MILAN Vašina is a strong believer in mobile. He has always worked in the mobile business and thanks to new technologies he envisions a future when everyone will have their own little personal notebook which they will no longer need to share with the whole family. The Slovak Spectator spoke to Vašina, the CEO of T-Mobile Slovensko, about challenges facing the telecommunications sector, government regulations, customer preferences, unique aspects of the central European market and also about only partially-explored areas where mobile technologies might soon take the lead.
The Slovak Spectator (TSS): What are the greatest challenges that the global economic downturn brought to the telecom sector? Which are the challenges that could have been here anyway even without the impacts of the crisis?
Milan Vašina (MV): The crisis has certainly already appeared thanks to the changed behaviour of customers. I cannot say that we are a sector which has not been affected. However, for the mobile telecom sector there have been couple of significant changes this year and it is important to separate these. The market will slow down and it will not grow as a whole because in the past it had always been growing. One of the two basic factors behind this is the crisis: customers tend to control their spending more and thus both residential and business customers are becoming more careful. They are travelling less and thus spending less money on roaming, often as a consequence of the crisis. But the second aspect affecting the market which has strengthened in 2009 is regulation: both internationally within the EU – the so-called roaming regulation – and also domestic measures such as regulation of termination rates.
So if we talk about a certain stagnation or fall of demand in the market, we estimate that two- thirds is due to regulation and only the rest is the impact of the crisis or scepticism among our customers.
TSS: Why is the telecom sector “blessed” with so many regulations?
MV: Some economic sectors have an impact on every single customer and if we talk about a very high penetration, then practically every person has some kind of contact with this product and this sector, which also means that we cannot avoid this type of regulatory influence.
I personally think that regulation should solve negative tendencies within the market; when customers’ rights are being violated. I do not think this applies to the telecom market where there is very tough competition, which in itself creates quite strong regulation. The Slovak market is very competitive due to the fact that there are three operators. It actually was the case even when there were only two main players. Whether one looks at the signal coverage, the quality of services or the networks or customer care and non-stop free info lines – these elements were brought to the
customer thanks to the competition and not because of regulation.
If regulation is not thoughtful it might have a contrary effect and limit the investment abilities of the firms in any particular branch; and mobile communication is a very demanding investment environment. This investment is especially important for customers because they can just say they want more pre-paid minutes for less money and in response to such a demand, the operator must develop its capacities. Some would also say: you have covered 98 or 99 percent of the population and then you no longer really need to invest. But the contrary is true. Customers are increasing their volume of calls and if they call only 10-15 minutes more than in past, you have to significantly increase the available capacities so that the operations work normally.
TSS: Telecom sector watchers suggest that customers will have a tendency to move from the trendiest technologies towards ones with a more acceptable price. What could such a trend bring for mobile operators? Could that bring some slowdown in developing new technologies?
MV: I think it won’t. In the past when the penetration of mobile phones was lower there was already a group of people driven by the passion for new technologies, the so-called early adopters. This group is actually not shrinking, and even with close to 100 percent penetration you still have 30 percent of the customers who are fans of advanced technologies and the remainder wants to use their phones for basic services. I am confident that there will always be the group of technical geeks.
Besides, you also have a whole generation of users who have been growing up with their mobile phones and have already adapted to the changing technologies. Then you still have a group which will never really have a mobile phone. You have people who were 30 when they went mobile and today they are about 45; they have been growing up with the mobile phone and they will use the new services and not only those initiated by a mobile operator. Thanks to this environment, there will be open platforms for a huge number of applications. And these won’t be viewed as separate revolutionary technologies, but rather creating wider use of online services, data, and community services. We have created text messages, pre-paid cards, GPRS, EDGE; these were all technological influences which have moved the sector’s development ahead.
My theory is that technologies have their justification – but at the right time. If you look at 3G, the technology was invented long ago but had to wait before it was implemented. The same goes for the iPhone: the operators waited for the moment when they felt that it would be well-received by the market.
TSS: There are some very specific groups of customers on the market such as seniors, children and physically-disabled people. Are you trying to focus on these groups as well?
MV: Certainly, we have in mind seniors and children but it does not happen in the form of special technologies, but rather special devices for these groups. We have provided phones for older people, with larger buttons and displays. With children it is more complicated because they want the same phone as their older siblings. As far as disabled people are concerned, we have special services; beginning eight years ago we started special tariffs for the hearing impaired because we knew that since the customer could not use voice services they could still send text messages or today, emails. We also have trained our staff and today we have about 80 sales people who can handle sign language. In fact, we also have launched a project called “Looking for another sense” for hearing-impaired businessmen so that we can help them integrate into society: it is still about communication.
TSS: Which are the unexplored areas where mobile technology might be used in the future?
MV: The possibilities of mobile technologies are almost limitless because at the same time it is a very personal item: you can communicate, store your photos and your contacts there. In the future it can be your bank card, your purse or even a sort of ID card. Today, at many places you can check-in with your phone. Since everyone has one, the possibilities are immense. Besides, you have an overarching network which helps you wherever you are. Of course, the services will be shifted in the future from today’s use of voice and text messages towards data applications and I think this will happen not only in terms of content and entertainment but also in simplifying life.
There is still another aspect, the change in value: so far, as operators, we have been bringing our services and now we will be offering an environment where new applications are coming, and there you need strong cooperation with other firms which are providing these services and you have to find interlinking and balance.
TSS: T-Mobile is now part of the service through which public transportation customers can buy bus and tram tickets using their phones.
MV: These are popular services and people have learned how to use them. There are similar services in the Czech Republic. I often travel to Prague and I am using it because it is simple. Yet, it shows how the possibilities of using a mobile phone are widening. Almost everyone has a mobile phone and therefore this service is accessible to almost every passenger using public transportation. There are certain types of micro-payments, lotteries and similar entertainment services. I do think that soon more and more options will be added, thanks also to changed legislation in this area.
TSS: What are the specifics of the Slovak telecom market when compared with other European countries?
MV: In the past we didn’t have such deep penetration by fixed lines as western countries did, so when mobile phones became available people who did not have fixed lines reached en masse for mobile services. I am confident that the Visegrad Four countries have a much better performance within the mobile market than many western countries. Today most voice communication goes through mobile networks, which is of key importance. This has created strong competition and in terms of price levels, coverage or services we are, in fact, ahead of many western markets. Customers are often not aware of the good signal coverage we have in Slovakia despite it being so hilly. In other countries, France or the UK, there are gaps in signal coverage because the percentage of voice calls transmitted via mobile services is lower than via fixed lines.
It also is interesting that Slovakia has been home to many pilot projects and this creates a huge advantage for the market. We have the highest percentage of customers who are using data services such as GPRS or 3G. It is visible that people are using a far larger portfolio of services. New, advanced technologies do not come later to Slovakia: on the contrary. In technologies like 3G or EDGE, we were among the first in Europe within our group.
TSS: The Slovak market has three mobile operators. Is it now saturated?
MV: The market must always determine what potential it renders to how many players because the development of a mobile network and everything around it is demanding. In my opinion, the Slovak market is saturated and three operators are the maximum which we can have here. If you look at developments in Austria, the Netherlands, England where many small operators first emerged and then consolidation came – this is because of the need for continuous investments. Many might not be aware of the need for continuous investments because they see the large number of customers; but a huge share of the revenue flows back as investments. Slovakia has three large players and this makes sense given the size and the potential of the market.
TSS: There is a tendency towards mergers between large mobile operators. What fuels this and what impact does it have on the market?
MV: Yes, in Austria T-Mobile merged with Telering and in Great Britain Orange and T-Mobile also merged. The same thing happened in the Netherlands where T-Mobile bought Orange: it is exactly a consolidation in the market as such. But when we talk about integration from the shareholders’ point of view and whether they are interested in consolidating their companies, then there is a different issue. They must consider what step makes sense towards the customer, the market and the company’s competitiveness. Then there is the economic aspect in which operators must consider whether they can have a more effective solution together than what they had as two firms. We have been cooperating with Slovak Telekom for a long time and we share many services with the fixed network and we strongly cooperate also in the area of our call centres in order to provide better services. If this merger trend continues, it is because of these reasons.
TSS: There is always much talk about the lack of bridges between academia and the business community and that schools often fail to produce graduates who are immediately ready to take up jobs and perform well. How do you view this in the telecom sector?
MV: We are actually trying to come up with solutions. We cooperate with schools and students and we are providing our new employees with an independent training programme so that they are ready for the position they were selected for. Based on my experience, I have been stressing that cooperation with schools and attracting young, talented people is crucial. We had young technicians who came to the firm at around the age of 18 and they have grown into top experts who work for the whole Deutsche Telekom group. True, at the schools they cannot access the latest technologies so easily. But if we go deeper in this discussion, in terms of investments into research and development in the central and eastern European region, then it is greatly underestimated. It is a key factor for the development of the market: investments in science and keeping the best brains at home.
TSS: What are the challenges that telecom firms might face in the future?
MV: It is perhaps shifting the customers from classical services towards data services and managing all that. The second key factor will be the effectiveness of the firms in the future because of the pressure on prices and regulation. Then there will also be new technologies.
I am a strong believer in mobile. I have always worked in the mobile business and I think that new technologies will further impact the lives of mobile users. Perhaps soon everyone will have their own little personal notebook which they will no longer share with the whole family.
TSS: Do you remember your first mobile phone?
MV: Of course. I worked for a firm as an intern and I received a briefcase that contained my first mobile phone. It was heavy when you carried it around. You did not make calls; you only waited for someone to call you. Though it was great excitement at that time, today it projects a very funny image – people running around with their briefcases.
And this really shows how revolutionary the developments have been in our segment in just 15 years. The firms which have been providing these services have been through immense internal change. They grew very fast and had to make a lot of technological adjustments because they had to adapt very quickly to new situations.
19. Oct 2009 at 0:00 | Beata Balogová