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The Friday Interview: Vern Kennedy, Magnet Networks
16.02.2007
This week's interviewee is Vern Kennedy, new chief executive of Magnet Networks.
You've refined your strategy from several business areas to focus on just two. Why?
When I got here the company was sampling a number of different markets. I had to decide which ones would generate the best returns for the company. These were business local loop unbundling (LLU) and fibre to the home.
Does this mean you are exiting the consumer LLU space?
We're not exiting this space, we're just not spending money in this space.
Will existing consumer LLU customers still be served?
If you are in an area that we can serve you, yes. However, the cost of acquisition of consumers for LLU was a component driver for us choosing one market over the other.
I'm here to generate a profit and will focus on areas that drive profits.
Did the fact that migration of customers through LLU is not automated in this country have a bearing on your decision?
Yes. Consumers want rapid, painless and seamless switchover between services. If you buy a cell phone you can switch immediately but you can't do that at present with broadband.
However, business customers know they are upgrading their bandwidth and signing up for a two-year contract and are prepared to wait a little longer. For them, broadband is not an impulse buy.
You've also decided not to sell internet television (IPTV) to consumers over DSL broadband but will do so over fibre. Why?
If you want to experience IPTV properly you'll need a DSL connection of at least 5Mbps – it needs to be flawless and reliable – but it depends on the condition of the local loop.
IPTV works better over a well-managed network and fibre to the home is best.
It comes back to cost of acquisition. Fibre rollout will still cost us money but at the end of the day we'll get to keep 100c on the euro out of our investment.
What is the best solution for the current impasse on LLU migration?
Ireland was very similar to the US telecoms market in 1999. What we did in the US to fund migration between carriers was put a 75¢ tax on every broadband bill.
Now you can change broadband provider in the US just like changing your shoes.
How do you envisage your strategy for Magnet playing out?
We aim to get to 15pc market share. This will probably take three to four years to achieve.
By John Kennedy
When I got here the company was sampling a number of different markets. I had to decide which ones would generate the best returns for the company. These were business local loop unbundling (LLU) and fibre to the home.
Does this mean you are exiting the consumer LLU space?
We're not exiting this space, we're just not spending money in this space.
Will existing consumer LLU customers still be served?
If you are in an area that we can serve you, yes. However, the cost of acquisition of consumers for LLU was a component driver for us choosing one market over the other.
I'm here to generate a profit and will focus on areas that drive profits.
Did the fact that migration of customers through LLU is not automated in this country have a bearing on your decision?
Yes. Consumers want rapid, painless and seamless switchover between services. If you buy a cell phone you can switch immediately but you can't do that at present with broadband.
However, business customers know they are upgrading their bandwidth and signing up for a two-year contract and are prepared to wait a little longer. For them, broadband is not an impulse buy.
You've also decided not to sell internet television (IPTV) to consumers over DSL broadband but will do so over fibre. Why?
If you want to experience IPTV properly you'll need a DSL connection of at least 5Mbps – it needs to be flawless and reliable – but it depends on the condition of the local loop.
IPTV works better over a well-managed network and fibre to the home is best.
It comes back to cost of acquisition. Fibre rollout will still cost us money but at the end of the day we'll get to keep 100c on the euro out of our investment.
What is the best solution for the current impasse on LLU migration?
Ireland was very similar to the US telecoms market in 1999. What we did in the US to fund migration between carriers was put a 75¢ tax on every broadband bill.
Now you can change broadband provider in the US just like changing your shoes.
How do you envisage your strategy for Magnet playing out?
We aim to get to 15pc market share. This will probably take three to four years to achieve.
By John Kennedy
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Magnet