INTERVIEW:
Question 1
Let's start talking about public policy changes in the telecommunication era in
Europe.
Answer
The changes actually started quite some time ago, culminating with the general opening of telecom markets in Europe on the first of January 1998. The kind of changes we're really talking about are deregulation of the telecoms industry completely, allowing new competitors, new technologies, to enter the marketplace. We've seen in countries like Germany, here in Italy, and in France a tremendous, explosive growth in the number of new network service providers, introduction of new technology. There are probably over 20 pan-European fiber optic networks under construction or in operation. So we are entering a period of absolutely chaotic change. Probably the best example of all that was Olivetti buying Telecom Italia, basically throwing the rulebook in Europe out of the window.
Question 2
How will these changes affect the evolution of network services in
Europe?
Answer
We have seen the beginning of the explosion in terms of the growth of the number of players in the marketplace, and frankly the ex-monopolies will retain a significant market share, which means the new players have to find a way of living with what's left over. In many cases in Europe we are going to see a consolidation in the number of carriers. There are too many new entrants in many markets across Europe. For us as users that brings tremendous opportunities to save money but also tremendous risks. How do you pick a carrier who is going to survive? How do you know you are getting the best value for money? The carriers are confusing the end users by introducing services that are very difficult to compare. Frankly, the lifeboats in the sea of change as we move forward will be competitive bids, processes for telecom service procurement, and having the negotiating skills to develop a good contractual framework, because you're going to have to use that to manage your relationship with the
carriers.
Question 3
What are the dangers and the opportunities in this deregulation process?
Answer
Let's start with the opportunities. The opportunities are clear. The opportunities for choice, something we rarely had in the past when it came to telecoms, the opportunities to benefit from the competitive pressures which are driving prices down, to be able to try out and to procure new types of technologies and service which are better adapted to our needs as both consumers and as enterprises. The risks: buying services from a carrier that disappears and that is not imaginary. It has already starting to happen in France. So while there is still growth, new players coming, there's underlying consolidation in the marketplace. The danger is that your carrier gets taken over by a global consortium that you don't do business with. So you really have to worry about the exit barriers in terms of your contracts at the negotiating stage. If you don't concentrate on the total cost of telecom service, not just the monthly fee, but also the costs of changing supplier, of carrier, then you'll pay too much as an organization.
Question
4
Which new network services will become widespread, will have greater success?
Answer
I think we'll see ongoing success for cellular communications; GSM has been a worldwide success, a tremendous success story for Europe, spreading well beyond the boundaries originally intended, which was the European continent. I think we'll see the evolution of higher speed services within GSM. We'll see the introduction of 3rd generation cellular, which will give us speeds of up to 2 megabits per
second.
Question 5
We were talking about new network services.
Answer
One of the biggest success stories is GSM, cellular telephony already being embraced in huge numbers: in Italy I believe 40% penetration and in Finland over 65% of the population has mobile phones. But if you look at the European average, it's still only around 13%, so obviously there's tremendous scope for growth there. We expect by 2004 that on average 60% of the population of Europe will have a mobile phone. We'll see new services for GSM, higher speed services for data, packet services, and from about 2002 we'll see the evolution of 3rd generation cellular which is able to deliver speeds of 384 kilobits per second and up to 2 megabits per second for the individual user. In terms of what corporate buyers will be using, I think we'll see a continued migration away from corporations owning and operating their own networks. They'll migrate to buying managed network services from public carriers. The increasing role of IP, the convergence of voice and data over IP, Internet protocol. There have been a lot of stories about ATM and IP fighting a war. In reality that war has not really materialized. ATM has found its role currently in the backbone of quality-conscious service providers. ATM gives them the ability to have scalability and manageability, something that IP protocols don't yet have today. I think going forward over time both will play a role and both will find a role in the backbones of networks as well as at the user interface.
Question 6
What do you foresee for cellular user and Internet user growth?
Answer
That is an interesting question. It took the Internet around 15 years to get its first 50 million users worldwide. To compare that, GSM in Europe alone took less than 7 years to get 50 million users. So mobile is exploding. If you look at the number of users - and it's very difficult to count Internet users - but if you look at the figures from various sources, there are around three times as many mobile phone users in the world today than there are Internet users. We don't see that trend changing very much. In 2004 there'll be one billion cell phone users and perhaps 300 to 350 million web users.
Question 7
What new cellular service can we expect in the new few years? Answer
In terms of carrier services, one of the favorite ones will be a general packet radio service over GSM; that will start launching throughout next year. Every country in Europe will have a service like that by the end of next year from at least one carrier. Following that, in 2002, as I said, we'll see 3rd generation cellular coming to market almost certainly in Finland first. They tend to be the innovators in the mobile space. In terms of end users I think what we'll see is a rapid growth in the number of value-added services, information services. Cell phone companies will be obliged to put in place the ability to locate a cell phone when it makes an emergency call. Now, having put that infrastructure in place, they'll then turn it to use for commercial advantage. So we'll have services emerging, for example, walking down the street, you could ask for directions to the nearest Pizza Hut or the nearest gas station or bank. Moving forward, I see several technologies coming out and converging. The wireless application protocol allows content delivery to mobile phones and portable devices. I see Blue Tooth enabling tremendous leaps in connectivity. I see operating systems that are common across multiple phones also playing a role, such that by the end of the 5-year planning period. Somewhere around 2004 I think it will be very common to see people using their mobile phones as electronic
wallets.
Question
8
Can you explain what kind of technology Blue Tooth is? Answer
I see a number of new technologies emerging in the mobile space that will, I think, fundamentally rewrite the way we view wireless communications and mobility. Those technologies include the high-speed services I mentioned earlier, the GPRS, but they also include wireless application protocol, which is a standard that allows content to be developed and delivered to the screens of mobile phones or PDAs [personal digital assistants], which have quite different characteristics. Wireless is expected to be able to adapt itself or adapt information to the different devices, thus opening a passport to the web for mobile phone users. Then we have another technology which is emerging, which is called Blue Tooth. Blue Tooth is a very cheap - probably in 2001 around a US$6 or US$10 chip solution - which delivers one megabit per second wireless networking in a 10 meter radius around the device; up to 80 devices can be networked. It is going to be so cheap that it is going to be in most mobile phones shipped from 2002 onwards. I think we'll see it also being implemented in things like vending machines and point of sales terminals, which opens a tremendous opportunity for the mobile phone or the PDA to become a kind of electronic wallet and allowing you to pay e-cash over a wireless link to the point of sale terminal or buying your coat from a vending machine, again, paying with e-cash wirelessly. I think that spells tremendous opportunity for Europe, because we are probably the most advanced users of mobile or cellular technologies in the world. We are years ahead of the US. I think we have a tremendous opportunity to take that lead and to merge it with the new technologies that will enable mobile electronic commerce, and then I think Europe can justly take its place as one of the leaders in the world in the mobile commerce or electronic commerce
space.
Question
9
More specifically, how will we pay in the next few years? Answer
If you look at France, we pay everything with smart cards, even down to parking meters, and we have done so for over 10 years. I've been in France for 16 years and I think I had my first smart card when I arrived, when I opened my bank account. I think that trend is going to grow. Smart cards have tremendous potential. In fact, everyone who has a GSM phone has a smart card in it. It's called a subscriber identity module. If you couple that, as I said earlier, with technologies like Blue Tooth, that same card could become an e-cash card as well as being the identity module for your mobile
subscription.
Question
10
What's your opinion of the Y2K problem? Answer
It's interesting. I think there's been a lot of scare-mongering by certain elements about the real dangers and risks of Y2K. I think we shouldn't ignore them. There will be issues, particularly I think for the smaller enterprises who have not yet put in place remedial action. I think in the telecoms area potentially the biggest problem of all is that so many people will be aware of the problem that at midnight on New Year's Eve they'll all pick up the phone, and so I suspect that network operators will have to implement call gapping, selective dropping of calls or selective unavailability of dial tone, to avoid that simple action of a large number of the people picking up phones and causing network problems. I think there will be occasional, small limited areas where there will be difficulty in communications but overall it will work, particularly in the European countries. Where there may be issues is when you get your bill afterwards, you'd be wise to check it very carefully. Those aren't mission critical systems for the carriers and probably are lower down on the priority list. I think if you get into certain other areas like developing countries, yes, there is scope for more endemic problems. Frankly, even if the power fails, the bulk of the telecoms networks will continue to run.
Question
11
So you think that the commercial aspect of the problem will overcome the real problem, the business? Answer
No. I think essentially that companies like BT or KPM in Europe pushed very hard on the ITU to raise the visibility of Y2K issues to the carriers world wide and that has resulted in a concerted effort to identify them and fix the problems, find alternative solutions where necessary. From a business perspective, I think that large corporations, multinationals, were aware of the problem early on. The national finance industry, again, did a very good job of highlighting the issue. I see governments becoming more and more proactive. Frankly, if you're a small enterprise, it's still not too late.
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