Mobile chiefs talk up their Irish roots

31 Oct 2002

This was the year when quote marks and air bubbles signalled the new order for mobile communications, not just in Ireland but also in countries across Europe and far flung corners of the globe. Vodafone and O2 extended a warm greeting to consumers everywhere: ‘How are you?’ and ‘See what you can do’.

In Ireland, mobile networks had first taken hold in the Nineties under the larger-than-life management styles of Stephen Brewer at Eircell and Denis O’Brien at Esat Digifone. So when anonymous global operators took the helm we could be forgiven for asking back: ‘Who are you?’ and ‘What exactly are you going to do?’

Now, at last, we’re starting to see. But is there a danger that the Irish mobile market will be swallowed into a global play and become little more than switches and cell sites patched on to the side of UK networks?

“No. Since I joined in October 2001, I’m still the only person from the Vodafone Group that has joined the Irish office,” says Englishman Paul Donovan (pictured), CEO of Vodafone Ireland, formerly Eircell. “There is a general approach to aspects of strategy but local organisations within Vodafone have very significant levels of autonomy.”

Danuta Gray, his counterpart in O2, and who is also English, says the same: “We have 1,400 people in the company and there’s only me that’s changed. We’ve put a lot of money into the Irish business and the Irish economy. We’ve spent €2.1bn on the business since the launch. We don’t treat that lightly.”

Similar to Donovan, she argues that the legacy of the old network is important. “We still develop marketing here and believe very strongly in keeping that very personal touch that O2 Ireland is about,” she adds.

There is also a very tangible place for the Irish office in terms of what it can contribute to the wider group: “We are a centre of excellence for things such as SMS [short messaging service]. It has actually forced other people in O2 to think more along the lines of the Irish business and the Irish experience,” Gray explains.

Donovan stresses how the Irish business has made a substantial contribution to the global cause. “Vodafone Ireland has more than punched its weight for an organisation of its size. It has led and piloted many things on behalf of the group,” he says.

The list of home-grown hits includes Ireland being used as the launch pad for the company’s youth marketing strategy, the Clonskeagh data centre playing host to its pan-European top-up platform for roaming pre-pay customers, becoming the first market to host the group’s Java games platform and developing aspects of the E-merge portal that are being rolled out internationally.

Naturally, it’s not all one-way traffic and being part of the world’s largest mobile operator — in 28 countries across five continents — has its advantages. “You wouldn’t turn down access to other markets. You wouldn’t turn down Ferrari and Manchester United,” says Donovan, barely able to suppress his delight with such high-profile sponsorships, “or the opportunity to quickly pick up services that have been developed elsewhere.”

By comparison, O2’s global prowess is confined to networks in the UK, Germany and the Netherlands, as well as a pioneering 3G (third generation) network that’s up and running on the Isle of Man. It’s smaller but the indigenous wing also reaps benefits from the wider company, as Gray explains: “We get more bang for our buck when allocating resources and investment for new products and services. If we were an independent group we wouldn’t have looked at products such as the BlackBerry [reviewed on page 8] and the xda devices. Of course, we would have invested in media messaging but probably not as fast or to the extent that we have done. We wouldn’t have launched Java Games Arcade either.”

She sums up: “We can benefit customers by things we get elsewhere in the group but we can also retain a sense of Irishness about the company. It’s an Irish company at the end of the day.”

Global with a tinge of green is how Donovan describes Vodafone Ireland.

Both Irish operations also retain a degree of autonomy. A high profile example at Vodafone was when the local office took the decision to award Nokia the contract to build its next generation network — which is the only territory not to retain an existing infrastructure supplier. Vodafone Ireland also opted not to launch the BlackBerry email device, preferring to push Email Anywhere as its corporate solution.

The indigenous network is also the only one in the Vodafone Group to support HSCSD (high speed circuits switched data), a souped-up version of GSM that delivers faster data transfer for business customers.

Gray says that O2 tries to address specific needs of a localised market: “There is still a lot of content and information that is only pertinent to the Irish market. And if we launch something like a product or service, the experience has to be right for the Irish customer.”

There are also technical issues that determine a degree of difference between Ireland and the UK. Both indigenous networks have launched product or services, for example, after they have appeared in Britain because of technical differences between the platforms and networks. A new GPRS (general packet radio service) phone might work on a UK network but it still has to be tested for Ireland.

There are also economies of scale that have precluded second-tier handset manufacturers, such as Samsung, which has enjoyed brisk growth elsewhere, from entering Ireland. The market is too small to justify a sales and servicing division to support the products, which is why we are more limited in our choice of devices.

This is one challenge for global networks as they extend into other territories; another is government regulation. How do they rate the regulatory environment in Ireland? “We are all critical of all our regulators,” says Gray. “When there’s good, healthy competition, which I think we have here, you don’t need to regulate to the extent that they would like to.”

Was she happy with the 3G licensing process from which O2 emerged with a type B licence? “The ‘beauty contest’ rules were there at the front and you could second-guess that an entrant was going to get marked higher. There were certain specific criteria that would give points to a new entrant literally because they were new. So catching up with that was going to be very difficult in any form of beauty contest,” she explains.

Vodafone has been even more vociferous in its criticism of the Office of the Director of Telecommunications Regulation (ODTR), with Donovan even delaying the initial payment of its type B licence while it weighed up the pros and cons of the rollout timetable. In the end, and unsurprisingly, Vodafone went ahead but Donovan remains unhappy with the application process. “We felt the competition was designed with one goal, ie to deliver a new entrant regardless of whether that new entrant was going to add substantially to the Irish business equation. The lack of transparency over the marking made it very problematic to put together a bid that was right with everybody concerned. As yet I do not know why Hutchison won the type A licence.”

Both O2 and Vodafone also applied for the cheaper type A licence, but the suggestion from both camps is that because Hutchison only applied for the type A licence it was certain to win regardless of merit.

Donovan and Gray are equally concerned about the wider government strategy whereby public money will subsidise fixed-line broadband while three mobile operators pay out around €300m for 3G licences.

“I think it’s crazy,” says Gray. “I have to question just how much subsidy the Government will be able to afford now that the economic situation appears to have changed. But wireless does have a part to play in broadband. We’ll be pitching in with our version of the story. I don’t see it as a ‘fixed-only’ discussion.”

“Is there a role model that we can look to for a real high-performance State-owned enterprise?” asks Donovan of a strategy that clearly leaves him flummoxed. “We have paid for broadband and now there’s talk about effectively subsidising broadband. I find it difficult to think that this would be the right thing for Ireland Inc to do.”

Fáilte go hÉireann!