Orange steps further into the convergence game

Orange has announced a new partnership with Groupama, adding another branch to the convergence strategy with a home telesurveillance service.

Everyone in the industry is talking about convergence as a means to improve revenues, but few have created quite a splash in the deep-end as the cannon-balling French telco. This latest partnership with Groupama will see the creation of Protectline, a joint platform for the operation and management of home telesurveillance services.

“The upcoming launch of our home telesurveillance service is an important part of Orange’s multi-service operator strategy,” said Stéphane Richard, CEO of Orange. “To deliver the best product possible, we have again chosen to work with Groupama to pool our skills and resources, following on from our Orange Bank partnership.”

With Orange owning 51% of the new venture, it’s a very clever way for the telco to diversify revenue streams. Groupama is already a well-established player in this segment, but Orange has something which every business wants; a humongous subscriber base to potentially sell added-value services into. This is where this partnership is a stroke of genius and an excellent foundation for future convergence growth.

Orange has built a successful business and large customer base through doing what it does very well. Until recently it has focused exclusively on markets which it has a pedigree in; connectivity. Recently it has explored banking, cyber-security, entertainment and smart home services, though each has relevant-industry partners under-pinning the venture, as well as a direct tie back to the core business.

Protectline is another example of how the Orange business is embracing convergence in a low-risk, high-reward manner. Groupama has the expertise while Orange has the sales and marketing capabilities. Each is supplemented the other, leaning on the skills which are brought to the table. Its sounds incredibly simple, because it is, but it is effective. Of course, you have to wonder why there aren’t more in the industry doing this and the answer is relatively simple.

When splitting the risk, you have to split the spoils. If Protectline becomes a roaring success, Orange can only collect 51% of the riches. This might not sound attractive to other telcos, some of which have chosen to go solo on diversification to varying success; just have a look at BT’s attempt to rock Sky’s dominance in the premium TV segment.

Sky is another which has proven to be successful in the convergence and diversification game, branching out from the core TV services to offer broadband and mobile connectivity offerings. However, similar to the Orange example, the risk has been somewhat removed as the broadband offering runs over Openreach infrastructure and the Sky Mobile is a MVNO. The high-risk elements of these diversification ambitions, the CAPEX heavy infrastructure, has been removed from the equation. Sky focuses on what it does best, maintaining a relationship with its customers.

The buzz around convergence has been dying down a bit recently, as while it is an effective strategy few has realised the bonanza which was initially promised. Orange is one of those few who are reaping the considerable benefit, but only because it is not going alone.

The question which remains is whether Orange can nail the customer experience element. This would have been the big hurdle for the banking product, though it seems to have passed with flying colours. Groupama can take the operational risk away from the telco, but customer experience is slightly different in every vertical; Orange will have to prove its worth by being engaging and intuitive if this is to be a success.

Orange has realised where its strengths are and by offering this massive subscriber base as leverage is any future partnerships, it is proving the low-risk convergence game can be a very profitable one.

Huawei employee arrested in Poland on spying allegations

Huawei’s sales director in Poland, who previously served in the Chinese diplomatic corps, has been arrested by the Polish authorities on spying allegations. Huawei immediately terminated his employment.

More details have been disclosed related to the arrest of Wang Weijing, who also goes by the name Stanislaw Wang. After serving as attaché at the Chinese general consulate in Gdansk, Wang joined Huawei’s Poland office in 2011, first as its PR director then as its sales director responsible for selling to the Polish public sector. Wang was detained on 8 January, on allegations of spying, as was first reported by the Polish public broadcaster TVP.

According to TVP, an Orange employee arrested on the same allegations, identified as Piotr D, had worked at the country’s Internal Security Agency (ISA, or “Agencja Bezpieczeństwa Wewnętrznego (ABW)” in Polish), which carried out the arrests. While at ISA one of his responsibilities was issuing security certificates for equipment used by Poland’s public-sector offices. He left the agency earlier after being accused of corruption but was not formally charged.

The offices of Huawei and Orange were searched respectively following the arrests, though a spokesperson for ISA told Reuters that the allegations against Wang were related to individual actions, not directly linked to Huawei. This is also the line Huawei adopted when it promptly severed the employment relationship with Wang, citing that “in accordance with the terms and conditions of Huawei’s labour contract, we have made this decision because the incident has brought Huawei into disrepute.”

Orange said it did not know if the investigation in Piotr D. was linked to his professional work but would continue to cooperate with the authorities.

Despite the troubles it has run into in markets like the US, New Zealand, Japan, and the UK, Huawei’s business in Eastern Europe has been largely unperturbed. However the latest twist in Poland and the earlier arrest of Meng Wanzhou, Huawei’s CFO, in Canada might put this position under pressure. On Saturday 12 January, Joachim Brudzinski, Poland’s interior minister, called for a EU-NATO joint position with regard to banning Huawei from these markets when speaking on a Polish commercial radio station. “There are concerns about Huawei within NATO as well. It would make most sense to have a joint stance, among EU member states and NATO members,” said Brudzinski.

Then on Sunday 13 January, Karol Okonski, a government official responsible for cyber security, told Reuters that Poland could consider forbidding the public sector from using Huawei products while probing the legal measures to limit Huawei’s access to the private sector. “We do not have the legal means to force private companies or citizens to stop using any IT company’s products. It cannot be ruled out that we will consider legislative changes that would allow such a move,” Okonski said.

Huawei has always denied that it poses security threats, or it spies on behalf of the Chinese government. In a statement it sent out to media after its CFO’s arrest and it sent again after the arrests in Poland, Huawei stressed that it “complies with all applicable laws and regulations in the countries where it operates, and we require every employee to abide by the laws and regulations in the countries where they are based.”

Incidentally, the South China Morning Post reported earlier that, shortly before her arrest in Canada, Meng Wanzhou and Ren Zhengfei, the founder of Huawei and Meng’s father, hosted a town hall meeting for Huawei employees. According to a transcript distributed to Huawei staff and seen by SCMP, both executives discussed extensively on compliance. Cases were divided into “red” and “yellow” lines. By red line, Meng meant the rules where there is “no bargaining and must be strictly complied with”, while by yellow line she referred to cases where strict compliance is not operationally feasible, and the company can build in the costs of flouting the rules as “sunk costs.” She cited labour risks as an example.

“Of course, beyond the yellow and red lines, there may still be another scenario, and that is where the external rules are clear-cut and there’s no contention, but the company is totally unable to comply with in actual operations. In such cases, after a reasonable decision-making process, one may accept the risk of temporary non-compliance,” quoted by SCMP.

Ren also urged his staff to consider both cost and benefit in compliance cases, especially related to laws of the US and EU. SCMP quoted him challenging those present when answering a question: “We must not bind ourselves up just because the US is attacking us. If our hands and feet are bound, then we will not be able to continue producing, then what’s the point of compliance?”

Orange squares up to OTTs in battle for smart home

With it abundantly clear connectivity alone is not enough to meet the profitability ambitions of the telcos, Orange has made a fresh push to wrestle control of the smart home away from those greedy internet players.

As expected, the Orange and Deutsche Telekom partnership has flourished into a diversification venture. For Orange, the team will be launching the Djingo Speaker, while DT will be launching its own version branded the Magenta Speaker. These are fundamentally the same product, operated by the same AI, tailored for the individual markets.

New products should hardly come as a surprise, but this is the tip of the spear aimed directly at the useful ecosystem created by Amazon and Google in the smart home.

Originally the router might have appeared to be the logical focal point of the fabled smart home ecosystem, though inactivity from the telcos and aggressive deployment from the OTTs has seen this shift to the smart speaker. Orange’s Live Box will seemingly be the home of the connected services portfolio, though with the smart speaker the team now have an interface which is increasingly becoming normalised with the consumer.

The big question is whether Orange is able to demonstrate the value of itself as a provide to the customer, above and beyond what the OTTs can offer. And they are playing an interesting angle.

“The business model is based on the subscription charge,” said Stephane Ricard, Orange CEO. “We won’t squeeze your data to make money.”

With the world quickly turning against the data-sharing economy, thanks to governments gradually exposing the complicated nature of the data machine, this might be a useful statement to make. Orange will charge a subscription for the added value services, not use personal information as a commodity in the manner the OTTs are.

This is where Orange might find its first challenge. Less than one in four French citizens have a connected device today, aside from a smartphone, while only 10% make use of a digital assistant. The initial connected life services offered by Orange, linking up everything from connectivity to banking and entertainment, will be free, though monetization depends on luring customers to the more premium services, such as security.

This is one of the services which will be placed on top of the connected ecosystem created by Orange in the smart home. Working in partnership with Groupama, the Protected Home is a security solution which can be remotely managed by the user. There will be future joint ventures and solutions launched on top of the smart home ecosystem, but Orange needs to convince the user it is worth it in the first instance.

With low penetration of connected devices and virtual assistants, the French clearly aren’t that enthused by consumer IOT right now. Perhaps the Orange brand, a trusted and credible company in France, can change this image. Though whether it can compete toe-to-toe with the likes of Google and Amazon in developer power, remains to be seen. We doubt it, though perhaps the world does not need an overly complex virtual assistant right now.

Users don’t need a virtual assistant to restock fridges, or arrange meetings, they just a link to control the smart home. This is an area which the user is still getting used to, therefore perhaps its inability to create an overly-complex and super-intelligent virtual assistant will work in its favour?

Orange’s ambition is to be a multi-service vendor with connectivity acting as the bridge between various different services. The banking venture is now a year old, making steady progress, and the team will hope the same success can be replicated in the smart home segment.

Orange plans banking profitability by 2023

With many commentators expressing doubt over Orange’s banking venture, it might come as somewhat of a surprise the team are planning to be profitable by 2023.

After launching the financial business last year, the company is collecting customers increasingly quickly and is currently in the planning stages of its pan-European assault. Spain is next on the list, but it is the profitability and larger revenue growth contributions to the Orange Group business which are capturing attention.

“The entry of Orange into the non-telco services, should be viewed as defensive and pre-emptive actions,” Ramon Fernandez, Executive Director of Finance, Performance and Europe at Orange told Telecoms.com. “It’s a key lever to stimulate growth beyond what the mature telco business can offer.”

This is seemingly how Orange is viewing the banking services. With profitability and growth in the traditional telco segments constantly eroding, any operator which wants to seek bumper returns will have to search elsewhere. In the Orange business, this has taken the form of cyber security solutions, entertainment, the enterprise cloud segment and finally, banking.

Mobile finance might seem like a significant step away from the traditional telco business, though there are common factors which all each to function and grow. This isn’t just a case of grabbing entirely new revenues, the convergence strategy is winning through again.

As it stands, the banking product in France currently has 200,000 customers, though ambitions are to have two million by 2026. Of those customers, 60% are opening accounts in the stores across France. This is a significant opportunity for Orange, as while there are certainly cross-selling benefits from telco to finance and vice-versa, the finance business does not exist without the retail footprint across the country. Fernandez described this as the ‘phygital’ world, which gives Orange an advantage over other digital challenger banks, of which there are quite a few in France.

That said, the retail footprint isn’t the only benefit. Brand awareness is now up to 45% thanks to the strong position of the Orange business in France, though the data which the banking team can lean on is critical. With services being launched in the loans and credit world, telco customer billing data can be used to understand the risk profile of customers. Identifying the right customers, with an acceptable level of risk, is key for the business and this is where the telco business can really drive benefits as well.

The important factor from a marketing perspective, which Fernandez and Paul de Leusse, the bank’s CEO, have been keen to emphasise is this is not being sold as a traditional bank; they aren’t selling a traditional banking relationship, they are selling the way to use a banking application on the phone. Orange doesn’t want to innovate on products, this is viewed as dangerous, but instead focus on user experience. AI is being pushed heavily, with digital interactions being preferred. This will mean not all customers relevant, but those who are demonstrate a desire for AI-interactions. de Leusse claims 45% of current customers prefer this route, and with a median age of 42, it isn’t just the digital natives who are adopting.

For the moment, the team are still in aggressive customer acquisition mode, this will continue through year two before a few years of stabilizing OPEX. Scalability is obviously critical here, and is set to start making an impact as the team has already negotiated a reduction in manufacturing costs for cards this month. This will make a notable impact on the launch of the Spanish finance business which will launch early next year with Romania to follow quickly afterwards.

This is where profitability will come from. By 2023, the team plan to break even, projecting revenues of €500 million with four million customers spread through seven countries. Only five of these countries will have a fully-functioning bank, though Orange Money services will plug the gaps elsewhere. While many telcos would shirk at the prospect of going into finance, Orange is approaching it as a convergence opportunity. The simplest way to look at this is regimented loyalty.

In years gone, telcos used to use the complicated process of switching providers as a means to enforce loyalty. With regulators now tackling this frustrating part of customer engagement, new ideas are needed. Convergence is one of those, as while there are pricing benefits to the customer, tying as many services as possible into one provider makes leaving a nightmare. If you were to take all of Orange’s services now, upon leaving you would have to search for providers for mobile, broadband, banking, entertainment and security. Having all of your bills in one place is nice when you’re happy, but leaving is a disaster; it is essentially enforced loyalty.

This might sound negative, and it is slightly nefarious, but this should not detract from an interesting and ambitious move from Orange. Telcos are searching for new revenues to compensate from the OTT assault, and this is proving to be a successful venture.

Orange hits green button on LTE-M network

Orange has unveiled its Long Term Evolution for Machines (LTE-M) network in France, with plans to launch in Spain and Romania by the end of the year.

Having launched its first LTE-M network in Belgium in May 2018, the French deployment will enable Orange to build new products and services in anticipation of boomtime in the IoT market. Technology will be deployed in each market dependent on the demand for particular services.

Orange will now begin offering services to all enterprise customers who have subscribed to the Orange full IOT offering, focusing particularly on logistical monitoring, telemonitoring, remote assistance and fleet management. The move underpins Orange’s efforts to diversify its core business, with the ‘connected economy’ high up on the list.

With France and Belgium up and running, plans to open up new networks in Spain and Romania, and other tests running throughout Europe, a pan-European offering does offer Orange an edge in the enterprise IOT game. Looking at the enterprise side of Orange, this is certainly an area which has been given attention in recent months.

Back in August, the cloud armoury was given a shot in the arm with the acquisition of  infrastructure and critical application services company Basefarm for €350 million. Alongside the additional skills, with a presence in Norway, Sweden, the Netherlands, Austria and Germany, the pan-European ambitions are being met.

5G ROI is a no-brainer for us – Orange

5G is clearly critical for the digital economy of tomorrow, but the expensive job of rolling out the networks take a bit more cunning thought.

Speaking on a panel session at Total Telecom Congress in London, Yves Bellégo, Director of Network Strategy at Orange pointed out there is no debate on the ROI for 5G. It’s simple; 5G enables us to deliver data significantly cheaper. With internet traffic continuing to explode, and mobile usage heading north as well, why wouldn’t anyone want to invest in something which can make business operations cheaper.

But here is the clincher; rolling out these networks is an expensive job, and ROI still hasn’t be completely justified. Telcos will have to accept the ‘build it and they will come’ attitude, though trying selling that to accountants. As Takehiro Nakamura, General Manager of 5G Labs at NTT Docomo pointed out, 5G will not just be there overnight, the rollout out will be gradual and it will be years before the concept of nationwide if even close to a reality because of this very reason.

For 5G to realise its potential, there will need to be considerable thought to identify the services which can be offered from Day One. It isn’t going to be as simple as offering a sweeping portfolio of new services, with the progressive rollout which many telcos have in mind, with 4G and 5G working alongside for years to come, difficult choices will have to be made.

Fortunately, a lot of these services can be offered on 4G, though as Ramy Boctor, CTO of Vodafone Qatar, pointed out, the performance will just be better on 5G. Perhaps this will play into the hands of the telcos; limited supply and potentially high demand, a perfect recipe for making money.

This is perhaps a fact which is lost in the buzz and hype; 5G will be incredibly limited for years to come. The rollout will take time, upgrading existing sites will take time, densifying the network with new sites will take time. This is not something many people seem to be saying, but it is worth remembering.

Orange goes submarine with Google cable partnership

Orange has been announced as the latest partner to join Google on its monstrous mission to bulk out its connectivity infrastructure maze.

The telco will act as the French ‘landing partner’ for Google’s Dunant transatlantic submarine cable, which is set to come into operation in 2020. As part of the partnership, Orange will provide backhaul services to Paris, while also benefiting from fibre-pairs with a capacity of more than 30 Tbps per pair.

“I am extremely proud to announce this collaboration with Google to build a new, cutting-edge cable between the USA and France,” said Stéphane Richard, CEO of Orange. “The role of submarine cables is often overlooked, despite their central role at the heart of our digital world. I am proud that Orange continues to be a global leader in investing, deploying, maintaining and managing such key infrastructure. Google is a major partner for Orange and this project reflects the spirit of our relationship.”

Announced back in July, Dunant (named after Nobel Peace Prize winner Henri Dunant) is Google’s first private investment across the Atlantic and supplements one of the busiest routes on the internet. The cable will be 6,600km long, connecting the west coast of France to North Virginia in the US. The cable is set to be the first to connect the two countries in 15 years.

While many organizations are investing in infrastructure through consortiums, Orange has invested in more than 40 submarine cables, few have taken Google’s approach in being the sole investor. It might be a more expensive approach, though Google will have more control over capacity and the route of the cable, perhaps giving it a bit of an edge over competitors. The weight of such investments have been putting some dents in the spreadsheets, the CAPEX column doubled during the latest quarterly earnings call, though it does put Google in a solid position.

From Orange’s perspective, the partnership will strengthen the telcos position to support the development of new uses for its consumer and enterprise customers in Europe and America. It will also be in a stronger position to provide services to wholesale market such as content-providers and third-party operators.

Q&A with Pierre-Francois Dubois from Orange

Pierre-Francois Dubois is the Director Marketing Products at Orange. Here’s what he had to say ahead of the Voice and Advanced Communications Summit 2018, where he is speaking about the new revenue streams and monetisation opportunities for voice and advanced communications.

How is the demand for Telco communications services changing and what is the place of the traditional Voice Telco offering in this ecosystem?

Because of mobile data, communications services tend to be unlimited which is why new business models need to be found to invest in enhancing these services. Nevertheless, I believe that operators will keep investing in voice services at least for the few years to come. Compared to messaging there are relatively limited levels of substitution of operator’s voice, even if it is more visible with international calls. Therefore, traditional Voice Telco remains something very important for the users and it is still also the simplest way for them to experience the quality of the network: drop calls and sound quality are associated with poor coverage or capacity limitations. Hence competition between Telcos has been a driver for investing on HD Voice, VoLTE, VoWiFi and it will probably remain true if we can find technologies that can enhance the voice service.

What has Orange identified as the most exciting new communication services opportunities and what is your work to develop and bring them to market?

Orange, like many other players and carriers, believe that business messaging is a major opportunity. The migration from SMS to RCS for businesses who want to interact with their customers on their smartphones is becoming a reality. We are currently rolling out RCS in several of our affiliates and like other Telcos, we have started experimenting with the potential of RCS business messaging with several brands. We believe this is the beginning of a new digital revolution which will be powered by AI, even if you don’t need AI in the beginning.

What are the new applications that are being developed by the Telcos to retain Voice revenues while stepping up their advanced communications offering?

With voice being unlimited, I don’t think that you can retain or recreate Voice revenues the way they used to be. The first goal is to remain relevant in the eyes of the customers, the new business models can be defined. As I explained, competition between Telcos has been the main driver to enhance the voice service and customers are still using our service. But this is not enough: we believe that we must go one step further and leverage, at least on Android where it is possible. The opportunity to replace the green button which is facing the customer on the smartphone with our own application, providing the customer with a full Orange experience -this is what Orange Telephone is aiming at.

You will be speaking at the Voice and Advanced Communications Summit on 9 – 10 October 2018 in Amsterdam on ‘New revenue streams & monetization opportunities for voice & advanced communications’. Can you give us a sneak peek at what your speech will entail?

Mobile apps were a digital revolution 10 years ago. Many among us believe that conversational commerce platforms like RCS associated with artificial intelligence and digital identity management will be the next one and that operators can play a role: we can develop bots for our B2B customers in this new ecosystem, we can develop new marketplaces, we can promote our payment solutions and our identity management to avoid fraud. All these monetization opportunities are B2B, but we first need to grow the RCS base.

What are you most looking forward to for the Summit and what has attracted you to attend the Summit this year?

Firstly, these Summits have a clear focus and it is a very good place to meet Telcos and vendors to check if the ecosystem is moving in the direction you anticipated. Also, this year should be a special year because we are anticipating the first 5G roll out for next year.
Join Pierre at the Voice and Advanced Communications Summit on 9 – 10 October 2018 in Amsterdam, where he will deliver a presentation on from LTE to 5G: how to support voice and minimize the risks?

Q&A with Stephane Proust of Orange

As we are fast approaching the Voice and Advanced Communications Summit 2018 we got in touch with some of our speakers – Stéphane Proust, a Senior Member of the Orange Group Expert Community. He’s heading the project for Orange Corporate in charge of the evolution of communication and real time services towards 5G (voice/video & messaging) his main objectives are to support Orange European Business Units for their trials & first 5G deployments and anticipate network evolutions for communication and real time services.

How is the demand for Telco communications services changing and what is the place of the traditional Voice Telco offering in this ecosystem?

The demand from our customers is evolving towards more rich and diverse services, with connected objects and new services such as banking services. But there are also fundamentals that do not change: our customers expect from us that we provide connectivity, speed, and high-quality voice. This is confirmed in all customer surveys that we conduct. So even if voice usage is not growing anymore, our voice service remains the fundamental basis of our service portfolio and a key indicator of the best carrier-grade quality of our networks – directly experienced by our customers or evaluated in benchmarks.

Could you tell us a bit more about your work at Orange Labs making for Voice offering available over 5G?

At Orange, we have always been active in research, standardisation and development to improve voice-based services. For example, we were early adopters of VoIP, for our residential customers. We were also early promoters of HD voice and the first operator to demonstrate international HD voice in 3G and we are now heading towards super HD voice…

More recently we deployed VoLTE in all our European operations. Today, my role is firstly to make sure that the standards are ready for voice and messaging support in future 5G environments and achieve end to end interoperability with devices. It is also to ensure that the path from circuit voice and VoLTE towards 5G is smooth, easy and cost-efficient for Orange’s network. Finally, it is particularly important to help Orange’s Business Units in France and Europe prepare for future 5G deployments and choose the best strategy for voice.

How far has your research progressed and how much further do you need to go before we start thinking about the reality to 5G for Voice?

There are several standardised options for 5G deployment with different levels of maturity in devices and network equipment roadmaps. The first deployments of 5G radio access still connected to 4G networks will not impact voice and messaging: voice will remain on 4G or 2G/3G. The full 5G promise with slicing capabilities will require a new 5G core network:  in such a full 5G environment the question in this case is not whether 5G will concern voice or not (voice service in itself does not need 5G) but how 5G users will simply be able to continue to make or receive voice/video calls or messages when connected to 5G. So we now need to prepare the solutions for voice on 5G for all future 5G services and devices and not restrict 5G to data-only applications.

You will be delivering a speech on ‘The roadmap of voice from LTE to 5G’ at the Voice and Advanced Communications Summit on 9 -10 October 2018, Amsterdam. Can you give us a sneak peek of what the attendees can expect to hear at the Summit this year?

My goal is to share the analysis conducted at Orange on how to support voice in future 5G environments and how to minimise the risks of the LTE to 5G evolution, taking into account the various options for 5G deployments and the different possible options for voice. It is also my goal to share views and get feedback from the industry on this. I hope this will be a real topic of interest for attendees since 5G will become a commercial reality very soon, at least in dedicated areas. So the question whether we could simply keep voice on 4G and exclude it from the 5G scope is not straightforward to answer…

There isn’t long to go until Summit. What are you most looking forward to this year?

There are lots of topics that have been developing for years and are reaching maturity now: 5G, but also RCS, multi-devices/multi numbers and more generally “multi-identities” which decouples voice service from single telephone numbers and SIM cards. At the same time, “telco” conversational services are more and more challenged by OTT services and the experience impacting revenue and usage. I really expect from this summit to get a good understanding of what the future holds in store for conversational services, what   the priorities and roadmaps of the ecosystem will be and how we can still capitalise on these assets and still enforce them.

 

Photo Stephane Proust (002)Stéphane Proust – Senior Member of the Orange Group Expert Community will be speaking at the Voice and Advanced Communications Summit 2018 on the 9-10th of October 2018 at Novotel Amsterdam City. It’s not too late to join us – grab your free operator pass here: http://bit.ly/2OAqC8S