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Norway’s incumbent operator group Telenor may have began life as the country’s state-owned monopoly at the end of the 19th Century, but today it has grown far beyond the country’s geographic borders. Telecoms.com caught up with Telenor Norway CEO Berit Svendsen to find out where Telenor is placing its focus both at home and abroad.
March 20, 2013
Norwegian operator group Telenor started life as the country’s state-owned monopoly at the end of the 19th Century but today it has grown far beyond the national borders and holds controlling interests in mobile operations in Denmark, Sweden, Serbia, Ukraine, Hungary, Montenegro, Thailand, Malaysia, Bangladesh, India and Pakistan.
Still, the group’s domestic operation takes a prominent position in its portfolio. It was responsible for a quarter of the group’s revenue in 4Q12 and Telenor Norway CEO Berit Svendsen sits on the Telenor Group board as executive vice president. Telecoms.com met with Svendsen to find out where Telenor is placing its focus both at home and abroad.
Perhaps the biggest story from this year’s Mobile World Congress was the launch of the Firefox smartphone OS. Seventeen mobile operators pledged their commitment to launch devices using the platform in an attempt to generate more revenues from mobile services and help them reduce the handset costs they incur from subsidising high-end smartphones.
Flying the Norwegian flag at the show was Svendsen’s boss, Telenor’s group CEO, Jon Fredrik Baksaas, who said of the platform that it “opens the door to the wide community of developers, who now have an opportunity to contribute to a new kind of smartphone”.
The Group has already said that its first Firefox OS phones will be launched in Serbia. Montenegro and Hungary. According to Svendsen, Asia will follow as for now, Firefox handsets will be most suitable for emerging markets.
“Firefox OS is going to make a smartphone that is very cheap; they’re talking about €100 to €200,” she says. “That is going into in the developing world – markets such as Bangladesh and India.”
There is potential beyond developing markets though. Svendsen explains that there are two ways of going about creating a mobile platform ecosystem; one is to create an app store for that platform, which means creating a closed ecosystem or, as is the case with Firefox OS opening that ecosystem up. The platform will use HTML5 so that developers don’t have to continuously rewrite code for different platforms. This is an approach that Svendsen supports.
“You should be able to create content in the same way as you can on the internet. I have heard [Mozilla CEO] Gary Kovacs talking about AOL having the walled garden on the internet in 1995. Then everything opened up and there was no more walled garden. The mobile internet can be regarded that way – I don’t know if it will happen but this is definitely an opportunity,” she says.
Svendsen is open about the troubles Telenor Norway is having with one proprietary ecosystem player, Apple. As Telecoms.com reported earlier this month, Svendsen is growing weary of Apple dragging its feet on LTE compatibility for the iPhone5.
Telenor recently switched on its LTE network in the northern district of Tromsø, which uses spectrum in the 1800MHz band. However, Apple, which supports LTE on the same band in the UK and Germany, has not enabled the device to support LTE in the district. LTE is not supported by the device throughout the rest of the country either, where the operator has deployed LTE using the 2.6GHz spectrum band. However, the power wielded by the likes of Apple will not last forever, believes Svendsen.
“The question is will the proprietary platforms be the one and only going forward, or will it open up? And I think over time it will open up.”
LTE rollout in Norway is causing other headaches for Svendsen, with the government affecting Telenor’s progress as well.
“We need the 800MHz frequency,” Svendsen says. “You cannot build nationwide coverage without these lower frequencies. The government has freed it up but they haven’t arranged an auction, so we are waiting for it and hoping they will do it soon.”
Telenor’s competitors in Norway began delivering LTE services two years ahead of Telenor but, at that time, there were no handsets available. Instead, LTE service was restricted to USB dongles on PCs and tablets.
“When we launched, the handsets were there, and we launched it as an offering to the mobile phone,” says Svendsen. “They [Telenor’s competitors] had not. Now, we are the only operator in Norway to have launched 4G to the mobile phone; they are still on the PCs and tablets.”
Asked if she would have done anything differently if the firm had the opportunity to turn back time, Svendsen says not: “Wait until the handsets are there, and then launch 4G to the mobile phone, because 4G to the masses is to the mobile phone, not to the PCs and tablets,” she explains. “I think we did it quite right, and just in time, when the handsets were coming in.”
Some operators have spoken of the need to share LTE networks with their rivals. Svendsen disagrees with that approach. She argues that Telenor’s reputation and brand image means is better off not sharing its prized asset.
“More than 60 per cent of consumers in Norway say that Telenor has the best on network coverage and capacity – this is the most important differentiator that we have,” she says. “If we start to share networks with other players we lose that, so this is not in our plans right now. Network sharing is something I think is more common if you’re the number two or number three operator rather than number one.”
Nonetheless, she acknowledges that operators have no choice but to cut costs going forward in a bid to managing the increasing pressure on margins caused by LTE rollout costs and the economic environment in many mature markets. It is for this reason that Svendsen is a fan of centralising certain operational functions.
“As a big mobile operator, operating in ten different countries, it’s very important that you look at what specific functions can be centralised and what can be learnt from each business. It is both that we should have a framework that is common across all mobile companies, and also that we should centralise some of the functions that should be centralised.”
She continues: “Going forward, you need to reduce your costs. How should you do that? You need scale—and you need to utilise your scale. There are certain functions that can be better centralised than specifically in a business unit. For Telenor Norway, the good thing is that I’m part of the executive management, so I have to take the whole view, and I think this is how you should do it.”
Svendsen, like her counterparts the world over, is also much exercised by the over-the-top (OTT) content providers, which generate huge amounts of traffic but offer no compensation. She remains convinced that there are opportunities to explore, and that operators and OTT players should seek ways to work together to benefit their customers.
“Traffic is increasing on the network by around 50 to 60 per cent each year. OTT players are putting so much pressure on investment for the telco going forward, and they have their own business models. So we can end up in a case where our services to the customer are not good, because we don’t have the money to invest in the network,” she explains.
She adds that the answer is to cooperate and discover profitable business models together.
“I’m saying either you have to increase prices for access or find models between OTT and telcos sharing their revenue, giving a better service if they have a CDN approach. I think this is going to happen; the internet is going to become more and more like a broadcast network. In Norway, there are several players that are quite positive about CDN approach because, as content providers, they want the content to be delivered to the end user with a very good quality of service.”
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