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A practitioner's view on NGA
Xavier Rodrguez-Martn, Chairman & CEO, Oni Communications
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investing in NGA
: : Onis distinctive businessmodel to maximise RoI
: : The global challenges ahead
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Introduction to Oni www.oni. t/indexUK.htm
Single next generation Portuguese operator focused
exc us ve y on t e corporate mar et, w t amarket share
130 M in revenues, 2/3 IP-based data services
27 M EBITDA, 2 M net profit
400 M invested in NGN: 10,000 km of fibre routes, 2n
European IP-MPLS network, 1st Iberian soft switches
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investing in NGA
: : Onis distinctive businessmodel to maximise RoI
: : The global challenges ahead
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Two forces:while networks want to converge...
Access throu h different means: fibre co er
coax, radio
uppor ng a arge num er o g a serv ces:voice, data, Internet, video
Interaction and customization facilitated by IT
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... business models tend to diverge
Dominant convergences
Clients withCarriers
Telecom + IT Corporate
Specific technologies,systems and processes
xe + mo e
each segmentResidentialBroadcast + telecom
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The two forces provoke dilemmas
Network convergence favours an integratedapproach; business model divergence favours a
segmen e approac
efficiency) andservice providers (focus favours
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Which force weights more whendeciding on NGA strategy depends
1. History and size
2. Degree of market maturity
3. Regulation
4. Politics
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1. History and size
existence of several national networks
copper and cable incumbents
Market shares of the different operators
Qualit of the ast liberalization rocess
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2. Market maturity: segmentation
Operator 1.0: Operator 2.0:
Addressing all the market Addressing part of the
Gain Penetration Gain Maturity
Building a large company
structure
mar et w t cost contro
Building a slim company
Positioning!
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2. Market maturity: strategic implications
Operator 1.0: Operator 2.0:
destructive competition,zero-sum game
towards segmentation-based,strategic competition
Me-too strategies
More innovation
Permanent price deflation
Difficult financial erformance
successful, in different ways, inthe same market
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2. Market maturity: telecoms 8management traps
-.
2. Growth at any price
3. Fixed cost allocation
instead of sustainable profitability
lack of robust mana ement accountin s stems
4. Strategic optimism
hides inconsistencies in cost allocation
waiting for the next big thing
5. Potential synergies
6. Growing market
different traffic profiles, technologies, skills
everybody running after the same ball
. or o o
8. Activity
-
confusing activity with results
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3. Regulation
De ree of vertical se aration
Protection of investment in fibre networks
Alignment of ex-anteregulator (ie telecomsregulator) with ex-postregulator (ie
competition authority)
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4. Politics
Telecoms are oliticall relevant
Innovation leadership
Economic relevance
Portu al: o ortunit to lea fro historical under-
performance
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investing in NGA
: : Onis distinctive businessmodel to maximise RoI
: : The global challenges ahead
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Oni: applying the operator 2.0 model
In business, the majority is always wrong. The future is not
logic. The stone age did not end by lack of stones
Anticipation is key: 3.5 years ago we exited the residentialbusiness and focused on corporate and carriers carrier
Profitabilit is directl associated with focus and differentiation
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What a business model is
Value ro osition
target segment, P&S offering and revenue model
value chain, cost model and organization
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and a different operating model
40% of revenue on fibre access
Cost leadership through mass customizationand selective
Processes, systems, skills and culture customized forcorpora e c en s es company o wor n or uga ,Heidrick & Struggles)
Telco-IT integratormodel based on partnerships
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investing in NGA
: : Onis distinctive business modelto maximise RoI
: : The global challenges ahead
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The challenges ahead are huge
Certainties and uncertainties for decision makin
: : Technology
: : Economics
: : Regulation
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Certainties
r an u ure or e ecoms
-
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Certainties: a brilliant future for telecoms
-
NGA will fuel dematerialization of value chains
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Certainties: short-term challenges aresignificant
era za on a e n urope
Current business models have accumulated a lot oftension and can be leapfrogged
The telecoms industry has a short memory
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This is a short-memory industry
The Internet bubble in 2000The Internet bubble in 2000
drivers consultants + manufacturers +(investors + investment bankers)
leadership engineers economists lawyers
,,cool downcool down
+ +
leadership lawyers
economists
engineers.Fiberpolitics!
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Certainties: NGA is thedriver for change
s a e cross roa o macro- ren s
demographic (i.e. health)social (i.e. education, justice)
. . ,
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certainties: NGA is thedriver for change
Value in the network and not only above level 2 (IPand beyond)
ecosystem. New apps will allow to escape frombroadband h er-com etition
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Uncertainties
Unbalanced risk-return binomial: how to move from
poetry to maths without loosing motivation
revenue gap increase the risk on RoI
Difficulty to anticipate regulatory issues will giveextra work to competition authorities
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Managing time is crucial
Right timing what we usually refer as luck
Anticipation allows to create temporarymonopolies
Procrastination the worst management sin
ong- erm approac us nesses are mara ons, no
sprints
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A few last observations
C cles are conse uence of human condition: from
greed to panic...and from panic to greed (coming soon)
a ua e n ormat on s not cons ere a commo tyany more. Ideas are scarce...and we have to make
Strate is back. Execution is not the onl im ortantthing any more
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Vision without action is adaydream.
Action without vision is a
n g mare
Japanese proverb
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A practitioner's view on NGA
Xavier Rodrguez-Martn, Chairman & CEO, Oni Communications