When internet access became available on the Bulgarian market, Dimitar Ganchev was one of the first to see the business opportunities this could bring. His company, Bol.bg, was the second Internet Service Provider (ISP) in the country when it was founded in 1994.

Over the years, Ganchev’s role in the local internet industry has been far greater than just owner of one of the first ISPs. He currently is chief secretary of the Internet Society Bulgaria, an NGO that represents end-users, a member of the Information Technology Council that advises President Georgi Purvanov, a member of the advisory committee for the annual John Atanasoff awards for achievements in IT and a board member and managing director of the Electronic Communication Association, an association of ISPs.

Now, in 2009, Bol.bg is owned by a foreign investment fund and Ganchev recently became product manager Bulgarian and international internet for Neterra, one of the largest ISPs and online content providers in the country.

We meet Ganchev in the brand-new Neterra offices in Sofia’s Mladost borough.

Local traffic
Ganchev’s job title makes him product manager of two internet products; Bulgarian and international internet. Asked how Bulgarian ISPs arrived at this separation of local and international network, Ganchev says the separation came when ISPs introduced LAN (Local Area Network) broadband internet.

The new bandwidth created a demand for cheap content. "In the beginning, this content was mostly pirated; films, music and software," Ganchev says.

The costs of maintaining a network, after initial installation, are largely flat and do not change much with the amount of data being transported over the network. Consumers, however, are charged based on amounts of traffic generated or bandwidth available. As data consumption grows and demand for bandwidth increases, the price per unit of data comes down, making broadband internet cheaper and accessible for a larger part of the market.

"Bulgaria is not unique in this separation," Ganchev says. "Russia has the same thing. It happens when there is a lot of local content and local traffic."

"In the end," he says, "the amount of internet traffic within Bulgaria was 10 times that of the traffic on our international networks. Local traffic was also cheaper than international traffic because of differences in additional fees and so on. So the price difference per amount of traffic could be as much 100 to one."

"Obviously, this traffic cannot be sold at the same price," Ganchev says.

In countries where the difference between local and international traffic is smaller, it does not pay to separate the two. But in Bulgaria, the story was different. In a pre-Napster era, pirate websites blossomed and broadband traffic exploded.

"We even have separated the networks at a hardware level, with separate routers and so on," Ganchev says.

But that was then and things have changed.

"Now, traffic difference between local and international traffic are closer to five to one. It might even become three to one," Ganchev says.

The change was driven by a change in how users consume media, it turns out.

"Gradually this traffic moved away from pirate sites where content was downloaded to be watched later, to sites like YouTube and Facebook, where content is shared and consumed in real time," Ganchev says.

And as users’ preference for media consumption changed, so did the use of the network, shifting to more international traffic and less local.

But because local traffic is still significantly larger than international, the pricing difference continues. "I don’t know how long it will stay like this, maybe forever," Ganchev says. "If peer-to-peer television, in which the data does not come from a single server, but from other users who watch the same film or listen to the same music, takes off, then again we will see large amounts of traffic within the local network," he says.

"When local traffic is cheap, users find a use for it, and when there is a lot of local traffic, it becomes cheaper," Ganchev sums up the principle.

Bulgaria is a relatively large consumer of interational internet traffic compared to the other countries, especially considering that only 30 per cent of the population has internet access at all. "International operators we work with are genuinely surprised at the amounts of international traffic Bulgarian internet users consume," Ganchev says.

Lies, damn lies
Time and again, official statistics state that only about six per cent of the Bulgarian population has broadband internet access.

These statistics suggest that, of the 30-or-so per cent that has internet access, the remaining quarter of the population still uses a modem and telephone line to connect to surf the web.

"I don’t think there is a single ISP left in Bulgaria which still offers dial-up internet access," Ganchev says.

"This would mean that there is no other form of internet access but broadband access," he says.

The problem, according to Ganchev, is the methods used in the statistics.

"They use questionnaires that were created years ago, based on technology that was available back then. The type of network connectivity that is in widespread use in Eastern Europe - LAN networks - does not exist in these statistics," he says.

According to Ganchev, subjects in the polls for these statistics are asked whether they have ADSL, Cable, WiMax or G3 internet access. If they have none of these, they are entered into the statistics as not having broadband internet access. "But that is simply not true," Ganchev says, "100 per cent of internet users in Bulgaria have broadband internet access, which is why they generate so much traffic."