Taking it to the WiMax

Economic News

22 Jul 2010
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The rollout of Bulgaria's most comprehensive WiMax network to date is a boost to businesses looking for greater media convergence, and could be the key to offering internet services to previously disconnected rural areas. However, the technology is still in its early stage, and price barriers may mean it will be some time before the service truly takes off.

On February 12 Sofia-based Max Telecom announced the completion of the first phase of its implementation of WiMax services in 10 cities in Bulgaria. In doing so it became the first company to offer a personal broadband mobile communications service in the country, providing high speed internet, email hosting and mobile television.

WiMax, one of the most widely anticipated new technologies, works on a similar principle to WiFi (wireless internet), but on a larger scale. While WiFi transmits over distances of around 100 metres - enough to cover an office, hotel or restaurant - at a transfer rate of around two megabits per second (mbps), WiMax can provide connection for users up to 8km away from transmission towers, at speeds of up to 10mbps.

Some industry insiders have suggested this increased range makes WiMax an ideal technology to bring internet connectivity to remote areas where laying cables is prohibitively expensive.

WiMax can also "hand off" connections from one transmitter to another, allowing users to travel freely without a break in service. This increased mobility will enable internet usage in cars or trains, and allows mobile phone users to access the internet from anywhere with WiMax coverage, or make calls using voice over internet protocol (VoIP).

In late December last year, local press reported that Max Telecom's WiMax coverage could be accessed by 2.5m Bulgarians, or 30% of the population. The company now aims to extend this to 90% of the country by the end of 2009.

Max Telecom will have competition from a number of other companies. All three Bulgarian mobile operators - Mobiltel, Globul and Vivatel, which is owned by BTC, Bulgaria's former state-owned fixed-line operator - have purchased WiMax licences, though have yet to launch the service to subscribers.

In addition, local telecoms companies Carrier BG, Trans Telecom and Nexcom have purchased WiMax licences at costs of 2.5m euros to 3.15m euros. Nexcom has rolled out WiMax services for computers (though not for mobile phones) in 10 cities.

In November 2007 Carrier BG announced a 75m euro, three-year investment plan to extend its WiMax network to 11 major Bulgarian cities as well as resorts using Motorola as the network supplier. In November Ivailo Filipov, general manager of Carrier BG, told local press the service would begin in spring 2008.

In January Trans Telecom announced that China's Huawei Technologies would provide end-to-end solutions for its WiMax network, which it intends to introduce to the central business districts of ten major cities before the end of the year.

However, issues of price for both hardware and services could hinder the expansion of the new technology in the short term.

The wholesale price for WiMax-compatible modems in Bulgaria remains above $100. Krassimir Stoitcheff, the CEO of Max Telecom, told OBG this would need to drop below $50 before it would appeal to a mass market. A general shortage of compatible mobile handsets will also need to be addressed in the coming year. In addition, the cost of calls and internet access will be marginally higher than those of the GSM and LAN providers, meaning that the customer is paying a premium for convergence.

Nevertheless, enthusiasm for the new technology remains strong in Western markets as well as in Southern and Central Europe, with few experts doubting its long-term potential. Last October Slovenia awarded 10-year licences for WiMax broadband telecommunications to state-owned Telekom Slovenije and to privately held TOK. Romania and Serbia are set to license their first operators this year as well.

Kaan Terzioglu, vice president of Cisco Central and Eastern Europe, which provided services for Max Telecom's network, told local press, "We are seeing countries in Central and Eastern Europe increasingly going straight to the latest, most advanced telecommunications technologies for their first implementations of broadband and related services. [WiMax] enhances Bulgaria's ability to compete on a global basis, while providing a solid technology foundation on which it can deliver value-added services to its citizens."

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