WiMAX home run for Vodafone Malta

The Vodafone Group is conducting WiMAX trials in different parts of the world but it was in Malta where it launched commercial services first. Joseph Cuschieri, Chief Commercial Officer (CCO) at Vodafone Malta, explains to Ken Wieland why the Vodafone subsidiary believes WiMAX is a perfect fit for delivering broadband to the home.

Malta is Europe’s smallest telecom market but it may prove to be a hugely significant one for the WiMAX industry. In June 2007, Vodafone-the largest mobile operator in the world in terms of revenue-launched its first commercial WiMAX service via its Maltese subsidiary.

If Vodafone Malta has a good WiMAX experience then it would do the technology’s chances no harm at all of being adopted by Vodafone on a larger scale.

The good news for WiMAX supporters is that Joseph Cuschieri, CCO at Vodafone Malta, is pleased with the technology’s performance so far and is giving positive feedback to the Vodafone Group. “The public are embracing the technology,” he says. “It is proving a good substitute for traditional fixed-line services and we are satisfied with the take-up, particularly as we are up against providers who have been in the broadband market a long time. Vodafone has had to work hard at being perceived as an Internet broadband provider.”

Using 802.16d equipment from Airspan in the 3.5GHz frequency band-7 channels of 3.5MHz-Vodafone Malta has achieved island-wide coverage with 24 base stations and an investment of around Eur2m.

Vodafone’s WiMAX strategy is to provide a fixed-line broadband product to complement its mobile service and has managed to attract 2,000 subscriptions. Vodafone Malta, with over 200,000 mobile subscribers, is the largest mobile operator on the island, which has a population of around 400,000.

But how does Vodafone Malta distinguish its WiMAX offering from its 3G service (to which it has 5,000 subscribers since launch last year), particularly as it will upgrade its HSDPA network later this year from 1.8Mbps maximum downlink speeds to 3.6Mbps? After all, some mobile operators in Europe-most notably Telekom Austria-are already using HSDPA as a DSL substitute. With Vodafone’s enormous purchasing power, the 3G route to fixed broadband might be even more attractive than it is for Telekom Austria, but Cuschieri doesn’t see it that way-at least not where Malta is concerned.

“We are positioning WiMAX as a household product that directly competes with ADSL and cable modem services from other providers,” he says. “With WiMAX you can have multiple PCs attached via WiFi to the CPE unit; it is mobile Internet within the home for the whole family. For HSDPA, we are positioning that as an individual mobile data product-broadband on the move.”

Vodafone Malta offers 2Mbps connections over the Airspan kit, which includes VoIP. There are monthly data download limits associated with the service, ranging from 4GB to 12GB, and defecting subscribers from other providers can keep their existing fixed-line number when they use the VoIP WiMAX service.

“We price the 2Mbps service practically identical to the incumbent’s,” says Cuschieri, “but the 3G mobile data package is almost double the basic tier WiMAX package.”

Although Vodafone Malta’s main competitors, GO! (formerly Maltacom) and Melita Cable, are bringing mobile and fixed bundled packages to the market, Cuschieri has no immediate plans to follow suit (which is understandable given that bundles invariably mean price discounts). However, Cuschieri says mobile and fixed bundled packages are “something to consider” if they prove to be popular. He will follow the market, not lead it, in this area.

Melita Cable has also recently announced a 10Mbps service, which may require a response from Vodafone Malta. “We are evaluating future WiMAX products that will go up to 4Mbps, but that will take another round of investment,” says Cuschieri, but he would not be drawn on how much extra investment that would take.

Country by country

It would be a mistake, says Cuschieri, to view WiMAX rollout in Malta as merely a technology test bed for the Vodafone Group as a whole (and the associated implication that the Vodafone Group is contributing funds to its rollout). “The rollout of WiMAX [in Malta] is being done purely on its own business case merits to address the fixed broadband market,” he says. “Every market has different characteristics that affect the WiMAX business case. It has to be done on a country-by-country basis.”

One potential drawback of the 802.16d business case is the lack of indoor coverage, which requires the installation of an outdoor CPE unit. “We estimate that around 70-75 percent of installations will require an engineer to install an outdoor CPE, but that is factored into the business case,” says Cuschieri.

The attractiveness of the WiMAX option also increases when the terms and conditions set by the incumbent on local loop unbundling (LLU) and wholesale bit-stream services appear unreasonable. Such conditions exist in Malta. “We are evaluating the LLU option and working on a business model, but we are not happy with the LLU terms,” says Cuschieri. “We have started discussions with the regulator on this but nothing has happened so far. There is lot of uncertainty. One way to get round that uncertainty is to build an alternate network, which WiMAX allows us to do.”

Vodafone Malta is one of three WiMAX licence holders on the island. The other two-Cellcom and Mobisle-have yet to roll out their WiMAX networks (blaming the lack of standardised and certified WiMAX equipment) and have consequently been find by the regulator, Malta Communications Authority (MCA), for not fulfilling their licence obligations.

It was in October 2005 when the MCA awarded the three WiMAX licences on the understanding that the ‘pre-WiMAX’ services would be later upgraded to 802.16e, and island-wide coverage to be achieved within two years.

Due to the complaints by Cellcom and Mobisle in early 2006 on lack of certified kit, however, the coverage deadline was extended for all three WiMAX licence holders (the new deadline for Vodafone Malta being 50 percent of the network to be deployed by April 2007 and 99 percent deployed by April 2008).

But that was not the end of the story. In October and November 2006 MCA received further requests from Cellcom and Mobisle for a ‘significant relaxation’ of their rollout and coverage obligations. MCA undertook a consultation period in early 2007 to weigh up the case but ruled in March 2007 that the requests for a further extension were unjustified. However, to make up for the lapse of time from the date of the initial extension request to the publication of the MCA’s decision, the regulator granted a 3-month extension to each of the three licence holders (the Vodafone Malta 50 percent coverage target being moved to July 2007 but the 99 percent target remaining at April 2008).

Vodafone Malta beat comfortably all the WiMAX coverage targets set by MCA. “We wanted to make sure we had as wide a coverage area as possible before commercial launch,” says Cuschieri.

Vodafone and WiMAX

Vodafone, through its Mobile Plus strategy, not only wants to provide mobile broadband but also make inroads into the fixed-line markets; it is positioning itself to be a ‘total communications service provider’. In doing so, it hopes to develop other revenue streams that can help offset any future losses in mobile voice and SMS revenue, particularly in developed markets where the twin forces of competition and regulation are taking its toll.

How big a role WiMAX will play in Vodafone’s Mobile Plus strategy is open to debate. If Vodafone Malta is anything to go by, where WiMAX is preferred to HSDPA in delivering fixed broadband, it suggests that it could be significant.

On the other hand, Vodafone is already committed to undertaking LTE trials with Verizon Wireless and China Mobile in both FDD and TDD modes. And Arun Sarin, Vodafone CEO, speaking at this year’s Mobile World Congress event in Barcelona, expressed his desire for a unified 4G standard-combining both LTE and WiMAX.

The official position of Vodafone is that it is technology agnostic- it’s not averse to using DSL in some cases-but some commentators take the view that Vodafone’s apparent trumpeting of WiMAX is no more than a ploy to encourage the 3G community to ramp up its efforts to provide a better mobile broadband experience.

The most overt pro-WiMAX pronouncements by Vodafone are, of course, Sarin’s keynote presentation at 3GSM in Barcelona in 2007-where he warned that alternate 3G technologies may ‘eat our lunch’-and Vodafone’s subsequent announcement in August 2007 that it had joined the WiMAX Forum.

It is difficult to support the view, however, that Vodafone is not taking WiMAX seriously. Not only does it have commercial WiMAX operations in Malta but also, via its subsidiaries, it either has WiMAX trials or commercial services in Bahrain, France, Greece, New Zealand and South Africa.

In terms of using WiMAX for true mobility services, Cuschieri says Vodafone Malta is “keeping its options open”.  MCA is currently in a consultation period regarding the allocation of 2.5GHz spectrum, which would open the door for mobile WiMAX if awarded, but Cuschieri is not convinced a true mobile WiMAX service will be necessary. “From a personal point of view, I don’t see mobile WiMAX as being able to provide the mobility that customers need,” he says. “Mobile WiMAX is not a substitute for 3G. Technology is always changing and developing, of course, but, at this point, mobile WiMAX can’t offer anything that 3G can’t in terms of mobility.”