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Appetite for disruption

Telenor has agreed to acquire Bulgarian mobile operator Globul from Greek operator group OTE

Max Telecom aims to overturn the status quo in the Bulgarian telecoms market with WiMAX-enabled triple play services. In less than six months its aggressive rollout schedule and eye-catching service bundles have begun to rock the boat.

Fresh from launching his company’s 802.16e WiMAX network in October 2007, Max Telecom CEO Krassimir Stoitcheff keynoted at the Informa Telecoms & Media WiMAX 2007 conference in Munich the following month. He made his strategy abundantly clear.

“Our goal is to disrupt totally the telecommunication market in Bulgaria,” declared Stoitcheff, going on to explain how Max planned to do that by rolling out anytime, anywhere ‘triple-play’ wireless broadband, VoIP and IPTV services to 80-85 per cent of the 7.5 million population of Bulgaria by the end of 2008.

He placed great emphasis on aggressively pursuing first-to-market bragging rights in affluent urban areas, bundling internet, VoIP and value added services, and partnering with content and applications developers. Max had, he revealed, sealed a deal to offer the Google Apps office suite as ‘MaxApps’. In a market where DSL is virtually monopolised by the incumbent BTC, three mobile operators are engaged in a price war, and several WiMAX players are emerging, Max had to be bold, said Stoitcheff.  “We asked: ‘If WiMAX is only for access what will be the difference from the rest? Without voice you are like any other ISP’. So we bundled services (voice is a critical element) as the only way to attack a crowded market.”

Nuts and bolts: BTS and CPE

Today, Max Telecom offers fixed and nomadic services using desktop CPE and PCMCIA cards to over 35 per cent of Bulgaria’s population, having built out more than 150 base stations in 13 cities. It is currently focussing on extending coverage to Bulgaria’s Black Sea resorts in time for the summer.

Max Telecom operates in 42MHz of 3.5GHz spectrum using 802.16e equipment supplied by Navini Networks, now owned by Cisco Systems. Cisco also supplies the Metro Ethernet backhaul that connects the Navini base stations to the core network.

The radio access network is currently operating in a ‘WiMAX-ready’ CDMA configuration, but from mid-April it will upgrade to full OFDMA mode as suitable equipment arrives.

‘e’ equipment is, says Stoitcheff , “incomparably better than 802.16d” and currently delivering network speeds of up to 1.5Mbps. Max plans to increase that rate to 5Mbps in 2008 with new CPE from Navini-Cisco that will use 5MHz channels (current CPE utilise 2MHz) and combined MIMO and Beamforming, or ‘Smart Beamforming’.

From early on, says Stoitcheff , Max identified in-building coverage and capacity as key to its business case because it planned to target urban areas.

Smart Beamforming promises to penetrate further than standard WiMAX signals while also delivering greater capacity. Stoitcheff says the network infrastructure is Smart Beamforming capable but he is awaiting compatible CPEs.

Max Telecom is also preparing the network for greater mobility by the end of 2008 by installing an ASN Gateway from Cisco in May. Once again, however, it is constrained by the lack of devices, speci_ cally 802.16e-compliant devices that operate in 3.5GHz spectrum.

“Our biggest concern is the availability of third party CPEs at relatively cheap prices,” says Stoitcheff.  “What we would love are USB dongles and an express card, and then WiMAX-embedded laptops.  The basic success of WiMAX will come from notebooks that are WiMAX enabled, because no-one can offer comparable service.”

The full monty

Max Telecom’s business case is built around portability rather than full mobility. The key is being able to offer connectivity everywhere, says Stoitcheff.

“We don’t necessarily want to compete with fixed players offering very fast speeds to the home. But it is not mobility we are offering, but a nomadic network that is targeted at business professionals and young people who want to have one account and be connected everywhere,” he explains.

It is “absolutely” a more attractive market than the traditional household market, says Stoitcheff, who says that he has taken some inspiration from the example of Unwired in Australia, which has successfully tapped a similarly footloose demographic in large, seemingly saturated, urban markets.

Max Telecom has, since November, signed up some 4000 customers, evenly split between  enterprise and residential users. Currently it is signing up between 50-100 subscribers a day, reports Stoitcheff, who notes that enterprise users are typically buying data services only, while residential subscribers are going for “the full monty” of tripleplay services.

These come in the form of ‘MaxPack’ bundled subscriptions that include MaxDSL internet, MaxVox voice (with some free minutes), MaxTV IPTV channels and MaxApps (including a ‘MaxMail’ account with a 2GB mailbox).

“It is a flat rate package,” explains Stoitcheff. “We bundle a few voice minutes for free and we bundle on-net calls for free. The TV and the MaxApps are part of the bundle.”

Interestingly the TV services have proved the biggest value-added draw, says Stoitcheff: “We are offering 40-50 channels, as a convenience product. We don’t see it as a big revenue generator but a feature that attracts more customers.”

The most popular package, he says, is the Max-Pack 1024Kbps deal that costs Eur20, includes 100 free voice minutes, and features MaxApps and MaxTV. Customers must sign a 24-month contract plus a setup fee and they have the WiMAX CPE modem for the duration of their contract.

Taking on the establishment

Max Telecom’s initial products are specifically designed against the incumbent ‘s ADSL services. “If you are a plain DSL subscriber you can easily substitute your DSL for ours because we are competitive on price and we offer more features,” says Stoitcheff. “Our starter package is exactly the price of bundled DSL plus voice from the incumbent.”

From April, Max Telecom will add a new product, aimed at small and medium businesses, bundling a Cisco wifi router with WiMAX CPE and two voice lines, tentatively called ‘HotMax’.

And to compete even more keenly, Max Telecom has also adopted an aggressive wholesale strategy. The operator is developing relationships with LAN service providers, and the first agreement will go commercial in April, says Stoitcheff. “They provide fibre to the home and we connect our voice core to their network and they offer our voice services on a revenue share basis,” he explains. Although this partnership doesn’t directly relate to Max Telecom’s WiMAX network, the long-term strategy is to partner with LAN providers to bundle high-speed access for the home via fibre with WiMAX connectivity when out of the home, providing one user identity and seamless connectivity.

“We want to migrate these customers to our mobile WiMAX network,” Stoitcheff says, “and if you don’t need super high-speed internet you can use our WiMAX at home.” By the end of 2008, Max Telecom hopes to have grown its subscriber base to between 50,000 and 100,000, depending on the availability of mobile WiMAX devices.

Its aggressive plans reflect the fact it is competing for mindshare in a market with a dominant incumbent, relatively mature mobile operators, and other WiMAX operators with ambitious plans. And its entry into the market has drawn an immediate response, says Stoitcheff.

“First, because we offer on-net calls for free the incumbent fixed line operator has started offering limited on-net calls for free. Second, because we are offering service with PCMCIA cards mobile operators offering similar cards have slashed their prices three times. And third, mobile operators have imitated our MaxPack bundle by offering mobile subscribers a fixed line,” he explains.

Stoitcheff does not seem overly concerned about the impending counter-revolution. After all, imitation is the sincerest form of flattery.


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