interview


Mobile WiMAX ambitions

peterziegelwanger

Wimax Telecom, a privately-held broadband wireless access provider, is turning to mobile WiMAX to sharpen its competitive edge in central Europe where it holds some 3.5GHz spectrum assets. WiMAX Vision spoke to CTO, Peter Ziegelwanger, about the company’s strategy for growth.

Dont miss Peter Ziegelwanger’s presentation at WiMAX Forum Global Congress in Amsterdam 2-3 June! Download the brochure at www.wimax-vision.com/global

WiMAX Vision (WV): What is the extent of Wimax Telecom’s network rollout to date?

Peter Ziegelwanger (PZ): At the end of 2008 we were present in 169 communities in Austria. We have built out a fixed WiMAX network and serve around 3,000 subscribers. In Slovakia, we have built out a similar network with a similar number of sites since starting in 2005. We have about 10,000 fixed WiMAX subscribers in Slovakia. In Croatia, we launched a mobile WiMAX network in December last year in two small cities in the eastern part of the country where we are now signing up commercial subscribers. Internally, for us, the Croatia network is still a trial but from the customer’s point of view it is commercial because he has to pay. We have signed up today around 100 subscribers in Croatia. We want to get experience of the 802.16e technology. It was an effort for us in the integration work in creating the end-to-end network architecture. We have developed quite a lot of software for our workflow systems to support the sales process, as well as the subscriber management [for mobile WiMAX in Croatia].

WV: So you have a central management system that covers all three markets you are in?

PZ: That’s right. We have a centralised ‘triple A’ billing system, and all the IP systems are centralised, as are all the workflow engines. We are trying to copy paste through every country more or less the same processes. Overall, end-to-end, we are using off-the-shelf tools and functionalities.

WV: Who is supplying the WiMAX kit?

PZ: In Austria and Slovakia we are using Alvarion base stations and in Croatia we are using Alcatel-Lucent.

WV: Bearing in mind Alcatel-Lucent’s recent decision to focus its ‘4G’ mobility efforts on LTE, where does that leave Wimax Telecom?

PZ: We have some purchasing commitments with Alcatel-Lucent so we’ll still roll out a certain amount of Alcatel-Lucent base stations in Croatia.

WV: Is your emphasis with mobile WiMAX on fixed and nomadic applications, then, rather than mobility?

PZ: The service is fixed and nomadic but from this year mobility is allowed in Croatia in the 3.5GHz spectrum we are using. We are offering a residential gateway but in the future we will change our network infrastructure by adding more cell sites and functionality so we can support small handheld devices, such as USB dongles and embedded laptops. The migration path we have is to make the network denser and to add more functionality on the mobility side. We’re running mobile IP so we can immediately switch mobility on. By the end of the year we will have a much denser network to support devices. We see the future as definitely mobile broadband but there is still, of course, a very important and significant residential broadband market, especially in areas where there is a lack of any other type of infrastructure. In Slovakia and Croatia there is still a lack of copper infrastructure and so there is still a good opportunity for a residential and nomadic product. But there are other factors, such as notebook penetration. I think this year, in all countries, the number of notebooks sold will be much higher than the desktop PC sold, so we have to offer mobile broadband services either with USB dongles or embedded devices.

WV: When do you expect to launch mobile services in Croatia?

PZ: The first quarter this year.

WV: So how does Alcatel-Lucent’s decision on WiMAX mobility impact you?

Alcatel-Lucent are saying that they rather believe in an LTEsolution in the small handset area where you have full mobility, such as on motorways and so on, and which will most likely be a voice session in the end. We still believe in a very data-centric approach to WiMAX and with no tough requirement for full mobility. The future WiMAX network, in our view, will give coverage in hot zones and be in a very dense and capacity-driven environment. There is no need to have coverage over motorways between cities. Our approach to building the network will therefore be different from the mobile operators’ approach.

WV: So you see no problem in continuing with Alcatel-Lucent?

PZ: So far there’s no problem. We still like to look at other vendors as well though, and we like the open standards approach as it let’s us see what’s going on in the network and to control it. We also like to choose different vendors for different components. We don’t like the black box [proprietary] approach.

WV: Where do you see WiMAX Telecom fitting in Austria, which has a high fixed-line broadband penetration and one of the most developed and competitive mobile broadband markets in Europe?

PZ: I strongly believe, and the market already shows this, that people want mobile broadband and are willing to pay for it. Already in Austria, 12 per cent of the population have mobile broadband access for at  east 3GB per month. So this is not a handset business; it’s not sending SMSs from the handset. It’s a significant mobile broadband data package. We strongly believe demand will increase to create a huge market and UMTS is not enough to meet that demand.

WV: What are your plans for 802.16e deployment in Austria and Slovakia?

PZ: Every new deployment in these two countries will be with the ‘e’ standard. The good thing about 806.16d is that it is very cost efficient from a capex point of view and it helped us to fulfil our regulatory requirements from a few years back to offer rural connectivity. But it is more difficult now to justify that business case as there is greater [rural] coverage from HSPA and DSLAMs. The new business case for us is urban-based, with deep indoor coverage.

WV: What’s the timetable for 802.16e launch in Austria and Slovakia?

PZ: We’re working on the business plan, which includes establishing partnerships, mainly with local cable operators. There are two reasons for that. One is they have the infrastructure, and we need that for backhaul, which, along with site rental, is one of the biggest costs for WiMAX. Second, the cable operators already have a customer base. It’s easier to cross-sell to existing customers than to acquire new customers. We give cable operators an opportunity to provide their customer base with a way to mobility, which would include content access on the move. As a small player, we have to find our niche and partners, and we think this is a good value proposition.

WV: Can you share any business case assumptions in terms of ARPU and subscriber numbers in order to achieve a return on investment?

PZ: We’re doing this on a case by-case basis and not from a nationwide point of view. We’re looking at being a wholesale partner and to share our knowledge about running a network with our partners. I wouldn’t like to be on the retail end. Cable operators have better retail expertise and I have the knowledge about how to build the network. And I have a very simple approach.  Why not send every cable operator customer a USB dongle, which they can use for free for three months? And if they don’t like it, they can send it back. I think that’s cheaper from a marketing point of view than having a big advertising campaign. We have to approach the customer in a different way. We are not able to spend Eur400 on customer acquisition costs, which is what the mobile operators are paying today. They are giving Eur400 notebooks away, with UMTS inside, to customers if they sign up for a two-year contract. We are not coming from that side. We have a different marketing approach.

WV: Even if you do get partnership deals with cable operators, will you still have to raise additional funds?

PZ: Yes, we’ll still have to raise money from external sources, which will be done a project-by-project basis. If we are working, say, on a small town in Austria with 15 cell sites, that would cost maybe around a ?1m. But we would also need the cable operators to participate in the fund-raising efforts. To help with this, we would like to showcase an up and running mobile WiMAX project as an island deployment [to potential investors], which doesn’t need to cost a lot of money.

WV: What brought you to the Mobile World Congress eventin Barcelona?

PZ: As a CTO, I was there mainly to analyse the technical stuff. Of course, I’m also trying to get my ideas across, as a small operator, of getting smaller projects profitable before going on to other projects. I’m looking at equipment that is small, cost efficient, flexible and small scaling. I like to have an ASN gateway supporting 2,000 subscribers. I don’t need a two million subscriber capacity gateway.

WV: Are today’s WiMAX equipment and device prices too high to make an attractive business case for Wimax Telecom?

PZ: Devices prices are the most important. All major current deployments mentioned in the press need to be successful [to bring prices down through scale].

WV: Are you worried that the big WiMAX projects, such as Clearwire and UQ, will not be successful?

PZ: When it comes to the technology, I’m not worried. If you asked me about technology a year ago, I was a little bit worried, but today, technology is not an issue. It is solved. What we need is scaling, particularly in the number of different devices. I need a Clearwire, a UQ and a KT [Korea Telecom] to help us by being successful.

WV: If the big WiMAX projects did stall for some reason this year, perhaps through a lack of capital, what would that mean for Wimax Telecom? Could you survive?

PZ: We can survive. Our operations in Slovakia, for instance, are profitable. After three and a half years it is EBITDA positive, which is not bad.  We don’t have that in Austria, however, mainly because of an inefficient network with a presence in rural areas for regulatory reasons. In Croatia, we have a very efficient operation, run by only four people. Sure, we will survive. But during 2009 there must be some significant movement with regard to success stories in the WiMAX industry. As well as the US, Japan, Korea and Russia, success in India would also be brilliant for the WiMAX industry to bring chipset costs down, because it wouldn’t be thousands of [silicon] pieces shipping per month but millions of pieces per month.

WV: You said earlier you were evaluating different technologies. What is your assessment of LTE progress?

PZ: We have done an analysis of LTE. From a technology point of view, it’s interesting.

WV: Any chance that Wimax Telecom becomes LTE Telecom?

PZ: Why not? But every vendor hypes new technology and LTE is in a hype phase, mainly because WiMAX was and is successful, and is working. And the WiMAX lobby is definitely not as big as the LTE lobby. But LTE is still some way behind. There is at least five years between a standard being ratified and having devices available with attractive form factors. It took that long with GSM and UMTS, and it took that long with WiMAX. The LTE standard has yet to be ratified.


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