Telenor out to avoid the ‘dumb pipe’ nightmare

Telenor out to avoid the ‘dumb pipe’ nightmare: Page 2 of 2

By Karamjit Singh February 4, 2014

Adding value to the chain

This is where Telenor hopes to bring its strengths to the table when it deals with Internet companies.

“We clearly have access to a large base of customers, we have a billing relationship with them and if we add in our customer insights, we think we can add huge value to any Internet company we work with,” Brekke (pic) says.

He says is already in conversations with all the main Internet players in the world to see how it can meld its strengths with their advantages to ultimately deliver services customers will want.

Internet companies are especially keen to work with Telenor to access its 145 million customers in Asia, he claims. “They need our help to reach users in Asia as the infrastructure does not permit them to bypass us and go direct.”

Getting this relationship right will determine which operators survive and thrive in the future Internet-dominated era, and which ones are doomed to become mere pipes to deliver the content.

While a number of operators have set up venture funds and have been taking stakes in many Internet companies as a way to hedge their bets, Telenor plans to make a select “few but big bets” as Brekke describes it, in companies which have already proven that the business model works.

“We need to be part of this [Internet future] and develop different organisational capabilities with end-to-end solutions. We are moving into a world where customers don’t care which operator they use. They just want to be able to access their content through their phones,” he says.

He notes that Internet companies move faster, have flat hierarchies, work differently and have different cultures. This is where the investment into SnT Classifieds will also give Telenor a window into observing how Internet companies operate and to learn from that.

“But we need to find the right partnership model and no telco has got this right yet,” claims Brekke.

He does not think anything radical will work, but it would be about finding the right partnership model which could be in the form of a joint-venture, equity investment or a strategic partnership.

In this sense, Telenor with its 145 million customers in Asia alone offers Internet companies and promising startups a mighty carrot with not just its customer base “but a billing relationship with them and customer insights,” Brekke argues.

“Combining our strengths with theirs will allow us to offer customers better services that meet their needs,” he adds.

Basically Telenor wants to position itself as the operator that Internet companies can easily connect their services too. Noting that such companies only become successful when they have scale, Telenor, with its global backend that connects to other operators and its own 145 million customers in Asia alone, could become the partner of choice for established Internet companies and the most promising startups.

“So, besides the connectivity that we offer, we can also bring to the table our competencies that Internet players will find valuable, and of course, our money too,” says Brekke, cautiously optimistic that Telenor has enough chips on the table to play a winning hand in the evolving telco and Internet landscape of the future.

While it figures out the right partnership approach, Telenor Digital is already working on a product called Global Scale, whose mission is to connect its global customer base to multiple services by using one ID. If successful, it sees this as transforming itself into one, global Internet company.

Brekke and Telenor are hoping that this dual-pronged strategy will increase their chances of successfully making the transition into an Internet company in the future, and thus enjoying a greater share of the telco and Internet revenue pie.

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