Perfect mobile storm
Vodafone Ireland’s new CEO Jeroen Hoencamp tells John Kennedy it’s the best and the toughest of times for the mobile industry in the face of vast technology and financial upheaval
JEROEN Hoencamp’s face is the picture of perfect calm as he describes the enormous challenges facing mobile operators.
According to the new CEO in charge of the largest mobile operator in Ireland, the challenges are thus: falling ARPU (average revenue per user); proving the investment case for next-generation broadband; a recessionary environment that has impacted every industry; and end users who are consuming vaster amounts of data via smartphones, tablet computers and other devices.
“There are two things certain in the future of mobile in Ireland: there will be consolidation and as a result fewer dedicated network operators; and there will be more mobile brands as mobile virtual network operators (MVNOs) target specific niche markets.”
Hoencamp is bemused at the way the Irish media seemed to seize on his earlier career as an officer in the Dutch Marines when he took the reins of Vodafone in Ireland in May.
Faced with compulsory military service in the Netherlands, he says he decided to opt for officer cadet training with the Dutch Marines after leaving college. Hoencamp believes that finding himself at the age of 21 in an organisation where daily 10k runs were the norm, as well as being responsible for a platoon of motivated marines, was pretty good grounding for his later executive life.
After he had spent two years in the marines, Hoencamp’s girlfriend (his wife today) went to university in the US and he followed to study an MBA at the University of Georgia in Athens. His corporate life began with the gruelling task of selling Canon photocopiers.
Hoencamp moved back to the Netherlands in the mid-Nineties and joined Phones 4 You, which was then acquired by up-and-coming Dutch mobile challenger brand Libertel.
“At the outset, Libertel expected mobile penetration in the Netherlands to reach 25pc. By 2000 it reached 80pc. In most European countries today penetration is at least 120pc.”
Hoencamp rose up the ranks at Libertel prior to its acquisition by Vodafone in 2003. “I began in the retail side of things and I think to test me and see how I operated out of my comfort zone they put me in charge of number portability, which was very much an IT project. After that I was sales director and then director of Enterprise at Vodafone for a number of years.”
Hoencamp believes his career path has been opportunity-led; he has never asked for a job in his life. “Ten graduates we hired recently asked me if there was a conscious plan to my career. In fairness, it never happened that way. To a large extent everything has been opportunity-driven:
I saw military service as an opportunity; when my girlfriend went to the States that was an opportunity. If you asked me a year ago would I be CEO of Vodafone in Ireland I would have thought you were crazy but when the opportunity came, I jumped at it.”
Taking on the role of CEO of Vodafone in the midst of a recession, Hoencamp sees challenges and opportunities. Referring to the Cisco global broadband study by Oxford’s Saïd Business School that ranked Ireland 13th in the world, he says this was an impressive feat, considering the country’s geography and population. “But being 22nd in the world in terms of mobile broadband quality means we still have places to go.
“If you look at the Irish telecoms market and the sheer economic situation, which would put pressure on any business, the market is quite competitive. Ireland has four mobile brands and over four million people, it’s very competitive.
“What’s interesting about Ireland is that, internationally, as far as operators are concerned it is always high on the list in terms of innovation and minutes used as well as the uptake of new services. It has a significant young demographic.
“It is also a very mature market from a mobile point of view. Vodafone has a strong position as market leader in mobile and is No 2 in terms of fixed, which gives us a great position if the world moves to total communications. Despite the economy, the financial situation and the pressure on mobile ARPU, there is a strong appetite among the Irish to use the latest innovations. There are challenges but we’re happy to face them.”
In tackling the big problem of who will invest in the next-generation networks that Vodafone and others will need for the future, Hoencamp points to fellow Dutch native EU Commissioner Neelie Kroes who has set a target of 30Mbps for every European citizen by 2020 and aspires that half of homes will have 100Mbps.
“I think for Ireland to achieve a universal 30Mbps, because of the geography and low population, the most economically viable route is mobile, particularly in rural areas. There is no business case for putting fibre in the ground and reaching every single home, even if all operators co-invested,” explains Hoencamp.
“To achieve 100Mbps, now that’s a different story. For half the country to achieve Kroes’ targets of 100Mbps it will require putting substantial fibre into the ground but the solution will still be a combination of fixed and mobile.
“You will need to put fibre into the ground to join up base stations as well as homes and businesses. So, whoever does the planning, can we please just put the fibre into the ground once – the next time you’re building a highway between Cork and Dublin can we please put some ducts in the ground. Do it right.”
For many, the notion of 100Mbps might seem notional but Hoencamp points out that in the Cisco study Ireland was in the camp of countries currently ready for the internet applications of today, not the applications of tomorrow.
“If you had asked me a decade ago would I see anything like the iPad or Android smartphones giving people on the street video and internet I would have said we wouldn’t have the hardware, the network coverage, the processors – but today, guess what, they’re here.
“I would say that in the next 10 years we will evolve to a point where 4G LTE (Long Term Evolution) will deliver 30Mbps to every home.”
The mobile industry’s competitive landscape, he warns, is a troubled one. “Four operators and four million people is about as competitive as this market can get.”
He predicts that some of the operators in the marketplace will come under pressure from shareholders who will need a return on investment. “Some consolidation will happen. But at the same time I think there will be an opportunity for more MVNO brands. The key for these MVNO brands to survive will be differentiation and being able to distribute.”
Ironically, within 20 minutes of leaving Hoencamp’s office I learn of the arrival of a new brand called Just Mobile which, through a deal with BWG Foods, is providing mobile services to Irish consumers via 650 Spar, Mace and XL stores in 500 towns.
“Do I think there will be consolidation among existing mobile operators? – yes. Do I think there will be more mobile brands in the market? – yes. The likelihood is we will have two main operators with a large number of MVNO brands that will live off smaller segments.
“Anyone who comes to me with a good brand, a good proposition for a target audience and who has thought hard about distribution, it’s an opportunity and I’ll talk about it,” affirms Hoencamp.
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