Swede success of Telia
Changing from being an old, state-owned telecommunications group into a modern, privatized company is not easy for Swedish telecom operator Telia. It led to a brief marriage and fast divorce from Nordic neighbor Telenor. But with QoS as an important marketing tool, Telia now aims to become one of the largest carriers in the world.
When the Swedish operator Telia presented its new £12 million logo last April, managing director Jan-Åke Kark proudly announced that it symbolized the company’s new strategic direction of a dynamic company characterized by great visions and simplicity. The image of an old, state-owned telecommunications group will be erased and the shape of a modern and market leading Internet company will emerge and — hopefully — attract some shareholders to buy stakes when Telia is privatized later this year.
"It is a different company now. We are making a journey through time. In some areas we are the most developed telecom company in the world, but in some others, we still have some distance to go," says Jan-Åke Kark.
Telia has hardly paused for breath since its ambitious £34 billion attempt to merge with state-owned Telenor of Norway — the first cross-border merger between national telecom operators in Europe — collapsed in acrimony last December. Less than six months later it is on the brink of the Nordic region’s biggest initial public offering.
A sense of lost time
One of the reasons for the urgency is a sense of lost time. Most Nordic countries were quick to deregulate their telecom markets, but Sweden and Norway have proved far less keen on privatizing their big public telecommunications groups. This has meant they have lacked the financial currency to expand abroad as rapidly as they would have liked to during the 1990s, for example through bidding for mobile licenses.
The prime goal of Telia’s new strategy is to develop advanced services for customers in Sweden and other Nordic markets and to pursue targeted international opportunities in key growth areas such as mobile communications, Internet, IP-based networks and broadband services, data communications and international carrier activities in Italy, Spain, France, Germany, UK and the US. It is already the largest provider of Internet and communications services in the Nordic and Baltic countries and has nine million subscribers in the region.
Telia’s turnover in 1999 was £4 billion. The company is divided into five business areas: Carrier & Networks, Mobile, Business Solutions, Enterprises and people Solutions. Carrier & Networks made the biggest profit last year with £242,000 and is the sixths largest carrier in the world. However, ambitions do not stop here and Carrier & Networks aims to become one of the three largest carriers in the world.
Increased pressure
The accelerated pace within the company is something that has not gone without notice in Telia Carrier & Network’s quality of service (QoS) department. "The pressure has increased enormously," says Klas-Göran Petersson, global operations manager and responsible for the maintenance of international voice-service at Telia Carrier & Networks. "We are now marketed as a QoS company. As the privatization constantly urges us to increase the revenue, the expectations of having QoS under tight control are higher than ever. During the 1970s and 1980s we used to have a very intimate cooperation with the other Nordic operators when it came to QoS issues. But this has all disappeared since they started to privatize the companies and enter new alliances."
The QoS department spent a lot of time working together with their colleagues from Telenor to prepare for the merger between Telia and Telenor. "The failed merger between was a huge disappointment for all of us. But in the end it was clear that is was not politically possible. However, the time we spent working together with Telenor was not wasted as we learned how to work with a partly different company culture. After the short marriage with Telenor followed by an emergency divorce, we just had to set about working to make up for the time we had lost through preparing the merger. But, despite the failure, we still have a good cooperation with our colleagues in Telenor," says Klas-Göran Petersson.
Telia clearinghouse
To switch over from traditional PSTN to new broadband technology such as voice over IP (VoIP) while maintaining a high QoS has been the biggest challenge so far explains Klas-Göran Petersson. QoS has always been considered as a crucial impediment to the deployment of VoIP. Telia was one of the first tier one carriers to enter the VoIP market. Beginning trials in 1997, it limited the trials to Scandinavia. After a huge success, it launched its Global Clearinghose Service in January 1999 making it the first clearinghouse with Europe as its base.
"Within one year, we have become market leaders in Europe," says Joel Westin, product portfolio manager for emerging voice services. "Increased volumes mean that we can get the lowest price for more and more destinations. The next step is to strengthen our position outside of Europe."
With VoIP technology evolving rapidly but still resisting standardization, Telia aims at hardware brand independence and at supporting value added services such as roaming, calling cards and unified messaging services. Except low termination rates, these are two areas seen by Telia as critical to success as the market matures and is therefore of top priority.
The company has worked actively with creating tools for the new technology and formed a strategic partnership with Cirilium, Clarent and Nokia, so far resulting in a draft for a common management information base (MIB) which has been presented to the European Telecommunications Standards Institute (ETSI). In addition, it has developed a tool to read the information from the MIBs, the IP telephony Explorer.
New QoS measuring tool
Recently, it also implemented NeTrueQoS, a QoS software solution developed by California based NeTrue Communications, to measure and manage the key parameters of voice quality across IP networks such as jitter, latency, packet loss, congestion, bandwidth and throughput. It also provides a single index of voice quality in real-time to assist QoS based management of billing, routing and provisioning.
The new clearinghouse mainly addresses Internet service providers (ISPs) and Internet telephony service providers (ITSPs) wanting to enter the lucrative telecom market as well as traditional carriers looking to expand their businesses into the IP telephony market. By signing only one agreement with the clearinghouse, instead of bilateral agreements with any number of providers, members gain global coverage and access to key wholesale trading venues like the UK and the US. The clearinghouse also provides accounting based on netted inbound traffic revenues and outbound traffic costs in a single currency with netted totals cleared on a monthly basis.
Klas-Göran Petersson is responsible for the clearinghouse’s operations and says that the company has been able to cut costs due to the shared technology with the clearinghouse’s members. To get the clearinghouse up and running was, however, a great challenge. As with everything else in Telia nowadays, it had to be done quickly. The technology used in the clearinghouse was also new for the QoS department. "We have had to invest a lot in training staff to master the new technology, " says Klas-Göran Petersson.
Reorganization and training
Telia’s new business strategy and privatization has requested a significant reorganization within the company as a whole. During the last decade, the number personnel have nearly halved in Sweden, from 45.000 to 25.000, and further staff reductions are planned. " We will invest a lot of money in training our staff in new technologies and some might not make it. We might have to think of recruiting new staff as well. This will be one of the highest costs for the company in the near future, "says Jan-Åke Kark.
If Telia will win the battle of the Internet market remains to be seen. But, Jan-Åke Kark is confident. He pictures all kinds of possible new Internet services for Telia in the future, from controlling the temperature in the washing machine to paying your parking fines. He says he benefits from his former career as a persistent door to door salesman of vacuum cleaners when he is now trying to get the best offer when selling Telia. "I think all managing directors should have sold something sometimes. It helps."
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