The Friday Interview: John Acton, Smart Telecom

11 Nov 2005

Running the business division of an emerging telco in a liberalised market is not for the faint hearted. The competition is merciless, the pitfalls are numerous and the cash pile needed to stay in the race is mountainous. So who would want to be John Acton (pictured), director of corporate business at Smart Telecom?

Acton considers the question. “It’s not for the faint hearted but if you’re looking for a challenge and excitement then that’s what you get with this job. We’re in a fight not just with other competitors but with the Goliath that is Eircom.”

Prior to joining Smart at the end of 2003, Acton cut his commercial teeth over two decades in the technology industry in Ireland, UK and US. Previous Dublin-based roles included sales manager for carrier Global One (now Equant) and country manager for Marrakech, an online trading platform, which is based in London these days. Even when things were not going according to plan at Marrakech, Acton says he learned a lot about business. “Nobody raised as much money as Marrakech – €61m to date I think. It was exciting times and working with new business models but we made mistakes and learned a lot from them, particularly the importance of stocking up on basic fundamentals of delivering a service or product to the customer at the right price.”

In the US, where he worked for an Arizona-based systems integrator and distributor called MicroAge, he got a different perspective on what motivates buying decisions. “In the US businesses have an approach of giving it a whirl and are open to risk-taking and taking the rewards from that.”

Acton is no doubt bringing all this experience to bear in driving corporate business at Smart Telecom. The company is probably the best known of the tier two telcos that have emerged in the Irish market in recent years as the layers of regulation have been peeled back. If Eircom and BT Ireland are the undisputed no 1 and 2 in the fixed-line market, then Smart is beginning to nip at their heels.

The assault began in the residential market with the launch of competitive telephony and broadband offerings and is now moving to the business sphere. It will be Acton’s job to make this happen over the next two or three years.

Smart’s business model for the corporate market is about creating its own network rather than wholesaling minutes off Eircom’s. Over the course of the past two years Smart has rolled out a national fibre network to this end. To keep a lid on costs, the company has both invested in its own infrastructure, for example the 140km T50 fibre ring around the M50 motorway in Dublin and piggybacked on public assets, primarily the 27 publicly funded regional metropolitan area networks (MANs), and the ESB’s investment in national backhaul circuits linking the MANs.

The result of pooling together these assets, Acton maintains, is that Smart now has access to an extensive network infrastructure funded by the Government to the tune of €300m – a level of capital investment Smart could never have managed on its own.

The investment won’t stop there. The company recently raised €55m in funding and a good portion of that is likely to be spent on further augmenting the network the company has put in place. “We would have already spent many millions already rolling out our network across Cork, Galway, Limerick, Letterkenny and so on, and we’ll continue to invest. We are a telco that’s in the growth phase so we expect to continue a very heavy rate of investment in our network over the next two to three years at least,” says Acton.
Owning its own network may sound like a luxury but Smart’s plan is to leverage that infrastructure to provide its customers with services they would struggle to get otherwise. On top of its internet protocol (IP) fibre network, Smart’s customers will be able to deploy a full range of next generation voice, data and IP products, he says.
“It’s not just bottom-line savings we’re offering. Businesses can implement a network over that they can push any type of any information and layer multiple applications in a much simpler way, giving them a competitive advantage.”

With the core network in place, Acton’s priority now is beefing up the salesforce to prepare the division for the challenges ahead. “We are looking at quadrupling the salesforce nationally. We’ll have about 20 direct sales people starting 1 January, ramping up to 40 or 50 by the end of the quarter.”

But what type of services will corporate customers look for? All the traditional types and some new ones, says Acton, who notes that the ‘bundle’ philosophy, which has become common on the residential side is starting to take hold among corporates too.

“It means offering mobile phone, landline, broadband and corporate connectivity – all from a single carrier. In addition, there is an 076 product, which is a mobile number that connects individuals over the internet regardless of where they are in the world. These are the type of applications businesses with a mobile workforce are looking for.”

Acton says Smart would be in a position to offer such bundles if it owned a mobile licence, which he calls the “final piece of the jigsaw”. The company has applied for a 3G licence and is due to hear in the coming weeks whether or not it has been successful. As with its fixed line business, the company is intent on owning its own wireless network rather than riding on anyone else’s. “The idea would be to sell capacity to other virtual mobile operators,” he explains.

In general, the thrust of Smart’s business in the coming years will be to move away from the low-margin voice stuff towards value-added services. Acton believes that while customers are increasingly willing to embrace new technology the challenge for Smart will be not expecting too much too soon.

“I don’t think people are going to lose their heads over 3G or voice over IP just yet but in five years time it will be a different story.”

By Brian Skelly