How to ensure success in a telecom new entrant launch?
Orascom Telecom Holding S.A.E. (“OTH”) announced last summer its participation in a consortium to create a new Canadian owned and controlled wireless operator. The new Canadian wireless operator has provisionally won AWS spectrum in Canada. A spectrum licence will only be awarded to it if final regulatory approval is granted by Industry Canada. The new Canadian wireless operator is the high bidder on spectrum across every region of Canada, with the exception of Quebec, therein providing population coverage of 26 million. The total cost of the high bids stands at approximately $442 million Cdn. The auction, which began May 27, 2008, was initiated by the federal government to increase competition in Canada’s wireless market.
OTH has joined forces with Canada’s Globalive Communications Corporation, the parent company of Yak Communications which offers dial-around, home phone, Internet and long distance services to more than one million customers across Canada. In order to comply with Canadian ownership and control regulations, OTH will be taking a non-controlling interest in the new Canadian wireless operator.
So, how should a new entrant get into the market? In the last 3 months, I received a significant amount of emails asking for some telecom launch office methodologies and how do we think any new entrant or MVNO should ensure the success of a start-up in any market. I decided to write about this after reading heavily about the case of the new Canadian operator and the challenge that different sources make on this concrete opportunity.
In my opinion there are two different aspect that should be analyzed: 1) Is there a real opportunity? 2) How to ensure a successful launch in the shortest timeframe?
Regarding the first, my opinion is that there’s a real opportunity there. Canada has a population of over 33 million with a mobile penetration of approximately 60% and an ARPU of approximately $55 Cdn. The reasons why OTH is particularly interested in the Canadian markets include:
- Higher prices – Canadians pay an average of 60% more for mobile wireless services than Americans according to the Telecommunications Policy Review Panel (Final Report, March 22, 2006).
- Fewer services – Canadians are losing out on high-tech mobile services. These services are becoming an integral part of modern business life (such as lightning fast internet connections, video-conferencing, video and TV streaming, and interactive application sharing) are not being introduced in Canada at the same rate as the rest of the world.
- Low penetration – Only 58% of Canadians have a wireless device compared to the United States where more than 77% have a wireless device and other industrialized countries, such as the UK and Hong Kong, where the number is over 100% (The Economist’s Pocket World in Figures, 2007 edition).
Regarding the second question, there’s only one way to ensure a global success and it is through a good launch director and a senior program management office. After being involved in no less than 10 start-ups in my life (e.g. Amena, Retevision, Xfera, Oniway, Optimus, Simyo Spain and France, MTC, Claro, Ola, etc) I clearly see the difference (in terms of success) of those start-ups counting on consultants to drive the launch office and those that didn’t. It is a fair feeling to think that operators can do everything by themselves but in my experience, it has been always better (not just at the launch time but also some months after) in those cases where consultants participated.
I absolutely believe there’s a role for Consultants: used properly, they can be a valuable resource. On the other hand, I think that shipping in an army of them to solve a challenge is pouring money down the drain. One of the problems is that telecom start-ups often haven’t been clearly thought through, so Consultants aren’t deployed in the right ways. And many client managers aren’t experienced in dealing with Consultants. They don’t know at what point and for what activities it makes sense to bring Consultants in, and how to manage them to get the best results. This is one reason why negative perceptions around Consultants have developed, not least in the public sector where high profile projects involving big firms, have run into serious problems.
In the case of the new entrant in Canada, they have decided to run the launch office by their own, through the hiring of specific individuals and freelancers. In my experience, it’s often very difficult to engage a single guy to do this, as it’s really difficult to find this “telecom experts”. Having said this, with an independent you get the right resource for as long as you need it. You have far greater flexibility. And if you’re leading a focused in-house team of interims, there’s nothing to stop you calling-in subject-specific expertise from a Consultancy if that’s what’s required. In this way, the client starts seeing consistent value for money.
In any case, I wanted to answer to those emails asking for methodologies, sample outputs, and all that launch-office stuff. With that purpose I have prepared the following presentation.
Hope it helps. Let’s wish the best for this new telco entrant. Canada is a fantastic country and deserves a fantastic challenger. Good luck!