Jewel in the crown

Since Telecom launched its XT Network in May, Gen-i has been clocking up the wins from its arch rival Vodafone, turning the signing of every a major client into a media event. CEO Chris Quin speaks to Telecommunications Review editor Sarah Putt about why XT has made such a difference to his business, why the company is embracing the cloud and what will drive business demand for a fast fibre broadband network.

POSITION:    CEO, Gen-i AustralasiaCommenced current role:     April 2008 Immediate past role:    GM, Gen-i New ZealandCar:    VW TouaregMobile phone:    BlackBerry BoldStaff:    3000Education:     BCA, University of VictoriaMost admired person:    My Aunt Mary Quin, who had a big career in the US and was kidnapped by Al QaedaFavourite Website:    www.formula1.comCustomer numbers:    3300Turnover:    $1.5 billionWebsite:    www.gen-i.co.nzQ: Gen-I appears to be driving growth in the XT network – do you think that’s a fair observation?

A: It’sa major focus. Getting XT launched at the end of May was muchanticipated. It really got us in the game with a base product set whichwe knew was robust, which we knew would give us great handsets, as wellas roaming all over the world.

Q: Iwas speaking to one of your customers and he’s looking at using the XTNetwork instead of installing wi-fi hotspots in some locations.

A: Exactly,the way we think about a data network changes fundamentally. It opensup all sorts of possibilities if you’re running mobile data to a smallbox that is a wi-fi access point on its own. As you think through thepossibilities two things become apparent. One is that it becomes very,very important that we got the network built with its speed capabilityand secondly, that we can integrate it strongly with ICT.

Q: What are your targets?

A: Ourtarget as a company is 50% market share over time, and that’s been inour investor relations story and Gen-i’s going to be a fairly largepart of that move.

Q: So it’s about improving Average Revenue Per User (ARPU) as much as increasing the number of connections?

A: It’s firstly about making sure we’ve got a strong value proposition forclients, so something that the business case stands up for thoseclients. So improved coverage, improved data speed, the way in which ITcan work better – all those things.

Q: What about your competitors, not just Vodafone, but TelstraClear in thefixed line space? They’ve got a good backhaul, a good trans-Tasmanstory. They didn’t have such a great network with the CDMA MVNOarrangement. Is it a concern that they’re moving back to the Vodafonenetwork and wholesaling mobile services from them?

A: Webelieve we offer pure product advantages over Vodafone’s network today.I think we can point to some clear advantages in data speed andperformance, in network coverage, and the various core measures ofwhether this a decent product or not.

Q: What would have been a better story for Gen-i – that TelstraClear MVNO on XT or that they MVNO on the competitor network?

A: I’m not sure which would have been a better story. I know from ourwholesale business they worked hard to put a proposition in front ofTelstraClear for XT. Part of it was, we wanted to take XT forward inthe market initially before we were ready to add another channelselling it. So I think it was a timing issue about why that didn’t workfor TC.

Q: You wanted some lead time?

A: To seal it in, to get our retail clients onto it first, to make sure wecould handle the capacity on it and all those things, so that was partof what we were thinking. That’s not untypical. In most countries whenyou launch a new network the MVNOs don’t come until some time after.There’s no one on Telstra’s network in Australia.

Q: What about 2degrees – do you see them as a threat to the Gen-i business?

A: Ithink any provider that has reasonable quality and a good price can be.Everything I’ve seen so far indicates that they’re aimed at more at themass market on launch. The fact that they’ve only got prepaidcapability at launch tells you what market they’re aimed at.

Theywill grow up and they will try new things, and we have to assume thatif customers like what they’re doing then they will grow and it’sanother competitor. But right now our view is that Voda and Telstrawill be the strong mobile competitors.

Q: What’s it like for Gen-i now that Telecom is operationally separated?

A: I’ve said this to a few clients and I firmly believe it. This hasactually led us to a better customer satisfaction place. The reason forthat is that I’ve got a service delivery manager from Chorus worriedabout the services they deliver to Gen-i and its clients. I’ve got aservice delivery manager from Telecom Wholesale worried about theservices they deliver to Gen-I and its clients. Previously there werenetwork people who didn’t want to get too close to clients and didn’twant to be part of that. Now you’ve got each of the units in a positionwhere they have to earn the business of Gen-i and deliver it and get acustomer satisfaction report from us on how their services are going.

Q: When Paul Reynolds took over as CEO a couple of years ago he describedGen-i as the jewel in the Telecom crown. Since that time you’ve hadsome wins [Fonterra] and you’ve had some losses [Commonwealth Bank ofAustralia]. What’s the future for the Gen-i brand two years on?

A: At the time there were two things we were trying to make clear. One wasour capability – we’d become an ICT organisation. Secondly, we weretrying to be very clear that we’d moved from being theless-than-customer-focused past of Telecom to an organisation thatunderstood those clients had a choice to make every week and would goif we weren’t doing a great job.

Calling it Gen-i time helped us do both those things and I thinkover the five years it’s been absolutely the right move. Meantime inthe last 14-18 months, while Paul’s been here, the organisation as awhole has swung very heavily to being driven by clients and driven bywhat people do for clients, and I think the image of two brands isaligning again. The key is that we’ve now got the group brand ofTelecom moving very positively, we’ve got Gen-I moving very positively.

Q: And there are no plans to sell?

A: No. That rumour has been like the game where the moles pop up and you hammer them down.

Q: Vodafone NZ used to have sale rumours spread. It seems to go around about the major players.

A: It’s fascinating because it’s been months and the same story is runningaround – Fujistu is the buyer with ABN Amro doing the due diligence.It’s nice to be wanted but if there is due diligence, then they’redoing it without me involved.

Q: Let’s talk about customers and an issue that’s affecting them: cloud computing. Is it a threat to your business?

A: People often say, is it a threat to telcos because I think they saw thetelco reaction to Unified Communications where calls came off a PSTNand went onto a LAN and our first reaction was defensive. But I thinkwe’ve grown up quite some time ago. I remember talking to sales teamsabout this in 2003 and saying the customer’s going to move. We own themarket share of voice today and we want to own it tomorrow, so you’vegot to shift to the way the customer will do it tomorrow.

Someof our revenues and our costs will change as we do that, but we willstill end up in a good position if we move when the customer wants tomove. If you try and defend you end up in a negative position.

Q: What are your thoughts about the  deal announced last week that NZPost, which has 2100 staff, has sigend a $1 million deal with Frondefor Google Apps?

A: Myreaction is that it’s a brave move and I don’t mean that negatively, Imean it’s a proactive move from an organisation that will be under costpressure like many organisations. We’ve been looking and talking topeople like Microsoft, Sun and Google and wondering when someone wouldhave the courage to jump, and someone has. The game’s far from overbecause Microsoft are not the sort of organisation that will just rollover and watch this happen, so who knows what will happen next.

Q: Finally, what are your views about the $1.5 billion network that the government is proposing?

A: Ithink we’ve said plenty about that as Telecom. We’re engaged in theprocess and we want to be. I think everyone has said $1.5 billiondoesn’t build you a fibre network for everybody, so we’ve got to bevery, very smart about how we do this. And the first thing is, don’tduplicate. Somehow the government’s got to find a way to work with theindustry in a trusting way which says, yes we can.

Q: What’s going drive demand for that network?

A: UnifiedCommunications in its widest sense. We put telepresence into ourbusiness – we put five sites in and we’re adding another 17 smallerunits. Fundamentally the speed at which my business can react because Ican get people together quicker, the engagement between people becausethey are virtually face to face, and the cost savings on travel,justify the spend. And we’re giving staff a work/life balance becauseconstant day trips to Wellington are not work/life balance. All ofthose factors combined make it a really exciting technology. It needsfibre.