Various strategies in place, still looking for right formula
Internet companies not eating telcos’ pie, ecosystem growing
AS a young engineer for an oil and gas services company, Jon Fredrik Baksaas’ favourite activity was to chill on a beach in Miri in the East Malaysian state of Sarawak, and watch the thunderstorms play out in the horizon. That was in 1983.
Fast forward to 2014 and as the president and chief executive officer of the oldest continuous telco in the world (2015 will be its 160th anniversary), Baksaas (pic above) now has a sharp eye out on ensuring Telenor successfully rides the data and OTT (over the top) storm that is hitting the industry.
As he notes in an exclusive interview with Digital News Asia (DNA) at Telenor’s headquarters in Oslo, “The competition for telcos is today as much on the telco side of the ecosystem (among other telcos) as on the Internet Protocol (IP) side of the ecosystem.
“Hence operators need to become IP-based service providers too,” he says.
That in itself is not new as the trend among telco operators now is to embrace the IP ecosystem, though most prefer to call it the ‘digital ecosystem.’
For instance in Malaysia, Axiata Group president and chief executive officer Jamaludin Ibrahim has declared his company intends to become more of a digital company.
Telenor too has taken some steps in that direction, and while it has brought “some value add to customers, we haven’t yet found the [right] formula in the industry on how to do this,” Baksaas admits.
A key step for Telenor was in establishing a digital unit Telenor Digital three years ago, to act and behave in a manner that is the exact opposite to how a telco would think.
Indeed, acknowledging that customer loyalty to their access provider is weakening and that “it’s all about their apps now,” Telenor Digital head Rolv-Erik Spilling says it builds a product with the mindset of creating customer value first, with monetisation coming after market traction.
Mindful of its telco roots and mission to inject a dose of digital- and Internet-based culture into its parent company, Telenor Digital is situated within the Telenor Hq but with a much more ‘fun’ work atmosphere.
Besides leading Telenor’s M&A (mergers and acquisitions) activity in the digital space, it also incubates a few startups.
Not doing anything is not an option
It is a time of transformation where customers today judge their telco by how good their experience is with the various apps on their phones, even though those apps that sit outside the control of the telcos.
It is no more a voice- or SMS-dominated world. Data is taking over – even in Asia where feature phones still make up well over 60% of Telenor’s 120 million customers in the six countries it is in. It has 160 million customers in total.
Telenor is itself helping to push this data transition even more among its Asian customers with its ‘Internet For All’ strategy.
While telcos, as recently as a few years back, were fearful of the eroding impact the data trend was having on their revenues, with tiered data pricing slowly becoming the norm and by changing their century-old business models, the battle to stay relevant to their customers and not just be a dumb pipe provider is truly on.
Baksaas says “not responding was never an option,” with Telenor investing in technology, services and a new platform on which new business models can be created.
In fact, the development of this new platform has been key to Telenor changing its business model to where partnerships now will play an increasingly important role.
Just as Facebook is a platform, the platform Telenor has built allows it to distribute content and services much more seamlessly over the 13 countries it has operating telco units in. It can now work with any partner and offer it its 160 million customer base.
What this means is that from a technical point, partners need not customise their products and services to fit the technical specifications of each operating unit.
More than that, emphasising the point that outside of the China, it is the telco with the largest geographic footprint and customer base in Asia, Telenor is positioning itself as ‘Your Doorway to Asia.’
This will be how it plans to work with the big and small Internet companies offering their various OTT services.
Nobody’s eating anyone’s pie
Baksaas is dismissive of talk that Internet companies with their OTT services will suck revenue and customers away from telcos.
“It does not work for any party to say they will take over your role because this digital ecosystem is created from the relationship between three key elements. You need quality networks to deliver the customer experience users demand; you need handsets with new functionalities; and you need the services to be offered over the networks and through the handsets,” he says.
Even Facebook founder and chief executive officer Mark Zuckerberg is putting a new emphasis on the role of operators in his vision of delivering the Internet to everyone, and his views have evolved considerably over the last year, Baksaas notes.
Predating Zuckerberg’s vision, Telenor already had its Internet For All strategy in place. In offering connectivity to all, “we are by extension enlarging the ecosystem for different players to participate in,” says Baksaas.
The point is that no one player can capture all the value for itself, and that Telenor is doing everything it can to remain relevant in a data-centric world.
Karamjit Singh was in Oslo to cover the Digital Winners Conference at the kind invitation of Telenor and DiGi. All editorials are independent.
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