Changing lines

Changing lines

Fri, Jul 24 2009 27975 Views
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,, 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, 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."

Going underground
For years, Bulgarian ISPs built their network by spanning cables across the gaps between apartment blocks. The practice was born not out of laziness, but of necessity. When state monopoly Bulgarian Telecommunication Company (BTC) was privatised, the underground tunnel-network that contained its cable network became its private property. Requests from ISPs to roll out their cables in the BTC-owned underground network, although formally allowed, were often rejected, saying it was "technically not possible."

"We have had cases where we had already installed a cable in BTC’s underground network without asking them first. When we then filed the formal application, BTC would, a month later, tell us that it was technically not possible. But our cable was there already," Ganchev says.

"BTC behaved like a monopoly in the worst possible way. With it policies, it stimulated ISPs to build their own network and these networks are now often better than the old network of BTC," according to Ganchev.

And exactly because of this, Bulgaria’s internet network is not behind international developments. "We are actually quite ahead I would say," Ganchev says.

BTC’s monopolist behaviour delayed the introduction of digital services over analogue networks, like ADSL, for several years. "So we skipped that stage and jumped to providing digital services over digital networks. We are now installing an optical cable network and can begin to roll out services that cannot be provided in, for example, the US," Ganchev says. There, "they have an old network via which they provide new services, but they have no incentive to install a new network," he says.

The Bulgarian optical cable network is being installed underground, but replacing the airborn-network with an underground network is going to take some time.

"It will take at least three to five years to move the network underground. Something that has been built over a period of five years, cannot be replaced in less time. Installing a cable through the air takes an hour, putting it underground takes a day," Ganchev says.

"The problem is that recent legal amendments gave the Commission for the Regulation of Communications the right to fine ISPs for cables that run through the air. Since the beginning of 2009, just about every ISP has been fined. These fines start at about 5000 leva and can go as high as 50 000 leva," Ganchev says.

The fines are not likely to go away either. In the coming years, ISPs risk getting fined a second or even third time for the same cables, increasing the fine every time.

"The regulator should not simply fine ISPs for every every cable it finds running through the air, but instead set a deadline by which that cable has to be removed and if it is not, then it could fine the ISP," Ganchev says.

Ganchev acknowledges that as of January 1 2007, when the country joined the European Union, network cables running through air were supposed to have been a thing of the past. "But BTC did not allow access to their underground network. They left us no option. What were we supposed to do? Cut the cables and leave our clients without internet?" Ganchev says.

It is not just BTC’s monopoly that Ganchev has been fighting. Ever since the early 1990s, the monopoly for the registration of .bg domain names has been with the Varna-based company Digital Systems, which has now given it to, which it fully owns.

As chief secretary of Internet Society Bulgaria, Ganchev was closely involved in setting up of the Bulgarian Public Internet Register (PIR), where he is currently chairperson of the management board.

The organisation brings together the Internet Society Bulgaria and the Electronic Communication Association, along with the State Agency for Information Technologies and Communication, and Bulgarian academia in the form of the Bulgarian Academy of Sciences.

PIR is currently preparing documents to file for the licence to maintain the .bg domain, a decision that ICANN, the Internet Corporation for Assigned Names and Numbers, is expected to take by mid-2010.

When PIR assumes the maintenance of the country domain registration process, its goal is to regulate the registration process and introduce competition into the registration market through an open licencing scheme. "Our concern is that companies operate with one set of rules, with a single database and that this structure is stable," Ganchev says.
"We hope that a simpler procedure and the introduction of competition in this market will make it easier and cheaper to register a .bg domain," Ganchev says.

In a parallel process, Ganchev is involved in the introduction of country domain names in cyrillic, which would end in .бг.

"We have had quite a lot of support at government level for this," Ganchev says. So much so, that Bulgaria was the first country in the world to apply for a country domain in a script other than Latin. "We beat the Russians by two or three days. They were not very happy about that," Ganchev says.

"Our own diplomats were, of course, very proud," he says.

An often used argument against domain names in non-Latin is that it creates little islands that are not accessible to those who do not know that alphabet. "The content on any Bulgarian site with a Cyrillic domain would presumably be in Bulgarian. So to anyone who cannot read or understand Cyrillic, the content of the site would be fairly useless," Ganchev says.

Ganchev said he expected companies would maintain multiple domain names; one for each language or group of languages.

"The advantage of writing web addresses in Cyrillic is that it will finally be clear how to write a specific address," Ganchev says.

"Take for example the website of the Bulgarian Foreign Affairs Ministry, which is That is an abbreviation of a term in a foreign language, which is meaningless for a Bulgarian," he says.

"The Interior Ministry, on the other hand, uses - an abbreviation of the Bulgarian name of the ministry. By that logic, foreign affairs should have used," he says.
"The end result is that now I can only find these sites with the help of a search engine," Ganchev says.

"An address in Cyrillic is simply easier to remember," he says.

Combined with lower prices and a simplified registration procedure for .bg domains, Ganchev hopes this will do away with the current practise of registering webaddresses that end in