Light Reading

Telefonica Holds Key to Digital Model

Ray Le Maistre

LONDON -- Wired 2011 -- The relevance of telecom operators to their customers is on the wane and only a radical shift in strategy that involves the development of new services, business models and relationships (with partners as well as customers) can help turn that tide, stated Matthew Key, CEO of the newly formed Digital division of Telefónica SA (NYSE: TEF). (See Telefonica Restructures, Creates New Units and Telefónica's Looking Trendy.)

Speaking during a Q&A session at the Wired 2011 conference, sponsored by Telefónica Europe plc (O2) , Key noted that as the mobile ecosystem is changing (a shift precipitated by the arrival of the iPhone), so "mobile operators' relevance to customers is changing and reducing. We have to be honest about that and we need to address that."

Addressing that situation involves "changing the business model. ... We need to create new services and revenue streams [and] be sure that customers are getting value" from multiple services and applications beyond basic voice and texts.

An important factor in developing new opportunities is the utilization of the massive amounts of data about its network, services/applications and subscribers. "We have very rich data and we're not using it" to its potential, noted Key. That data can be used as the foundation of location-based applications, to identify customers' content and services preferences and also provide customers with useful information about their usage habits, something that should improve the increasingly important customer experience.

But for a large traditional telecom operator such as Telefónica, the development of new services presents something of a dilemma, as most of these new services and applications will result in a reduced use of voice and text messaging, currently the main drivers of mobile services revenues.

Key said Telefónica has recognized this. "This is the biggest factor -- the mindset shift. We can't close our eyes to [the impact of over-the-top services]. ... We have to embrace the future and change our raison d'etre. ... We can't operate in a walled-garden environment."

That's why the new Digital division has been set up as a separate operation -- so that it can behave and develop like a separate organization and then inform the rest of the group and feed it new ideas, business models and services, even those that cannibalize existing revenue streams. That autonomy is important to being able to deliver against its mission, Key noted.

Even though the different parts of Telefónica Digital are still getting to grips with working together and building new opportunities, there are some initial services and applications from the Digital camp Key was able to reference. The O2 Connect VoIP trial in the U.K. will look to find out how O2 customers might use Wi-Fi connections as more than just data offload points, while an O2 wallet application using near-field communications (NFC) is set to be launched during the next three months following a trial in London's Docklands area. (See O2 Trials VoIP Service and Telefónica Buys VoIP Player Jajah.)

But Telefónica Digital can't achieve those goals by itself, he added. "We're not going to be able to build and own everything ourselves, so we need partners to help deliver," he stated.

Some of those partners could be startups that might need assistance and help, including financial help. Is that something the new Digital division can offer? "Telefónica Digital can fund entrepreneurs. We are actively looking for investment opportunities at bright young companies," stated Key.

— Ray Le Maistre, International Managing Editor, Light Reading

(0)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Interviews
Top Tips for FTTH Operators

10|8|15   |   02:26   |   (0) comments

At Gigabit Europe 2015, Ventura Team co-founder Richard Jones talks about some of the key business case considerations for FTTH network operators.
LRTV Interviews
M-net Calls for FTTx Unity

10|8|15   |   03:45   |   (0) comments

At the Gigabit Europe event, Jörn Schoof from M-net, the Munich city network operator, calls for industry collaboration on fiber broadband access rollouts.
LRTV Documentaries
The Business Case Challenge for NFV

10|7|15   |   03:47   |   (0) comments

Virtual CPE is one of the early success stories for network functions virtualization, as service providers are finding flexible, programmable CPE solves a lot of logistics problems and reduces their cost. But even here, Masergy Communications faced a business case challenge, says CTO Tim Naramore.
LRTV Interviews
JT Offers Some Gigabit Lessons

10|7|15   |   4:08   |   (1) comment

Barna Kutvolgyi, managing director, Global Consumer, at JT, the incumbent operator on the island of Jersey, talks about how other service providers can learn from his company's gigabit broadband rollout experiences.
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Network appliances have a strong value proposition in today's networks and will continue to do so in the NFV and SDN-enabled networks of tomorrow.
Hot Topics
M&A Speculation Swirls Around Juniper
Ray Le Maistre, Editor-in-chief, 10/6/2015
Cisco's Chambers Rules Out Political Bid
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/6/2015
Infinera Fleshes Out Its Metro 100G Story
Ray Le Maistre, Editor-in-chief, 10/7/2015
AT&T Gets Green Light for VoWiFi
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/7/2015
AlcaLu Execs Lose Out as Nokia Unveils New Top Team
Iain Morris, News Editor, 10/7/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
"What?! I'm on with Finisar about their stock price tanking" Click Here