Digital services key to telco survival: Telenor Digital head

• Sees opportunity to develop digital leadership positions in Asia
• Needs to overcome telco legacy to create new revenue streams

TO Rolv-Erik Spilling (pic), head of Telenor Digital, the picture is crystal clear: Any telco which cannot attract its customers to buy services along with the Internet access it gives them “will go out of business,” he declares matter-of-factly.
 
By services, he does not just mean apps but also various digitally-enabled services that can be delivered over mobile devices such as e-commerce, classifieds, machine-to-machine (M2M), healthcare, and financial services.
 
What’s not so crystal clear however, is finding a business model that works for the various initiatives the digital unit is driving within its parent the Telenor Group, the 159-year old Norwegian telco with the biggest Asian footprint among western telcos.
 
A hundred and twenty million out of its almost 160 million customers come from the six Asian markets it has a presence in. Telenor’s strong Asian footprint also dictates its future strategy with the focus on delivering its ‘Internet For All’ and ‘Empowering Local Communities’ visions.
 
The business model Telenor Digital is thinking of experimenting with is a mix of the traditional access-based telco model and an Internet-based advertising model.
 
“We earn on connectivity, but why shouldn’t we earn money on ads?” Spilling tells Digital News Asia (DNA) in Oslo, where the Telenor Group last week played host to a conference in conjunction with the announcement of the Asian winner of its Digital Winners app challenge.
 
Spilling point outs that this is how every Internet company that has data as its key asset, monetises its users.
 
Those successful Internet companies have their own platforms, so Telenor Digital too has built a platform that allows for easy connectivity and distribution of any service or product across the group.
 
Able to handle up to 400 million users, the platform relieves developers of the need to customise products, or integrate and develop APIs (applications programming interfaces) for each country Telenor operates in.
 
It also allows Telenor to mine customer insight into a single global interphase, and “if allowed by our customers,” notes Spilling, Telenor can develop advertising services for them.
 
Asian market fragmentation an opportunity
 
The very fact that Spilling can entertain the notion is down to the fact that Telenor Digital, as an organisation, is developing an Internet-like culture for itself while incubating a number of mobile app and Internet startups.
 
This is further strengthened by the fact that Spilling sees so many opportunities in the Asian markets Telenor is in – opportunities which the Silicon Valley-based Internet companies are not going to be able to target, he argues.
 
As he observes, there are so many parts of the digital ecosystem that are fragmented in Asia, with no clear market leaders.
 
“If you look at e-commerce, digital payments, classifieds, healthcare and M2M, the markets are in the beginning stages of being formed,” he says.
 
Even in Malaysia, where Telenor has a 33% stake in leading classifieds portal Mudah.my, Spilling says it is investing strongly to reinforce its market-leading position.
 
“Experience in other markets shows that only when you are twice the size of your nearest competitor and have achieved a network effect, can you then start monetising in a meaningful way,” he says.
 
But it is not an easy task to build a market-leading position, he admits. Getting the timing right for any service category is extremely difficult and Telenor Digital has already experienced some failures.
 
“They say it is useful to learn from your failures but let me tell you that failing is a very painful experience,” he shares.
 
Yet from some of its failures have emerged useful lessons that have helped Telenor Digital forge ahead.
 
Spilling is hopeful that over the next 10 years, the Telenor Group will have other [revenue] legs to stand from on these new services markets it is trying to develop today, while strengthening customer relationships on its mobile Internet side.

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