|Issue:||Europe II 2008|
|Topic:||Building ICT usage in South Eastern Europe|
Moniu Monev is a co-founder and the CEO of Nexcom Bulgaria, the first operator in the country to commercially offer WiMAX services, including wireless Internet, telephone, leased lines, VPN and MAN. Previously, Mr Monev was the Vice President of Marketing, Balkan Area at Nexcom Telecom, USA. He also established telecom companies in Macedonia, Albania, and Romania, a JV in Serbia and started network operations in Romania and Macedonia. Moniu Monev graduated from the National Film and Theatre Academy in Sofia, Bulgaria with a Master of Arts degree.
Bulgaria started liberalising and modernising its telecommunications sector rather late, as a result, its Internet penetration rate is only 30 per cent. Nevertheless, in the last two years, with Bulgaria’s accession to the EU and its adoption of new regulations harmonised with the EU, foreign investment has grown and local broadband access was unbundled by the incumbent. This has introduced needed competition – especially through the introduction of WiMAX, forced rate cuts and stimulated the overall growth of the sector.
When Prof. Kleinrock, in whose laboratory ARPANET the world’s first packet switched computer network was developed, made his important contributions to the field of computer networking, he spoke of a vision of an ‘Intergalactic Network’, ‘where everyone on the globe is interconnected and can access programmes and data at any site from anywhere’. Even so, he probably he did not realize the full extent to which his work and that of the scientists who followed would influence the everyday lives of people around the world within the following decades. The Internet is at the core of the current process of economic globalization. The world economy is now characterized by the almost instantaneous flow of information, capital, and cultural communication. New areas of the world and new regions within countries are experiencing growth by becoming part of the information society as providers and users of information and communication technologies (ICTs). The networks themselves both reflect and create distinctive cultures within the global information society. However, despite the virtual fall of boundaries, the pace of becoming part of this society and accepting this culture varies depending on the initial set of local conditions. The specific socio-economic context defines, from the outset, the extent and the speed of introduction of new technologies as means of participation in the new economy. The country-specific social and economic environment however, leads not only to different timetables for inclusion in the race, but also influences the speed at which regions gain momentum in their ICT development. The digital divide still has not been bridged despite the measures taken by policymakers, service providers and other non-government organizations who seek ways to achieve widespread use of the Internet. There is still a significant gap between those who benefit from digital technologies and those who cannot. Even today, only 20 per cent of the world’s 6.6 billion people have access to the Internet, and there are underdeveloped countries that have an Internet penetration rate of less than one per cent. We are going to see many changes and new starters, but there are concerns that the digital divide will be growing, that people will continue to be excluded, as the growth of the Internet and the Information society accelerates. Let us, for example, consider the emerging economies in Eastern Europe; although the Internet is available and growing in all countries of the region, it is not yet as widespread as in the more developed West European countries. ICT vendors in the developed countries now compete in a marathon race to meet rising demand and consumer requirements. Emerging markets such as Bulgaria, Romania, Ukraine or Serbia to name a few are, however, trying to meet similar expectations while trying to avoid numerous existing issues and barriers. For the emerging countries in Eastern Europe, this competition is not a free run. It is a hurdle race rather than a marathon. Among the barriers telcos in the SEE region (South Eastern Europe: Albania, Bosnia and Herzegovina, Bulgaria, Greece, Macedonia, Moldova, Montenegro, Romania, Serbia, Slovenia, Turkey) have to contend with include the often inadequate or even totally lacking telecommunications infrastructure, dependence on the incumbent, slow liberalization and weak competition, delay in reforms and inadequate regulatory policies. According to the Internet World Stats website, the Internet penetration rate is highest in Norway (88 per cent), Netherlands (87.8 per cent), Iceland (85.4 per cent), New Zealand (77.7 per cent) and Sweden (77.3 per cent). In Bulgaria, for instance the figure stands at merely 30 per cent. The fixed telco market in the country is still dominated by the incumbent. For a very long time no real alternatives were available for either providers or end-users. The access by new operators to the ADSL infrastructure of the incumbent was postponed for several years, so these operators did not have the opportunity to provide broadband access to its end-users. As a result, most of the alternative operators had to find more capital to invest in their own infrastructure, search for alternative technologies and somehow avoid depending on the incumbent’s infrastructure or wait for the bitstream agreements that give competitors access to the incumbent’s access network to serve their own customers to become a reality. Other hurdles that local telcos had to deal with included, among others, an inadequate regulatory regime, the general lack of ICT education and PC literacy, the brain-drain of IT specialists followed by steadily rising labour costs, the low average personal income of population and the insufficient physical infrastructure. The Internet and the other digital technologies provide us with powerful new tools that can greatly enhance communication and commerce. New technologies lead to radical changes in communication, information processes, business management, regulations, consumer habits and requirements. ICTs serve as a growth catalyst for economies, fostering market growth and the competitiveness in each country. There is no wonder that they have a substantial influence on the way people live, think, work, communicate, use information, entertain and educate. Since Bulgaria had delayed implementing innovative technology and restructuring its telecommunications sector accordingly, it was for a short while among the countries that risked deepening the digital divide. To catch up with the leaders, Bulgaria had to implement all the necessary changes rapidly and effectively to cope with the hurdles. The alternative telecom operators had to be very flexible, innovative and adaptive; they needed to implement sophisticated management strategies and new product development techniques. Some of the players merged to build a more powerful market presence, others invested in their own infrastructure, the development of new bundled solutions and the launching of new generation services. Others managed the situation by adopting the new WiMAX technology after the 3.5 GHz point-to-multipoint tender in 2005. The licence allowed their holders to develop a nation-wide WiMAX network, which they used to deliver high-speed, last-mile voice and Internet services to homes and businesses in a cost effective way. WiMAX is an alternative to wired broadband like cable and DSL as a way to provide last-mile access to the consumers. Some operators in Bulgaria bet on WiMAX because it allowed them to quickly rollout high-speed broadband access. WiMAX easily covers large urban and suburban areas, including those areas where, under normal circumstances, distance and terrain might otherwise pose a problem. WiMAX was also a preferred solution because it required less investment for capacity building and can be used for a whole range of voice, data and multimedia services. WiMAX is a 100 per cent alternative to the incumbent and enables service providers to offer a wide range of new generation services like mobile broadband, IPTV, video on demand, telemetry, video surveillance, etc. Experts quickly pointed to the potential of the technology to win a large market share from traditional telecom operators and break the monopoly of the incumbent. Despite the developmental hurdles facing Bulgaria, it succeeded in overcoming the difficulties and in the last one or two years the local ICT market celebrated positive changes, reforms, many new entrants, investors and strategic players. Just to mention several of the key events: the EU accession and the acceptance of new Electronic Communications Act harmonizing the Bulgarian legislation with the 2002 Legal framework of the European Community. In addition, lower roaming rates were introduced for calls to mobile operators, the sector consolidation advanced, the growth of foreign investments was astonishing, and mobile operators were obliged to decrease their termination fees for calls from fixed to mobile networks etc. Another success, despite a four year delay, was the bitstream agreement reached between the incumbent and the Electronic Communications Association enabling other providers to access the ADSL network of the dominant operator. The demand for broadband and penetration rates now grows rapidly. The ICT market grew 23.4 per cent in 2007 and we are optimistic about its future development. The potential of the market is enormous and even faster growth is still to come. The first positive signs for these expectations were the great increase in foreign investments Bulgaria attracted and the increased financial support by the EU aimed at significantly raising the level of innovations and funding of ICT projects. These investments in ICT implementation and development are already fostering economic growth in Bulgaria.