Meet mobile’s maker

2 Jun 2008

From a fledgling start-up in 1996, Oliver Coughlan has transformed mobile operator O2 from a voice and text network to a full broadband provider

The current debate in the Irish telecoms industry centres around the building of next-generation networks (NGNs) and, of course, how the country will ensure high-speed broadband for everyone. It’s a long way from 12 years ago when most people in Ireland had yet to send their first SMS text message or even to go online.

“In 1996, when we had 173 base stations we thought that was almost a network,” recalls Oliver Coughlan, chief technology officer of O2 Ireland, who is retiring this week after 12 years constructing the network of Ireland’s second-largest mobile operator O2.

When Coughlan joined the then start-up Esat Digifone, he was employee No 24 in a company that only had 19 desks and two printers. “If you didn’t come in on time, you had nowhere to sit and most of our laptops were in Norwegian,” he says, referring to the fact that prior to Digifone’s acquisition by BT in 2000, it was jointly owned by Telenor.

Over the past 12 years, Coughlan has presided over initial to mass-market growth of mobile in Ireland, the introduction of mobile internet first as 2.5G technology and then 3G, data services such as BlackBerry email, the introduction of mobile broadband, the acquisition of the O2 Group by Telefonica three years ago and, lately, O2’s deployment of the coveted Apple iPhone.

Today the company has more than 2,000 base stations countrywide and in recent years Coughlan oversaw an ambitious technology changeover to incorporate 3G technologies such as HSDPA (high speed downlink packet access) and EDGE (Enhanced Data Rate for GSM Evolution) from Ericsson.

O2 Ireland now has over 1.7 million subscribers. Last week, the company reported that blended average revenue per user (ARPU) – combining voice and data revenue – fell from €45.2 in the fourth quarter to €44.2 in the first quarter of 2008.

Coughlan attributes the decline in ARPU to a more competitive Irish mobile telecoms landscape. “Subscriber numbers are up, minute use is up, but ARPU has declined because of the value-for-money offerings customers are taking up.”

While for much of the early part of O2 Ireland’s history – when it was still known as Esat Digifone – the company existed as part of a duopoly with rival Eircell (now Vodafone), Coughlan says the competition was every bit as intense as it is today with other operators like Meteor and 3 in the field.

“There was a duopoly period but the fact was we hated each other, professionally. We hated Eircell with a passion. We had to hate their brand and what it stood for. It was competition, extreme competition. And that competition is rife today.”

Up until 2000, the mobile market was purely about voice minutes and some text messages but around the turn of the century Coughlan says he saw a definitive shift towards mobile data. “The shift towards data saw us having to plan not just for SMS, but richer offerings in picture, video and music.”

He now says there’s a definite shift in the direction of mobile operators becoming total telecom providers, competing not only for mobile but also in the realm of fixed-line services, providing fixed-line broadband and IT services.

In recent months, arch-rival Vodafone acquired Perlico for €80m and it is rumoured that O2 may acquire broadband and TV player Smart Telecom. Other players such as BT and Carphone Warehouse have been mentioned in the running for Smart, which is understood to have a price tag of around €100m.

Coughlan says the shift to fixed line will be inevitable for O2. “We’ve gone from utility voice and data to converged services like mobile broadband and fixed broadband and telecoms. We have to change to meet customer demands.”

Coughlan says the biggest gamble of his career at O2 was the decision to transform the Irish network, shifting from a Nokia-Siemens platform to a new platform with Ericsson.

“The decision in 2006 to swap out our network was a phenomenal piece of work. Every base station in the country was swapped out. The difficulty there is that if you have live traffic and live customers, you can’t upset their experience because if you do, they’ll leave you. They don’t particularly care who their mobile provider is, as long as they have a good experience.”

The shift to a new network and changing competition in the market, Coughlan explains, led to the decision to transfer 450 technical workers to the outsourcing division of IBM.

He said the decision came as a “rude awakening” to the O2 workforce, “but also a shock to the system in terms of where the market is going and how competitive it is and how companies like O2 need to change, no matter how successful they were in the past decade.”

On the horizon is further investment in fixed-line and NGN services and Coughlan says the challenge for his successor will be second-guessing what users will pay for in the next 18-24 months.

While Coughlan says he is retiring this week from O2, he intends to take a month out before looking at other opportunities where he can bring his experiences to bear.

“The fundamental lesson I got from this is that when you surround yourself with like-minded people and give them responsibility, trust and leadership, anything is achievable,” he concludes.

“From a chief technology officer’s point of view, it is imperative that irrespective of how complex the technology, product or solution, you must make it simple for the customer to understand and use. You must ensure that the customer is at the centre of everything you do.”

By John Kennedy