Light Reading
Telefonica Digital CEO Matthew Key is looking for partners, investment opportunities, new business models and ways to be more relevant to mobile users

Telefonica Holds Key to Digital Model

Ray Le Maistre
10/13/2011
50%
50%

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
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
LRTV Interviews
TWC Business Looks Beyond $3B

12|10|14   |     |   (0) comments


TWC Business Services chief Phil Meeks explains how his unit has reached $3 billion in annual revenues and what its plans are for next year.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
T-Mobile Lights Up 27 Wideband LTE Cities
Sarah Reedy, Senior Editor, 12/15/2014
Like Us on Facebook
Twitter Feed
Webinar Archive