The interview with Alcatel Lucent SA (NYSE; Euronext: ALU) president Ben Verwaayen, was supposed to last thirty minutes. Then it was shortened to fifteen minutes, and in the end his secretary said that there was chance that it would be even shorter. For four straight days, Verwaayen has been sitting in his small, unventilated office, holding meetings with clients, journalists and analysts at a pace hard to describe.
His secretaries stand behind his door, praying that the meetings will end quickly so that they can try to stick to schedule. But how is it possible to hold an interview with one of the most fascinating and impressive figures in telecommunications in such a short amount of time? I prayed that the preliminaries should be as short as possible, and to be able to squeeze in as many questions as possible.
Liberation from the shackles of regulation
Of course, Ben has a completely different plan. He starts asking the questions. He wants to know what I think about this year's exhibition, what the trends are. In short, his time is his own. Verwaayen is an extraordinary figure in the global telecommunications industry. Before Alcatel Lucent, he was CEO of BT, one of the largest telecommunications companies in the world.
Verwaayen was a pivotal figure in the decision to split telecommunications services and infrastructure in the UK, and he led the splitting of BT into two separate companies: infrastructure and services, which today are completely separate. Over the years, this split has enabled growth in the number of service providers and has increased competition, resulting in the long-awaited release from the shackles of regulation in the UK.
Where is the industry headed?
"The industry is moving towards video, personalization and globalism. Video is the technology. Everything will be broadband and everything will be IP. The trends are set by the users. They will take control, or they already have, and they will decide how they would like to receive their services. It's usually a fourteen year-old girl who decides, not the carriers. When my granddaughter wants to talk to me, she wants to call me on Skype. She doesn't think of picking up a phone and making a call like in the olden days. Therefore, video is becoming the dominant way to connect, and along the way it will kill off other services that were created in previous years. And this is why a fourteen year-old girl is will determine how we connect, how we behave."
Verwaayen thinks that this is the essence of the new revolution. "In the end, it will be the little girl that causes us and providers to change our way of thinking. The people in Barcelona can say what they want, but they are forgetting about the fourteen year-old girl who is telling us what she wants us to have so that we can meet her needs. Because she is the one in charge. No longer does the father announce at the dinner table, "I've decided to call the phone company to order broadband." That's passé. In order to meet this reality, we have new 4G technology, we have the need to create personalized services because each of our children has different needs, and they want things to be personalized especially for them. Technology cannot compete with this, regulations cannot compete with this, and providers always lag behind the customer."
Have you identified responses to these trends? Was there anything new at this year's exhibition?
"I don't agree with people who say that they don't see anything new. Why don't you see anything new? I will tell you: because you are looking with the eyes of someone who does not see the revolution, but the revolution is happening."
And in the meantime, we see that the industry is suffering losses and fighting to sustain itself.
"There are regulated markets, and there are non-regulated markets. Which ones are profitable? Those that are not regulated. Why? Because regulation is a platform that looks to the past and not to the future. This is a perception, a perceptual delay. Therefore, what is important to regulators is roaming. Okay, this is important, but it is not the most urgent issue right now."
"Regulators are thinking about the parents and not about the children," Verwaayen says. "So are politicians. As a result, they are losing the connection between the two worlds, and the worst thing is, they are losing and they don't see where the money is. And where is the money? In tablets, in the cloud, and in the way the two are connected."
His conclusion is clear. "This industry needs to be 4G. The carriers, the regulators, and the consumers. They all need it. The industry needs to understand that, for example, people will pay for security, for location-based services, for analysis, and in short for all the things that turn the pipeline from a stupid pipeline into a smart pipeline. The fact that it is possible to connect and transfer high-volumes is no longer enough. There needs to be added value."
iPad alarm
"My house in Paris was broken into despite the fact that it had an alarm. What does the alarm do? If someone makes noise, the alarm calls the police, and that's it. And I paid $100 for this service. Now, everything is in my iPad: bank account numbers, credit card codes everything is there. I am willing to pay $100 for a physical alarm. Am I not willing to pay 10% of this amount to secure my iPad? If you have ever been robbed, or if your home was ever broken into, you know that it can be a nightmare. Imagine that your grandson's home was broken into? So I think that we are in the middle of processing and internalizing this change."
Why did you decide to sell the Genesys call centers activity?
"It's a great company, it has a great product, but if we can be brutally honest for a moment, it has no connection with our strategy. This is call center software. That's not our strategy. If we were extremely rich, we would have considered it. Since we aren't, I need to improve our balance sheet and stick to the strategy."
Why do we see so much volatility in Alcatel Lucent's profitability? Sometimes you have record results, and sometimes huge losses. Why is that?
"The world thinks everything happens in 90 days, but in reality not everything happens in 90 days. If you look at the year as a whole, it looks different. Sometimes it takes time for contracts to be signed, and you miss a quarter. Sometimes someone makes a payment late. You need to look at the results more broadly and see the trends. This is not an excuse. It's reality. If you look at six months, you will see different results. And if you look at the previous three years, you can certainly see a change, but not be without ups and downs."
Why did you decide to build your cloud computing and IMS global research center in Israel?
"It's very simple. Talent has no passport, but it has a location. Smart people. The answer is always talented and smart people. Lots of smart people all in one location - that's what made me build the center in Israel."
The author was Alcatel Lucent's guest at the Mobile World Congress 2012 in Barcelona.
Published by Globes [online], Israel business news - www.globes-online.com - on March 12, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012