A Colorado University graduate, part of a team of 5 students in a telecommunications class doing a research project on municipal wireless service in Romania got in touch with me to find out a WiFi executive’s thoughts on muni WiFi, obstacles and challenges of doing business in Romania.

They are working on a multi-million-dollar project that, they hope, will involve Siemens in a municipal WiFi mesh system for Cluj Napoca, Romania (population cca. 500.000).

Details are not so important at this stage so I’ll keep the guys in the shadow even if they plan to compete with our business here (c*free has 22 hotspots in Cluj Napoca, one is metro-class).

I think it’s surprising the amount of attention this Transylvanian city gets from a wireless perspective. Our developments have been natural as we’re based here. At turn, a US designed muni project for blooming city in Romania is interesting read. There’s good wireless business perspectives in Cluj but I’m inclined to think it’s just a contextual hype.

From the outside observer Cluj looks attractive because no other Romanian city has so many c*free hotspots, for example. So if there’s hotspots there’s probably demand. Correct so far. This lead to a cascading demand as different businesses could not compete without their own free WiFi. Answering a few questions to the project panel I explained why I think a muni WiFi project is not suitable in Cluj for now.

They asked:
1. What you feel is the best opportunity for entry into the municpal wireless market in Romania? –(I have reviewed your slides)
2. What the executive feels are the biggest opportunities related to muniwireless?
3. What the executive feels are the biggest threats or obstacles related to muniwireless? (e.g., no businees model for romania yet).
4. What the executive feels are the biggest challenges about doing business in the country?

I answered:
1. Muni wifi has been rejected by the potential beneficiary (the Municipality) as a joint or sole funding party. Just like in the US, a private joint venture will be encouraged.
c*free wireless is in talks with Cluj Napoca muni to support deployment of a mesh system during 2007 as a proof of concept.
Our company does not feel that it’s opportune time-wise or business-wise to invest such a system at a metro scale for now.

2. muniwireless is undoubtedly great business for content providers, brand awareness and promotion, hardware retailers or suppliers, education, local structures, administration and so and so forth. Not so much for the operator – unless the operator shares revenues with content providers or deploys secondary/tertiary services on top of infrastructure. Incremental roll-out would be advised, preferable to one-time full-scale service. For example there’s little reason for mesh systems being deployed in heavy-cabled (read connected) neighborhoods, especially if the business plan revolves around connectivity.

3. Romania, as you noted, is a great, receptive market! Dynamic and mobile, hungry for information and communication, but reasonably correct in the choice of lifestyle. The Romanian public is driven by economic value and is financially conscious. There’s little value in the eyes of this (be advised) literate public in paid WiFi. SoHo or residential connectivity with already paid broadband justifies not side expenses on muniwireless/hotspot premium connectivity.
Ubiquitousness of WiFi services, laptop/mobile devices penetration, demand, tourism growth and average wage index are factors to be considered when researching an entry point for muniwifi. Better yet, even without a business model, a market or a clear exit strategy, a muniwireless project will yield big future business and results in Romania. But it’s likely investors would look elsewhere due to steep costs and foggy, distant exit point.

4. This market needs powerful local brands alongside established international players. It’s a social tip for involvement. Romania is in raging consumerism with low production output. That creates unbalanced commerce and debt, adds stress to the overall economical health.
Thanks to a very incentive tax environment (16%) and an average VAT compared to other EU members (19%), Romania is good business ground for ventures that benefit from startup funding. Very skilled, fairly cheap, labor and good infrastructure are a plus.
One of the drawbacks of this fine picture are the fact that some/most payments are seen as optional by business partners (eventually to be paid, but not always on deadline). That blocks cash flow and business growth, destroys timings.
Not having EU-standard logistics, worldwide shipping, Paypal services or alike, international integration into mainstream online commerce and business frustrate Romanian users. This generates an incredibly high number of passive Internet surfers and so, a very low ARPU for WiFi startups, incumbents or muniwireless ventures alike.
Apart from specific glitches the term that perfectly describes Romanian business is “LONG”!

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