Reaching out

The company clearly isn’t resting on its laurels, however, with an ambitious plans under way to extend its reach and develop its offerings – something reflected in KPN’s recent ranking among the top 10 telecoms operators globally in terms of investment potential. Here, CXO editor Alice Hoey speaks exclusively with Marco Visser, KPN Mobile NL’s Chief Operating Officer, about building a bigger, better business.

CXO. Earlier this year, KPN announced it would accelerate the rollout of the HSDPA mobile broadband technology upgrade for its 3G UMTS network. Do you have a roadmap or a deadline for achieving this and what progress has been made so far?

MV. A couple of years ago, KPN like many telecoms operators started to roll out UMTS as a data network – HSDPA is the next generation of this. It enables faster broadband with which the mobile operators can provide an almost ADSL-like experience, similar to what we now have available at home.

In the voice market, we are now seeing a great deal of fixed mobile substitution, where mobiles are taking away minutes from the fixed network. With HSDPA, we’ll see mobile be able to take not only minutes, but megabytes, away from the current fixed network.

We see many organisations around the world now making preparations to roll this out, and KPN launched it last month. Much of the uptake of HSDPA, especially early on, is likely to be in the business market, where it will enable users to access e-mail and files much more quickly than is currently possible. So it is a considerable development in the total lifecycle of a mobile operator.

CXO. And are these capabilities something you are seeing more demand for from your business customers?

MV. Absolutely, as the clear leader in the business market in the Netherlands, we see a gradual and steady uptake of UMTS services – most notably in laptop cards. This is something that will really accelerate with the roll out of HSDPA because it will make business even more convenient.

To give you an example, a salesman is able to access an order while still on location with a client to make sure it is being processed straight away and that the bill is sent immediately. Essentially, this new technology helps improve the productivity of the business market.

CXO. There seems to have been a big increase in the demand for wireless mobility solutions such as these in recent years in the corporate market. How has KPN enabled the shift towards the mobile enterprise?

MV. There are a number of things we can offer businesses. For example, we recently introduced the ‘mobile office’ for the smaller business segment, while for larger organisations we offer more integrated fixed mobile solutions. In general for the business market, we want to move upwards on the business value chain, as well as on the IT value chain, not only providing a wider range of services but also taking over the management of these services for our business customers.

We are also seeing a lot of growth on the consumer side when it comes to mobility. In the Netherlands, which is renowned as a highly competitive market, we have over 100 percent mobile penetration, have four mobile operators and a number of brands out there. However, we still believe there is huge potential for growth in the consumer market. Consider, for example, the fact that the average consumer spends less than three minutes a day on their mobile phone. That means, in effect, there is still 23 hours and 57 minutes of growth left ahead of us.

Clearly, there are still some price pressures facing the industry as a whole and it is essential that we exploit new opportunities to get people using their mobiles more. I’m fairly optimistic that we will be able to tap into this growing market, which includes the next bubble of growth – provision of data and content over the phone. This is something that has been over-hyped and, as an industry, we have perhaps been over-optimistic about when it will happen. We are, however, all confident that it will happen – we are going to have mobile TV, content over our phone, location-based services, mobile payments, identification forms over our mobiles, etc. It is important that we are aligned with a number of industry partners to bring this forward and, as market leaders in the Netherlands, KPN has a role to play in orchestrating this movement.

CXO. Returning to the HSDPA upgrade – will it have additional benefits for KPN itself?

MV. We use it ourselves as a company. All our service engineers out on the road, for example, use laptops with HSDPA cards.

This roll-out represents a relatively small investment for KPN compared to that associated with 3G. We will have around 90 percent of the Netherlands covered by the end of the year and then will have the HSDPA layer on top of that. In doing this, we are really beefing up the quality of the network, which for us is very important. We’re confident that we have the best network quality in this country, which should be the case because we have the most business customers.

CXO. You’ve built a number of partnerships this year – do these play a part in this network development?

MV. They do in part. For example, when we took over Telfort, which was the fifth largest operator in this market, we announced that we would close down that network and integrate it into our own by next year. This adds around two million customers to the 5.5 million that KPN currently has.

Clearly, our network needs to be expanded before we can migrate these additional customers. In addressing this need, we decided that rather than go with one supplier alone, to also partner with Huawei. While this Chinese network builder is less known in Europe than the Ericssons and Nokias of the world, it is triggering a lot of competition within the network building community. This in itself is important and we are confident we will gain some advantage in partnering with Huawei.

As a network can take around 10 years to build, you are locked into any supplier partnership for a long period. It’s therefore extremely important to make the right decisions on your suppliers when you start building a new network. With 3G and HSDPA, we had a once in a decade opportunity to change suppliers.

CXO. And you’re also to acquire Gemnet? Does this signal a desire to develop your provision in the area of secure data exchange?

MV. Security is a big issue for companies today. For example, VoIP is a hot topic at the moment, but the challenge there is to have something that is better value for money than your current telephony, without compromising your security and data integrity. This is one of the main reasons that many large corporations have not yet made the shift to technologies such as Skype. They don’t yet trust it to be secure enough for their core business communications.

CXO. Your subsidiary, Sympac, has now expanded its network to the Czech Republic. Is it important for the business to have a foothold in Central Europe?

MV. KPN as a group has quite a small footprint – in the Netherlands, Belgium and Germany – but we also have a number of international clients such as ABN Amro, which has operations in over 75 companies. We set up Sympac as an organisation that will deal in particular with those countries outside of our footprint, ensuring we can offer our services to multinational corporations. It is a brand that is enabling us to make a bigger impact internationally, and it is something that is developing very nicely at the moment.

CXO. Looking forward, what are your primary objectives or business strategies?

MV. There are three main things. First, KPN has both a fixed and a mobile business and there is a strong drive in the coming years to exploit the synergies between the two. This is not only on the technical side, but also because we have so many households to whom we supply both services; we want to develop ways to better exploit that.

On the mobile side, we are looking at ways in which we can further increase the profitability of our mobile business. Having recently finalised a number of new investments, for example, with the rollout of HSDPA, we should be reaping the fruits of that soon.

Thirdly, we want to make inroads into offering the next wave of new services – mobile payments, mobile TV, etc. We are currently rolling out a DVBH network – allowing mobile TV over your handheld device – which should see the light next year. We have very high hopes for this in the wider expansion of our product range.