BIG INTERVIEW: Andrew Kwok, president, Hutchison Global Communications
14 July 2016 | Alan Burkitt-Gray
Hutchison Global Communications has a key role between content companies and the fixed and mobile operators whose customers consume the content. Andrew Kwok explains the importance of the partnership to Alan Burkitt-Gray
Working with fixed and mobile operators to give them seamless services from content providers is now high on the priority list of Hutchison Global Communications (HGC).
And those content providers include over-the-top (OTT) companies, says Andrew Kwok, president of international and carrier business.
OTTs are here to stay, says Kwok: “They might be around 20 or even 50 years,” so it is in the interest of operators to work with them as best they can.
The traditional view of fixed and mobile operators has long been that OTTs were “stealing their lunch”, as many of them have said frequently.
Operators were putting in fixed, and mobile broadband infrastructure and OTTs were using it without paying – though the end customers do pay for their access.
That attitude is still around, says Kwok, but he wants to foster a more cordial, helpful relationship between the two sides.
“A lot of people feel OTTs are taking away their business,” he says. But HGC is taking a different attitude: “We have already started to embrace OTTs and to see what we can do together.”
This is simply a recognition that the way media companies deliver their content is changing, and so is the way that consumers receive content. You only have to look at commuters on Hong Kong’s metro, the Mass Transit Railway (MTR), to see that: with widespread 4G coverage in the tunnels, people occupy themselves during their journeys by consuming digital media. It’s not just on the MTR, though.
As Kwok points out, content owners traditionally bought connectivity – through technologies such as cable or satellite – to deliver their services to their customers.
“Now the situation is that the delivery channel is inside the operator’s network,” he says. “Now we use phones to watch TV and the whole ecosystem is shifting.”
That gives a new role not only to the fixed and mobile operators but to the carriers such as HGC that bring the content from the media companies into the retail operators’ networks. “We don’t want to take any of the revenue and become competitors,” he says.
“We want to partner and smoothly integrate the service. Our bread and butter is still telecoms.” The market is bigger than ever: “More and more companies are delivering content,” he notes. And what is HGC’s role in this? “We provide a solution end to end,” says Kwok. “We get the content from the content provider and deliver it to the eyeballs of the user. Content delivery is more important, and a total solution is more important.”
It can be a bumpy ride, he admits. “The big issue is the risk coming with the opportunities. We really feel it.” But in order to put itself in the best position for the new media world, HGC is forming alliances on both sides of the link.
“We have 30-40 OTTs on our network already,” says Kwok. These include Tencent, the giant internet portal that is based in Shenzhen in mainland China, just a few minutes away from Hong Kong, and its communications service WeChat.
Tencent announced in October 2013 that it was using HGC’s data centre services in Hong Kong to handle the huge traffic volumes generated from its instant messaging services.
There is also LeEco, the Beijing-based online video company, formerly known as Letv. In November 2015 HGC agreed on a long-term collaboration plan, including provision of data centre hosting and colocation, as well as local and international networking, customer service and marketing support. The solution is designed to aid the former Letv’s global business expansion via HGC’s international business network: HGC now offers services from the content company’s portfolio in Asia, Europe and the Americas. Those relationships – and other OTTs are included too – formed phase one of HGC’s strategy, “to offer our network to them to deliver their services”, says Kwok. “The business is good. But now we are embracing phase two, which means we are trying to get them connected to end users.”
HGC has an advantage here. Its parent company, Hutchison Telecommunications Hong Kong Holdings, which runs fixed and mobile services in Hong Kong itself; is also a part of the CK Hutchison Holdings, which owns operators around the world, most of which use the Three brand. “We have 11 mobile operators around the world,” says Kwok.
There are operators in Hong Kong and nearby Macau. Elsewhere in Asia, there are businesses in Indonesia, Sri Lanka and Vietnam. In Europe there are Austria, Ireland, Italy, Denmark, Sweden and the UK. And there is a 50-50 joint venture with Vodafone in Australia.
“Our objective with phase two is to enhance our capability to reach the mobile eyeballs and the fixed-line eyeballs,” says Kwok. And that’s not just where the Hutchison group has its own mobile businesses: HGC can help deliver content elsewhere, too.
HGC is involved in the Conexus Mobile Alliance, set up a decade ago to facilitate collaboration between a number of operators across the region – companies including Japan’s NTT DoCoMo, Korea’s KT, StarHub of Singapore and Thailand’s True.
Kwok himself is deputy chairman of the board of the alliance, which was formed to develop and enhance international roaming and corporate mobile services for its members’ customers.
The alliance has a combined customer base of about 275 million mobile subscribers in members’ markets – and about 690 million when combined with Vodafone, which is a partner of the alliance.
“We can help ease the pressure on their infrastructure. And we are very fair in distributing the benefits. Everyone gets a fair share of the revenue,” he says.
“Phase two is a solution business. We’re talking about the capability to reach the end user and about the performance of the service. We have the technology to deliver the service efficiently.”
This includes “very difficult projects even to developing nations”, he says, pointing out that it is nine years since HGC set up in Myanmar, long before competition was introduced into the mobile industry there. “You have got to have a licence, regulated by the government. We partner, and we bring in revenue. They become our supporters in those countries.”
HGC has expanded its operations to a number of other countries. He lists Bangladesh, Laos and Cambodia as examples, “and we have just closed deals in Kenya and Zambia”, he adds.
“We provide solutions and we deliver services. This is something we deliver and they like it. We are working with more than 600 operators around the world. If you want to have a good business, then you have to meet the market requirements.”
What is the most difficult challenging area for HGC in this market? It is nothing to do with the day-to-day requirements of building relationships between content providers and the fixed and mobile broadband operators that deliver their content to the consumers, but it is a technology challenge.
“It is the fully-fledged integration of IT solutions with established telecoms services,” says Kwok. As a result, HGC is “hiring more and more IT people instead of telecoms people”.
This means a change in focus in a solution-driven world where many companies have decided to outsource their IT.
“We like to provide solutions to our customers.” It’s more than just where to terminate circuits but is a matter of understanding customers’ requirements.
“We understand requirements and tailor solutions for them. We will work with all kinds of partners – including IT, security and equipment companies plus carriers, OTT partners as well and software houses. We can provide different levels of security and different solutions.”
HGC has 22 offices around the world, mainly in Asia but also in North America and Europe. “We will develop the solutions centrally, but they will need localising.” And HGC will have local equipment partners and sometimes local IT people. “We are going very deeply into R&D and the productisation of next generation delivery,” he says. “Our commitment is to very heavy R&D – and now we can tailor-make specific delivery systems for mobile and fixed customers.”
HGC’s relationships, of course, are much wider than just the entertainment-focused content industry. “The market is very competitive for cloud services,” says Kwok, naming companies such as Amazon Web Services and Alibaba.
“We need to provide cloud on demand, and we can help customers to do so. We offer tailor-made solutions to all customers with our application-based platform – especially in areas such as gaming and retail. We can load applications and it’s very easy to launch a service and to dimension it according to usage. Customers want tailor-made solutions and our cloud service is important right now for us.”
Kwok has already talked about the close relationships across the border into China. This expanded in early May when HGC signed a peering agreement with China Telecom Global for their IPX networks.
That deal will allow mobile operators and carriers served by both parties to use the two IPX platforms to deliver traffic generated by 4G data roaming, mobile signalling and voice-over-IP.
“This further expands our existing coverage in mainland China with a larger mobile subscriber base in the country,” says Kwok. LTE roaming is a key service.
“It’s too early to conclude what other services we’ll offer, but we do want to explore.” In this fast-moving market, there will be plenty to explore, and plenty of scope as HGC expands into new areas.
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