[ Brainstorm Magazine ] – Providing telecommunications is not just about digging up the roads and connecting buildings; it’s also about delivering services that connect people using open collaborative networks and business models.
“At ECN we recognise the ability of information and communication technology to profoundly transform the way organisations work by making it easier and cheaper for people to access information and make telephone calls. However, what differentiates us from our competitors is the combination of our two greatest assets, namely our Next Generation Network (NGN) and our Next Generation Mindset,” says John Holdsworth, Chief Executive Officer at ECN.
“Until recently the attitude of the incumbent networks was very much ‘one size fits all”. Many still operate in the belief that once they have delivered a physical service, then the job is done. As a new entrant we have a customer-centric approach and are prepared to tackle difficult tasks with an enthusiastic ‘can do’ or ‘why not’ attitude. “Ultimately, we measure our success by the contribution we make to our customers,” he adds.
ECN’s comprehensive portfolio of converged voice and data services is backed by its advanced IP-based NGN. “Unlike our competitors who now face substantial upgrade costs and rollout delays, we anticipated the transition to IP-based NGNs when we started rolling out our network at the outset of the liberalisation process,” says Holdsworth.
Corporate Culture
Following through on its Next Generation Mindset means ECN places an emphasis on ensuring it finds and keeps the right people. “This is achieved by creating a positive and challenging working environment and ensuring that all employees have a clear understanding of the organisation’s objectives and strategies,” Holdsworth says.
“We have a talented group of people working here. It is their enthusiasm and skill that makes it easy to deliver innovative services. Our people view what they do as something far more than just a job. That’s where the attitude that sets us apart from our competitors starts – with the team.”
Holdsworth adds: “We continuously invest in our people and believe that it’s important to put that expertise within easy reach of our customers. That’s why our account and service management teams are accessible countrywide, putting skills-based services on the doorstep of South African businesses – right where they’re needed.”
Competitive Landscape
“The corporate fixed line market consists of the traditional network operators, internet service providers and least cost routing companies. In the future, further competition from mobile network operators is also expected, as they explore strategies to enter the fixed line market with convergence propositions,” says Holdsworth.
“While the incumbents still represent the main competitive threat due to their entrenched position in the market, other organisations compete aggressively within specific product segments. The least cost routing companies, for example, compete for outbound fixed-to-mobile traffic, while Next Generation telcos such as ECN compete for the full range of inbound and outbound voice traffic: including local, national, fixed-to-mobile and international.”
Holdsworth goes on to say that: “ECN continues to focus with great success on the corporate market where there is the most ‘bang for the buck’. Competition is increasingly based on value for money, the key factors of which are price, reliability and service. ECN’s value proposition in this regard is currently unmatched by any of its competitors in the market, hence the growth rate achieved in the past two years.”
Regulatory Road Map
Defining the current state of play, Holdsworth says that the focus in the media on self-provisioning is misplaced. “ECN supports the right of all licensees to self-provide their own networks, but it does not think self-provision is the panacea that many industry insiders believe it to be. The total size of Telkom’s network, for example, exceeds 100 million circuit kilometres; the possibility of any local player replicating that capability even in the long term is very unlikely.
“Therefore, it is ECN’s view that the focus and priority should be on forcing the incumbents to share their networks with new entrants on competitive terms. Rapid implementation of a comprehensive set of pro-competitive regulations that align with the principles of the Electronic Communication Act (ECA) will have a much greater impact on choice, prices and services than the provisioning of more wireless broadband networks with limited scope and scale,” he says.
However, Holdsworth strongly emphasises that without a vigilant and robust regulatory regime in place, it is unlikely that this will happen quickly. “The incumbents’ imperative is to drive shareholder value by controlling retail markets and eliminating competitors, while the ECA requires them to undertake activities that are necessary to enable competition. “Protestations of a general commitment to transparency lack credibility because the underlying pressures on them are to prevent the reality from ever matching the rhetoric. From their perspective this is rational, valueadding behaviour and it is easy to see why. All other things being equal, the more successful we are in the market, the less revenue and margin there is for them,” he adds with a smile.
Opportunity Areas
“Fixed line number portability will enable our customers to switch their telephone services to ECN and retain their original telephone number. The ECA mandates number portability, but ICASA has not yet promulgated the necessary regulations. Number portability will provide ECN with the ability to earn interconnect revenue on inbound calls, which means we can provide our customers with low cost blended rates,” says Holdsworth “Carrier pre-select (CPS) will enable our customers to route their telephone calls to ECN over existing Telkom lines. In the UK the introduction of CPS created a platform for genuine competition. Service providers were simply required to mail through customer details and they would be switched 14 days later. As a result, the CPS market took off rapidly and since inception, approximately 4.2 million customers have left BT to join alternative CPS service providers.”
Holdsworth points out that, “while CPS will enable subscribers to quickly and easily switch away from the incumbent, it will not provide scope to deliver meaningful innovation or value-add. Local Loop Unbundling (LLU) encourages investment in network infrastructure while acknowledging that recreating the incumbent’s local access network is not economically feasible. LLU will allow ECN to place equipment in the incumbent’s premises and effectively take over the copper wire access line between the exchange and the customer’s premises.”
Strategy and Focus
Holdsworth believes that 2009/2010 will see the beginning of the end of the toll-bypass or cellular least cost routing era and the emergence of IP based NGNs that are licensed to provide a full service Telco offering in direct competition with the incumbents. “A combination of lower interconnects and market-driven change will see obsolete least cost routing technology phased out and replaced by IP-based NGNs. “When we entered the market corporate voice was being delivered using legacy LCR technology. ECN’s vision led to the construction of its IP-based NGN. This strategy has enabled ECN to differentiate itself from its competitors and ensure that it is strongly positioned within the SA telecommunications market. “We remain committed to delivering visionary, innovative solutions that allow our customers to achieve their cost-cutting objectives and provide them with a competitive edge. ECN continues to look beyond today’s requirements to the next generation of advanced telecommunication service that will best serve the needs of its customers.
Risks Going Forward
“ECN’s major risk is continued delays in implementing new regulations may slow down the liberalisation process. Despite this, ECN remains optimistic that the new licensing and regulatory regime will eventually enhance competition. Continued vigilance will nonetheless be required to ensure that ICASA delivers on its mandate and the incumbents do not foreclose on competition as they implement their retention strategies,” he concludes.