Facebook poaches Ofcom gamekeeper

Regulation is coming and Facebook knows it, so it has reportedly persuaded Ofcom’s Director of Content Standards, Licensing and Enforcement to join the team.

The news comes courtesy of the Times, which reports that Tony Close resigned last week and was placed in gardening leave as soon as it became clear where he was headed. Close had been at Ofcom since 2003 and was most recently one of the people heading up Ofcom’s regulatory strategy with regard to social media, a role that became a lot more interesting when it was given new censorship powers earlier this year.

Neither Ofcom nor Facebook seem to have confirmed the move and we hadn’t received a response to our enquiry to Ofcom at time of writing. However there’s no sign of Close on Ofcom’s content board page, which seems to confirm he’s legged it. Facebook seems to have a taste for UK establishment figures, having nabbed for Deputy PM Nick Clegg to head up its government relations in 2018.

Close continues the rich tradition of public servants taking lucrative positions late in their career in the private sector to help navigate their former beat. He will be able to fill Facebook in on the latest thinking when it comes to regulating social media companies, something Facebook insists it welcomes, but presumably also wants to ensure doesn’t get in the way of business.

The regulation of big social media will be a defining issue of the next few years. They are supposed to be neutral platforms that allow public discussion without any editorial involvement of their own. Increasingly, however, pressure from advertisers, politicians and regulators has compelled them to take an active role in censoring their platforms to ensure the ‘wrong’ kinds of content don’t appear on them.

That kind of activity is associated with publishers, not platforms, but the likes of Facebook, Twitter and YouTube still don’t produce their own content. That, along with the practical impossibility of editing every single piece of content before it’s published, means social media companies can’t be classified as publishers for the purposes of regulation.

So it seems clear that a new category needs to be created for services that facilitate publication but don’t produce their own content. Regulators would then need to create a unique set of rules and obligations for that category to abide by, such as parameters of acceptable speech, as well as a proper structure to protect the interests of those who publish on those platforms.

It’s very hard to see where the best place to draw those lines is. This publication would prefer minimal censorship combined with robust public challenges to contentious content, but we’re apparently in a minority. Mainstream sentiment seems to err towards a more censorious approach to ‘preventing harm’ and it will be the job of regulators like Ofcom to define that. Facebook has quite sensibly used some of its abundant funds to get a greater insight into what form that definition may take.

Nokia to replace CEO Rajeev Suri

With Nokia’s turnaround still seemingly distant, the Finnish networking vendor has decided it’s time for some fresh leadership.

Current Nokia CEO Rajeev Suri (pictured) will hand over the reins to Pekka Lundmark on 1 September of this year. Lundmark, who is Finnish, presumably has to work out six months notice at his current employer Fortum, one of the region’s biggest energy companies, where he is currently CEO. Lundmark also did some time at Nokia between 1990-2000.

“After 25 years at Nokia, I have wanted to do something different,” said Suri. “Nokia will always be part of me, and I want to thank everyone that I have worked with over the years for helping make Nokia a better place and me a better leader. I leave the company with a belief that a return to better performance is on the horizon and with pride for what we have accomplished over time. Pekka is an excellent choice for Nokia. I look forward to working with him on a smooth transition and wish him the best success in his new role.”

“I am honoured to have the opportunity to lead Nokia, an extraordinary company that has so much potential and so many talented people,” said Lundmark. “Together we can create shareholder value by delivering on Nokia’s mission to create the technology to connect the world.

“I am confident that the company is well-positioned for the 5G era and it is my goal to ensure that we meet our commitments to our customers, employees, shareholders and other stakeholders. Strong values, leading innovation and unflinching commitment to our customers have always been core to Nokia and I want to put this even more at our centre as we move forward.”

“With the acquisition of Alcatel-Lucent behind us and the world of 5G in front of us, I am pleased that Pekka has agreed to join Nokia,” said Risto Siilasmaa, Nokia Board Chair. “He has a record of leadership and shareholder value creation at large business-to-business companies; deep experience in telecommunications networks, industrial digitization, and key markets such as the United States and China; and a focus on strategic clarity, operational excellence and strong financial performance.”

“On behalf of the entire Board of Directors I would like to thank Rajeev for his many contributions to Nokia, where he has served with both honour and distinction. Rajeev’s loyalty, commitment, and deep personal integrity have served as an example to all of Nokia. I know that Rajeev will, like myself, always have Nokia blue running through his veins.”

That last sentence was presumably a nod to the fact that Siilasmaa is also calling it a day after eight years chairing the Nokia board, to be replaced by current Vice-Chair Sari Baldauf at the Nokia AGM in a month’s time. So this year will see the two people most individually responsible for Nokia’s current strategy and position leave the company. That’s a fairly major strategic rethink right there.

Suri oversaw a massive transformation of Nokia in his time heading up first Nokia Siemens Networks, from 2009-2014, then the whole company from 2014 until now. When Nokia bought Siemens out of their networking JV in 2013 it became clear that was the direction the company was headed in. This was confirmed when Nokia sold its shockingly diminished handset division to Microsoft the next year, along with its CEO at the time, Stephen Elop, which created the perfect platform for Suri to move into the top job.

He wasted little time in making his big strategic move: the acquisition of fixed-line giant Alcatel-Lucent to create an ‘end-to-end’ networking player. That was the narrative at the time and continues to be Nokia’s main unique selling point but, after an initial uplift, Nokia’s share price has slowly declined since then, implying all those lovely synergies have been slow to materialise. Share price reaction to this news seems neutral.

So the inference from Suri’s statement, that he’s just a bit bored and fancies a change, doesn’t really ring true. Chatting to industry figures about the news, the sense we get is that it was just time for a change. We haven’t heard any severe criticisms of Suri, just a sense that he may have run out of ideas. It could be argued that his job was to transform the company into a networking specialist and, having done so, it’s now time for someone else to take the ball and run with it.

Veteran telecoms Analyst John Strand reckons the Huawei situation has played a big part in Nokia’s current situation and thus Suri’s departure. One reason is what Strand characterises as “indirect government subsidies” in China, which have resulted in Huawei and ZTE now having a near monopoly among the Chinese MNOs. Recent industry estimates we have seen have Nokia’s share of that market as low at 3%.

Strand’s other point concerns the PR battle being waged by Huawei, in which it has become increasingly strident in its public statements in the face of US accusations. “He is a victim of a Chinese propaganda war,” Strand told us, indicating he thinks a stronger public performer is required now.

Whether or not Lundmark is such a person remains to be seen. He has been CEO of Fortum for five years and was CEO of Finnish crane company Konecranes for a decade before that. Among his executive positions at Nokia were VP of Strategy at Nokia Networks. So he certainly has the CV for the job, but this job marks a significant step up in terms of public profile.

Lundmark can presumably count on the full support of the board, though. Incoming Chair Sari Baldauf has not only been on the Nokia board since 2018 but was on the Fortum board for seven years prior to that and will have been his boss for a couple of years when she headed up the Nokia Networks business from 1998-2005.

So it looks like Nokia has decided it’s time for a fresh start and has put in place an experienced Finnish double act to do so. It would be odd for the company to make any other major strategic moves prior to Lundmark’s first day, but he will be hoping the quarterlies remain stable until he get’s the chance to make his mark.

Three UK in a spot of bother as senior execs head for the exit

With Three’s big bet on Huawei proving to be somewhat of a disaster, two senior technologists are heading towards the exit.

Many have focused on the difficulties faced by BT in light of Huawei’s limited role in the 5G future of the UK, but Three is potentially facing the biggest headache of all. And just as the team begins to pick up the scraps of a decimated deployment strategy, two of its most senior technologists have exited the business.

Phil Sheppard, who was for all intents and purposes the telco’s CTO, and Graham Marsh, the former-Director of Core Technology, have almost 30 years of Three experience between them. Now neither is working at the telco, and despite these two most likely having a significant input into the headache that is the current rollout plan, this is a company which probably needs as much experience in the ranks as possible.

While there will be conspiracy theorists who link these exits with the Huawei decision, this might be somewhat of a dubious link. Graham Marsh has already started his new role, founder at Infinite Potential, while Sheppard’s exit is less than a week after the Supply Chain Review announcement. There might well be a link, but this would be an incredibly cut-throat decision. Sheppard has said on LinkedIn he will be doing consultancy work in the immediate future, as well as taking a few holidays.

Irrelevant as to the background, Three could really use with this experience in the room not working for someone else.

The sticky situation which Three is currently in should not be taken too lightly. Three went big and bold with its 5G deployment plan, deciding to swap out Samsung 4G RAN to ensure backwards compatibility with its sole 5G RAN supplier Huawei. This strategy could have been a game-changer for the city-centric telco, but now it looks like a complete disaster.

The conclusion of the Supply Chain Review last week have certainly been met with mixed reviews. For some, at least there is a decision, a foundation of certainty which can be built on over the coming years as the industry hurtles towards the 5G era. But for others, the 35% network share restrictions on ‘high-risk vendors’ is either too extreme or not extreme enough. There isn’t a huge amount of consensus when it comes to the position on Huawei.

There are now two restrictions which the telcos will have to bear in mind. Firstly, equipment from ‘high-risk vendors’ cannot make up more than 35% of the radio inventory across the network. Secondly, no more than 35% of the total internet traffic across the year can pass through equipment from ‘high-risk vendors’. For a telcos who’s sole 5G RAN supplier is now deemed a ‘high-risk vendor’, this is a monumental migraine.

During its earning call last week, BT outlined the financial impact of the Supply Chain Review decision; £500 million. Part of this will be redefining its deployment strategy, while it will perhaps have to undertake a ‘rip and replace’ project to ensure there is interoperability between 4G and 5G RAN equipment. Three is yet to put a figure on the Huawei conundrum, but the impact here will be much more than financial.

Firstly, you have to consider the ‘rip and replace’ project it has been undertaking for the last six months in an effort to replace Samsung with Huawei as a sole supplier. Some of this work can be left alone, it has a 35% window to work with after all, but depending on progress, some of this work might have to be undone to ensure new supplier equipment performs to the levels desired.

Secondly, there is a major timing penalty placed on Three.

Picking a supplier in the telco industry does not happen overnight. There are numerous bureaucratic hurdles to jump over, commercial negotiations to take place, and trials which need to be navigated. It isn’t as simple as replacing Huawei with Ericsson, let’s say, this is incredibly time intensive.

Three is in a difficult position, and more often than not, whenever this is the case the people who have ‘been there, done that’ are some of the most valuable in the room. Unfortunately for Three, two of its most senior technologists are seeking pastures new.

Some have suggested the exit’s might be linked to the Huawei decision. There might be an element to this, but we suspect it is more a case of coincidence and bad timing. Very bad timing as it works out.

NB: On a personal note, best of luck to Phil. Having interviewed him a few times on camera and events, Phil is a lovely man with a wealth of experience. Whoever hires him next has found themselves an excellent employee!

Nokia reckons it doesn’t need a COO anymore

Joerg Erlemeier, a Nokia lifer who is currently its Chief Operating Officer, is calling it a day at the end of the year and Nokia won’t be replacing him.

To be honest we didn’t know Nokia even had a COO, but then again it’s not traditionally one of the more high profile top jobs. Your classic COO usually contents themselves with staying behind the scenes, attending to the day to day running of the company while the CEO flies around doing deals and other important stuff.

Here’s what Erlemeier has been up to in his quarter of a century at the company, according to the Nokia site:

  •  Senior Vice President, Integration, Nokia, 2015
    •    Vice President, Global Services, Europe, Nokia, 2015
    •    Head of Delivery, North America market, Nokia, 2013/14
    •    Head of Program Management Office, Nokia Siemens Networks, 2012
    •    Head of Middle East & Africa, Nokia Siemens Networks, 2009 – 2011
    •    Held several executive level positions in Nokia/Nokia Siemens Networks, 1994 – 2009

Erlemeier’s linked in has him doing a variety of restructuring, integration and transformation roles in recent years, which may imply he has a big part in the whole Alcatel-Lucent process. Either way, he’s off to spend more time in the golf course and Nokia doesn’t think it needs a COO anymore. Instead it’s going to get the rest of the C-suite to work harder.

“Joerg has been a long-time, trusted colleague,” said Nokia CEO Rajeev Suri. “He leaves the company with my thanks and deep appreciation for his many important contributions.”

“After 25 years at Nokia, I am ready to take on new challenges,” said Erlemeier. “While the company is in the midst of a transition, I leave firm in my belief that the right plan is in place to improve future performance. I wish the company and all my colleagues the very best.”

Hardly the most touching eulogy from Suri, was it? Perhaps it has something to do with the fact that Nokia seems to have binned the COO role first, not as a result of Erlemeier’s resignation. In other words he got the boot. To what extent this move is linked to Nokia’s 5G missteps is unknown, but companies don’t tend to get rid of senior execs when everything’s going well, do they?

Ofcom reported to have picked another civil servant as new boss

There was a time when some degree of telecoms expertise was considered a desirable quality in a prospective head of Ofcom, but that is long gone.

According to a report from the Guardian, former civil service Permanent Secretary Sharon White will be replaced as Chief Exec by former civil service Permanent Secretary Melanie Dawes if Ofcom has its way. While the appointment is made by the Ofcom board, it needs to be approved by the Secretary of State for Digital, Culture, Media and Sport. Since we’re not sure who that will be by the end of the year, Ofcom would apparently prefer to keep its choice quiet until after the General Election.

We asked Ofcom for comment, but were given the standard line about not responding to rumour and speculation, which was expected. We were pointed towards today’s official announcement that Ofcom board member and Chief Exec of the UK Regulators Network will be keeping the seat warm for Dawes, or whoever, until the UK political dust settles a bit. Oxley has ruled himself out of taking the gig permanently.

The Guardian quoted some random anonymous person who they say knows Dawes as calling her ‘a safe pair of hands’ and we have no reason to doubt this mysterious insider. That’s presumably why senior civil servants are now preferred to people with industry expertise – the government doesn’t want Ofcom getting funny ideas about policy and that sort of thing. Just keep quiet and do what you’re told, there’s a good regulator.

KPN goes in-house to resolve CEO soap opera

Having bailed on its new CEO within days of announcing her, Dutch operator KPN has taken the safe option with its next pick.

Current COO Joost Farwerck (pictured) has been promoted to CEO with immediate effect, following the decision not to follow through with the appointment of Dominique Leroy, who is being investigated for insider trading. Farwerck is effectively caretaker CEO for now, but KPN has announced its intention to formalize the gig on 1 December, presuming there are no further dramas.

Picking an internal lifer who has been on the management board since 2013 largely eliminates the possibility of nasty surprises or skeletons in the closet, which must surely be a high priority after the Leroy debacle. Having passed over Farwerck in favour of an external appointment so recently, the conversation must have been a bit awkward, but fair play to him for not sulking.

“With Joost assuming the role of CEO, the supervisory board is pleased to appoint an experienced telecommunications professional,” said the presumably relieved KPN Chairman, Duco Sickinghe. “He has been a member of the board since April 2013 and is part of the leadership team that shaped the 2019-2021 strategy. Joost knows the company inside out and the environment the company is operating in. With Joost as CEO, the supervisory board is convinced that we will make good progress on the further development and execution of KPN’s strategy.”

“It is with pleasure that I assume the role of CEO of this great company which focuses on offering high speed connections to consumers, businesses and Dutch society,” said Farwerck. “KPN is a company with a realistic strategy in place to perform in the competitive Dutch market. My primary focus will be to deliver on that strategy and explore how we can accelerate the execution even more to deliver organic sustainable growth. We have a great team and a lot of dedicated people in the company. I am eager to work with all of them to execute on that strategy.”

Farwerck will be paid €875kpa, which isn’t bad, but is still less than the €935k Leroy was due to get. Given the very strong negotiating position he must have been in following the Leroy business, this doesn’t say much for his negotiating skills. Maybe he’ll get a bit more in December.

KPN cancels CEO appointment following insider trading investigation

Dominique Leroy was due to switch from Proximus to KPN but now she’s CEO of neither following an investigation into insider trading.

Leroy (pictured) was unveiled as the new CEO of Dutch telco KPN earlier this month, having previously headed up Belgian operator Proximus. She was due to hang around at Proximus until December, but within days employees of the company protested the prospect of having a ‘lame duck’ CEO at a time when there was extensive restructuring underway. This led the Proximus board to bring forward Leroy’s departure date to 20 September.

Another reason for the staff kicking off may have been the revelation that Leroy had flogged a bunch of her Proximus shares on 1 August, just a month before calling it a day. No unreasonably this led to speculation that she may have conducted the sale in advance of an anticipated drop in the share price following the announcement of her resignation. Leroy addressed the matter in a personal message published on the Proximus site. Here is it in full.

I would like to comment my sale of Proximus shares on August 1, 2019.

A CEO of a stock quoted company has few moments in which he can trade his company shares on the stock market. As for me I was in a closed period- this is a period during which no transactions are allowed- since November 22, 2018. I had the intention to trade my shares since several months, but this was not possible. After the publication of the results of the second quarter, August 1st was the first day on which new transactions were possible. I have therefore instructed the bank end of July to sell shares that day, what happened with notification to the financial regulator on August 5, as it needs to be done and with publication on their site on August 6.

At that moment I had not decided to leave Proximus. I was in discussion about the renewal of my contract with Proximus and had some conversations with several external parties, amongst which KPN.

I understand that with hindsight the timing can create the perception that I did this exactly prior and because of my departure. This is surely not the reason for my sale of shares, but this can –now that the discussions with KPN are closed soon after my holidays and the communication on my departure already had to happen beginning of September- be understood in such way by the external world. I regret that this perception has been created, this is not in line with my values where integrity and transparency are very high.

Belgian authorities don’t seem to have been reassured by this explanation, however, and launched a formal insider trading investigation, even going so far as to search her home for incriminating evidence. Typically this isn’t the kind of stuff companies like hanging around their new CEOs and KPN seems to have decided Leroy is not worth the extra aggro.

“KPN regrets to announce that Mrs. Dominique Leroy is no longer a candidate in the process to become the Chief Executive Officer and Chairman of the Board of Management of KPN,” said today’s announcement. “The duration of the procedures which concern Mrs. Leroy by the authorities in Belgium is unclear and unpredictable. The Supervisory Board of KPN considers these uncertainties around timing not in the interest of KPN and its stakeholders. For this reason, the Supervisory Board has taken the decision to withdraw the intended appointment of Mrs. Leroy in the position of CEO of KPN.”

“This was a difficult decision for the Supervisory Board given the track record of Mrs. Dominique Leroy as a very accomplished executive,” said current KPN Chairman Duco Sickinghe. “However, the uncertainty around timing results in a situation, which the Supervisory Board considers not in the interest of KPN. We wish her all the best.”

In other words: you’re on your own, kid. While it’s understandable to rethink a decision in the light of new information, it’s notable that KPN isn’t willing to wait to see if Leroy is exonerated by rhe investigation. Either they think there’s little chance of that happening, they think she’s irredeemably tarnished regardless or they just think the process will take too long.

Leroy presumably did her due diligence before selling the shares, but it’s hard to see how she can justify selling the shares before the announcement of her departure was made, since she already concedes she was considering doing so when she sold them. Meanwhile both Proximus and KPN are CEO-less.

With Vivendi subdued, TIM Chairman Conti calls it a day

Fulvio Conti, who was appointed as Chairman of Italian telecoms group TIM after Vivendi lost control of its board, thinks his work there is done.

“The Board received the resignation of Fulvio Conti who stepped down as Chairman of the board and Director of the company as of the end of the meeting,” said a TIM statement. “Mr Conti stated that he believes his mandate has been completed, in light of the Board achieved stability in its operations and the renewed focus on creation of sustainable value for all the company’s stakeholders.”

Conti got the gig back in May 2018 after activist investor Elliott succeed in wresting control of the TIM board from French conglomerate Vivendi. His appointment, along several other Elliott nominees, was resisted by Vivendi on the reasonable assumption they were inclined to accommodate Elliott’s wishes in board meetings. Even if that was the case, however, it was hard to see how it was any different to the situation when Vivendi nominees dominated the board.

There followed months of moaning from Vivendi as it attempted to persuade TIM shareholders to get rid of the of the offending board members, but to no avail. In April of this year Vivendi officially threw in the towel, and has maintained a sulky silence ever since. Conti seems to have interpreted this as Vivendi permanently getting back into its box and, as a result, likely to be a corporate good boy from now on.

Conti’s departure could be viewed as confirmation that his main function was the taming of Vivendi, and now that job has been done he’s free to spend more time with his yacht. The TIM board couldn’t resist one last dig, however, noting “the positive contribution, the complete correctness, the institutional sensible approach and respect for the rules during his mandate in the interest of the company, its shareholders and all stakeholders.”