- worn out -- he had
been replaced with a cardboard imitation.  The space inside the mausoleum was
very very empty:  symbolic of the tragedy of the inheritance left to this
proud nation by the failure of the communist experiment. Russia lives and
moves forward but it is hard to judge where its newest journey will end.

The dramatic changes introduced by the fall out from the coup of August 91 no
longer are the primary focus of people's attention. Instead, usually of
necessity, people focus on the "economic situation."  Russia is lurching very
unsteadily toward the building of a market economy.  Income stratification is
increasing dramatically.  Unfortunately it is doing so both without the
economic safety net features of most western economies and in a way that, by
western standards, is absurdly skewed.

New Economic Classes

Andrei Sebrant, who was also my April host, reads me a short story on income
distribution from the Russian newspaper Argumenty i Fakti. The lowest 25% of
Russian incomes are those of 3500 rubles per month or less ($12).  This
includes not surprisingly pensioners, secondary school teachers and heath care
workers  However it includes all scientists, physicians and university
professors. Somewhere in between this group and the highest 10% are to be
found factory workers.  But generally well above them in income are taxi cab
drivers and workers in the oil and transport industries.  The highest 10%
(350,000 rubles and above - $1200) are those with management positions in
foreign trade, state enterprise ministers and politicians.  Such income
distribution is not something likely to enhance long term social stability.
Nevertheless it is the current fact of life for the Russian people in an
environment that if anything seems more fluid and rapidly changing than six
months ago.

As I watch programs on the television, read the local press, and talk to as
many people as I can, what I see is kaleidoscopic in form.  I begin to realize
that the situation is too complex and too fluid to be totally grasped by
someone who doesn't experience it first hand and with complete language
fluency on a long term basis.  As Masha says to me: "even though you have
spent much time with us, you can not even begin to really understand what our
life is like."  Thinking about what Masha has told me, I am struck by the
absurdity of the tendency of some American observers to attempt to simplify
this complicated situation.  When AT&T "hires" 50 or so fiber optic
researchers for $70 a month, this is taken by some as an indicator of the
acceptable professional salary for all educated Russians.  This is absolutely
untrue, and betrays an intellectual laziness that will not serve future
Russian American relations well.

Meanwhile, having arrived in Moscow at 10 am Friday October 2,  on Saturday
the 3rd, I take the overnight train to Petersburg where on Sunday morning
Victor Iukhtentko (whom I had previously "met" only by electronic mail) greets
me.

Again we talk about the chaos and the economic situation.  Victor says that
inflation is increasing faster than people's income and that the decontrol of
oil and gas prices in September 1992 will give inflation another powerful
boost.  (The decontrol appears to have been responsible for the dollar to
ruble exchange rate more than doubling over the last sixty days with the rate
of increase showing no signs of slackening.) And yet to a superficial observer
conditions seem no worse, the street bazaars no larger and the lines no longer
than in April.

Certainly advertising as a symbol of a generally agreed upon embracing of a
market economy has increased.  It has even spread to the public address system
of the Petersburg metro.  On television the sophistication of the commercial
is approaching Western standards and the range of consumer products runs from
Wrigley's Spearmint chewing gum ("original American quality" to Vidal Sasoon
Shampoo.  Meanwhile on the street corners, posters announce that "the famous
Volvo cars now here." The increase in the apparent influx of western goods
between April and October is startling.  But Andrei assures me that economy is
stratifying.  The western goods advertised are affordable generally to only
the most wealthy 10 to 20% of the population who are usually, either former
officials of the old regime or those who have been the most successful in
buying and selling imported products.

For sixteen years I have lived five doors down from an elderly Russian emigre.
She has given me $200 and asked me to deliver it in Moscow to her sister,
Tatiana Panteleevna.  It turns out that Tatiania's husband Alexander is an
official both of the old and new regime. He is Minister of  Roads and
Highways.  Shortly before the last weekend I spend in Moscow they call and
offer to take me out on Saturday in their chauffeured car.  Since they speak
almost no English, it will be good practice for my Russian.

While they are very pleasant people, they are very definitely members of the
most wealthy segment of the population.  Their Moscow apartment  of  three
bedrooms, a living room and kitchen is palatial in comparison to other
apartments I have visited.  Fine furniture, a large library behind glass
enclosed bookcases, Japanese stereo equipment and a collection of antique
Afghan guns and knives adorn it.  Nevertheless they assure me that they spend
as little time as possible in it.  From April to late November they stay at
their country dacha from where Alexander is chauffeured to work every day.
Still Alex complains that his salary has not kept up with inflation.  On
return to the US I learn from my neighbor that they will remedy this problem
by renting their Moscow apartment to a western businessman for $2,000 a month
- an amount of money that could provide adequate support for a family of four
for a year!

With inflation getting much worse everyone is occupied in buying and selling.
Short term activities only. A brilliant spectroscopist from Andrei's lab
joined a group which flies to Singapore to get computer parts and returns them
to Moscow where they make two new computers a day. His former lab colleagues
make 1500 rubles per month and he 35000.  According to Andrei, he now brings
chocolate to his former laboratory friends. Under such inflationary
conditions, long term investment in building or designing or creating is
simply impossible.

Certainly, services to westerners for dollars and German marks abound.  (The
first taxi in Petersburg that I found was a sparkling new maroon Mercedes Benz
with a meter denominated in dollars.)  For those with the language ability and
the contacts, the buying and resale of all manner of merchandise is very
lucrative.  For example, Andrei tells me that Sergei de la Cuesta, who in
April had been engineering the error correction protocol into the cheap
Taiwanese fax modem has given up on this venture and is reselling computers.
And Dima Volodin -- one of the five top telecom experts in Russia -- chastises
Andrei for using the network to talk to western school children when it should
be used to earn dollars.

Service to the Customer -- an Unfamiliar Idea

While services may abound, the idea of  having customers, finding out what
they want, and giving them to keep them coming back for more is far too often
missing.  Two examples should suffice to make the point.

The country palaces of the Tsars and the Winter Palace that houses the world
famous art collection known as the Hermitage are the most important tourist
attractions of Sankt Peterburg.  Many parts of them have fallen into
significant disrepair and the Russians have taken to charging foreigners 800
rubles for entry and 600 for taking photographs.  A native may visit for 20
rubles.  Given the economy problems of the country it seems reasonable to have
foreign visitors subsidize the cost of maintaining these priceless monuments.

But some bureaucrat who oversees the hours of operation has ignored an obvious
source of additional revenue. All are closed one day a week.  The Hermitage,
in the heart of "Sankt Peterburg," closes an hour early on Sunday and is
closed all day Monday.  It seems reasonable to assume that keeping it open
would provide more revenue as well as needed work for the custodial staff --
not to mention making for happier tourists.

The other example was a promised visit to Kizhi -- a 300 year old wooden
church with 22 onion domes and certainly one of the most important and,
because of its remote location, rarely seen architectural monuments in Russia.
Thanks to the courtesy of  Paul Polishuk, President of Information Gatekeepers
of Boston and co -sponsor of the second annual Russian Fiber Optics and
Telecommunications Conference, I had been offered a ticket to Conference which
was to be combined with a cruise to Valam Island Monastery in Lake Ladoga, the
city of Petrozavodts on Lake Onega and the fabled site of Kizhi on the other
side of Onega.

The conference was of course the main reason for 23 Westerners and 150
Russians boarding the 340 foot long Vissarion Belinskii.  The ship essentially
was run on two fare classes.  The Westerners paid roughly $200 a day and the
Russians an amount in rubles which amounted to about $5 a day.  If there were
ever any question about weather making the visit impossible, service to the
customer should have demanded that we go straight to Kizhi, the most important
stop.

Instead we sailed from the bottom to the top of Lake Onega and arrived at
Valam Island Monastery in absolutely beautiful weather.  Left Valam at One PM
enroute to the Svir Canal the 60 mile long channel connecting Lake Ladoga to
Onega.  We had at least 60 to 70 miles of open lake to cross and, before long,
the boat was beginning to sway dramatically from side to side.  By sundown we
were still in rough seas with blue sky overhead.  Two hours later we were in
the Svir River and there was announcement about stormy conditions on Lake
Onega which might make the visit to Kizhi impossible.  That night, a midnight
the boat anchored. At 6 am it started moving and at 8 am the passengers were
awakened with announcement that if we continued directly to Kizhi we would not
arrive until two hours after night fall.  (No mention of the six hours without
moving that had just been spent.)  Because of uncertain weather conditions
we'd continue for an hour to the settlement of Svirstroi where we'd dock for a
day and return to Petersburg on the following day.

At Svirstroi we tied up next to an identical boat filled entirely with western
hard currency paying passengers.  It was continuing on to Kizhi in three hours
and its management was positively contemptuous of our captain's reason for not
continuing.  Later in the day we were invited onto the bridge where the
captain discussed the storm conditions.  The discussion made it clear that the
boat was operating well within its margin of safety, but it was also clear
that protest would be of no avail.  Our boat was managed by a different
company than the hard currency boat.  I can only speculate that, with the
recent decontrol of fuel prices, the value of the fuel saved by traveling
about half the length of the scheduled trip was substantial.  An in Russia
with the current hard times, the motivation of immediate gain can tend to
outweigh willingness to make a longer term investment in future goodwill.

The Voucher Program -- Teaching the People
Capitalism

The Russian Government, as part of the privatization of State run business and
industry, has initiated a voucher program.  Every Russian citizen including
every child is to receive by December 1 from the Government, a 10,000 ruble
voucher.  Starting on December 1, these vouchers may be used to purchase
shares in the former state run businesses.  To ensure that people have a
chance to spread their investment, shares may not be priced at more than a
thousand rubles each. Early in 1993 the time for investment of vouchers will
expire and enterprises will turn over to the government vouchers against which
they have issued stock and be reimbursed by the government for the total value
of the vouchers presented.

Andrei tells me that the conditions of the voucher program seem to be changing
weekly.  The latest he has heard is that Yeltsin wants to issue a decree to
permit the vouchers to be used to buy land as well as shares in former state
businesses.  (See box this page 5.) A piece of land that can be farmed will
mean much more to an average Muscovite than an abstract certificate of part
ownership in a giant company.  If Yeltsin can postpone the next meeting of the
Council of People's Deputies from December 1st 1992 until March 1, 1993, the
land purchase decree will become a fait accompli.  The conservative majority
in the Council is against permitting such a purchase for it fears that
foreigners will buy up the majority of  the Russian land.  On October 21, the
day after I return home, Yeltsin looses his bid.  The Council will meet
December 1st.

Meanwhile a market in buying and selling vouchers has already arisen.  The
first prices I hear quoted from Victor are 8,000 rubles.  Ten days later in
Moscow the street price appears to have sunk below 5,000.  While the vouchers
may yet play an important role in the privatization of the Russian economy, in
November 1992, no one really knows the extent of the impact that they will
have.

Entrepreneurship

Victor Iukhtenko, who is 44 years old, presents an interesting personal
history of a would be Russian technical entrepreneur.  He graduated from an
aviation technical school with training in radio electronics.  Continuing to
study, he became an engineer who headed a group developing some early computer
hardware and software.  In 1978 or 79 when microprocessors first began to be
used in Russia he began to write software for them.  In 1981 he was promoted
to a technical directorship.  At this point he was expected to take a more
active role in the communist party.  He found that the party took on a much
more intrusive role in his life and quickly became disillusioned.

The productivity of the enterprise was very poor.  Victor analyzed why and
recommended changes to his bosses.  Unfortunately no significant changes were
made.  Meanwhile in 1980 he began doctoral research into the field of
man-machine interfaces.  He completed the Candidat Nauk degree in 1986.
During the late 1980s he worked eight hours a day as a technical director and
eight hours a day as a programmer exploring the development of artificial
intelligence and expert systems.  He soon found a new job at the technical
state university where he organized a small four person research group in
artificial intelligence. And then in 1991 they decided to separate from the
university and go out on their own as the Intelligence Bank Company.

They now work in two fields.  The first is software development using the
Prologue language and PDC compilers from Denmark.  They have developed a
spreadsheet oriented program for businessmen to use for financial planning.
They also have developed software that can be used to simulate concurrent
processes.  Because it is based on cellular automata theory it can be used in
any field where there is a process that develops in discrete steps.  They have
developed a version of this used to simulate automated control systems in the
power industry.  The simulation system helps to build a bridge between the
hardware and software developer.  When they input hardware parameters into
their simulation software, it helps to guide the authors of control software
in their development work. Using the software it becomes possible to generate
a natural language description of how to control the equipment by means of the
software and computer system.  Another piece of software they have developed
will generate a flow chart from a PASCAL language program. Their second area
of effort has been in the development of a special set of tools to be used
with PDC Prologue. It includes a frame representation database and a frame
editor.

Victor took an account on Sovam Teleport when he started the Intelligence
Bank.  Since them he has also become a Relcom user.  In addition to electronic
mail, he follows the Relcom advertisement conferences and finds himself
beginning to take on a role of information broker connecting a contact in St
Petersburg with the progress of a ship load of sugar as it travels up the
Volga River.  He reads the Usenet News Group on Prologue. I am there with him
solely because of the computer network contact. In some ways the network has
become more important to him in the conduct of his business than the
telephone.

Victor apparently works the long hours familiar to Western entrepreneurs.  His
wife Yelena, says that she is glad I have visited because she will she a
little of her husband, who she says not infrequently sleeps at his office.
Victor points out that one of the "joys" with which he must cope is the
requirement to report income and pay taxes every 90 days.  One such period
comes up during my visit and he spends an entire evening closeted with a woman
who teaches economics and serves as his accountant on the side.  Local laws
appear to be in direct conflict with some national laws. Victor says that he
will obey local requirements since the local authorities can breathe down his
neck more easily than can Moscow.

While he spends long hours on his software business, he also has invested much
time growing his own food on a small plot of land 75 miles outside the city.
The results of the harvest are piled high in several corners of his apartment.
Nevertheless he says that on the morning after my departure he will return to
his "micro" farm to save 150 kilograms of potatoes that are endangered by the
unexpectedly early cold snap and snow that has fallen.  He sums up his
situation by saying that he is economically worse off now than he was at the
institute in early 1991.  Nevertheless he knows he has done the right thing
for he is significantly better off than he would have been had he stayed with
the institute.

Chapter 1

The Fiber Optics Conference - High Tech on Lake Ladoga


Fiber Optics is a fledgling industry in Russia.  The Russians do produce a
1300 nanometer fiber, but not in enough quantity to even begin to make a dent
in the potential demands of a national telecommunications network.  Problems
for Western companies who are pondering whether to invest in helping the
Russians to build a national infrastructure are compounded by the fact that
155 nanometer fiber is the smallest bandwidth that they consider to be of much
use.  CoCom remains an additional complicating factor.

Most anticipate that major CoCom restrictions will be eliminated by mid 1993.
CoCom has actually invited the states of the former Soviet Union to join a new
CoCom subgroup with the intent of rapidly easing export restrictions.
Meanwhile 155 megabit per second transmission is permitted between cities and
560 megabit within cities.  Nevertheless the picture is still somewhat
confused, for a western telecommunications company in Moscow showed me a map
that listed a fiber "forbidden zone" between the 38th and 58th meridians --
roughly from Moscow to the Ural Mountains.

The 150 Russians on the boat are mainly academic researchers many of whom, as
their research institute's funds have dried up, are eager to try to
commercialize some of the components that they have developed in their
laboratories.  About 10 exhibitors have their wares displayed on tables in one
of the ship's lounges.  A handful of Western companies are represented;
Alcatel, the Italian company ASST, AT&T Bell Labs, Alcoa-Fujikura, Ericsson,
Cable and Wireless, and two other English companies.

A large American maker of fiber optic test equipment also is there.  By the
end of the second day he is telling me that he has found Russians who could
supply him with both with lasers and with other components that he needs for
his test equipment.  Components that cost him $100 in the US he can buy for
not much more than $5 each from the Russians.  He gives two different Russians
$50 each on the spot as a trial order for some of the goods.  If the quality
is satisfactory, he says that he could buy as much as $10,000 a year in lasers
from one supply and a smaller amount of parts per year from the other.  (Later
in Moscow, Andrei tells me that he suspects the reason that the prices are so
low is that the supplies are still able to use materials bought by their labs
at pre inflationary prices.  When the supplies run out, he warns that the
prices are likely to increase by three to four hundred percent.)

The "Fiberization" of Russia

By far the most important insight gleaned from the conference is that the
fiberization of Russia is likely to happen far more rapidly than anyone could
have predicted even six months ago.  Orgres is a division of the Ministry of
Fuel and Energy of the Russian Federation formed several years ago to explore
the development of communications systems for the ministry.  For the past two
years Orgres has been exploring fiber and especially fiber optic ground wire
or "fog" wire.  Boris Mekhanoshin, the Director of Orgres, gives a
presentation on his plans at a session of the conference on the first day of
the cruise.  (As Director of Orgres, he is responsible for all fiber optic
telecommunications activity undertaken by the Russian power industry. This
includes the planning, financing, and implementation of all projects domestic
and foreign.)

Orgres has completed the installation fog wire from Vyborg in Finland to
Petersburg.  The fiber is dark now but will go live in the first quarter of 93
with the installation of the necessary transmission equipment. They laid this
fog wire at a rate of 200 kilometers in one month.  The design of the Moscow
-St. Petersburg and Moscow Bialystock routes began in early September.  With
the 1993 spring thaws they will begin to lay the cable itself. (The major
point of the design is choosing the places for splice points.  They must be
accessible and generally at the tops of the towers in strong bullet proof
boxes. Each reel of cable is normally about 6 kilometers long.  However the
necessity of properly siting each splice point means that each segment will
seldom be exactly six kilometers.)

They signed, at the end of September, an agreement with the Polish government
to interconnect the Moscow line with a system that Poland is building from
Warsaw and connecting to Berlin.  They anticipate completion of both lines by
the onset of the winter. With such completion and with the completion of the
underwater cable to Kingesip, by he end of 1993 satellite telecommunication to
the Moscow and St Petersburg areas of Russia should become superfluous.

The Russian power company has the money from its current revenues to install
the Moscow to St Petersburg and Bialystock links.  It exports power to Finland
and Western Europe and gains hard currency revenue from doing so.  They have
formed a company to manage the Moscow St Petersburg Bialystock routes.  It has
also formed a joint stock company to seek funds for the fastest possible
installation that would enable the Trans Siberian Line (TSL) to be completed
in a maximum of three years instead of the five it would take to acquire right
of way and bury cable.  They power company already has a high voltage
right-of-way going all the way to Vladivostock.  Alcoa Fujikura is ready to
supply the cable.

The speed with which they will be able to implement the TSL will depend on
their success in raising investment capital.  If they are very successful, the
line could be completed in two years.  (They are just starting to talk to
foreign phone companies.)  They will need an operating license from the
Ministry of Communications (Min Sviaz).  However, they don't think they will
have much trouble since, if they did, they would switch off Min Sviaz's
electricity.

Boris points out that AT&T, MCI and Sprint have heretofore understandably
assumed that Min Sviaz, acting as the Russian PTT, is the only partner for
international telecommunication within Russia.  Now, with Orgres, he adds that
important new access and communication will develop.  The Orgres joint stock
holding company will obtain the operating license from Min Sviaz leaving
Orgres free to sign whatever agreements it wishes with American IXCs or
European PPTs. A telephone company can, from point a to point b, lease one or
more of the fibers in the fog wire from Orgres which will be the owner.

Alcoa's motivation, according to Patrick Risen who has come from Alcoa-
Fujikura's Brentwood Tennessee office, is to supply Orgres with the 11,000 to
14,000 kilometers of fog wire necessary.  They are not prepared to give them
credit.  That is under the purview of Ex-imbank's, AID and other fundors.  But
they are prepared to do two things that will increase Boris' opportunity to
get the capital he needs.  He controls the production of some equipment that
they can use in the production of their fog wire.  Thus they can bargain and
barter.  Secondly the Russian power company has outstanding experience in
stringing cable (whether it is ordinary or optical ground wire is irrelevant).
Therefore Orgres and Alcoa-Fujikura will do their own joint venture in
Argentina and again Orgres will have an opportunity to earn capital for use in
investment in Russia.  Risen estimates the cost of a fog wire Trans Siberian
Line at $225 million -- $100 million for the cable, $25 million for
installation, and $100 million for transmitter receivers.

Alcoa realized the potential and found that Fujikura was the only company
producing it.  They formed an Alcoa Fujikura subsidiary to produce the wire in
the United States. The idea is to take the ground wire that is found on all
high voltage power lines and replace it with a cable that performs the ground
wire function but also has fiber optic cable inside an aluminum sheath at the
very center.  The MCI TVA project has 30 fibers.  MCI gets 22 and TVA 8.
project began early in 1990 and completed in early 1991 over a distance of 800
miles from Eastern Tennessee to Alabama, Mississippi and terminating in
Western Tennessee.  Alcoa is producing fog wire with up to 48 fibers.  It will
soon introduce 64 and 72 fiber wire.  The wire is about 15 millimeters in
diameter and must be designed so that it effectively the same weight as the
old.  About one tenth of fiber in the US is fog wire.

The speed record is on another MCI project in Georgia where they laid 70
kilometers in six days.  The power company needs its own telecommunications
system to monitor its output.  In exchange for the use of the right of way,
they get a state-of-the-art communications system.  Laying the wire costs one
half as much as buried cable. Once laid it is 8 times more reliable.

On an existing high voltage right-of-way, the ground wire is severed and the
fog wire attached to the end of the ground wire.  Several towers further down
the line a winch is used to pull the old ground wire out and, as the pulling
continues, to thread the new fog wire from tower to tower.  The process is
repeated and the fog wire is spliced together in the field.  In places like
Russia and Eastern Europe, fog wire is particularly attractive where you have
great distances to cover, lots of power grids and a need to install the
network rapidly.

Once the fog wire is installed, the telecommunications company and the
electrical utility become natural allies in making sure that the fog wire is
repaired because neither can afford to loose the communications it provides.
The fact that the fog wire is visible at all times makes inspection and repair
much easier than with buried cable.

The fact that Boris' plans for the use of fog wire are as of November 15, 1992
almost unknown outside of Russia is an interesting indication of how difficult
it is to get a "handle" on the situation there. The October 1992 issue of the
East European and Former Soviet Union Telecom Report (EESTR) has a story on
page 3  called "TSL Returns."

There it states that "Intertelecom, the Russian and CIS long distance company,
has brought the Trans Siberian Line (TSL) fiber optic project back to life."
The project with an estimated cost of one billion dollars is to run from
Hakhodka near Japan to St. Petersburg via Moscow with a spur from Moscow to
Novorossiisk that will link with the Italitel sponsored cable that will run
from there to Palermo Italy.   Intertelecom plans two stages.  The first stage
is an upgrade and digitizing of existing microwave facilities to 140 megabits
per second bandwidth.  Revenues from the first stage will be used to support a
565 megabits per second fiber second stage -- by which time it is assumed that
CoCom restrictions will no longer be operative.  Min Sviaz is inviting the
partners of the former consortium to sign on again in a new consortium.  EESTR
predicts that almost all either have done or will do so.

However EESTR also notes that a competing non Russian project Fiber Link
Around the Globe (FLAG) that would link the UK with Japan via the
Mediterranean Sea and Indian Ocean has obtained "landing rights in a number of
key countries along the route."  If completed before the TSL, FLAG could make
the TSL no longer so economically attractive by siphoning off "key hard
currency generating traffic between Europe and Asia."

Certainly with FLAG on the horizon, the plans of Orgres become extremely
important for Western companies to evaluate.This is especially true since,
according to sources at Owens Corning, no restrictions against the
installation of 1550 nano-meter wavelength single mode fiber exist.  Orgres
can install this quality of fiber and can upgrade the equipment that transmits
over it as CoCom restrictions are relaxed further. Currently 155 megabit per
second transmission over 1300 nano-meter fiber is allowed.  CoCom will meet
again before the end of November 1992.  At this meeting it is expected to
approve at a minimum 155 over 1550 transmission.

Fiber MANs in Moscow and St Petersburg
Subways

Andrew Corporation of Orland Park Illinois has initiated a joint venture with
the Moscow and St Petersburg subway systems to lay in the subway tunnels of
each city, the fiber infrastructure for what can become a Metropolitan area
network.  Since the value of these MANs will increase dramatically, when
Orgres completes its fiber linking the two cities to each other and to Western
Europe,  Macomnet, as the venture is known, is a natural ally for Orgres both
for interconnection to its fiber and for possible investment in the effort.
It will function as network for other communications companies that want to
use it to provide services to end users.
The agreement between Andrew and the Moscow subway, known as the Moscow
Metropolitan, was signed at the end of 1991 and a subset of the network went
live in April 1992.  Andrew has been granted exclusive commercial right of way
to all Moscow subway tunnels.   In August of 1992 Andrew initialed a virtually
identical agreement with the St. Petersburg Metropolitan. Harold Sohner of
Andrew's Richardson Texas office informs me shortly before I leave that
Andrew's Director of Macomnet will be in the US while I am in Moscow.
However, he gives me the name of a Mr. Shislikov and the address and phone
number of the Moscow office assuring me that he will talk to me while I am in
town.

Andrei Sebrant tries to make the appointment for me while I am in St
Petersburg. Unfortunately he runs into unexpected problems.  It seems that
even Mr. Shislikov is in the US and the only people in the Moscow office which
he actually visits are Moscow Metropolitan Engineering staff.  They are
adamant that if Harold Sohner had wished any of them to talk with me he would
have told them so. He has not and therefore they do not desire a meeting.
They make it clear that their interest is in getting a fiber communications
system for their trains, switches and signals  -- period.  Andrew has promised
to handle all contacts with outsiders and it is my hard luck that no one from
Andrew is on hand.

Patrick Bodnar is manager of Andrew joint venture with Moscow Metro.  Chris
Adams (Andrew Corp. Suite 100, 1850 N. Greenville Ave, Richardson Texas 75081)
is their principal person in charge of Russian projects.

Chapter 2
Financing Network Infrastructure

The Emergence of
Rinaco

On October 14th I met with Iurii Krichever, Director of Computing for Rinaco,
the investment company that now holds a controlling interest in the Relcom
computer network.  Rinaco has an entire floor of a rather non descript office
building a few miles to the south of the main campus of the University of
Moscow which itself is about five miles south of Red Square.  There is a lot
of open space in the Rinaco offices, something quite unusual for a Moscow
organization where office space is extremely expensive.  I sense that it has
something to do with the image that Rinaco wishes to project as a kind of
Russian Merrill Lynch.

Rinaco is the first Russian investment company to be fully independent of the
Russian government.  Its focus is on investment in the Russian economy as well
as the economies of the former union republics. The founders of Rinaco include
the Russian Commodity Exchange, the Russian National Commercial Bank, the
Asian Commodity Exchange and several other commercial companies. Rinaco is
capitalized at one billion 200 million rubles.  Its interest is in
investments, and it has a department of finance and technical specialists
whose responsibility it is to evaluate investment plans brought to them.

Rinaco is also involved in the development of a Russian stock market.  They
have developed the first depository system for Russian stocks.  Iurii adds
that two months earlier a delegation from the United States Federal Reserve
had visited Rinaco in order to give advice.    All companies who want to be
backed by Rinaco must play by their rules, use their accounting principals,
their technology and their software.  They have adopted the rules of the Group
of Thirty used on the London Stock Exchange.

Iurii Krichever, Rinaco's Director of Information Systems, revealed Rinaco's
ambitions:  "While Kurchatov and Demos are the two largest nodes of the Relcom
network in Moscow, we in Rinaco also want to be the third [Relcom node] and
perhaps the most important node in Russia.  Our interest goes beyond email.
We want to provide our clients ad hoc access to western commercial databases.
We have gotten a proposal from Demos to build a joint network channel to the
West 50% paid for by each party."

"I am not sure that this joint project with Demos can be realized, because it
is very hard to predict what will happen in this country.  Demos' business
[after its split with Kurchatov] is starting from scratch.  We have had a talk
with Borodko [the Demos Director] and after a few weeks, his intentions became
fuzzy. I am afraid that we must now build the channel ourselves."
Consequently Rinaco will go ahead with its own plans for a Western commercial
Internet link. While they have VAX's, they cannot afford Wollongong TCP/IP
software. Consequently they will use public domain TCP/IP software.  Carneige
Mellon has CMU-TEK for a $200 license fee.  Two VAX 8350s (equipped with a
"telecom controller" and nearly 15 gigabytes of storage) act as their main
host.

The VAXes were bought for the maintenance of the stock depository system. But
the predictions of their finance specialists about they volume of stock
trading and issuance have turned out to be wrong.  Consequently, even the
VAXes are not needed and they are using very successfully a PC based version
of their depository system.  Having paid 25 million rubles for the VAXes, they
must use them for something.  (Iurii explains that there are some dilettantes
at the top of Rinaco who think, if a company is to be important, it must have
large expensive computers.) To try to take up the slack, they sell depository
software to other depositories which are growing in number both in Russia and
in the other Republics of the former USSR.  "We have told them that we will
link them together as nodes in a major financial network.  They will function
as the central node through which all the traffic from this depository network
will flow.  The VAXes will be necessary to support such a central node doing
heavy financial data transfer.  They currently have a trial connection for two
depositories. This system must provide email among all the depositories as a
first priority.  We then want to provide on-line direct communication for real
time financial data transfer."

Having an Internet node is not their main aim but more like an additional
service. They want to make it possible for their users to get financial data
from western databases as well as do real time automated trading of shares.
Having spent a lot of money for their computers, they have not too much left
over for networking.  In addition they do not have enough money for VMS and
RGB, the VAX database.  Consequently they are trying to make deals with other
Russian financial institutions in need of computing power in the hope of
gaining enough resources to fulfill their ambitions.

I have brought Iurii a written quotation for a 64 kbs connection to the
Commercial Internet Exchange.  By the time all the components are added up
(including the estimated $65,000 annual fee to Min Sviaz for its half of the
annual satellite tariff) the yearly tab comes to almost $160,000.  To the best
of my knowledge it is the first written quote for this connectivity ever
provided to a potential Russian customer.  Unfortunately, the price far
exceeds Rinaco's ability to pay.

Rinaco's View of the
Evolution of Relcom

The joint stock company "Relcom" was formed with Rinaco having the controlling
interest (37%), while the Kurchatov Institute of Atomic Energy (KIAE) has a
20% interest.  However the position of the Relcom network has become very
complicated because KIAE and Demos, the two Relcom founders, are currently
each in control of a portion of Relcom.  The programmers of Demos were very
unhappy with their small share of the "Relcom" stock distribution and, as a
result, Demos has split away from Relcom.  Sergei Petrovich Borodko is the
Director of Demos.  The Demos and KIAE nodes of Relcom (both located in
Moscow) are the largest in Russia.

Relcom is backbone network with two major nodes in Moscow (Demos and KIAE) and
subscriber nodes from all over former Soviet Union. Only the Moscow nodes:
Demos and KIAE had links to west.  For two years they functioned as a single
entity.  However in July of 1992, when "Relcom" was established as a stock
company, there was a struggle between Valerii Bardin and Aleksei Soldatov and
Borodko in Demos.  Demos then split into Demos+ and Demos*.  Borodko heads
Demos*.  He began to function as a hardware reseller in Moscow becoming the
sales representative for Hewlett Packard. Demos+ focused more on network
services.  But after a few weeks Demos+ was disbanded and Bardin established
Relteam, a new fully based UNIX company.  The Kurchatov arm of Relcom didn't
like Borodko and Kurchatov actually disconnected from Demos.  Iurii  thinks
the link has been reestablished.

A left over irony of the struggle is that Borodko owns Relcom as a trademark.
Meanwhile the number of Relcom's nodes continue to grow. Relcom includes now
about 3,000 organizations having a total of 30,000 hosts.  The cost of using
Kurchatov and Demos nodes is different, cheaper in Demos.  Rinaco has
connected to both Kurchatov and Demos in order to get Usenet newsgroups
through Kurchatov and complete connectivity to everyone through both.

Chapter 3
International Networking for Russian Researchers and Educators

Academic Networking at the Mathematics
Section of the Academy of Sciences

During the summer Dmitrii Vulis, an emigre mathematician and networker, has
introduced me to Nikolai Repin of the Information and Publishing Sector of the
Mathematics Department of the Russian Academy of Sciences.  I meet him on the
15th of October in his well furnished office on the 20th floor of the Academy
of Sciences "palace".  The building's windows are somewhere between gold and
copper in color -- an ostentatious last gasp of "Soviet" state funded science.
With him is Iurii Znamenskii, Director of the Laboratory of the Institute of
Cybernetics.   Iurii's second job is Director of Setin Ltd., a
telecommunications consultancy and hardware reseller of Israeli made CISCO
AGS+ class routers.  (So much for one more CoCom restriction.  See Box next
page.)

Aerocom is a joint stock company that provides foreign telephone services, and
the Headquarters of  the Academy of Sciences has a barter arrangement that
gets it a voice line or a 9600 baud data line to the United States in exchange
for giving Aerocom office space in the prestigious Academy Headquarters
building. Their line begins in the M-5 telephone switching center in Moscow
and ends in the TRT offices at 888 Seventh Avenue in New York City.  Aerocom
has promised a microwave local loop so that they can avoid the city network in
their connection from their office to the M-5 switching center.  Next they
want to install leased 19.2 data line.  Then in 1993 a satellite line.  They
have looked at the possibility of using a Russian satellite.  Under these
plans Aerocom would pay for one half the channel and other Moscow companies
that Repin and Znamenskii would bring together would pay for the remainder.


The Steklov Institute of Mathematical Sciences pays 600,000 rubles per year to
Relcom for its connection.  He estimates the entire Academy is paying eight to
ten million rubles per year to Relcom for its connection.  He believes that
many of the institutes are paying the vast majority of their budgets for
electronic mail.

While the domestic service provided by Relcom is fine, the question of
international service is still a problem.  RELARN (the Russian Electronic
Academic and Research Network) is being created by the government as an
academic, non commercial network so that its international traffic can be
subsidized by the government.  The government has promised RELEARN a six
million ruble subsidy for 1992. Repin is not certain whether that subsidy has
been paid.  In April, May and June of 1992 Relcom made 700,000 rubles in
credits available to academic institutions which then received their Relcom
connectivity at half price. However, since then, these institutions have been
paying full Relcom commercial rates.

Russian Access to the Internet -- A New
American Policy Muddle

I have brought them a quotation from JVNCnet to install a SLIP TCP/IP
connection from 888 Seventh Avenue in New York City to the JVNCnet New York
City POP.   The quotation also explains the procedures and costs for expanding
the SLIP connection to full 19.2 and then 64kbs TCP/IP connections. As I did
at Rinaco I also attempt to explain the lack of a clear American policy on
adding them to the NSFnet policy routing data base.

They situation becomes even more muddled when they show me an electronic mail
quotation from a Patricia Boykin at a Washington area office of Advanced
Network and Services. This document asserts that since ANS runs the NSFnet
network, if the Academy of Sciences paid ANS $200,000 for a 64kbs connection
to ANSnet, ANS could provide access to every college, university and research
center connected to the NSFnet.  I told Repin that it appeared to me that ANS
was promising something that they would be unable to deliver.  At that point I
gave him the following policy statement from Steve Wolff, the NSFnet Director.

"Date: Tue, 29 Sep 92 10:50:01 EDT
 From: Stephen Wolff <uunet!cise.cise.nsf.gov!steve>

On behalf of the R&E community, NSF sought and in June, 1991 received a letter
from the Department of Commerce authorizing IP connectivity to the so-called
Eastern bloc.  In a second letter from Commerce in January, 1992, the
authorization was reaffirmed and clarified; i.e., that the concern was export
control, not  the connectivity itself.

Accordingly, Poland, Czechoslovakia, and Hungary, have been now for some time
announced on the NSFNET Backbone; somewhat more recently, Estonia is reachable
as are (potentially) the other Baltic states.

Although connectivity to the xSU is covered by the Commerce letters to NSF, at
the request of the Federal Networking Council (FNC) the NSF agreed not to
carry such traffic on the NSFNET Backbone.  This concession was nugatory until
two recent events:  a network in the xSU is now being announced by the CIX, so
that it can (and does) exchange traffic with non-Federal US nets, and Federal
mission agencies are establishing what amount to point-to-point links from
specific sites in the xSU to specific US computational resources.

At the FNC meeting on Thursday, the 24th September, the NSF therefore asked
the FNC to reconsider its position, since a side effect of the growing
connectivity (which is either "non-R&E" or is between unilaterally-selected
scientists and sites in the US and the xSU) is to disenfranchise a large
fraction of the US R&E community whose aspirations for unrestricted scientific
and educational collaboration with their peers and colleagues in the xSU NSF
fully endorses.

 -s[teve]"

I had then asked Steve Wolff to explain how the FNC had answered his request.
He responded that it had agreed to establish a committee to "study" the issue.

At this point Repin pointed out that the Moscow Institute of Theoretical and
Experimental Physics has an IP line to the German Synchrotron Physics Network
in Hamburg and from there Russians with accounts on the German network can
telnet or ftp anywhere.  I agreed that American policy seemed to be full of
holes for the Russian Institute for Automated Systems (IAS) Sovam Teleport
joint venture terminates on Pandora.  Pandora is a San Francisco based system
with a 56 kbs link to BARRnet and from BARRnet to the entire NSFnet.  Any
Russian user of Sovam Teleport having the money to pay the extra charges, may
used the Moscow San Francisco leased line connection to log into Pandora. From
Pandora such a user may then telnet or ftp to any part of the NSFnet.

Soon after my return to the US, I again asked Steve Wolff to comment on ANS'
assertion of being able to provide complete access to the NSFnet.  He replied
that ANS could do what it liked with the commercial portions of its network.
Did such commercial portions include all attached universities of a mid-level
network that had signed the ANS commercial connectivity agreements I asked?

Very soon after I raised this question, (which Wolff refused to answer) John
Cavallini, the Director of the Energy Sciences Network and member of the
Federal Networking Council moved the debate to a different level with the
following admonition to Wolff.

Date: Fri, 23 Oct 92 21:45:19 -0400
From: uunet!
oerv01.er.doe.gov!cavallin

"Actually Steve, it is out of compliance for anyone to allow access to the
Russian Federation citizens to critical technology.  Wherever the technology
is, here or there, it is still under export control.
The fact that someone is doing it without license or approval doesn't mean its
compliant. Our so called approval from Commerce is still not implementable
precisely because we haven't been able to say all the critical technology
accessible on the net is secured properly.

JC"

When I asked Cavallini for a definition of critical technology, all I received
in return was silence.  As with continuing CoCom restrictions, someone
somewhere in the bowels of our bureaucracy is trying to lock the barn door
after the horse has escaped.  It is to be hoped that the new Administration,
which at least is computer literate, will soon unlock this policy muddle.


Chapter 4
Business Communications-
Russian and American Straws in the Wind

A Few Steps Towards the Modernization of the Communications
Environment

Telephone directories are beginning to appear.  In St. Petersburg Victor gives
me an advertisement for a business directory that will be published in January
1993. (See Figure 5 page 22.) In Moscow a hardbound telephone directory
smaller than the one for Trenton NJ sells occasionally in the subways for 180
rubles.  Andrei tells me that it was published in late 1991 and that the cut
off date for getting into it was January 1991.  With numbers that are almost
two years old he thinks its usefulness will be limited.  He says that he has
heard about the existence of a relatively up to ate business oriented
directory. However its price of $20 in hard currency effectively puts it
beyond the reach of most Westerners.  Another option is provided by the Moscow
Business Telephone Guide. (See Figure 4 page 17.)  Published monthly in
newspaper format and distributed free mostly in major hotels, it lists about
4,000 businesses by name address and telephone number. The businesses covered
range from joint ventures, to moving companies, to movie theaters.  While
undoubtedly useful to a western businessman, the directory's utility to his
Russian counterpart is very marginal.

Federal Express and DHL do service Moscow and St Petersburg.  Unfortunately
their prices are well beyond the reach of Russian users.  The Federal Express
price for example for a seven ounce envelop to the United States is $65.00. A
five and one half pound box costs $88.00.  Twenty two pounds for $314.00 and
154 pounds $1,820.  In April of 1992 I saw one United Parcel truck on the
street of Moscow.  In October I saw none.

The postal system continues to be shunned.  In St. Petersburg Victor had a
letter for a contact in Moscow. He asked me to take it with me and called its
intended recipient, giving the address of Andrei's apartment where it could be
retrieved.  Victor imports Prologue compilers and related software from
Copenhagen.  The shipping cost for a package of about 10 pounds is over $200.
He tells me that if he has paid orders for two such packages it is less
expensive for him to fly from St. Petersburg to Copenhagen and back to deliver
them.

Transinform --

A Communications Joint Venture  in Search of New Friends

I became acquainted with Transinform in April and found out more about them
during the summer.  Besides offering Glasnet a home (see my April Report),
they operate the only x.25 network in Russia which as yet has no foreign
partner.  (The Central Telegraph Office has Sprint and IASnet has Cable &
Wireless as partners.)

In July of 1992 Esther Dyson wrote the following about Transinform:  "A new
joint stock company called Transinform was organized in October 1991 to manage
and resell capacity on the communication channels of the oil and gas
industries and railways, and to offer a variety of information and data
services over them.  Getting access to these lines and to some others is easy
since the major owners of Transinform with 20 to 25% each include:  the
Railroad Central Communications Station, the Industrial Association of
Communication of Minneftegazprom (the oil and gas industry); the Central
Station of  Technological Communication of Gazprom, and Marine Computer
Systems - the ICL Morflot personal computer production joint venture.
(Morflot is the Maritime ministry which has its own communications
facilities.) . . . ."

"The firm currently is run by Alexander Gromov, who comes from Marine Computer
Systems where he ran Sovpak, the Marine Ministry's communications network that
is now part of Transinform's dowry.  Transinform has 40 employees. . .  The
concern has about 200 subscribers, including its founders, and various other
exchanges and transportation companies. The services include not just raw
communications facilities (including some capacity leased from Intertelecom
and resold), but also fax, telex, email and information services. . .
Estimated revenues for the first year of operations are 30 million rubles.
The initial capitalization (raised in the winter of 1991-92 when it was worth
about $8 million) is 46 million rubles."

Transinform is located in a Ministry of Railroads building at the Red Gates
subway stop.  Anatoli Voronov, the Director of Glasnet, has told me that
Gromov and his deputies would be very interested in entering a joint venture
with a Western company that wished to use the roof of its building for siting
a satellite dish in exchange for a portion of the bandwidth. Transinform has
issued the invitation that I used to obtain my visa.  On Friday October 17th I
meet with Victor Moskvitin, Manager of the Central Telephone Station of the
Ministry of Railroads and Georgii Khmelidze, Executive Director of the
Transinform Stock Company. (Khmelidze is Alexander Gromov's principal deputy.)

Moskvitin begins by explaining the purpose of his operation.  He is
responsible for the Central Communications Station of the Ministry of
Railroads.  This Station is the principal node for telephone communications
for all railroads in all of Russia.  The railroad telephone network has
channels for coax and radio.  The majority of the switching equipment is in
the building in which we are meeting. Other radio transmission equipment is
installed elsewhere in the Moscow area.

Turning to the reason for our discussion, he notes that they had already
considered a project that would put a dish on the roof and had signed a
contract for the project evaluation with a foreign partner and they were
convinced that it would work.  They analyzed how the signal from the dish
could be connected to the x.25 network and to the telephone switching
equipment.   Such connections could have been not only to the railroads but
also to the gasprom ministry.   But unfortunately there was no success because
the potential partner, a small European company, broke off the discussions and
went home without saying why.

To what kind of a communications infrastructure could they offer to attach
satellite bandwidth?   Moskvitin explained that his operation focuses on
intercity telephone lines, adding that it operates almost 1,000 such lines all
throughout the former Soviet Union.  Furthermore they operate an additional 60
lines for Gasprom and 120 for Min Sviaz.  They also operate a local Moscow
phone network with a switch that handles 10,000 numbers -- all 262 numbers and
another 200 numbers for the 260 exchange.  Connection to these exchanges could
be done without significant geographic limitation by using their radio
facilities if need be.

They are attempting now to develop additional services in radio communications
which will allow them to bring in more customers.  They offer communications
services to roughly 100 large companies that would be users of international
bandwidth. They supply new telephone lines to the various commodities and
stock exchanges which are among their backers.  In short they act as an
independent telephone company.  In effect they are a competitor of the Moscow
City Phone Company.

The problem of course is that Min Sviaz issues operating licenses for any data
or voice transmission network.  But Min Sviaz has given Transinform an
operating license and now they can operate as an independent provider.  (The
whole reason for the creation of Transinform was to unite the communications
needs of different ministries in one entity that could operate independently
of  Min Sviaz.)

However the installation of a dish would require an additional license from
Min Sviaz.  They would assure their foreign partner that they would bear the
cost of the license, the physical installation of the dish, and the connection
of the signals from the dish to the local phone network and x.25 network and
ask in return for a share of the profits.  They suggest that after the testing
of the installation is completed, the partner would receive income from both
the incoming and outgoing calls, until the capital cost of the installation
had been paid off.  At that point they would charge for outgoing traffic and
let their western customer charge for incoming which of course would be
greater by probably at least a three-to-one ratio.  They are prepared to be
very flexible.

What, I asked, if the western partner expected the channels to be filled and
paid for in full from day one?  This is very difficult, Moskvitin responded.
It requires a lot of thought because no one has tried it.  It might be better
to install a smaller dish.  He thinks that Infonet is planning to install
three dishes.  Perhaps it  may be a customer for the surplus bandwidth.  Their
American partner must understand that it will be a little more difficult to do
business in Russia than it is in America.

In six months they could fill one 64kbs channel with paying customers. In a
year, if they were fortunate, possibly as many as five.   But they really feel
unsure of what they could achieve because the market is really unknown.  While
they see their best market as small and medium sized businesses, in 1991 there
were a lot of small businesses in Russia which were solvent but now 70% are
bankrupt.  Also we can't foresee what the major directions of government
policy will be a year from now.

American Operators in Russia:    US West

On Monday October 19th, I met with Fred Skovberg, the Deputy Director of US
West's Moscow Office which is located in the International Trade Center on the
Moscow River about a kilometer from the Russian "White House."  The building
is relatively new and western in every respect from the Federal Express Office
in the lobby, to the Otis Elevators, to the cold water fountains in the
hallways.  In the lobby one finds free business telephone directories in
newspaper format and free copies of the daily English language Moscow Times --
published in English for the Western business community and filled with useful
articles on Russian political and economic developments.

Fred starts by summarizing US West's Russian activities.  They operate what
they call MCC -- a cellular telephone system in Moscow.  MCC currently has
1600 subscribers and is an MNT450 system.  We went live three months ago and
it looks like our biggest problem is going to be having to expand the system
earlier than we had planned because of very strong demand.   They are doing a
similar cellular network in St. Petersburg.  It is called Delta Communications
and has about 1000 customers currently.  For cellular customers who wish
international connections they use both the local Moscow international switch
and switches run by two bypass operators.

We are also putting in three international gateway switches two in Moscow and
one in St Petersburg to connecting to a combination fiber optic line and
digital microwave system that starts in Denmark and terminates in Kingisep on
the Russian coast where it will go by digital microwave inland to St
Petersburg and Moscow.  Those switches will go into service some time in the
first quarter of 1993.

"We have been in and out of the Trans Siberian Line (TSL).  CoCom has caused
us some delay in this project.  What will finally come of it we are not sure."
They are interested but not in a big way for they see too many obstacles.
Fred had talked to technical people in St. Petersburg and it was his
impression that all that was usable on the TSL was 34 megabit transmitters and
140 line speed fiber. Such an installation from the point of view of US West's
needs is not useful.

"We are positive about Russia but on a long term commitment basis."  We are
not here to come in and put in some kind of by pass service or one of a kind
project that we think we can make a quick buck on.  "We are here for the long
term and want to form a close working association with a number of Russian
entities. We see ourselves here in the 15 to 20 year type of time frame.  The
communications infrastructure of Russia is not something that you can overhaul
in two or three years.  You are really looking at a network build from the
ground up over a 50 year period.  There is actually a Moscow telephone switch
installed by Ericsson in 1936 that is still operational."

Andrew is laying relatively slow 34 megabit 140 line speed fiber in the Moscow
subways.  Fred advises me to find out whether the Fiber Optic Ground wire
being talked about by the power ministry will be 1550 nanometer American made
or 1330 Russian made.  Russian 1330 nanometer fiber does not have the
operational speed that would be necessary for US West to make certain routes
economical for investment.

A Visit with MCI

MCI is located about four blocks down a side street from the Belorusskaia
Vokzal (Belorussian Train Station).  I arrived very late in the day on October
19th and was warmly greeted by Jonathan Noland who runs a small but growing
MCI operation.  Earlier that afternoon he had just activated first
international circuit link between Intertelecom and MCI.  MCI had been renting
circuits from other international carriers to achieve international
connectivity for its customers.  Now, for the first time it was running its
own links.

John explained MCI's philosophy: First and foremost -- MCI doesn't want to be
an operator.  By this it turns out that while MCI wants to help Russian
"operators" build infrastructure,  it will be up to those operators to cope
with the chaotic economic and political landscape and to see that users pay
their bills.

MCI is a partner in the Copenhagen - Kingisepp fiber project and will be
working with Infonet in putting in earth stations.   Consequently, it is
getting all the connectivity it needs. It  wants just a simple correspondent
telephone relationship between its customers n the West and Russian providers.
What they do in Russia is almost entirely limited to what their customers in
other parts of the world ask them to do there to help their needs.  The
Russians need to acquire capital to procure a network and then to get the best
equipment possible not have poor equipment shoved down their throats.

The telephone traffic MCI brings in on its direct connections will help get
them this capital.  Voice traffic has an international settlement rate.  The
current rate is $2.60 a minute.  Every time an MCI customer calls Moscow it
pays $1.30 per minute to MCI and $1.30 per minute to the Russian PTT.  There
are more calls coming into Russia than going out.  The exact number is
regarded as proprietary information. But one could assume that for every ten
incoming  calls only four are outgoing.  The positive balance of incoming
calls generates a net hard currency inflow for the Russians.

Noland dislikes those who would talk of a quick fix and points out that the
Russians "need stability, good honest advice, and a long term partnership."
Cases exist where MCI customers want special service.  Noland  takes actions
to meet these requirements as best he can.  Sometimes within correspondent
means and sometimes outside.   In other words, on occasion, certain services
are supported here through direct capital investment on the part of MCI.  Such
services give the Russian provider benefit from MCI technology, training,
marketing, and so on.   But this is done only when an MCI customer in the US
asks MCI for help in installing a service requirement in Russia or elsewhere
in the CIS.

They are frequently approached with all sorts of opportunities.  When this
happens, they ask does it benefit MCI customers?  Does it add to the
profitability of the Russian operator and is this something that fits in with
MCI's long term goals?  He is concerned that the Russians are falling for
western schemes that will not benefit them in the long run.  The bottom line
is that connectivity is not as big an issue as equipment and switches and coax
to the subscriber's business. Most important of all is the that hard currency
generated must reside here and be employed here and implemented here rather
than extracted from the country. But they will also make advice and
information available to their Russian hosts as well as capital.

It is to be hoped that this desire to cement long term relationships will
eventually extend into bandwidth for Internet connectivity.  Signs are
encouraging.  As of mid November both MCI and Sprint have indicated an
interest in opening a connection for Russian researchers and educators to the
Commercial Internet Exchange.
In the six months separating my April and October visits many significant
things have happened to the networks I first became acquainted with in the
spring.  Relcom continues to grow, although not nearly as fast. Glasnet has
considerably expanded its grass roots impact.  However IASnet and
Sovam-Teleport from the point of view of investment has had the most
interesting changes.

Chapter 5
Russian Computer Networks:  Where are They Six Months Later?

Sovam Teleport

In early June Cable & Wireless announced a $4 million dollar investment in the
infrastructure created by the Institute for Automated Systems.  Under the laws
of the Russian Federation Sovam - Teleport became the operational corporation
for a major x.25 network.  Sovam Teleport has three owners:  Cable & Wireless,
the Institute for Automated Systems and the San Francisco Moscow Teleport
(SFMT).

Under the pressure of rising telecommunications costs  brought about primarily
by the end of government subsidies, IASnet had shrunk considerably from
several hundred users in 15 interconnected cities to nubs in Moscow and St
Petersburg.  The Cable and Wireless investment is being used to turn this
around.  A new x.25 net with PADs and sales and customer support offices in 40
cities throughout the former Soviet Union is being built.  An American who
will live in Moscow and direct this effort from there is expected to be on
staff by the end of the year.

The other part of the venture is a 9.6 leased line connection between a host
in Moscow and San Francisco. Known also as Sovam Teleport, this system has
roughly 400 users in the US and 400 in Russia.  The San Francisco host
(Pandora) is connected to the Internet at 56 kbs.  Users in Moscow may send
email to Pandora or establish a direct x.25 login to the system.  Those who
are able to pay fees in the range of $20 per hour may use a set of menus to
ftp and telnet anywhere in the Internet.  In December the Moscow 386 33 MHz
host will be replaced by a 486, UNIX, 50 MHz host with over two gigabytes of
disk space, a net blazer and TCP/IP software to be run over x.25.  A direct
64kbs Internet link to Moscow is a high priority.

The San Francisco Moscow Teleport appears to have evolved into a holding
company for Russian telecommunications ventures.  On October 20, 1992 another
of its ventures, Sovintel, an international bypass telephone company received
a $6.5 million dollar loan -- the first Russian commercial loan not backed by
government guarantees. (See textbox page 19).

Relcom Matures and Splits

My schedule did not permit another visit to Relcom or Demos.  However in
addition to the information on Relcom developments that I gained from Iurii
Krichever at Rinaco and Nikolai Repin at the Academy of Sciences, a Relcom
associate in Helsinki sent me the follow memo on recent Relcom activities and
plans.  (Note Also that Relcom has joined Eunet, the European Unix-based
network and acts as Eunet's sole representative in the territory of the former
Soviet Union.)

From: Oleg Tabarovsky <[e-mail]>
Organization: Relcom Corp. (Research & Development)
Subject: Notes on some TCP/IP WAN activities in xSU
Date: Mon, 28 Sep 1992 20:21:56 +0300

"Notes on some TCP/IP WAN activities in xSU
Activities in the field of TCP/IP networking include SU domain coordination,
assignment of IP numbers to ex-Soviet organizations, development and operation
of IP-network in SU. The coordination and assignment of IP numbers for the SU
domain are carried out by RelTeam Ltd., a private company.

The former Soviet Union and Russian Network Information Center is run by
RelTeam Ltd., which assigns IP numbers on behalf of RIPE NCC.   RelTeam Ltd.
is also the main developer of all networking software in EUnet/RELCOM network,
and the coordinator of IP activities in EUnet/RELCOM.

Some notes on current state and future of TCP/IP networking in EUnet/RELCOM
network operated by Relcom Corp follow.  Currently EUnet/RELCOM network
connects approximately 3000 sites all over xSU.  EUnet/RELCOM includes
approximately 70 regional nodes (backbones) in all former USSR republics and
major cities. Currently most links between nodes and sites in RELCOM are UUCP
links. The network international link now is UUCP connection to EUNet via host
techno.fuug.fi in Finland.

Several problems,  including growth of the network, significant delays because
of UUCP links, and inability to provide net services going beyond e-mail
forced us to begin a transition from UUCP to TCP/IP network.  In doing this
the main problems we are facing are lack of at least medium speed digital
channels (64K), lack of appropriate routers (cisco's are still under COCOM
restrictions for us) and lack of properly trained staff at every EUnet/RELCOM
node.

Nevertheless, we try to solve all of these problems (probably with the
exception of the last one).  At the end of 1991 the kernel of  xSU IP network
began to grow. Currently a pilot IP network connects 11 LANs in Moscow, Moscow
region and Barnaul (Altai). The links are mostly voice grade leased lines
equipped with V32bis modems and dialup links (with permanent connection) via
high quality phone service called  ISKRA (former communist party phone
network).  ISKRA phone network connects almost all major xSU cities and its
quality permits reliable V32bis modem connections.  Currently Moscow backbone
consists of 3 routers at EUnet/RELCOM main hub (KIAE premises), ISKRA POP and
Moscow Long Distance Exchange.  All other networks which form current IP
network kernel are connected to these routers.

Plans call for the establishment of international IP link to the EUnet cisco
in Amsterdam through the router at Moscow Long Distance Exchange in just a few
weeks.  Voice grade leased line which will form the link is going to be
equipped with ZyXEL modems at both ends. That will allow to exchange data at
speed up to 16800 bps uncompressed. (See text box p.20.)

During the first stage of IP network development in xSU we plan to connect all
major EUnet/RELCOM nodes via voice grade leased lines and ISKRA dialup links.
In the near future (by the end of 1992) we hope to establish up to 20 IP links
via leased lines and several other links via ISKRA, these links will form the
global IP network connecting at least 50 LANs. Regional backbones will in
their turn form intraregional IP networks in such areas as Siberia, Ural,
Altai, St.Petersburg, Ukraine, the Far East and others."
Demos

As earlier sections of this report point out, the Demos Cooperative, which
supplied much of the programming talent for Relcom, split away from Relcom at
the end of the summer of 1992. According to a NewsBytes story filed in Moscow
on October 2, 1992:

"The Demos/+ company has announced the availability of an electronic mail
network alternative to the existing Relcom net. A number of business and legal
questions are still open, however, and are creating turmoil among users and
managers.  Demos is offering complete "TCP/IP connectivity to the outside
world," Dima Volodin of Demos said at a UNIX society meeting in St. Petersburg
recently. Demos has entered an arrangement to use dial-up connection with the
AlterNet network through the UUNET Technologies of Falls Church, Virginia."

"Demos is actively working to establish a connection to an X.25 packet
switched network. Mikhail Popov of Demos said that the service will be
unveiled within a month, but refused to name a partner with whom it is dealing
in Moscow. Newsbytes has learned that a business agreement exists between
Demos and the newly established packet network run by the city phone monopoly
(Moscow City Phone Network).  Demos/+ now has approximately 25 nodes in
various regions of the former Soviet Union and 600-800 active users. . . .
Some of Demos/+ nodes are at the same time connected to the Relcom.  Demos/+
said it will soon change its pricing structure and will charge for on-line
time only, offering probably the first large commercial on-line service in the
country. . . . ."

"Legal questions concerning an "acceptable use" policy on Internet and the
access to US supercomputing resources for Russian parties have been
"successfully solved," Volodin said. He refused to further comment on this
matter. US Department of Commerce and the National Science Foundation has a
set of rules actually prohibiting former Eastern Bloc parties to access large
supercomputing resources available through the TCP/IP network, to which
Demos/+ now has access."

Glasnet

I asked Tolia Voronov, the Glasnet Director to summarize for me what had
happened to Glasnet since April.  He replied enthusiastically.  "With the
completion of the move to the Transinform premises in April Glasnet's
situation improved dramatically. They acquired adequate telephone dial in for
the first time with two rotary numbers with a total of  sixteen lines and one
of the "cleanest" telephone exchanges in Moscow.  They have approximately 500
users eighty percent of whom are located n Moscow, with the remainder spread
among 20 other cities.  This twice the number of users at the beginning of
1992."

By the end of the year they should have close to 700 users because the will
absorb into  Glasnet in November, the entire small network known as Pilotnet
which has more than 100 users among schools in Moscow and other cities.
Pilotnet was originally sponsored by IBM which donated equipment for 100
schools which were connected together by a BBS system.  "But they had
difficulty in running the BBS and reached an agreement with us to take over
their operation and service their users."  They will "pay" for their new
Glasnet service by giving Glasnet administrative office space in a building on
the other side of the square from the Transinform building where the Glasnet
machines are.  In return the Moscow Pilotnet users will profit from having the
same telephone access as Glasnet, while those in other cities will be able to
use the Transinform x.25 network when it matures.  Tolia adds that the
Transinform network has currently accessible PADs in only two cities besides
Moscow -- Odessa and Kiev.

Glasnet users in other cities either have to call Moscow long distance or use
one of the three Iskra lines to which Glasnet has bought access.  Iskra Two is
now operating as an independent telephone company selling access to anyone who
will pay in over two hundred cities in the former USSR.  Note however that
each user would have to buy his own access to Iskra in whatever city he
happened to reside.  Tolia says that access costs only 600 rubles per quarter
while each call is charged separately.

Glasnet used to be dependent on American paid for direct high speed modem
calls to San Francisco for its international connectivity.  This is no longer
the case.  It has purchased access to international Iskra lines.  Every two
hours it calls Greenet in London and from there its messages are routed
through the IGC network to the US and to the rest of the worldwide Internet.

The unstable political and economic situation are sources of continued concern
for Tolia.  While we talk he has to take a phone call.  He becomes extremely
agitated and even curses in English.  Economic relations with the Ukraine have
come to a complete breakdown because of maneuvering between Yeltsin and the
Ukrainian president.  He has just been told by his representative in Kiev that
there is absolutely no way to pay the 150,000 rubles owed to him by Glasnet
users in the Ukraine.  He guesses that he will now have no choice but to
remove his Ukrainian users from the system.

The modem taxes for the benefit of the local telephone company that were
approved in April are now beginning to hurt.  While the cost of an average
year's use of Glasnet might be 40,000 rubles, the phone company wants a yearly
fee of 50,000 rubles for every subscriber who uses a modem.  They are
beginning to be able to identify users who try to do so secretively and these
users will be forced to pay or they will lose their phone service. Tolia fears
hat they will find that they cannot afford to have their Glasnet usage costs
more than doubled.


Chapter 6
Whither Russian Policy?
The Role of the Ministry of Communications

An Interview at the
Ministry of
Communications

On my last day in Moscow Glasnet's Anatoli Voronov finally succeeds in meeting
a very difficult request that I had made of him.  He has convinced Arkadi
Golubkov, the Vice Minister of the Ministry of Communications, President of
the State Committee on Informatics and soon to be Minister of Informatics
(Data Communications) to grant me an interview.  When we meet, it is quickly
apparent that Arkadi, who appears to be in his forties, is very articulate.

I ask him for comments in four areas. First Russian Federation
Telecommunications Law.  Second the limiting of access to telecommunications
because of prices rumored to be set artificially high.  Third the question of
a live connection to the Internet Fourth the question of what might be
involved in finding a partner for Transinform.

Golubkov replied:  "There is a telecommunications law which is now under
consideration  in the Supreme Council.  Its name is the Communications Law.
It will be 4 to 6 months before its text is finalized.   The text will not be
published while the law is still in draft form."

When I asked whether there is there is text of an existing law impacting the
operation of computer networks that I could review, Golubkov obliquely replied
that the various parts of the ministry did of course operate under sets of
written regulations.   I then asked about laws impacting pricing.

Golubkov answered:  "We are just now transferring everything to the market
economy.  That is why the head of each enterprise is allowed to set his own
price.  The prices for telecommunications are not controlled.  There is even a
presidential decree to this effect.  A stipulation that telecommunications
prices will not be controlled will be included in the law."

I said that I had heard that prices tended to be rather high because I had
heard that Min Sviaz charged enterprises very high prices for operating
licenses.

Golubkov answered: "That's not true. Min Sviaz does not take any license fees
because there is now no existing law that allows them to do so.  They charge
only a technical fee which covers not only the cost of the paperwork, but also
all necessary technical advice. Normally Min Sviaz gives licensees on a tender
basis.  For example they announced a competition for bids on a cellular net in
the range of 900 megahertz and the announcement included all the costs and
payments necessary."

When I asked whether Arkadi could estimate what the technical fee cost might
be for putting a satellite dish on the roof of the Transinform Building, that
replied the necessary technical details were too complex. That the fee would
be determined in part by the incoming and out going bandwidth or at least
estimates of same as well as information on what will happen to the bandwidth
after it leaves the dish.  All these questions could be prepared in a hard
copy memorandum for my next visit.

Golubkov continued:  "For your information we are also working on a law on
information and what in Russian is called law on informatization.   This
includes a law on information security.  For example only ten days ago the law
on the security of software and databases was published."  They will give me a
copy.

"The law on communications is rather difficult.  As you know the United states
has been developing this law since 1934."  I ask if he could explain one or
two of what for them are difficult points in developing the new law. Golubkov
replied that the main question was that of long distance versus local
telephone companies.  He indicated that as a part of the on going process of
privatization "the long distance telephone companies will be state controlled
while the local phone companies will be privately run."

I say that I have heard complaints that Min Sviaz is both a regulator of
telecommunications and because of the joint venture between Central Telegraph
and Sprint is also a provider. Some claim that there is a conflict of interest
between regulation and provision?  "It is not a real conflict."  Rather it is
just a working situation where nothing existed before and now both sides are
providing a service. The main problem is the question of payment for services.
Because Sprint operates primarily with payment in hard currency, "for every
dollar it invests it receives three dollars which it takes out of the country.
We want to see our partners as partners on an equal basis, equally sharing all
difficulties and all expenses as well as all profits equally.  And we also
believe that it is necessary to invest part of the profit into further
development of network infrastructure."

I say that I have heard that their power ministry has already installed fiber
optic ground wire from Vyborg Finland to St Petersburg and has very ambitious
plans. I ask him to comment.  He replied that while they are "glad to see the
power ministry hanging fiber optic wire from their towers, we have many
contradictions between ministries because all support and hardware necessary
to send signals over the wires belongs to our ministry. We think these wires
also are ours and perhaps we will make a deal with the power ministry to use
their towers to hang our wires."

I ask whether he thinks that within the next year the plans to link St
Petersburg, Moscow and the Polish border with fog wire will become a reality.
He does not know and will have to ask questions.  He believes that it will
depend on the amount of investment that the Power Ministry receives.  I say
that I had heard Boris Mekhanoshin express confidence that he could do the
Moscow Petersburg Bialystok portion out of capital from the operating budget
of the Power Ministry.  Would Arkadi please comment on this?

Arkadi responds that this may be the case but that they must also overcome
some technical and operational problems.  He adds that prices are very
relative.  For example local telephone service costs about the same as a loaf
of bread.   While it is true that computer networks are expensive to use, this
is because prices here are set by those companies who provide the computer
network service.

I wonder whether their prices are high because the technical fees that they
have to pay Min Sviaz in order to operate are also high.  Arkadi answers that
part of the problem is that modernizing service at the local level (the so
called last mile) is the most expensive while at the same time use there
produces the least revenue.  By the same token the cost of modernizing
international service in proportion to the revenue received is small.  If Min
Sviaz fees are high, they should be thought of as a way of funneling money
into local loop development.  They are concerned about the computer networks
(including Sprint) skimming only the cream from the marketplace.  money from
these international "cream-producing" operations must be gained and be used to
improve the infrastructure of the local loop.

At this point Anatoli asks how users of his network who pay an average of 2000
rubles per month can be expected to pay an additional 50,000 rubles per year
for the use of a modem.  Arkadi responds that while a modem tends to occupy a
telephone connection for a longer time than voice and therefore puts a greater
strain on the network, that this is a matter between the local phone company
and its customers -- one over which Min Sviaz has no control.

Arkadi then goes on to explain the Ministry's plans via Intertelecom for its
own international fiber network, by means of which in the next two to three
years, they will bring into Russia 45,000 international lines.  From
Copenhagen to St Petersburg there will be 15,000 lines,  from Palermo via
Italtel to Istanbul and Novorossisk 15,000 more and from Japan to Nakhodka and
Khabarovsk another 15,000.  Thus there will be a need to develop and
infrastructure to support these major international trunks.  "Thus with all
these programs that we shall undertake our foreign partners will have many
areas in which they may choose to participate.  We are the only entity that
can be held to be responsible for the coordination of the development of our
telecommunications infrastructure from the local level, to inter city trunks
and final to inter-connections with the modern, digital global telephone
network.  We try to sell that reasonable funds are invested in all these areas
despite the fact that only the top most one of international connectivity
looks the most attractive to our potential foreign investors.  Under our
regulations each level may exist and operate independently.  However they may
also charge each other for whatever services they offer to each other.  And we
at Min Sviaz will also take 20% of each transit dollar and redistribute it
partly to local companies and partly to long distance infrastructure.  This in
short is the system which we are creating".

Golubkov continued:  "Now your last question about an Internet node for
Russian scientists is a very interesting and important one.  This could be a
non profit network.  I am ready to approach this problem and discuss it on a
practical basis."  I explained what I had done in bring price quotations to
Nikolai Repin at the Academy of Sciences and Glasnet and Transinform and
Arkadi expressed his approval.  I also mentioned that I had met Marat Guriev
in April.  Golubkov immediately pointed out that Guriev was only a user and
that any network for Russian scientists "would be established only on the
basis of the existing infrastructure of Min Sviaz.  Because we have you know
Russian telecommunications satellites."  But how will you connect from a
Russian satellite to an American ground station I asked?  "Well that is a
problem and we must work on that," Golubkov answered.  I asked what I should
tell American network providers and officials when I returned to the United
States.  Arkadi replied:  "Tell them that we are ready to discuss all
reasonable ideas.  We are working toward the creation of a Russian Information
Center and Teleport that will be based on our experience with networks like
Relcom, and Glasnet."


Chapter 7
Some Concluding Thoughts on the Russian Enigma

Moscow Through the Eyes of Andrei

In early November Andrei sent me the following:  "This fall a real winter cold
came to Moscow unusually early. The city looks strange even for us who have
been living here all our life. Green leaves frozen in the ice of deep puddles
like huge insects in the amber. Chary sunshine filters through hazy clouds in
the pale-blue sky. Golden domes of tall cathedrals burn like candle lights
above the old cake of Kremlin. Strange again, there is no birthday today.

Last Sunday all our family: Marina, Patty, Masha, and I visited Gorky Park.
All attractions usually closed for the winter were still open and it was a
strange fun to ride a roller coaster with icy cold seats. It was a pleasure to
go upside down - at that moment your rear part was not so pressed against cold
iron and felt slightly warmer. Watch lead grey Moskva river from a big Ferris
wheel... water so cold that it looks like it cannot wait to freeze and relax.
On the small ponds in the park the ice has already formed thin and transparent
laces near the banks and the ripples magically disappear when they approach
the land... You almost cannot see the ice itself, you see just impossibly
smooth surface...

The park was almost empty - surprisingly so, because at warmer times there
always were long lines to every ride or attraction. The cold could not do that
- it's a little bit difficult to scare Russians with a mild frost. I got some
answers when had to pay for the tickets at the roller coaster. After spending
three hours in the park with the family I left there 1/3 of the salary the
State pays me a month. The craziness of Russian economical situation quietly
crept into golden Sunday afternoon filled with laughter of those who still
have money to visit amusement parks.

To compensate for the cold, political life is hot like volcano fuming before
the eruption. And stinking accordingly.  The eruption itself is scheduled for
December 1, the Congress of Peoples' Deputies is to open on that day. The
President has asked the Supreme Council to delay the Congress till spring.
Councilmen have voted down that appeal saying they are fed up with the
Government and want it to stop experimenting with 200 million of living souls.
As though these guys from the Supreme Council know another way out of this
insane situation we're in or can one read about it in a textbook? The
President got angry and said he would not forget this impertinence.

People are watching all that on TV and consume hassles instead of calories.
Looks like they get enough, for you will not see starving faces in the rush
hour crowd. Nor will you see happy or smiling faces - as a result of this
diet. Fortunately, kids prefer Disney cartoons to political debates and
therefore are strata of the population that laughs most often.


Inflation is the real ruler of this country now. Twice a week Commercial
Currency Exchange changes the exchange rate for rubles in respect to Western
currencies. At the moment, ruble price for dollar becomes higher every week by
30 or 40 rubles. In night news on TV two hours ago they said it was 393 rubles
per 1 US dollar. By the moment when you read this, it will be well above 400,
of course. Many people are too frustrated to go on with their work. They
prefer easier ways - and crime rate grows even faster than exchange rate. And
beggars sit at every corner of Moscow metro stations, under all that luxury of
endless colorful marble.

On the other hand, more and more people realize that they should not sit and
wait until their salaries will make some sense. In order to survive, you have
to find second and third jobs - and earn money from private companies.
Sometimes it is funny to see that university students are dressed much better
than their professors and look much more confident. Young and adaptable,
students have already learned how to make quick money. Professors are less
lucky. They try to make money by research or teaching - but who will pay them
for either? And many leave the country.  I find it very difficult to locate a
seminar on my field of physics still open in Moscow. I have no one to discuss
science with - unless I use Internet e-mail to connect to former Moscovites
who are now residents of  Israel or U.S.A.

>From Physics and Biology, students drift to Economy and Trade. Will Russian
banks in the next century be as powerful as our H-bombs now? If yes, all that
maybe is not in vain. On the other hand, will there be a population to use the
banks - or only tourists from abroad? Many of them Russian speaking..

Speaking seriously, I am afraid for the future of science here. If I can
survive now - this is because before I was working 10 to 14 hours a day in the
lab - and it was the real school that polishes a puppy to a professional
scientist. I could afford doing science all day long - now that pays me back.
But those who are entering the field today just cannot work in this style -
they must  learn how to juggle three jobs at a time. A useful skill, but it
remains to be seen if they can become professionals in any meaningful sense.


The traditionally slow pace of local life has changed dramatically. Events,
news, and money - everything is flying by at ever increasing speed. Maybe
there have been so few people on that roller coaster in the park because our
life is a huge one now? And no safety bars and the design has never been
tested - it's a full scale field test now in progress - and God save the
passengers!

And God comes to Moscow. Many different Gods, in fact. Preachers of all
possible confessions come here to tell people where the truth is or when the
end of the world will come. One group promised that it would happen on October
28 and covered half of Moscow with their posters.

Some kids were really scared. Another half of the city was covered with
posters advertising Billy Graham as a person who has an answer to every
"Why?". His commercials on TV are between the ads of electronic lottery and
one more newly born private bank. On October 29 one of the central newspapers
published an article with a headline: "Supreme Council Session Took Place
Instead Of Previously Announced End Of The World". This is a modern joke,
Russian style. Or Russian mass media style.

Fall is a strange time. Snow falls and melts and freezes into dirty ice. It
will be some time before everything is covered with a white blanket hiding the
mud. But snow or ice outside, it is still warm in our rooms and hearts.
Laughter and hope never give up - they just move to secluded places. Computer
networks among them. The concept of seclusion changes with time, you know.

Some Concluding Thoughts

With the election over it is to be hoped that the new adminsitration will be
focusing on fresh policy towards Russia. Current policy is a disgraceful
muddle.  Only two things separate Russia and the CIS from the status of a
third world country: nuclear weapons and the brain power of an exceedingly
well educated populace.

Andrei points out that in general foreign scientific journals have been almost
entirely unavailable for more than two years.  Science is an international
field.  To do science one must read the international literature one's own
specialty.  To be unable to do so is to be cast adrift and relegated to a new
dark age.

Russia's ability to maintain its scientific and technical brain power is in
danger in at least three critical areas.  First is emigration -- many
brilliant minds are simply leaving the country.  Second those who saty behind
will have a more difficult time learning because teachers of English French
and German can no longer afford to teach science students foreign languages.
For if these teachers are to survive, they find it necessary to put their
language skills to work for joint ventures. Third the message is science is no
longer relevant.  Become an importer or some kind of a trader if you want to
prosper

It is in no one's interest to destroy Russia's ability to function as a
self-sustaining modern society.  Yet given the current apparent western
indifference to Russian events one could even begin how, if the pay were good
enough to the restore the journals of his field to Russian libraries, a
Russian scientist might even consider it patriotic to work for a Qaddafi.
The new adminsitration must focus on ceate plans to deal with these problems
and as a first priority must do every thing possible to facilliate direct
Russian links to the NSFnet.

In view of American governmental indifference it is encourgaing to see huge
amounts of priavte activity.  It can only be hoped that the exploitative
activity will fail and that activity that provides real capital investment and
growth and gives Russian needed technical and managment training will succeed.

Certainly in view of the current unsettled situation, it is likely that
success will go to those who are prepared to innovate. Bureaucratic
conservative approaches are unliely to get far.  In this context the role of
the Mnistry of Communications still seems unclear.  Arkadi Golubkov is
undoubtedly a very intelligent man.  Let's hope that he is also flexible.
Some of the remarks he made could be interpreted to indicate that Min Sviaz is
unprepared to be by-passed in any situation -- even if the good of the nation
were oviously at stake in a solution not of Min Sviaz's making.

Russia needs to do in five years what the United States has done in 60 years.
Simultaneously it must adopt new technology, built a modern infrastructure,
develope markets and regulatory bodies, define national interests and develop
national policies and goals.  If it is unable to for any reason it may find
that the "market" does this for it.

Ewing NJ -- November 15, 1992


Appendix A:  Rinaco-self Described


After my return, Iurii Krichever sent me by email the following description of
Rinaco.



       -   INTERNATIONAL
       -   SPECIALISED
       -   INDEPENDENT


The Russian Investment Joint-Stock Company (RINACO) is a leading CIS universal
financial company providing complex services for a wide range of clients.

RINACO was established in 1991 as an open joint-stock company with authorized
capital of 1.2 billion rubles and remains the first and the largest investment
company in the CIS.

The resources of RINACO's founders and thousands of its large and small stock
holders which includes the nation's leading banks, exchanges, insurance and
transport companies, radiostations and individuals makes it possible for
RINACO to solve practically any problem in the field of financial and
investment services.

RINACO's activities include:

    o    Investment Finance
    o    Privatization
    o    Banking
    o    Securities
    o    Venture & Debt Capital
    o    Legislation

When we established RINACO, we had one goal in mind - to create the finest
investment company in the CIS.  I believe we have accomplished that goal.

Our company has developed a wide range of services for state and non-state
institutions in the fields of investments, finance, securities, insurance, and
legislation.
Headquarted in Moscow, RINACO is uniquely positioned to stay abreast of
developments at the federal level. RINACO also has representatives in more
than 120 cities in Russia and the other countries of the CIS. These
representatives reflect our desire to provide clients with the most effective,
efficient, and well-informed service available.

I believe in RINACO's team, composed of the most talented individuals in the
business.  It is this new generation which improves RINACO's philosophy,
strategy, and management in the present market.

The ongoing overhaul of the nation's economy will have a substantial impact on
everyone in the industry. The changes will be extensive, and only the
strongest, most flexible financial institutions will prosper in the years
ahead.

Today we are ready to work with you so that we may realize the full potential
of future investment projects. I invite you to contact our team.

               Best regards,

Dmitry Sukhinenko,
Chairman, Board of Directors



RINACO enters the new year with an established reputation for providing
services to our clients in Russia and abroad in the areas of: legislation,
consulting, privatization, securities operations, investments, and finance.


Our partners number more than one hundred. They include a number of the
nation's top banks, exchanges, insurance companies, largest enterprises,
government organizations, and several of the world's largest financial
institutions. Its deep knowledge of the governmental process allows RINACO to
bring its public policy perspective to the many diverse challenges faced by
our clients in the present uncertain situation.

We place the entire potential of our company, including professional staff,
infrastructure, finances, and experience in the public and private sectors, at
the disposal of our partners who share our intentions on the integration of
the national economy into the world economic system.

               Sincerely,

        Stepan Melkonov,
         Chief Executive Officer



INVESTMENT  FINANCE

Our investment financial policy focuses on:

  o Shared Participating Investments

RINACO provides permanent capital through capital stock investment. In such
cases owners share their equity in a project with RINACO. This permits them to
reduce their exposure to risk and, by improving the project's capital base,
often makes it possible to obtain substantially more debt capital for the
project as well.

In addition, in order to finance large-scale industrial projects requiring
hundreds of million of rubles, RINACO can raise funds through the issuance of
securities.

 o  Direct Loans

Financing for smaller projects with a high rate of recoupment  within a short
period of time is provided through a direct loan program from RINACO's own
funds. These investments generally range in amounts up to 30 million rubles.

PRIVATIZATION

RINACO is a leading adviser on all aspects of privatization, having been
actively involved in many assignments on the territory of the CIS. RINACO's
experience, knowledge of the market, analytical skills, and negotiating
abilities have generated requests from both local governments wishing to
implement privatization programs and companies being privatized. In addition
to advising governments and the businesses to be privatized, RINACO also
advises private companies wishing to take over public sector activities. We
use a wide range of privatization methods, including public floatations,
private placements, acquisitions, leases, and concessions.

BANKING

Quick decision making, experience, market knowledge, and total confidentiality
are the central themes of RINACO's banking business.  We concentrate on
arranging and managing syndicated and bilateral credits for large- and
medium-size corporate and financial sector borrowers.  Contacts with one of
our founders - a leading financial institution - insures quality assistance in
the conversion of rubles and hard currency. The same contacts will also attend
to your day-to-day banking needs.

We advise major companies on debt restructuring and other aspects of banking
relationships.

VENTURE AND DEBT
CAPITAL

RINACO has extensive experience in advising local governments, project
sponsors and contractors in the field of raising venture and dept. capital.
Venture capital is aimed at investment in high-growth companies, whether at
start-up or at a later stage of development.

We can help to attract venture and debt capital up to hundreds of millions of
rubles in the shortest possible period of time.

SECURITIES

RINACO was the first company in the CIS in the areas of creating:

    - a totally integrated system for securities transactions;

- a computer-based depository for securities operations, developed in
accordance with international standards, and
- a telecommunications network for the securities industry.

RINACO's established depository system consists of the most modern electronic
technologies for the issuance of securities, and operations with them. Our
Moscow depository center presently holds the stocks of 10 joint-stock
companies, of around 200,000 stockholders.

The dealer's network of RINACO (composed of more than two hundred independent
stock dealers) is linked with the depository by a computer network that
enables us to keep abreast of the securities markets of the whole territory of
Russia, all other countries of the CIS, and some countries of Eastern Europe.

LEGISLATION

Our highly respected and experienced staff will:

     - provide legislative consulting;
    - analyze legislative and regulatory     initiatives that affect  non-state
institutions;
    - aid in establishing contacts with     governmental officers, and
     - help to establish a joint-stock     company, including the
    preparation of foundation     documents and their processing           through the
governmental offices.

RINACO's Investment Project Digest

"NABAT"

NABAT manufactures, installs, and services high-security alarm systems
designed for any movable or fixed property. NABAT owners are guaranteed full
protection of their property through insurance coverage.

In the process of its operating the owners can rely on the broad possibilities
of the Russian Ministry of Interior. The NABAT system shortly will be used in
both the Kremlin and the "White House".

 "FINANCIAL NETWORK"

Presently, the mass privatization in Russia is underway creating the need for
the first Russian global depository network. RINACO created a special division
to deal with the tremendous amount of shares to be issued.  This wide network
of sub depositories, spread over the country and connected with the main
depository, will allow RINACO to become the "Chief Accountant" of the CIS.

A BIG CONSTRUCTION
PROGRAMME

The BIG CONSTRUCTION PROGRAMME concentrates on reconstruction and new building
on blocks in the historical part of Moscow. This program is carried out under
the supervision the Moscow city government. Under this program a number of
offices, hotels, dwellings, and restaurants will be built.

TV COMPANY "VCT"

 VKT (from the Russian acronym "Your Commercial Television") is active in
setting up a new national commercial TV network by establishing film, TV,
animated cartoon, and sound recording studios and training personnel for the
TV industry. VKT is responsible for several popular programs for business
people that are broadcast during prime time.

"COROS" MEAT INDUSTRY

RINACO is organizing a number of small meat plants in the Moscow region. These
plants will produce more than 120 varieties of meat products. A wide network
of food shops has been established to sell these products.

"THE AMBER SHORE OF RUSSIA"
This company is involved in new construction and the restoration of the
existing dwellings on 175 acres in the territory of, on the Baltic seaside.
The Amber Shore is actively involved in the organization of the tourism
industry in this area.

MEDBANK

MEDBANK offers a bank of blood and marrow for the treatment of the victims of
Chernobyl and other catastrophes. It includes oncology, hematology, organ
transplantation and an information bank. MEDBANK also is working to establish
a medical insurance program for the population of Russia.

The list of our large-scale investment projects also includes:

a computer network, an automobile production and a transport corporation, a
merchant house, and an information-analytical agency.

 Appendix B:

Development of  Informatics, Telecommunications Systems and Networks in the
Russian Federation

Telecommunications is, beyond any doubt, the most important part of
infrastructure of any country's economy. The level of development of
telecommunications can serve as a criterion for evaluation of the economic
development of a country.

The aim of this report is to provide an overall  assessment of the current
situation in telecommunications in  the Russian Federation and to analyze
possible ways of  development of this industry now and for the future under
conditions of economic reforms currently underway.

 I. STATUS OF
TELECOMMUNICATIONS IN THE RUSSIAN FEDERATION

     The main components of the telecommunications industry  are:

     - local public service telephone networks;
     - trunk (long distance) and international telecommunications;
     - telegraph communications and data transmission networks;
     - television and radio broadcast;
     - postal service;
     - civil construction industry for telecommunications facilities;
     - credit-and-finance establishments;
     - industry-bound system of higher and medium educational institutes for
training personnel.

The number of people employed in this industry is about 1,000,000.

The Russian Federation occupies the 6-th place in the world in the number of
installed telephones (21.2 million), and the 4-th in  Europe (see table 1 of
the Appendix).  Regarding the number of installed telephones per 100
inhabitants Russia occupies the 30-th place in the world and the 21st - in
Europe.

About 15 million. applications have been registered on the  waiting list from
those wishing a residential telephone installed  in their flats;  in other
words,  about 50-60 million. persons are  waiting for a telephone to be
installed in their households.

The local public service telephone networks  have  about  33.5  thousand
exchanges in operation with a total capacity  of 22 million. lines. Crossbar
exchanges are predominant (about 70%),  digital exchanges make about 17%, and
the rest of  exchanges are of step-by-step type. The proportional part of the
digital data transfer system is  about 53%. The overall  length of fiber-optic
cable lines is extremely  small -- only 1744 km.

The local telephone networks are all automatic. The growth rate of telephone
lines is about 1 million/year.

On the trunk telephone networks about 1.2  billion telephone calls per year
are placed. In USA this  figure is about 68 billion,  in Germany - 12.6
billion,  in  Italy - 7.5 billion (see table 2 of the Appendix). About 76% of
customers can make use of automatic trunk  telephone service, but only 23% of
them live in  rural areas.

The network has automatic trunk telephone exchanges with  the total capacity
of 200000 channels of primarily crossbar  switching system. Quasi-electronic
and  digital exchanges make about one third  of the total number of the
exchanges.

The trunk network has about 270000 communication channels  in operation, of
which 65%  are based on cable lines, 30%  - on fradio-relay lines, and only 3%
-  over satellites.

The total length of trunk telephone channels based on digital  transmission
systems is extremely small:1.1% of the overall length  of the channels.
Fiber-optic cables have not yet achieved wide-spread application.      At the
same time,  the long-distance telecommunications  networks of the Russian
Federation have in operation the  longest cable and radio-relay
telecommunications lines in  the world (9.5 thousand km).

International telephone traffic totals 41 million calls per  year. This is the
equivalent of 0.24 calls per inhabitant per year;  for comparison, the
respective figures for some other  countries are as follows:  Switzerland -
34.40;  Holland  -  15.03; Germany - 9.15; USA - 3.36 (Table 3 of the
Appendix).

The international telephone telecommunications are organized so far through
the only automatic international exchange in Moscow.  About 4000 international
telecommunications  channels are used to provide international calls.

Access to international telephone networks is made via  satellite channels of
such international organization as  "Intersputnik", "Intelsat", "Eutelsat",
next through the network  of terrestrial channels passing through the
territory of Belorussia  and  Ukraine, then over a radio-relay passage to
Finland from Estonia and at  last through the submarine cable line from
Hakhodka to Japan.

Mobile radiotelephone networks are functioning in 90 cities of Russia and have
about 20000 customers.  These networks are founded on an out-of-date analog
radio system called "Altai".  Cellular phones are available only in Moscow and
Saint-Petersburg. Data about the number of subscribers of cellular mobile
radiotelephone networks in some countries of the world is given in Table 3 of
the Appendix.

 In the Russian Federation a combination of telegraph channels, switching
centers, stations and substations provide  to subscribers telegraph service,
telex services and also facsimile  transmission of newspaper pages over
telecommunication channels.
 The network of the internal Telex has more than 70000 subscribers, the
International Telex network - about 5300 subscribers.  The  International
telex network is completely isolated from the Internal Telex network and
utilizes the only international switching station in Moscow.  (See Table 3 of
the appendix).

The Russian Federation has not yet created a unified network for data
transmission;  there are only a small number of dedicated networks established
in the framework of private and joint  enterprises.

The postal service of Russia processes and delivers yearly over 28   billion
newspapers and magazines, 4 billion units of written  correspondence, about
171 million parcels and 56 billion ruble's  worth of money orders and
pensions. By the number of postal deliveries  per annum  the postal service of
the Russian Federation occupies the second place in the world after the USA.

For transmission of radio and TV broadcast programs and  for  provision of
telecommunications channels the telecommunication satellites of the types
"Gorizont," "Ekran" and "Molnia" are used. Besides that, the international
exchange of TV programs with 40 countries of the world is  made  through  the
"Gorizont" satellites in the "Intersputnik" system.

The development of the telecommunication industry in the past was to a great
extent dependent on the usage of imported equipment delivered from
East-European countries for hard  currency appropriations allotted by the
Government. Up to 65% of equipment for the local telephone network  was
imported,  for  TV  and radio broadcast the figures were 30%, and for
international telephone network - 15%.

The delivered equipment was obsolete and  did  not  meet  the requirements of
the world standards.  Beginning in 1991, due to the lack of hard currency, the
deliveries of equipment practically come to a stop.  The national industry
does not  manufacture at present electronic switching equipment with SPC,
fiber-optic  cables with attenuation of  less  than  0,2 dB/km,  digital
radio- relay lines and digital transmission systems with the transmission rate
of more than 140 Mbit/s.
II. OUR PRIORITIES

For a successful implementation of the economic reform in the  country, it is
vitally important to have a highly reliable, ramified  world class
telecommunications network.

The Ministry of Posts and  Telecommunications  considers  the following
directions  of telecommunications development in the country as priority
directions:

1.International telecommunications development.

The major projects in this field for the nearest  future  are:  construction
of a fiber-optic submarine cable  line  Copenhagen-Kingisepp with continuation
to  Saint-Petersburg and  further  on to Moscow over a digital  radio-relay
line.

The construction of the line has already begun. In parallel  to this the
construction of three international telephone  exchanges   is   going   on,
two in  Moscow  and  one  in  Saint-Petersburg with the total capacity  of
about  10,000  channels.  The  commissioning is planned for the end 1992 -
beginning 1993.

The next step in this direction is the construction of a  fiber-optic cable
line  Palermo-Istanbul-Novorossiisk  with  continuation  over  the digital
radio-relay line passing via  Rostov-on-Don to Moscow with construction of  an
international  exchange in Rostov-on-Don. The intended completion of  the
Project is in 1994.

In addition  to  the  international  telephone exchanges  being constructed
now  it  is  also  planned  to  build  international  telephone  exchanges  in
the following cities:  Ekaterinburg, Novorossiisk, Samara, Vladivostok,
Novgorod. The implementation of these projects will, in our view,  cover the
most urgent needs of Russia for the international  telephone
telecommunications.

We also plan to start establishing  an  unified  packet-  switched data
transmission network an access to the international  network. In is  primarily
the Russian banks,  stock exchanges and  commodity exchanges that will make
use of  the  services  of  this network.

 2. Development  of cellular systems of mobile  telecommunication.
Currently the cellular networks of mobile telecommunications  are in operation
in Moscow and St. Petersburg. Both networks   had  been  constructed  by the
joint ventures and operate in the frequency  range  of  450 MHz.

In future   this   type  of  communications should  be  developed for more
advanced range of  900  MHz.  In  nearest  future the  mobile  cellular
networks  operating in  this  frequency   range   should   be constructed   in
Moscow,  St. Petersburg and Samara.

 3. Enhancement  and  digitization  of  trunk  and local  telephone networks.

It is  necessary  to  reconstruct fully the trunk telephone  network.  Only
76  %  of  the  trunk  network is automated  due to the  application of
obsolete technical facilities.  18% of  region centers of the Russian
Federation don't  have automatic  trunk telephone exchanges providing the
automatic  telecommunications for the subscribers of these centers.   9% of
the intra zonal circuits are aerial ones.

Up to now there are step-by-step exchanges  and  aerial  circuits in the
operation on the local telephone networks. Due to the absence of required
equipment the full-scale  telephonization of sparsely populated and difficult
to pass  regions of Siberia, the Far East and the Far  North  is  not yet
completed.

4. New  telecommunication services development.

The Ministry  of  Posts  and  Telecommunications of the  Russian Federation
encourages the construction of dedicated  and outlay  telecommunication
networks within the framework of private and stock companies for the
commercial structures  and businessman.

Together with the traditional telecommunication services we should develop the
new services,  using the  modern technologies.  These services will be
composed of satellite systems using the VSAT technology and direct TV
broadcasting via the  telecommunication satellites.

III. OUR POLICY.

Since it is well known that the telecommunication networks  are an integral
part of the market economy of the state, the Russian Ministry of Posts and
Telecommunications is going to  pursue the following policy of reforms in
telecommunications:

1. Flexible rates for services.

2. Introduction  of  free  rates  with  the expansion and  extension of
economic reforms.

3. Construction of dedicated telecommunication networks for the market
structures of the economy.

4. Sharing of telecommunication enterprises.

5. Privatization of telecommunication enterprises if necessary and  required.

6. Creation    of    stock    companies    and    private  telecommunication
companies,  including the companies in which foreign capital is invested

7. Attraction  of  advanced  foreign  technologies in the  field of
telecommunications as a basis for the construction of modern telecommunication
networks.

8. Creation of a production industry for the perspective  telecommunication
facilities, attracting foreign capital  and advanced technologies.

9. Attraction of foreign partners for the development and  examination of
conceptual projects. General plans for prospective development of the
telecommunication  networks.

10. Russian technical specialists trained in the field of  telecommunications
in the training centers of foreign  countries at the expense of these
countries.

IV. OUR NEEDS

In whole,  for the fast development of the  Russian  Federation
telecommunication  networks, the Ministry of  Posts and  Telecommunications
believes that the most productive way is acceptance by the seven
industrialized countries of the decision  concerning  the launching of the
special-purpose  program of  technical and financial support for Russia  in
the  field  of
telecommunications.

The Ministry  of  Posts  and  Telecommunications desires to attract  foreign
investment for the realization of telecommunication development projects
described in the Section II of the  present  report  and also for  some other
projects.

Appendix

Local telephone networks of some countries of the world

Table 1

    Country    Population     Total number of    Proportion (%) of
        million    telephone sets,    telephone sets
            in millions     per 100 persons


    USA    248.7    132.6     53.34
    Japan     123.1     53.2    43.24
    Germany    78.6     29.4    47.43
    France    56.1     26.5    47.26    UK    57.2     25.5    44.58
    Italy    57.5     21.2    36.97
    Russia    163.1     21.2    13.00
    Spain    38.8     11.8    30.40
    Sweden    8.5     5.7     67.85


Annual number of trunk and international telephone calls in some countries  of
the world
                                                  Table 2

Country     Number of    Number of    Number of
    trunk    international         international
    telephone calls,    telephone calls,    telephone calls
    billion    million     per 1 person
                                           in a year


    USA     68.5    835.2    3.36
    Germany    13.3    694.3    9.15
    UK     *    *    *
    France     *    *    *
    Japan     *     166.8    1.35
    Italy    7.5    239.6    4.20
    Russia    1.2    41.0    0.24
    Holland     3.3    222.5    15.03
    Switzerland    1.5    229.0    34.40


Number of telex users and mobile  cellular network subscribers in    some
countries of the world

                                                     Table 3

    Country    Number of telex                     Number of cellular
               users per  thousand      subscribers per thousand

              USA                    58.7                            3500.0
    Japan    *    490.0
    Germany    134.4    163.6
    France    144.6    168.5
    UK    *    975.0
    Italy    69.7    66.0
    Spain    35.1    29.8
    Sweden    16.6    349.0
    Switzerland    32.2    72.7
    Russia    5.3    less than    1.0

 *- information is not available


TEXT BOXES

Politics and Economics
A Russian Physicist Reports to American Students


To Miss Jacobs' Social Studies Class, Creede HS,  in Colorado

Hello! I am happy to answer your questions. I think the questions you asked
are really important to understand what is happening here. In fact, it is
possible to open a separate conference to discuss them.  But I'll try to be
brief.

Russia now and actually always was an "experimental lab" of History. First,
Lenin started his cruel experimenting on the living people, now Gaidar et al
are continuing.  But what can be done else now, if no one ever experienced
anything like this?  Getting into capitalism from socialism.  In the years of
socialism we had a joke: What is the difference between capitalism and
socialism? - Capitalism is sucking SOCIALly, socialism -CAPITALly.  Our
experiment in building socialism sapped the capital of our society.  As the
result of this capital decay our society and economy are still unhealthy.  And
of course life is tough for the majority of the population.

In fact, the former "communist" regime should have been gone in 1985 when
Gorbachov came to power. But he managed to stabilize it by selling the Gold
Resources of the State. Official figures are: from the 70-s untill 1985 there
was 2000 tons of gold in the State Gold Fund; by 1991 there was only 100 tons
of gold left. This is about the what the state owned in 1913. You can see why
he managed to maintain somehow the level of life during his 5 years of power
and why he failed further. Brezhnev survived due to the "oil dollars",
Gorbachov - due to the gold of the state.

Of course after these 74 years of god knows what (it cannot be called
communism) people got tired of it and when it failed the majority were
excited. People were lacking normal democratic freedoms: of mass media, of
free elections, of demonstrations etc. But now you will be able to find all
sorts of newspapers starting from "The Hawk of Zhirinovskii" and "Pravda" and
finishing with "He and She", "Sex in Your Family", etc. I should explain:
Zhirinovskii is the leader of the right extreme party, close to fascism. He
fortunately does not have much support, but the party is allowed to have the
newspaper until and unless there is overt (open) fascist propaganda in it.

During a historically very short time (couple of last years) people have
gotten very much used to the freedoms they have acheived and now already do
not pay much attention to having them. But, if anyone would dare to try to
terminate what we have now... I am afraid, people would not love that. Yes,
sometimes in the overcrowded metro trains I can hear some angry remarks (by
the way, mainly from the people of the middle age and by appearance not very
well educated):

"What for do I need this freedom of mass media if my wage is low???" Yes, not
so many people are now coming to the political meetings and demonstrations.
But that's because people are busy! They have many things to do now and just
do not have time to spend in the streets rioting for/against something.  But
again, I am sure that if one day we will get up in the morning and find out
about the new coup, the situation will be much worse than a year age, many
more people will come out to defend what they achieved.  Looks like I'm
getting too long and boring already. I'll stop for now. I definitely
understand that the picture I gave is simplified and strongly depends on what
class of the society you are considering.   Bye for now.      Masha.

Dear Andrew, Travis and Adam! Your question about the workers wages is quite
hard to give brief answer also. That's because the wages are strongly
dependent on the industry, social position, geographical area and many other
factors. Let me show my statement on few examples.

For instance, in Tyumen', the very rich with oil area the workers are paid
40-50 thousands a month, teachers were on the edge of rioting because of low
wages: 15 thousands... In comparison: in Moscow teachers are making 4-6
thousands. The official statistical data for the government paid workers -
6000 monthly. But now when many people shifted to the private sector of the
economy, many are making a lot more. For example in the private kiosks in the
streets of Moscow people get about a thousand daily... Scientists make 2000 -
3000 .

Now - about prices. First of all, they are changing almost weekly. I will give
you the figures what I've seen myself, but that does not mean that when you'll
be reading this letter they will remain the same. All prices are in rubles.  1
liter of milk today was 14 rubles.  Regular Russian made fridge last week was
about 30 -60 thousands.  Imported fridge is more than 100 thousands Same with
TVs: Russian I have not seen for more than a week and I do not know what price
will be when they'll appear.  Imported TVs more than 100000 . Pair of athletic
shoes: Nike - 15 000, ROOS'(high) - 5-7 thousands, Reebocks - 9- 12 thousands
(It all depends on the place where you see them , exactly like in the U.S.)  A
3 person baidarka (canoe)three weeks ago was 15000  a 2 person I have not seen
since summer.  But in making the calculations take into account apartment rent
payments, oil for the car (if you have one), transportation expenses if you
use public transportation, such necessities as clothes for growing children in
the family etc.

Good luck in your estimations! If I can be of any help further, please, write
back.
Masha.


What Russians Can and Can't Own

>From the Moscow Times, October 20 1992

Moscow Law:  What Can Russians Own Here and There?

"In the past there was no prohibition against an individual having a bank
account abroad or having property outside Russia.  For whatever reasons
Russian law has now plugged these loopholes.  Several regulations from late
1991 and early 1992 permit citizens to maintain bank accounts abroad only as
long as they reside abroad and require them to transfer all funds in such
accounts to a Russian bank upon returning home.

Similarly a short paragraph in another regulation prohibits citizens from
owning property or shares outside of Russia.  The Russian government has also
adopted Soviet rules forbidding individuals from receiving payment in foreign
currency.

It is legal for a Russian citizen to have a foreign currency bank account and
even to convert rubles into foreign currency in certain circumstances, but
such rights are largely symbolic without the right to earn foreign currency.
Land and other property laws also fail to provide Russians with clear secure
opportunities for saving.

Land ownership other than dachas and kitchen gardens is limited to farmers who
may themselves loose their land if they use it incorrectly.  Apartments may be
owned but the state remains the largest landlord and is not always willing to
sell apartments to their occupants.  It also by no means certain what
obligations will come with such ownership.

Privatization offers people with sufficient means the chance to purchase
enterprises or shares in them but the privatization law requires an individual
purchaser to present his tax returns to prove the legitimacy o f the funds
that he wishes to use for the purchase.

Employees of such privatized enterprises enjoy preferences in purchasing
shares in them and are also entitled to receive part of the proceeds from
their privatization.  Russian law also does permit people to start their own
businesses, although these businesses may also not have bank accounts or
property abroad without permission.

Symbolically Russian law has abandoned the requirement of soviet law that
every one must work.  Unemployment is no longer a sign of dissidence.  It is
the sign of the times."



Invest Rubles:  Receive Dollar Dividends!

In the newly "capitalist" Russia wherever you turn, you are greeted with
invitations to invest your money in new stock companies.  On the fiber optic
conference cruise someone has distributed a prospectus for a Transiberian
Communication Line Stock Company.  Talking of a 1997 completion date, this
appears to be an investment effort to raise funds for the line planned by Min
Sviaz and Intertelecom.  A translation of the first page follows.

Transiberian Communication Line Stock Company.

The TSL is one of the best possibilities for investing your money in industry.
You invest rubles and receive hard currency.  It is possible to use the
territory of Russia to build a communications bridge to Europe. The CoCom
embargo against high technology, especially in fiber optics makes it
impossible  for foreign technology to compete in this effort opening the way
for indigenous technology instead.

We plan to cooperate with Min Sviaz and some other leaders in the
communications industry in the privatization of the necessary key industries.
A permit to create on the territory of the CIS (Russia and the Ukraine) is the
basis for a new stage of development of national communication networks
centered in the most important economic regions.

The present technology of digital signal development guarantees the quality
necessary for entrance into world networks.  Using fiber optics allows high
traffic through put and by this the profitability of this line.

Main parameters are:

Total length 14,300 km

Quantity of parallel channels are 4 to 6 in each direction.

Data speed 140 to 565 megabits per sec allowing from 1920 to 7680 telephone
channels.

Total capacity about 30,000 channels

Plans are to go from 7680 to 15000 and 30,000 channels

Russian communication needs would fill half the channels.



Israeli Company Sells in Russia
Router that it Claims Outclasses the Cisco AGS+

On September 9, 1992 Yaron Polak, Director of Marketing and Sales, RAD Network
Devices Ltd., Altidim Technological Park, Bldg 1, Tel Aviv 61131, Israel
Telephone [phone], send a fax to Iurii Znamenskii in Moscow.

The fax reads:

Dear Dr. Znamenskii,

We are delighted to inform you that Open Gate has been released.  After three
months of intensive testing in large networks and in a number of successful
Beta sites throughout the world, RND feels confident that OpenGate is ready
for general release.  This means that we will now be shipping OpenGate without
restrictions.

The Market is ready for OpenGate.  We all appreciate the tremendous new
opportunity OpenGate gives us for generating new business.  RND has prepared a
host of marketing material to help you promote OpenGate.  This includes a
Coulor Brochure, Datasheets, a Sales Guide and a detailed System Description.
By now you should have received copies.  Based on our experience, the System
description provides an excellent "first impression" on customers, so be sure
to order these and use them in your sales effort.

Please copy this fax to all relevant people in your organization.  RND's
technical support contact in your organization will receive by airmail a full
technical OpenGate release package.  RND is here to provide you with any
assistance you may need!

RND is ready, the market is ready.  Let's go out there and sell.

Best Regards,
Yaron Polak

Iurii also gave me a 13 page technical comparison of the OpenGate Router
(which uses the Intel 80960 RISC processor) with the Cisco AGS+.  If the
comparison is accurate, this Israeli company is producing routing technology
equal to or better than the best American technology.  Furthermore RND also
advertises a complete line of routers ranging in price performance from very
inexpensive entry level boxes at the bottom to the OpenGate at the top.

In view of some uncertainty about whether Cisco's entry level 64kbs router is
still under CoCom control or not -- while it is clear that every router more
powerful is still controlled -- it seems that we have here another example of
the way in which CoCom is handing the Russian market to foreign suppliers.




Sovintel Gets 6.5 million EBRD Loan

by Geoff Winestock, Moscow Times -Tuesday October 20, 1992

The disrepair of the Russian phone system is the only security that the joint
venture Sovintel had to put up for a landmark $6.5 million loan it signed on
Monday with the European Bank of Reconstruction and Development.  The
telecommunications firm became the first Russian legal entity to receive what
amounts to a regular bank loan from an international financial institution,
according to Ron Freeman, the EBRD's merchant banking vice president.

The EBRD, as well as the Export Import Bank of the United States and the
German Hermes export insurance agency have previously only underwritten
projects on he security of a government or commercial bank guarantee.  The
EBRD 5-year loan, however was made without recourse to either the Russian
government or Sovintel's US partner.

Freeman said:  "With the structure of this loan the EBRD confirms its
willingness to finance commercial enterprises in Russia without government or
other guarantees."  Sovintel, owned by the Russian Ministry of Communications
and a US partnership of GTE Spacenet and the San Francisco Moscow Teleport
will use the funds to extend its international telephone and data network,
with a move to cities outside Moscow as the next big step.

Tony Kuczura, Sovintel's acting director, said that the fact that the EBRD had
made a normal bank loan to Sovintel showed that the company was emerging as a
normal business unit without the need for cash or other guarantees from its
parent organization.

Kuczura says that western firms will need an alternative phone system for many
years to come.  The problems with the Soviet phone system are so great,
including lead cables and electro-mechanical switching dating back to the
1950s, that it would take ten years to reach acceptable standards for business
use. Sovintel employs 60 Russian staff, mainly trained in the United States.
Its network now links about 100 western businesses to the outside world.



SomeTechnical Details on Relcom TCP/IP Hardware and Software

"Now we offer a few technical details on currently used software and hardware.
Lack of appropriate routers forced us to develop our own solutions.  First of
all we developed CSLIP software which is capable to use several physical links
for one network interface.  Such software allows us to achieve acceptable
bandwidth (for example ~6KB/sec FTP for ASCII files) in the absence of medium
and high speed links, and provide good backup in case if one of the links
fails.  We plan to develop in the nearest future the same software for PPP
protocol.

Routing software currently used is "routed" but it has become unacceptable due
to significant growth of RIP traffic over the links. All major routers (Moscow
backbone routers first) will be upgraded to use "gated" software (the latest
"gated-alpha" and "gated-3.0" when it will be released).  Using "gated" will
allow to use BGP-3 between major border routers, highly reducing routing
traffic. Using BGP-3 will also allow simple routing between xSU AS and
Amsterdam Cisco. Future plans based on utilizing gated software includes
switching to OSPF as IGRP. Until that time networks will still speak RIP to
backbone routers.

Router's built-in software for "firewall-alike" functionality, IP accounting
and priority queues is also under development and will be installed soon.
Router's hardware currently consists of 386/33 (486/50 planned),  8/16 channel
DigiBoards and Ethernet card(s). We also plan to install appropriate 64K
interface." [This is a continuation Relcom report quoted on page 18.)

 Contacts for EUnet/RELCOM & RelTeam Ltd.:

        Nickolay Saukh  - [e-mail]
        Valery Bardin   - [e-mail]
        Oleg Tabarovsky - [e-mail]
____________end box_______