CEO Interview: Niall Norton and the Digital Revolution
February 29, 2016 - Openet
It reflects on how fast things are moving in the communications world that we wanted to catch up with Niall Norton (NN), CEO of Openet just a few months after our last chat. Although the technology nearly defeated us, Norton was in optimistic form.
DisruptiveViews (DV): Niall, in some of our conversations with vendors over the last few weeks, we have been hearing that there is a new will, even excitement, among operators as they transform themselves into digital telcos. Do you feel the same thing?
NN: I am not sure about the excitement exactly, but there is certainly a new impetus. I would say that some are moving as the result of a sharp stick. At the moment there are basically three types of operators. First, there are those that seem quite happy to remain what we rudely call dumb pipes, and there is nothing wrong with that. There are those that are embracing the challenge of becoming digital service providers and there are those who are somewhere in the middle.
Most have the infrastructure to do it, but it is more about the mental tuning and the bravery to do it. The rewards are clearly big, but what made telcos successful before has put up barriers to them being able to compete with the modern digital service providers.
Candidly, the old idea that a product catalogue was valuable is outdated and it is really now just a cost centre. Let’s face it, no-one is going to increase their ARPU just by sending out a thicker bill.
We are moving towards an environment where it is more about sending updates from app stores and things like that. It is worth looking at cable companies. They are becoming content producers, which is probably not something they would have done as their first choice. Something similar is happening to the mobile guys, and there are serious alternatives out there. The fundamental question is: “what do you want to look like in two years’ time?”
DV: If you look at the results of some of the big telcos at the moment, the picture seems to be increasing volumes but flat revenues, almost a defensive position. How many telcos are really making money out of the digital services arena at the moment?
NN: I think it is probably about 20 percent who are moving and the other 80 percent either haven’t made their minds up or simply don’t know yet. I think many companies in that kind of position are basically regrouping and working out what their identity is. If you think about it, there are only two challenges – at a strategic level – that they need to address. One is how do they get from profitless growth to profitable growth and a part of this is changing the partner chain that they operate in. Do more relevant things for consumers, and that is not easy.
The other is reduction in the operating cost side of the model and the move towards a virtualised environment. That means software defined networks, automated cloud, whatever the buzzword of the day is, but these are really important because volumes will continue to climb and terms like revenue per transaction will cease to be meaningful.
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