Mauritius’ Nomad: Voice and Internet combine in the coming Wi-MAX business model

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There are those who dream of a converged future where voice and data are combined, using significantly cheaper wireless technology. A number of those who see the future this way have bet on Wi-MAX being the technology to do it. A good many of Africa’s mobile operators have taken a side bet on it to see what happens. The doubters were no doubt heartened by a very public spat in which the CEO of Australia’s Buzz Broadband dropped Wi-MAX and went over to TD-CDMA. As an insurgent challenger in Mauritius to the new, vertically integrated mobile operators, Nomad, is looking to do both voice and data on Wi-MAX and wants to become a Pan-African player. Russell Southwood looks at how the dream is shaping up.

Nomad was started in 2005, taking over from Network access. Its backer is a Dubai-headquartered petroleum company called Galana which has invested “hundreds of millions of (Mauritian) rupees in the company”.

It installed its first base stations in 2005, covering about 65% of the island in 2007. The plan is now to cover a further 20% of the population. Unlike the mobile networks, it does not have contiguous coverage. The first network rolled out came from Navini and the current network expansion is based on Telsima equipment. The latter is providing equipment to both Reliance and VSNL in India, two of the largest networks in the world. The two technologies work alongside each other, being used in different areas.

The company uses its Wi-MAX network for all of its national backhaul traffic. According to Nomad CEO Anil Jayant (formerly with VSNL) who has been in post for 10 months:”Wi-MAX is a great technology which works very effectively.”

Like a lot of the early wireless broadband pioneers, the company has had a bad reputation for bandwidth speed. However Jayant says the issues were largely to do with network maintenance and monitoring and more effective ways of dealing with customers.:”We’ve spent a lot of time getting these things in place. We’ve put in place a strict maintenance schedule and we’ve replanned the network using a more standard base station methodology. It’s a service assurance issue.”

Nomad operates in the 2.5 ghz spectrum and according to Jayant:”This is very good spectrum and you can move to mobility on it.” Nomad’s future business model is only really restricted by the licensing framework. For as Jayant says:”It depends on what we are allowed.” He anticipates that good Wi-MAX/GSM compatible handsets will be available in Q4 2009 and that licensing willing, they will move into offering mobile voice services.

He thinks that this newer generation of Wi-MAX/GSM handsets will meet the expectation of younger users who are already beginning to think differently about the mobile phone as a device:”For the youth, it’s not a telephony-based device. It’s also a camera and can be used for online chat and music. This will change the device from what it is now. The GSM handset will not cut it.”

It currently has around 10,000 subscribers and is readying itself to roll out new packages aimed at different segments of its market. For example, it will soon offer a Midnight Special package for Peer-to-Peer downloaders.

Its current broadband offers are in the MR300-400 range but because it is completely reliant on incumbent Mauritius Telecom for international bandwidth through the SAFE cable. According to Jayant:”There is lots of growth potential in the hospitality and ICT sectors and connectivity requirements are escalating. But there has to be lower international bandwidth prices so needs to be a better equilibrium between price and profit. Lower bandwidth prices will help the market expand.”

He believes that Mauritius Telecom (MT) is making significant profits from what he sees as over-priced bandwidth:”If I look at the SAFE consortium costs, (rates charged) should not be more than the US$00s. These guys are taking a huge profit premium from everybody.” Not surprisingly, MT denies the charge and says it will be making more reductions over the next 12 months.

The company has pan-African ambitions and is looking at three countries: Madagascar, Rwanda and Tanzania. He sees a future business model based on the convergence of the mobile and broadband market:”The technology will allow you to do that and all you will need is the licence. When we enter a new country we will obtain all the necessary licences to provide voice and Internet.”

But vertically integrated mobile operators Nomad is challenging are not standing still.

The second largest mobile operator Emtel (jointly owned by a local company and Millicom) was the first African company to install a 3G network and is now putting in HSDPA into several areas (like CyberCity and Port Louis) that will offer speeds of up to 1.8 mbps compared to 384 kbps on 3G.

As with Nomad, Emtel’s speed problems come from its Mauritius Telecom international link. For as Roy told us:”The bottleneck remains the connection to the outside world.” It has announced that it wants to buy into a second international cable if the opportunity arises. The Government is keen to see a second cable independent of Mauritius Telecom but has said the private sector must find the US$60 million to finance it.

Currently there are around 50,000 subscribers with 3G handsets but CEO Shyam Roy expects this number to go up as handsets fall in price: they are currently between US$150 at the cheap to about US$300 in the middle range. Of all 3G services, data is the most widely used. Prices are relatively cheap: a 1 gig package costs US$12 a month and 2 gig costs US$25 a month. There are around 2-3,000 USB card holders for lap-tops which gives full mobility within the coverage area.

Emtel currently has a microwave backbone but will have a fibre backbone between the main population centres by October of this year. Interestingly Emtel also started installing a Wi-MAX network at the end of last year with Alvarion equipment to provide a data service island-wide: Roy says that he can guarantee bandwidth levels locally but because of the Mauritius Telecom link cannot do the same internationally. But overall he seems happy with the performance of the network and sees it converging with LTE in the long-term.

The dominant market player, Cellplus (owned by Mauritius Telecom) is offering 3G services and shortly plans to introduce mobile TV, which currently in the test phase. It also offers Blackberries to its customers that works on GPRS and 3G. There are currently around 1,000 customers.

But last week, the world of Wi-MAX was rocked by the CEO of Australia’s Buzz Broadband calling it a “disaster” that has “failed miserably” and saying that his company has gone over to TD-CDMA (on 1.9 ghz), the technology used extensively by Sentech and whose South African owner and promoter of the technology has a minority shareholding in it from Vodacom.

Buzz Broadband CEO Garth Freeman slammed the technology, saying its non-line of sight performance was “non-existent” beyond two kilometres from the base station, that indoor performance decayed at a mere 400 metres and that latency rates reached as high as 1000 milliseconds. Elsewhere, other early WiMAX adopters have also reported issues with indoor coverage. Late last year VSNL of India (which is a heavy investor in Wi-MAX) said at an IEEE conference that indoor signal loss occurs just 200 metres from a base station.

Freeman said poor latency and jitter made the technology unsuitable and unacceptable for many Internet applications in general and for VoIP in particular. Buzz used the benefits of the latter, heavily promoting it as a main selling point as it sought to persuade people to sign-up for the new service and dump old ones supplied by the incumbent .

The unlucky vendor faced with this rather unhappy customer was Airspan. It hit back by saying Buzz’s focus on cost-cutting had effectively killed-off the network’s chances of ever functioning properly and the company's chief marketing officer, Declan Byrne, claimed Buzz had refused the vendor's help in improving its network and had consistently and deliberately chosen low-cost equipment unsuited to the company’s requirements and which therefore affected range and service quality.

Byrne said among other things: “We regret the distress caused by Buzz’ poor network architecture decisions to the customers in need of Broadband Internet access and VoIP services.”

Continuing the “he says, she says” argument, Buzz Broadband’s CEO posted a retort on the Internet that said:” …the WiMAX part of the network was deployed precisely as detailed in a presentation made to Buzz in August 2006.” And in that statement, it’s perhaps possible to guess at the distance between the idea sold to its customers and the reality of the network it put in place to deliver it, whoever was to blame.