Interview of the General Director of “Cornet-AM” Company, subsidiary of “Russian “COMSTAR-OTS” in Armenia Boris Demirkhanyan to Mediamax News Agency and Banks.am portal##

- “Cornet-AM” has concluded the first construction stage of WiMAX wireless broadband access (WBA) network. It was noted that the new network is meant to provide a full spectrum of telecommunication services, including: data transfer, digital telephony, high-quality internet access, organization of corporate networks (IP VPN), etc. Does this mean that the telecommunication market of Armenia is already liberalized and “Cornet-AM” can bravely enter competition with “ArmenTel”?

- We have concluded the stage of physical assemblage of the equipment of WBA network. This is an unprecedented network, according to Armenian standards, since the main sphere of interest of all providers is Yerevan. However Armenia is a small country and the richer Yerevan becomes, the more requirements appear beyond its borders. Thus, planning our network, we put the stress on the fact that any of our services – telephony, internet access, data transfer, or organization of corporate networks, as to their content, quality and price policy, should be practically identical to the services, which are available in Yerevan. At present, the network is in a testing stage, and we hope that already in September the WiMAX WBA network will be officially launched into commercial operation.

What concerns the liberalization of telecommunication market, formally it was liberalized back in October of 2007. On the other hand, the historical dominating position of “ArmenTel” as a national operator will yet for a long time make certain corrections in the process of market liberalization. “ArmenTel” has everything necessary for a telecommunication company. Any other company builds that “everything” to become a full-scale telecommunication company. I believe that it will take a long time yet before the legally declared liberalization becomes real liberalization of the market.

However, as opposed to the telecommunication market, one can confidently talk about the liberalization of the services, since any telecommunication service, stated in the license of the company, has no limitations as to the opportunity for its provision to the final consumer.

- Last year, in an interview to our agency you said that corporate consumers represented the main interest for you, at the same time noting that the possibility of services provision to individuals were considered as well. Will WiMAX network be available to a wide circle of users?

- While planning the WiMAX network, we, of course, first of all, focused on corporate customers – a segment, which has historically been a priority for “Cornet”, but the network is planned in a way as to have technical opportunity and provide services for individuals.

It is obvious that WiMAX, representing a new technology and being at the stage of its formation and spreading, is not an inexpensive technology. Correspondingly, the services, provided with the use of the network, can not be positioned as inexpensive ones. But one should also take into account the fact that the quality of services, the access speeds and the operative quality of connection fully justify the seeming expensiveness at the first glance. And, finally, we are not that rich to buy cheap things.

Tostcost for connecting to WiMAX network for individuals will make about 36 000 drams, for the legal entities – 78 000. The monthly fee will depend on the package and the tariff plan, chosen by the customer. The Company tries to carry out flexible price policy to optimize the expenditures of the customers.

- What volume of investment is made by the company in the establishment of the WBA network?

- These investments make about $5mln. The network covers 18 towns of Armenia and Yerevan. Building such a network, we solve social tasks as well: provision of access to bordering regions and the ones, where telecommunication is not developed. I believe that the further investments will be directed to expansion of the access zone (new base stations will appear and new regions will be covered) and the establishment of an own transport network – to connect the base stations.

- Beeline started providing rural areas of Armenia with internet access with the use of its CDMA-network. Will you compete with Beeline in the regions?

- I think yes, but I would prefer not to call it competition. In certain regions of Armenia there is such a situation present that for a long time yet there will be no competition there in the form, in which we are used to perceive it. For us, for Beeline and for other companies, since the market of regions is far from saturation at present, the adequate offer of each player will find its concrete consumer and this should contribute to the economic development of the regions as well.

- “COMSTAR-OTS” leadership stated that one of the strategic steps of the company in Armenia will become the promotion of voice connection services. It is known that “Cornet-AM” submitted an application to the Public Services Regulatory Commission (PSRC) of Armenia to receive a number capacity of 60 000 numbers. Does this mean that the company starts promotion of voice connection services in Armenia?

- Yes, we plan promotion of complex services. We do not want to limit ourselves only to internet access, especially that if before the traditional telephony provided for presence of telephone stations and a huge amount of cables, today it can be considered a parallel service, a secondary level one.

The network built by us covers large territories, and of course we could not avoid using it for provision of all the possible services, including the very traditional and demanded one – telephony.

- Is the possibility of certain synergy between “Cornet-AM” and “VivaCell” services considered, taking into account the fact that both companies enter the structure of the Russian AFK “Sistema”.

- Services of mobile connection and the services, which we intend to provide, do not practically correlate. I do not think that at the present stage our services can have common points in any aspects; moreover, the decisions on interrelation of subsidiary structures are formed and made by the parent company in a centralized order. On the other hand, we very closely cooperate with VivaCell and try to find points of contact, which will allow contributing to the development of the two companies.

- What is your assessment of contradictions, which arose between “ArmenTel” and a number of internet-providers in connection with the launch of Hi Line service by the “ArmenTel”?

- The basis of this problem is the historical canons of interrelations between the national operator and the providers. If before “ArmenTel” was the “wholesaler”, providing internet-resource to the providers, which then passed it to the final consumer, today, in the view of the fact that “ArmenTel” itself is interested in provision of services to the final consumers, this, taking into account its technical capacities and the potential, could not avoid leading to the change of the game rules.

It is difficult for me to determine a certain recipe to find a way out of the present situation. On the one hand, I realize that business-interrelations, which have been forming for dozens of years, cannot be changed right away; on the other hand, we were the ones to want liberalization, right?

I believe that each of those, who see themselves in the telecommunication market, should find their own solutions. I think that the best path is autonomy and independence.

The more alternative telecommunication resources exist in Armenia, the more civilized game rules in the market will be. The more providers pay attention to the establishment of their own infrastructures, the easier it will be for them to hold a dialogue both with “ArmenTel” and with other providers.

- How did our neighbors, for instance, Georgia, cope with this problem?

- Initially there was no monopoly in Georgia. The whole telecommunication infrastructure was divided among three main companies there. Telephony services already 10 years ago were provided with absolute freedom in Georgia.

However, if we discard the geographic location and the appropriate quantity of cable resources, which pass through the territory of Georgia, there is simply no network there. There are separate segments, which either do not link up with each other, or link up improperly. Thus, mo matter how bad the monopoly itself is, nevertheless, in Armenia it has established quite good telecommunication infrastructure. For instance, the telephone infrastructure in Yerevan is for 90% digitalized, while in Tbilisi, digital ATS can be counted on the fingers of one hand.

- You noted that a large amount of cable resource pass through the territory of Georgia, which makes internet available and quality. How do the matters stand in Armenia concerning this?

- Armenia is provided internet by “ArmenTel”, which has a basis fiber-optic network in the territory of the country with two entry points on the borders with Georgia and Iran, and Fibernet Company, which has a fiber-optic cable, passing from the Georgian border to Yerevan.

Any provider, in a somewhat broader sense of the word, tries to gain a primary resource of network access; however this is not easy to do and is not always profitable from the economic point of view. What can be done today in this direction?

It would be very auspicious for the telecommunications of Armenia to gain an entry to a third state, for instance, to Turkey, where there are very many telecommunication resources and there are points of the presence of practically all the main arterial operators. The access to such resources could have very positive influence on the telecommunication atmosphere in Armenia.

- As we know, your company provides specialized services to the commercial banks of Armenia. Would you, please, present the spectrum of those services?

- We provide commercial banks with services of connecting the cash-machines to the processing center of ArCa system. As far as I know, there are only two companies in Armenia, which have the right to connect cash-machines to ArCa through their networks. Those are the Central Bank itself (CBA Net) and “Cornet-AM”.

Besides, we still provide X25 service to banks. But since the X25 network is relatively old, and more and more technologic solutions and banking applications focus on TCP/IP network, I believe that in the nearest future the necessity of X25 may completely fall away. We provide our remaining services to all our customers.