Networking the Nordic way
Company Strategy

Networking the Nordic way

With one of the most extensive and eclectic networks in the world, where will TeliaSonera International Carrier extend its footprint next? Guy Matthews investigates.

To be a credible provider of wholesale telecoms services these days, you ideally need scale and an extensive global network to match. Few players though enjoy a footprint as eclectic and wide-reaching as that of TeliaSonera International Carrier, the wholesale face of Nordic operator TeliaSonera.

“Our network is one of the most extensive in the industry, covering Europe and including Russia, the US and Asia,” claims president Erik Hallberg.

He is particularly proud of the company’s status as the only Tier 1 European carrier with its own network in the US: “We have a strong history there, having been involved with the market since 1995 with a continuously growing customer base,” he says. “The Telia management spotted that it was an obvious place to be active many years ago.”

Hallberg says that despite a tough and rapidly consolidating market to contend with, there are plans to accelerate development in the US: “Our expansion there is strategically important, and helps us maintain our position as one of the largest global IP carriers,” he says.

He points out that this US presence is both helpful to European service provider customers looking for North American connectivity, but also plays well in the other direction.

“Our extended network enhances our service offering to our US-based customers,” he says. “In light of the TeliaSonera group being one of the largest operators in Europe, we believe our customers in the US consider us as a very competitive alternative.”

Off the beaten track

If the market for trans-Atlantic connectivity is fairly well trodden, then this is counterpointed in the TeliaSonera International Carrier portfolio by other investments well off the beaten track. How many other European carriers operate networks in Nepal or Kazakhstan for instance? Who else covers eastern Europe, the Caucasus and central Asia? It’s an asset set that includes 43.8% of Russian mobile operator Megafon and 38% of Turkish cellco Turkcell.

“We work in a complex mix of countries – but there are commonalities,” explains Hallberg. “End-user demand in Kazakhstan is for connectivity that works, just the same as in Sweden. Everywhere we have a presence, what we’re doing is connecting content with users, and not simply providing a network.” There are places where TeliaSonera doesn’t go under its own steam, in south east Asia, Africa and Latin America, but Hallberg doesn’t entirely exclude such regions from his plans: “For Asia and Africa – well, we’re open to finding partners to give us coverage there,” he says. “We’ve invested a lot in other regions, so we need to work on those places before we start considering new areas.”

The carrier owns and operates 43,000km of fibre around the world, much of it supporting investment in mobile networks, particularly in the developing economies where it is active: “In the emerging markets, mobile data services are growing very fast,” explains Hallberg. “In many cases, such as Nepal, our local entity has to build its own fibre network there to support those services.”

If parent company TeliaSonera is known for one thing, it is as a pioneer in mobile data and next-generation cellular networks, a useful credential when extending network reach into challenging new markets. It launched the world’s first commercial 4G networks, in Sweden and Norway, in late 2009, and has been busy extending 4G reach into other markets, including the three Baltic states where it has network presence.

“Look at Estonia, where we switched on our LTE network within six minutes of the licence being granted,” says Hallberg. “I think the regulator was pretty surprised about that. We’ve learned a lot over the years, and we’re now able to use that knowledge in these new markets.”

In addition to wired and unwired data traffic, TeliaSonera International Carrier also handles a lot of international voice minutes: “It’s a useful business to be in, because it helps us to develop good relations with the market,” explains Hallberg. “We run it a bit like a bank runs an arbitrage business.”

The media spotlight

Other areas of increasing importance to the company, he says, include media distribution and managed data centre services: “Recently we signed a deal with [European digital media specialist] Populis and its media portal Excite, covering managed services and IP services. This solution will support their network of vertical web properties, ranging from credit and travel guides to car blogs, and visited by over 26 million unique users per month. Our Media Connect Service has also attracted demand lately from sporting and arena events.”

Hallberg says he wants the relationship between TeliaSonera International Carrier and all its wide variety of customers to be something beyond the wholesale run of the mill. “For our customers, we want to be the most attractive carrier out there,” he says. “We want them to see us as providing quality and reliability, as being trustworthy and on time. We don’t just want to deliver a product, but maintain a relationship. Lots of companies have got their future development tied up in our network. In fact it’s not like just a network to them – it’s their business.”

But Hallberg says he is becoming worried, as he looks around the industry, about what he sees as an unhealthy disconnect between the aims of carriers and the demands of their customers, particularly concerning investment in the sort of infrastructure that will be needed to manage tomorrow’s traffic levels.

“I’m a little concerned about how carriers are recognising infrastructure return,” he says. “Long-term profit doesn’t seem to be a focus, or profit at all really. From a shareholder point of view, investment in infrastructure must give a return. A major topic over the next few years is likely to be how to move back to long-term profitability in this industry. New business models are needed for the future to achieve this. I’d compare it to using the Autobahn 30 years ago, where there was no limitation on speed. Today if you want to drive fast you need to plan, because there’s lots of congestion. It’s like that with today’s network infrastructure. We need to get efficiencies in place so we can all have the services we want.”

Hallberg sees the wider carrier industry as responsible for striking the right balance between infrastructure investment and ensuring the right return on that investment by charging customers the right price: “We can blame no one but ourselves,” he says. “We must tell those who buy our capacity that they’re not getting it for free.”

Addressing the future is not so much a matter of technology as of business models, he believes: “Which model will win? I don’t know, but I know that something must change.”

“Telecoms services need to be sold more like other utility services, like electricity and water. In these other industries, people pay according to the content they use. Carriers are becoming more mature in this respect. We’re all business people – the carriers and the content industry alike. The whole ecosystem has to function properly. It needs now to act as one, and to realise that standardisation doesn’t take away your edge – it unlocks possibilities.”

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