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TIE Fireside Chat with Sanjiv Ahuja, CEO, Orange

In a room full of mainly software and hardware entrepreneurs, Mr Sanjeev Ahuja gave a very refreshing angle of the telco industry compared to one I have heard from an incumbent telco over my last 20 years in this industry- i.e. looking at things from a customer point of view! He very deftly answered questions from the audience about which would be the next killer aps or hardware innovations needed, by referring back to the customer. He invited innovators in the Valley to put try out their apps on the Orange Partner Program, where customers will be the final deciding voice on what wins and what does not.

Some of the keypoints Mr Ahuja laid out in his opening remarks and during some of the Q&A included:

1) customer, customer, customer at the centre of everything (there are 11 customer touchpoints used as a metric for internal and external assessment for all aspects of Orange, e.g. HR, training, product management, help desk, sales, incentives, etc). He felt that Orange from day one was focused on the customer, being the 4th entrant into the UK market. Today, this culture is being used to reenergise and redefine France Telecom (which acquired Orange). Orange today he felt has the most sophisticated CRM in place, allowing it to offer a full customer satisfaction and experience as well as customising services and pricing based on each customer patterns. This has lowered churn rate – 20% in UK, 13% in France, etc. Today they have 100 million subscribers with a goal of offering what the customer wants, whenever, wherever, whatever, keeping it simple and relevant (even customer contracts have gone done from 3-5 pages to 1-2 pages, and total time for a customer to sign on and get service is fast).

2) Branding from a consumer mobile player to a truly converged operator. Today it offers more music on mobiles than other operators (1st UK operator offering full track music), mobile TV (1st mobile TV operator in France, UK, Romania, Slovakia, Poland and soon in Netherlands), applications that unleash the customers creativity, etc. They were the 1st European operator to offer mobile blogging, is the largest VOIP provider in France (about 240,000 users per week in UK- bigger than BT), offering IPTV in Senegal and Ivory Coast by next year, etc etc. They are not wedded to any one technology, and offers 3G, EDGE, GPRS, Wi-Max (mainly for backhaul), is the 2nd largest Wi-fi provider in Europe, etc. They are constantly updating and offering what users need and want, and in the process of rolling out IMS. Definitely working on offering converged services and experience to customers, and do offer e.g. single contact list, single voice mail across fixed and mobile, single email, etc. Their motto is to offer consistency in service and quality across the globe, and this branding today is worth $10 billion.

3) testbed for innovation. Orange has 9 development centres around the world including one here in the Valley. Through their Partner Program portal and also their CRM data, Orange is always ensuring it keeps the customer at the centre of decisions they make. He pointed out an interesting example of how they noticed that many users of mobile phones had lots of pictures either locked up in the phone, or lost when the SIM card gets changed or lost or destroyed, etc. Some users also felt that it took too many steps from the time of taking the picture to uploading or sharing these pictures. So Orange offered a service where everytime the customer clicked a picture on the phone, it will automatically get uploaded onto their site for the customers use later. This service fulfilled a need, and so many users were willing to pay an extra 5 pounds a month for this service and it was a success!!

Some other animated comments he made:

– that the US is quite a “developing” country when it comes to broadband and telecoms. Senegal and Ivory Coast will be getting IPTV a lot sooner than most US customers will. UK has a 115% penetration, Slovakia is about 80% and Romania is expected to be 60% far exceeding the US!!

– Net neutrality is mainly a US debate. He found it very ridiculous that there is not an understanding that someone has to pay for the maintenance of the network, of upgrade, adopting new technologies etc. He gave the analogy of saying it is almost like saying that just because you have now manufactured chip so give it away free, or that you have pumped gas out of the earth so now give it away free, or provided for lines for electricity into all homes so now make electricity free. Telecom is a very Capex intensive industry.

-What is a key issue INSTEAD is industry interoperability. Orange worked on a standard with other industry players announced recently in Barcelona.

-Orange is not looking to compete with Google, Yahoo (rather partner with them) and not in the content creation busines (again prefer to partner with them). Meanwhile, small screen in mobile devices do however limit the type of content or apps that users need or want. For example, to date have found that mobile browsing is not as popular as SMS. Also video or TV clips watched on mobile devices should not be more than 5-7 minutes long. So there is still much to be learnt about type of content and ideal devices that users need or want. Meanwhile, Orange tries to offer complete packages of apps, content offering e.g. Digital Rights Management and use on multiple devices (fixed and mobile), SIM on phone to ensure a good customer experience. In return customer signs on longer term and allows for SIM to be locked. Orange will allow unlocking of SIM, but as they subsidise phone and offerings, prefer customer to sign on with them with these terms and offer in return smoother customer experience.

– In the past, Orange used not to open its network to MVNOs. Now has changed its position and works closely with MVNOs in many countries. This has been working well for Orange.

_ Orange has been doing well in mobile advertising, and last year it had double digit million Euros.

-In response to a question about ARPU (average return per user) for Orange versus Indian operators, and if this means increasingly lower ARPU for Orange as it rolls out services globally, he pointed out major differences. Even whilst on the surface, Indian tariffs seem low, users have to pay for incoming and outgoing calls thereby making the average cost per call just a little lower than what is charged in UK or France (where incoming calls are not charged). Even if labour costs in India are cheaper, Orange’s total labour costs is only 8.5% of total Opex, so not that much lower %wise compared to India. More importantly, France alone has 200,000 base stations whilst the whole of India has so much less than that- so users are so far willing to tolerate a lower quality of service, drop calls etc- something Orange users are not. Orange users also expect indoor coverage, signal strength, good retail experience etc, etc. So customers are willing to pay for better service, better apps, content etc and these will help Orange maintain and grow ARPU, as they roll out services globally. However he recognises that as quadruple play takes off, customers will also expect discounts for bundling of services. Whilst this could be justified initially as a savings on costs of sales, it cannot be justified for the term of the contract. So Orange deals with this by extending the duration of the contract in exchange for this discount. In short, there are many ways to ensure ARPU is kept and customers are happy.

Overall a very pragmatic and animated presentation- he clearly passionately kept the customer at the core of his comments and felt that what the customer needs, and wants and is willing to pay for- is what will determine success.

This article was posted on Thursday, November 2nd, 2006 at 1:40 pm You can leave a response, or trackback from your own site.
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