“You need to be extremely flexible. You need to be agile and move fast.” Francois Eloy isn’t talking about preparing for the 2012 Olympics, although if you took his comments out of context you might think he could be. For Eloy, the telecoms industry is facing massive challenges. Its responses to these challenges could dictate not only whether individual businesses survive or fail, but how the telecoms business as a whole is perceived.
He believes that, traditionally, wholesale carriers were managed like utility companies and that their innate reluctance to differentiate their services is where the root of many of their problems lie. “What’s the difference between a big pipe which is transporting water or electricity, and a big pipe which is transporting data and voice? It’s just a pipe at the end of the day. And this is where we need to change ourselves as wholesalers, as carriers. For tomorrow, that’s a big question.”
Eloy’s desire to refocus the industry’s perspective is, no doubt, a direct reflection of his own recent experiences. In the last 18 months, Colt has been through a major reorganisation, and has rationalised its own business. Colt, which describes itself as an information delivery platform, enabling customers “to deliver, share, process and store their vital business information”, has been refocussed into three businesses units: Data Centre Services; Colt Enterprise Services; and Colt Communication Services, the unit which Eloy is leading.
For Eloy, significant changes are needed in order for carriers to be able to survive and profit. By changing their focus to offer integrated networking and IT solutions, he believes that telecoms operators should be able to reposition themselves within
the market. Responding to customers’ needs is one of the driving forces in the business today.
Eloy comments on the changes in his own business: “The organisation will have simplified a lot to be much more aggressive, which is a positive word in the marketplace.”
Tomorrow’s coming soon
With internet traffic increasing, in Eloy’s estimation, by a rate of maybe 5% per week, the time for change in the industry is already well upon us. He doesn’t believe that under our existing models the carriers are winning out. “They don’t get the revenue; they just carry the costs.” On top of that significant factor which is inhibiting growth in the market, Eloy cites the European regulations governing the cost of interconnection, which is forcing the roaming cost down and down.
Much of Eloy’s philosophy rests upon the need to streamline. “If you want to grow, you need to simplify your organisation. You need to remove the complexity out of the organisation.”
Simplification to Eloy, however, doesn’t mean being more focussed, or engaging in fewer activities, either as a business or as an industry. If anything, Eloy appears to be highly ambitious when it comes to extending the reach of his business. “We want to provide business solutions covering voice and data, but are also focussed upon the areas of managed services and cloud computing.” There are, in his opinion, huge opportunities for carriers to grow their business and open new doors in the market.
Eloy believes the telecoms market is “going through a kind of consumerisation”, which is affecting the way carriers will sell.
For Eloy, the fundamentals have changed, down to the very level with which the end user interacts with the network: “Just walking through the offices, through corridors, what do you see? You see iPads, iPhones and digital tablets. Are employees still using corporate PCs? Not that much. Instead, they are using their own iPads to access business applications. That is a massive change.” And the change is moving the industry towards the wholesale adoption of cloud computing.
In the clouds
The ubiquitous shift towards cloud computing creates massive opportunities for carriers: “Demand is just exploding in the data business, because of cloud computing, and because of the regulatory situations in terms of data protection as well,” he says.
But he wants the industry to provide a more controlled and considered approach towards meeting demand, allowing businesses, enterprises and other customers to actively select their network usage. His argument is that the market today is based around peaks in network usage, meaning that at present the capacity must always be available which allows busiensses to cater for the highest points in demand at any time. He doesn’t believe this sits well with the way that the telecoms businesses function in the real world.
Eloy cites as an example a business which requires very high bandwidth for three days a month, between the 21st and the 25th, due to monthly reporting activity. “What are they requesting? They need an application for three days a month. Why should they
therefore pay for a full licence?”
He finds it easy to extrapolate from his example, although he is honest about the results of his findings: “I don’t know exactly what the future will look like, but I’m pretty sure about consumerisation. You will pay for what you are really using. It turns the concept of the dumb pipe around completely.”
Such a shift in priority could lead the industry even further. “When it comes to customers’ requirements, I think their needs for the future will be pay per use. If I need computing space for one day per month, why should I pay every month on a fixed term? Flexibility is going to be key in our new world. I’m really convinced that this is where the changes are coming.” He is clear about the fact that customers have limited budgets. Whether they are enterprises, government or other verticals, managing both their expectations and their costs is crucial.
A pragmatic vision
While Eloy believes that there are genuine opportunities to be taken in the world of telecoms, his view on the outlook for the industry is realistic in tone. “I’m pretty sure that we shall see big market consolidations. At the end of the day, you need to grow. This is a huge capex business, and companies who haven’t properly planned for these trends will probably be in trouble in the next couple of years.”
The industry is struggling from significant price erosion, both in voice and data, coupled with an explosion in traffic. “Everything now is related in terms of needs to managed services and cloud computing. If you don’t own such an infrastructure – if you don’t own data centres, if you don’t own the last mile connections – I think you’re going to be in trouble.”
Eloy’s personal vision for the future is a positive one, and like many telcos he wants to continue to grow his business both organically and through acquisition. Only a few months ago, Colt acquired Market Prizm, a real time financial information company which seeks to help financial institutions accelerate their trading and operational performance. “In the finance sector, we now not only transport the information through the network. We also host the information in our data centres, we manage the information and we own the information.”
Eloy is clearly sensitive to the challenges facing today’s market, and to the need for telecoms businesses to react and adapt their business models accordingly. But he is also excited and stimulated by the resulting opportunities: “I define what’s going on today as ‘positive stress’ as opposed to ‘negative stress’. What is negative stress? It’s about cutting costs, reducing people and so on. The positive stress is about managing growth. We are in positive stress.”
Colt
History: Colt was founded in 1992 with funding from Fidelity Investments. In 1996 Colt was floated on the London Stock Exchange and the NASDAQ.
CEO: Rakesh Bhasin was appointed chief executive officer of Colt in December 2006.
Network: Colt operates a 21-country, 33,000km network that includes metropolitan area networks in 38 major European cities. It also has direct fibre connections into 17,000 buildings and 19 Colt data centres.
Customers: Colt has over 35,000 European business and government customers.
Products and services: It aims to provide major organisations, mid-size businesses and wholesale customers with network and IT infrastructure, with expertise in IT managed services, networking and communication solutions.
