The Friday Interview: Campbell Scott, O2

14 Nov 2003

The lack of a national broadband infrastructure is hindering the roll out of wireless LAN networks according to Campbell Scott of O2 Ireland (pictured).

Scott, whose role as product director includes managing 02’s Wi-Fi strategy, says the company is satisfied with the performance of its existing 30-odd wireless hotspots but the extension of this network would be difficult without the lower transmission costs that a national broadband network would deliver.

“We need a lot more national broadband to deploy them more widely,” he says. “The cost of backhaul prevents us from having a hotspot on every lamp post.”

Until this happens, O2’s priority is to make the user experience as satisfactory as possible to drive up usage of the existing Wi-Fi network. The ability to connect easily is one area being addressed; so too is the billing/pricing issue and in particular the possibility of post-paid subscribers’ Wi-Fi usage being charged to their monthly bills to reduce the hassle factor.

“As an industry, pricing is one of the areas where we have to make a better effort. We know that customers don’t really understand megabits and kilobits so we’ll be doing a lot more to make pricing clearer and simpler,” says Scott.

While Vodafone has arguably made a bigger impact with its Vodafone Live! strategy than O2 has with its own multimedia messaging/entertainment marketing campaign, Ireland’s second network stole the lead in the Wi-Fi area leaving its bigger rival a bit flat-footed and seemingly indecisive about whether or not to go down the Wi-Fi road at all.

But Wi-Fi is not where the action really is. It’s really only a sideshow to the main act: 3G, MMS and even good old GSM. Despite the latest figures from ComReg showing that, at 81pc penetration, the Irish mobile market is finally reaching saturation point, Scott forcefully argues that there is still substantial growth in the market.

“In terms of the number of people with a mobile device, yes we’re probably getting close enough to saturation but there’s lot of people now with more than one device – that’s one area of growth. There’s also plenty of room for growth in, for example, vending machines with telemetry-type functions.”

Scott observes that the mobile market is also growing by stealing more and more share from the fixed-line market – a trend he expects to continue. “The opportunity is there for more and more voice minutes to go mobile to the extent that you may not need your fixed line at home.” Not even to secure an internet connection? “Well you’ll be using 3G at that stage,” he laughs.

And then there is the data side. “We decided several years ago as a company that data was a priority for us and we’re on target for 25pc of our revenue coming from data by the end of 2004,” Scott remarks.

It is of course text messaging that has driven data revenues beyond the industry’s wildest dreams and although growth here too is showing signs of levelling off – perhaps inevitably after the exponential growth of recent years – Scott says that O2 has successfully introduced new ways of keeping the curve moving upwards, such as for example new text bundling offers and price promotions.

Moving up the data value chain to multimedia messaging, Scott sees roaming capability as a catalyst to help these services take off and welcomes the recent agreement between O2 and Vodafone that will allow a free flow of media messages between the networks. Roaming, he points out, will need to include full international roaming between networks for MMS services to reach their full potential. Currently, while 02 customers on holiday in, say, Spain can send media messages to other O2 customers they can’t send messages to a Spanish media-messaging phone as parent company mm02’s network covers just three countries: Ireland, UK and Germany.

On the subject of 3G, Scott is careful not to overplay its significance or indeed devalue existing technologies. “3G is just another way of transmitting data,” he points out. “We already know all the applications we use on the internet but what 3G offers is to use a lot of those applications when you’re not at your PC.”

GPRS is often portrayed as a stepping stone to 3G. Is this how he sees it too? “I suppose so but GPRS will continue to fulfil a lot of people’s needs for a long time yet. The early 3G adopters will be those with specific needs where they need richer media and faster downloads. It’s a continually evolving thing: as more applications become available on better devices with 3G, people will move on to it.”

In fact he sees the three main network technologies – GSM, 2.5G (GPRS) and 3G (UMTS) – coexisting for many years yet. “The investments needed in all these technologies mean that they are meant to be used for a number of years. Our 3G licence is for 20 years.”

Although the mobile market’s heady growth years may be behind it, Scott feels there’s plenty of sparkle left in the sector and O2 Ireland can continue to shine within the group. Its parent mmo2’s half-year results which will be announced next Monday will reveal the full extent of this contribution.

By Brian Skelly