Founder of the startup Fairwaves Alexander Chemeris worked in open source telecom projects, and lost his job because of the crisis, he created his own business. He plans to build on low-cost hardware and software with open source mobile networks in Africa and Asia
“The telecommunications industry is the worst manifestation of a large b2b. It can be worse only for the oil industry, but I have not come across it, “says Chemeris. Engage in mobile network technologies, he began more than ten years ago, when he studied at a system programmer at the Moscow Engineering Physics Institute (MEPhI). As a student, he settled in the concern Systemprom (part of Rostekh), where he developed communication tools for videoconferencing.
In parallel, he was engaged in technology of voice and video over the Internet (VoIP) with open source for the American startup SIPez, and in 2007 moved there to work. At the same time, Chemeris was carried away by the open source software project – OpenBTS: people and companies from different countries wrote the code available for all for mobile communication via the Internet.
SIPez closed the Moscow office due to the crisis in 2009. “At first I decided to become an independent consultant, but in Russia a start-up boom started, and I decided to start a start-up,” Chemeris told RBC magazine. By that time, he decided for himself: the large equipment manufacturers on the telecom market are inefficient – each develops hardware, such as base stations and own software for them from scratch, and everything should be open and created together.
Constructor for communication
By 2011, Chemeris founded the company Fairwaves – in Russia registered LLC “Umradio”, but its parent company, judging by the “SPARK-Interfax”, is located in the United States. “In the end, what we are doing now is radio equipment at the interface with VoIP,” says the entrepreneur.
“Radio part” is a base station, which is put on the tower of cellular communication. In the Moscow office where Chemeris and his two employees are sitting, there is a metal box (base station) on the table, and next to it is an electronic board about 20 × 15 cm built in. It converts the digital signal into a radio signal and back, “like a sound card” , explains the founder of Fairwaves. “Sales of these boards are now feeding us,” adds Chemeris. In 2016, the company sold almost 1 thousand cards worth $ 0.8-1.3 thousand each, the Fairwaves margin was about 100%.
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“I wrote the program for this card, and it will be an IoT-router. I recorded another program – there will be an LTE-router, the third one – a GSM base station, “explains the company’s operating director Andrei Bakhmat. Customers buy cards for different tasks – from monitoring their mobile radio frequencies to protection from drones. Fairwaves itself creates on its equipment mobile GSM-networks.
The company began with private cellular networks, for example, for miners in Latin America or the police at the Walk of the World festival in Holland. Its product is bought also by non-profit organizations: in 2013, under the order of Rhizomatica, which improves the availability of communication in poor regions, entrepreneurs provided cellular communication to the Mexican village of Javić with 600 inhabitants, and later – even more than ten villages. And Accenture bought three base stations for the Ensemble Pour la Différance project – with their help, experts create an alert system on the island of Idjwi in the Democratic Republic of the Congo to protect women from attacks.
The company is also building hybrid networks: for example, such a project was on a private island in the Caribbean region – the customer Chemeris did not name, saying only that it was “an unknown businessman in Russia.” On the one hand, the network is connected to a regular office PBX – the service staff on the island uses mobile phones the same way as wired phones. When a guest arrives on the island, his mobile through the Fairwaves system goes to the mobile network of the “big” operator and can communicate in roaming via satellite. But the main market, which focuses Fairwaves – the countryside in the underdeveloped regions of the world such as the outskirts of Javić. There it is unprofitable for mobile operators to work with large equipment suppliers: the local population can pay only $ 2-3 per month for communication, and with such revenues it is impossible to recoup the cost of an expensive network.
By 2020, the GSM standard will still be the most common in sub-Saharan Africa: it will have 41% of the market (in Europe – 14%), according to the forecast of GSMA Intelligence. By 2019, Africa will be the region with the fastest growth in mobile connections – an average of 7.4% per year; Central and South Asia – in second place with 5.1%, calculated the analytical company Ovum.
The main hopes Chemeris assigns to the direction of the business, which does not yet bring money – the construction of a turn-key network, when “the operator does not need to do anything, only pay money.” The company is negotiating such projects with large operators in Africa (for example, in Nigeria) and Asia, another potential customer is in Europe. One such contract can bring $ 50-100 million gross profit in ten years, but it makes sense to build networks in countries or regions with a population of 50 million people or at least 1,000 cellular towers, calculated at Fairwaves. The company has a pilot contract in Africa – it is shown to potential customers.
Under the wing of Facebook
“Telecommunications is the last frontier that did not give in to the opensor, and now we see the fall of this last stronghold,” laughs Chemeris. “It pains me to see the inefficiency of the industry, when every company reinventes the wheel, instead of building a cart.”
Files with the specification of the first version of Fairwaves were laid out in open access: anyone could download them and produce the device themselves. But in 2014, Fairwaves abandoned the open-iron model at the base stations: it works well when there are large volumes of production or a community of companies that work together to develop, explains Chemeris. As an example, he leads the project to create servers Open Compute Project (OCP), which in 2011 launched Facebook. The company has created an open platform with all the files for the development and production of servers, among its participants are such IT-giants as Google, IBM, Microsoft and Intel.
“Facebook and Google do not compete at the” I have a cooler server “level, and it is more profitable for them to save together on its purchase,” explains Chemeris. Manufacturers of equipment for mobile networks must also compete in value added, “not at the level of those with wheels that are more round,” he is sure. The open source model is widely used in development, but its viability depends on the way the business is monetized, says Mikhail Tregubenko, director of practice for advising the technology, media and communications sector in Russia and the CIS.
The startup Chemeris did not have enough market weight to create a community of “hardware” developers for mobile networks with open architecture, but free software can be done together. In the Osmocom developer community, about five companies, including Fairwaves, and several enthusiasts. Everyone is working on one software for mobile networks and using it, and fixes and improvements are available to all participants – a kind of “Linux for mobile communication”, explains Chemeris.
“Open source is one of the features of the sharing economy, or the economy of common access to resources, which is successfully developing, taking market shares from traditional approaches,” says Alexei Podryabinnikov, marketing director of the operator of mobile towers “Russian Towers”. As an example, he leads the mobile platform Android, which has made “a revolution in the field of mass smartphoneization”: such a model in the equipment for telecom operators is also able to make a coup.
Chemeris did not abandon creating an “open” base station, but instead of trying to organize his developer platform, his company joined a similar project Facebook – OpenCellular (part of the Telecom Infra Project). “When a company with a lot of weight does it, many things become possible,” he says. OpenCellular was launched in August 2016. 10% of the world’s population does not have access to cellular communications, and Facebook decided to “help solve the problem,” the company said in a statement. Since February 2017, Fairwaves has been involved in the development of hardware and software for OpenCellular base stations (IT people plan to put their part in open access) on Osmocom technologies and their testing systems. Presentation of developments will be held in late June in Kenya.
With colleagues from Facebook, Chemeris met in 2010, when they worked together on OpenBTS. In 2014, developers Lance Condrey, Kashif Ali, Curtis Heimerl and Shaddi Hassan founded the Endaga startup, bought Facebook one year later, and old acquaintances invited Fairwaves to participate in the open source project initiated by the company (terms of cooperation are not disclosed).
Facebook is trying to “create some moves” in the industry and show that it needs to be invested, says Chemeris: “Investors follow the fashion, and Facebook is trying to make the theme fashionable.” In 2011-2014, Fairwaves attracted about $ 500 thousand from several business angels. The next attempt to raise the investment start-up in 2016. “We almost killed the company,” Chemeris says of her. Entrepreneurs spent “tens of thousands of dollars” on trips to the Silicon Valley to meet with investors, but no one was persuaded. It was necessary to reduce the payroll fund, firing several people.
Fairwaves earnings in 2016 amounted to about $ 800 thousand, in 2017 Chemeris wants to increase it to $ 1 million. While building a business, Chemeris intends at the expense of income, rather than investment. Fairwaves hopes to work in cities. Fairwaves earnings in 2016 amounted to about $ 800 thousand, in 2017 Chemeris wants to increase it to $ 1 million. While building a business, Chemeris intends at the expense of income, rather than investment. Fairwaves hopes to work in cities. Although until recently, Chemeris believed that he could not compete with large producers, but since May 2017 Fairwaves is trying to enter a new market – is preparing to build a data network in cities in developing countries. But basically the startup focuses on the countryside: “The market for rural and remote (rural and remote areas) in Asia, Africa and Latin America is huge and completely uncharitable,” explains Chemeris.
Original in Russian: RBC Magazine
Author: Elizabeth Arkhangelskaya