Kathy Gibson reports from SATNAC 2014 – Central to Telkom’s turnaround strategy is becoming a leader in broadband provision, and it is doing this by changing its go-to-business model as well as its branding.
Dr Brian Armstrong, chief operating officer of Telkom, says the telecommunications organisation is still focused on its vision of connecting South African to a better life.
“Telkom aims to be the leading provider of converged ICT solutions,” he says. “We have the fixed line capability and are rapidly growing our mobile capability.. Going forward, we want to be at the centre of the digital home while continuing to lead in the business, enterprise and government markets and remaining the pre-eminent wholesaler.”
In terms achieving its goals, Telkom is driving a number of strategic interventions across the business.
“Our goal is to be the clear leader in broadband, which means we need to be reasonably ubiquitous,” says Armstrong.
He says the turnaround will require five things to succeed. Firstly, Telkom needs to deliver a superior customer experience. “if you constantly irritate your customer, whether though the call centre, or online, or through product that doesn’t work or that you battle to get fixed, you can’t be the leader.”
The company also recognises that it needs to offer the right broadband products that meet customers’ needs wherever they are. These need to be backhauled to a great ISP, while compelling content and services need to be available as well.
“Even if you do all that – offering the best operational processes, services and product – if the brand is damaged you will struggle to be a leader,” Armstrong says.
In terms of customer experience, Telkom has conducted studies to determine what’s important to its customers and embarked on a programme of work to deliver on these expectations. These cover all customer experience
touchpoints from explore and buy, get started, fix fault/get help and the use experience.
“This is a comprehensive programme to address these issues across Telkom,” Armstrong says. “We are seeing encouraging results. The programme will be running for the next few years and hopefully embedded into the DNA of the company.”
Regarding the availability of broadband products, Armstrong points out that the number of addressable households is set to double to 2,9-million by 2020. “This is a very important market for us and we are focusing on it very clearly.
“If we want to provide broadband to these households, we need to understand what customers are prepared to pay, what their needs are; where should we deploy copper or fibre; what is the required radio access density; and what
access method should we deploy.”
To figure out the right mix of technologies, Telkom has developed a model that addresses three dimensions: usage behaviour, the value proposition, and the technology.
A new integrated plan lets the company enable network technologies based on the cost of supporting specific customer usage profiles in different geographies – so there will be different technology solutions rolled out to different customers based on their use case and geography.
“Telkom has done a thorough market-based assessment, identifying where the demand is,” Armstrong explains. “Using data from the recent census, the company mapped demand and assessed the supply scenario. This got us to a view that let us look at the density and affordability, and let us determine focus areas.”
In terms of the broadband roll-out, Armstrong says the technology mix will likely be about 60% VDSL and fibre to the home (FTTH), about 30% LTE and about 10% DSL and satellite.
The company’s FTTH pilot rollout will be going live in December 2014 and Armstrong says this will help to inform the FTTH use case.
“We also need to focus on having a great ISP,” says Armstrong. “The Telkom Internet ISP has seen bandwidth traffic growth of more than 100% each year. If you stretch it over five years, this translates to a 40-times growth. This means you have to have really flexible and agile bandwidth provision. So scalability and flexibility is vital.”
Importantly this bandwidth growth does not necessarily translate to revenue growth, so it has to be done more efficiently.
Armstrong points out the use case for high-speed Internet is not confined to video and entertainment, but includes smart home services and e-commerce among others.
However, television is currently the main driver and once households move beyond one television or into the 4K arena, VDSL and FTTH become viable options.
This, in turn, is driving a market convergence where telecommunications operators are looking to the content arena for their growth, and Telkom is currently considering its options in the content space.
“In our view, there are four options to go forward: you can be pipe and port provider; you can mediate other people’s content; you can aggregate other people’s content; or you can seek to become a media player yourself and acquire own content.
“The Telkom strategy is to look at the various options. We believe there is an opportunity, indeed a necessity, to play in this space.”
With all the other elements in place to be a leading broadband provider, Armstrong points out that the lack of a strong brand will interrupt the goal.
“So we have a good product and good services, but does this mean we will be the undisputed leader?” he asks. “Unfortunately it doesn’t.”
While surveys show that Telkom is a clear leader in products and services, the company still comes out behind competitors in terms of market perceptions.
“This is because our brand lets us down.” Armstrong says.
The company’s new pay-off line has thus been changed to “Tomorrow starts today”, while it is pushing a message of new beginnings, that it’s about the here and now; and simplicity.