We must be cautious not to reinvent the wheel, said Stan Miller, Chairman of the Board at ice group, speaking to ZTE Technologies, who believes that the company should be lean and focused. As an industry veteran, he shared with us his business philosophy and future goals of the company. ice group is an international telecommunications company focusing on wireless data communication services. In addition to its high speed mobile broadband services in Norway, Sweden and Denmark, the group has operations in Brazil, Indonesia and the Philippines.
What competitive advantages does ice group have?
I think the first thing to say is that we don’t see the other operators as competitors at all. We utilize lower frequencies but also in Norway higher frequencies with LTE. Basically we build data-centric networks. We are focusing more on partnerships and relationships such as B2B rather than B2C. So a lot of our customers belong to brands, utilizing our networks. We are building a completely different business from the one people believe our competitors are building. We’ve only got data. That is a big differentiator.
We’ve got two kinds of markets in which we operate. The first one is developed markets such as Norway, Denmark and Sweden, where there is vast land mass, a relatively small population and existing infrastructure. We make a difference because we can cover the whole land mass. The second kind of market is developing markets with no infrastructure out there. There is a very large land mass and a very big population. The countries we are focusing on at the moment are Indonesia, Philippines and Brazil. We cover parts of the countries other operators haven’t covered yet. For instance, in Indonesia, everybody is competing in Jakarta but we go outside of Jakarta as well. That’s how we differentiate. We build complementary networks.
What changes our business is that we are deploying a different business model from that of traditional operators which is postpaid and prepaid. We are deploying a service where customers can choose the speed and the amount of data and they pay us in advance for the service. Everything (voice, SMS and data) is included. You can call it an iTunes kind of business model. If you want to download a song, you pay 99 cents and you get the song.
You have many years’ experience in telecommunications. What operational philosophy have you brought to ice group?
I think there are a couple of key areas that are very important. There are people better at innovations than telecom companies and operators. Therefore, it is important to partner with companies instead of creating the same infrastructure that normal telecom operators have. We believe we want to be lean and focused. In terms of what we do, we focus on the commercial aspects. We partner with companies like ZTE to bring us innovation.
Secondly, all telecom operators believe that they should get their money from the end consumers. We have a philosophy where we say what I can take from my end customers for free and how I can earn money from other people for doing that. That is a big shift from the normal telecom operators thinking. For normal telecom operators, when thinking about APRU, they think about their own users. When we look at APRU, we not only look at that part but also how else we can make money.
As far as I know, about 4 billion people in the world don’t have any access to data or mobile communications. For instance, in Indonesia alone, there are 67 thousand schools that have no connectivity. From the logistics point of view, just to get the school books to these schools is a very expensive exercise. If we can cover those schools, it brings down the cost of logistics and we can earn money from doing that but not from charging the children going to school. This is very important for us. We can think of companies like Facebook and Google. They have been trying to use drones, balloons and satellites to cover people in the countries where they don’t have coverage at the moment. So you can imagine in the partnership we can supply the infrastructure and earn some money from them for doing that. We are busy looking at those kinds of business models.
How important are applications to ice group's strategy?
It is critical to us. It does not mean that we have to invent them. We need to share our commercial thinking with clever people who can design these things. The simpler the better. In today’s world, we must be cautious not to reinvent the wheel.
Operating in Scandinavia and emerging markets, how do you drive synergy within the group?
It is completely different. But at the end of day, the business model should be the same for all. At the moment, we are not in the phase of creating the synergies. Obviously, there is a timing difference between Norway, Indonesia, Philippines and Brazil. Norway and Sweden have been a laboratory where we test things. We just acquired a stake in a Brazilian mobile operator, and our operations in Indonesia and Philippines are in the transition to LTE. Ultimately, the ecosystems of the whole business would be the same. The idea is to have one center that manages all the technologies for all the networks and one operating system. Of course, you have different languages in different countries but the engine room should be the same for all of them. In that regard, our partnership with ZTE is very important because we want to grow with one partner all over the world.
How do you describe ZTE as a partner?
My relationship with ZTE goes back over 10 years when I was at KPN. They are an excellent partner and never go back on their word. When they say that they will do something, they will do it; if they say they can’t, they would be upfront and say they can’t do it. Obviously relationships also depend on personalities and so forth. With ZTE, I’ve built up a long-standing relationship over many years. I find them to be extremely reliable, trustworthy and supportive and focused on helping us to find solutions. I don’t think I can choose any better partner than ZTE. I also recommend them to many other companies of which I am on the board.
How do you exploit the new growth markets like IoT?
In terms of IoT, the first thing you need is connectivity. That’s why our networks must cover all areas. You cannot have a self-driving car in Sweden if you have no connectivity. In order to have IoT, you not only need external coverage but also indoor coverage if you want your fridge to do something. That’s exactly where we come in. We can supply it at a very economical fee because we don’t have the same structure as the other telecom companies. We employ very few people and have a reliable partner like ZTE to actually do the work. We work on the commercial part of the business.
In the past, people thought that telecom operators need to go into all kinds of services like music, which means that you must not be a dumb pipe. I say you mustn’t be a dumb pipe but being a clever pipe can be a very good business. If you look at satellite operators, they don’t make music, set-top boxes or movies. They only own the satellite and just sign the contract of 15–20 years for the satellite. Their EBITDA margin is about 80 percent. It’s a profitable business. That’s the same view that we have. Anybody can use our network. We own and operate the networks. When I say “operate”, we’ll outsource that to companies like ZTE because they can do this much faster and better than we can. We want to set the commercial strategy.
What vertical industries are you focusing on?
It depends on the country and the stage of development. For instance, in Sweden, we serve the forestry industry with our networks. It is very automated as you can imagine. It is 10 percent of the GDP of Sweden. All the forestry equipment is working on our network. We didn’t develop the applications but just provide the network. With regard to coffee plantations in Brazil, these people need access to the coffee trading markets. Even the oil industry in Norway needs communication around. So there are a lot of specific fields that we’d like to cooperate with. The obvious one is military and police. Let’s call it blue light services (ambulances). They need high security and a partner to do that. That’s not something we’ll supply. But we will do it together with a military kind of organization that supplies that kind of technology. For instance, in Britain you’ve got BAE. They will take the capacity from us and supply the blue light services. We want to enter partnerships with people that are trusted in the industry. If you think of self-driving cars, it’s better to partner with Volvo and supply them with the network than to try to figure out how to make a self-driving car.
What are your goals for the next five years?
In five years, we’d like to cover one billion people in the world with our networks. We want to only take 10 percent of those populations, which is 100 million. We want to earn 10 dollars per month from the 100 million. We’d like to have a margin of about 50 percent. When I say 10 dollars, I don’t mean 10 dollars from those customers but earn money from those customers being on our network by supplying them with other services for which we get paid for.
The advantage we have is restarting with a completely clean slate. We are not building old legacy business or an old telecom system. We already cover 500 million, if you count Indonesia, Philippines and Brazil together. We just need to do a few more to reach 1 billion. And I want us to be the lowest-cost manufacturer of a megabyte of data.
I want the system to be completely self-service so the customers can completely help themselves. This is very important from our point of view. And we want to be the friendliest company. Telecom companies are not known for being customer-friendly. So we want to make it as simple as possible and very transparent for the customers.
ice group, IoT, Scandinavia, vertical industries