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The Russian network society 91estimated at the level of 2.2 percent of GDP (4.7 billion US$). The number ofemployees was about 500,000, less than 1 percent of the labor force(Issledovanije ID “Komp’juterra, 2003).The statistics are in many ways discouraging. They show the marginal roleof the information-technology sector in Russia’s economy and, in addition,demonstrate the gap between the industrial and new sectors of the Russianeconomy. Distance and technical backwardness hamper the all-Russianprogress of interactive digital networks – the backbone of the new economy.As a rule, problems of the new Russian economy arise from the low level ofthe national telecommunications infrastructure (still using copper cables) andthe long-term crisis in the economy. The monopoly position of Rostelecom, thekey player in the regional telecom markets, hinders competition in the sectorand prevents the resolution of the problem of the “last mile.”Access to the Internet has become an evident indicator of acute problemsfaced by the new economy. Low telephone penetration (no more than 180 linesper 1,000 inhabitants) and the poor quality of telephone lines (ISDN-lines areextremely rare even in big cities, and fiber optics almost inaccessible), alongwith low penetration of home computers (64 per 1,000 inhabitants in 2001) arethe most critical obstacles to progress. Poor living standards make the rapidexpansion of the telecommunications infrastructure (for example, broadbanddigital networks) into homes practically unrealistic. This also leads to thealmost complete disconnection of rural areas both from fixed telephone andInternet networks.Compared to other former Soviet countries, Russia maintains the biggestnetwork of Internet hosts, but on a similar index for Western European countriesit lags far behind, with only 105 hosts per 1,000 citizens. Russia is, ofcourse, ahead of Moldavia, Armenia, Georgia, and the independent states ofCentral Asia where less than 1 per cent of the population has access to theInternet. It is worth noting that the level of telecommunications infrastructurein the country does not allow for a drastic improvement in the situation. Thelevel of teledensity is 197 telephones per 1,000 citizens, still far behind themost advanced countries.Nevertheless, at the beginning of the twenty-first century, the Russianinformation-technology sector has experienced an essential growth inspired byInternet progress. Investments have increased significantly and private companieshave enthusiastically entered the market. In order to promote the Internetamong the mass audience, small-scale access providers have invented a specificallyRussian solution of a cheaper technology, so-called home networks,invented to avoid the “last mile” problem by connecting neighboring apartmentsand further switching them to the Internet. Home networks haveevolved in the densely populated areas of big cities and linked private apartmentsinto intranets with a further connection to the Internet. However, the