December 17, 2008, Moscow: COMSTAR – United TeleSystems (COMSTAR-UTS JSC, LSE: CMST), the largest integrated telecommunications provider in Moscow and 66 Russian cities, today announced the commercial launch of its new value-added service for Internet users – COMSTAR-FON. It is provided in cooperation with FON Wireless Limited. FON Wi-Fi routers will be available in all sales and customer service centers of COMSTAR-Direct, the leading broadband Internet provider (STREAM brand), a part of COMSTAR-UTS Group.

COMSTAR-FON is a Wi-Fi-based Internet access network, which is a part of global FON network with more than 400,000 active access points (hot spots) around the world. COMSTAR-UTS is an exclusive operator of the Russian Wi-Fi FON domain.

COMSTAR-FON subscription is available only to broadband Internet users of COMSTAR-Direct who rent COMSTAR-Direct modems. COMSTAR-FON network will be build and expanded by users who have installed COMSTAR-Direct rental specialized Wi-Fi routers. Such subscribers will be able to use similar FON hot spots installed by other users all over the world, including all COMSTAR-FON hot spots, for free.

Sergey Pridantsev, President and Chief Executive Officer, commented: “I am sure this project which requires from us virtually no capital investments will be in demand with our subscribers and will become another COMSTAR-UTS competitive advantage in broadband access market. We also consider the possibility of adding FON functionality in IMS gateways to be installed in Moscow subscribers’ houses under the project aimed at MGTS network upgrade. Later, we plan to bring COMSTAR-FON network development experience to the regions of Russia.”

Alexandr Gorbunov, Vice President for strategy and development, added: “According to our research, many Moscow subscribers have Wi-Fi facilities at their homes. This is a popular service, and I believe that our users will appreciate the offering to install FON routers. For a small rent fee they will get not just a Wi-Fi hot spot at their homes, but also communication available in any place where FON exists both in Russia and other countries. Such a co-branding product will enhance the existing user loyalty and attract new users to our company.”

The main idea of COMSTAR-FON is that any COMSTAR-Direct user subscribed to unlimited broadband Internet may install the special FON Wi-Fi router, i.e. the device enabling usage of Wi-Fi access to the data network. The router splits your Internet channel in two Wi-Fi access zones: private zone (“My Place”) connectable only by the subscriber who installed this router, and COMSTAR-FON public zone which is accessible to any user in the router coverage area having a laptop or any other device equipped with either built-in or external Wi-Fi adapter. Private zone provides a secure wireless access to ADSL channel. COMSTAR-FON public zone in its turn also allows ADSL channel connection with an option to get a wireless Internet access for the users of COMSTAR-FON network after authentication procedure. Internet speed for the subscriber who has installed a COMSTAR-FON hot spot doesn’t depend on the public zone access.

At the first stage, only existing and new COMSTAR-Direct subscribers who use rental ADSL modems will be able to install routers and get the benefits of FON network. To arrange a hot spot, subscribers will get routers on a rent basis. Global Wi-Fi network users connect, setup and activate the equipment in the COMSTAR-FON network by their own via the site (https://www.fon.comstar.ru/). To use the service, the router needs to be always-on. If the router is off, COMSTAR-FON access is locked and subscriber can use only a standard ADSL-based Internet.

Active FON users can use their login and password to get a guest access to any FON hot spot around the world, including those of COMSTAR-FON.

FON router rent fee will be 30 rubles per month. COMSTAR-FON guest access will be provided with prepaid COMSTAR-FON cards.

Later, FON Wi-Fi module will be integrated into the typical ADSL modem which ensures Internet access for COMSTAR-Direct subscribers. Such modems will be rented to COMSTAR-Direct subscribers in 2009.

Earlier under this project, COMSTAR-UTS has signed a strategic agreement with FON Wireless Limited. Within the framework of this agreement FON and COMSTAR, based on COMSTAR-UTS subscriber base, shall make an Internet Wi-Fi access network in Moscow all users of which will become the users of global FON network.

For details on COMSTAR-FON network and active hot spots, please visit: https://www.fon.comstar.ru/.