Company Strategy

Unifi Communications: Albania in from the cold

Unifi Communications is building a network that could transform Albania from its current status into a significant regional hub, reports Kavit Majithia

With a population of just over three million, and an economy still in recovery, Albania might not seem an obvious choice for major network investment.

US-based international carrier Unifi Communications plainly thinks otherwise. It has launched the first stage of its Balkans-Italy Network (BIN), in partnership with European network operator Interoute which is providing a landing station in Bari on Italy’s Adriatic coast. The network is expected to be complete and operational in the first half of 2011.

The undersea cable will provide a connection between Bari and Albanian capital Tirana, tapping into the Balkan region’s growing internet, data and voice traffic demands, says Unifi. Interoute will support Unifi’s cable system in Italy and enable connection through network access points (NAPs) located in Milan, Frankfurt and beyond. As part of the project, Albania’s first NAP will be established in Tirana to provide an interconnection point with the country’s various network operators and service providers.

“Today there are three active mobile operators in Albania, and a fourth could be launched in a few months,” says Adrian Shatku, CEO and president of Unifi Communications. “The incumbent has been privatised. The government is also planning to launch 3G licences by the end of this year which will accelerate the demand for IP. There are also a few alternative providers which are aggressively marketing triple-play services and the networks that they have built on their own.”

Shatku says he fully expects the new cable to stimulate demand for arange of services, and that it is being built to handle virtually an unlimited amount of bandwidth: “We are starting with 100Gb, but that is upgradable to four Tbits,” he explains. “The more demand the better because larger capacity eventually turns into more revenue.”

Albania’s modest and mostly poor population is not, on its own, likely to soak up this flood of bandwidth. Shatku believes the country’s strategic positioning in the Balkans will provide additional terrestrial connectivity into neighbouring countries, including Greece, Kosovo, Macedonia and Montenegro. Unifi Communications has further plans to extend BIN’s connectivity to other regional markets, including Bulgaria and Turkey, benefitting from Interoute’s stake in those markets.

Albania is receiving European Union (EU) funding to improve its poor national road and rail networks, a range of issues which has restricted the country’s economic growth and international trade initiatives. It is not at present getting any funding for development of communications networks, like BIN, leaving investors like Interoute and Unifi to bear the brunt of the risk.

“Albania is a good investment,” says Shatku. “It is a candidate to join the EU, which could lead to better integration with the rest of the world. Broadband is the indispensible infrastructure of the 21st century, so for Albania, and for us, this network is the right step.”

The BIN project will crucially provide diversity and redundancy for the existing Trans-Balkan Line (TBL), installed 15 years ago to connect Bari to Tirana and which continues overland through Macedonia, Bulgaria and into Turkey.

Renzo Ravaglia, executive vice president of wholesale at Interoute, reiterates that this existing connection hugely underserves Albania’s global connectivity needs with its limited and expensive capacity. He claims that the cost of 1Mb of IP transit into Albania is currently in excess of €50 and such pricing is “increasing the digital divide between Albania and the rest of Europe”

“This development is important for the economy of Albania because cheaper and more available bandwidth will make the development of services possible, for example enabling call centre development,” he says. “A lot of people in Albania speak Italian fluently, so Italian companies can now outsource services there. Unifi and Interoute’s connection is an enabling infrastructure for the development of the economy – a tool to develop other segments of the economy.”

While EU investment in Albania is being directed towards developing areas like public administration, justice and home affairs rather than telecoms infrastructure, there will be an inevitable positive knock-on effect on demand for communications services, says Paul Kwon, a senior analyst with the Buddecomm consultancy firm and an expert on eastern European telecoms. He believes Albania will receive over €250 million in the next three years as part of the EU’s pre-accession process.

“Spending on telecoms services in Albania will grow in line with GDP,” expects Kwon. “Its underdeveloped nature presents a growth opportunity. This is enhanced by Albania’s EU aspirations which mean it is putting in place a stable environment conducive for investment.”