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Published: February 22, 2011
 / Spring 2011 / Issue 62

 
 

The Thought Leader Interview: Didier Lombard

S+B: What are the essential issues confronting information and communications companies right now?
LOMBARD:
I think we are living through an exceptional period of economic transition, and we are exactly in the year zero of this new era. The pivotal moment is not last year or next year; it’s right now. The explosion of data on the networks, and especially in mobile applications, has multiplied by 200 to 300 percent since 2009. In that time, most people have begun to use their mobile phones and the Internet in a completely different way in their day-to-day life.

Previously, voice communications represented the majority of telecom usage. Data use was marginal. Now, some telcos — in Asia, for instance — have seen the proportion of voice drop to 20 percent of the traffic. The rest is data. All sectors that use telecommunications, which in fact means all economic sectors, will have to transform their business model. Some have already been drastically affected: for example, music, video, and publishing. But this change will be more widespread.

S+B: Is this shift really that much more drastic than the changes we’ve already seen over the past decade?
LOMBARD:
Each time in the past, the change was focused on one sector, it took a reasonably long time to shift, and it was not as disturbing as it is now. This time, the transition will be very rapid. This time, incumbent telco players will have to adapt, because the new players are not waiting. And the transformation of the business model will be painful for many of us. The old business principles will no longer work in the new context.

Many people tend to consider the future as a continuation of the past. They believe, for example, that the new generation of networks will simply bring more capacity online within each of the existing infrastructures. But in fact, the impact of this explosion is not only felt in the amount of high-speed data traffic. It is also causing a rapid, permanent change in the ways people are interconnected through broadband integrated networks.

Transforming Every Sector
 

S+B: How does this affect telecom providers like Orange [France Télécom’s brand]?
LOMBARD:
In two ways. First, it forces us to expand capacity. At Christmastime 2008, there was a major crash in networks in New York and London, because the traffic had increased so quickly. We had no problem at Orange, because we had anticipated that we would need the capacity and we had invested in it. But the explosion in demand will continue, and we have to take care of it.

The main part of the investment to serve mobile phones, paradoxically, must be in the fixed network. Even the mobile networks with the best coverage require capacity behind their transmitters, or they fail. Some countries have installed 3G networks where customers can’t reach any servers, because there is too little capacity on the trunk lines. We will need a huge investment in fiber optics. We also probably have to accelerate our “long-term evolution” [LTE] and fourth-generation mobile service rollout. [LTE/4G is a mobile data platform that will be launched in many countries in 2011.]

The second impact is in customer behavior. Customers will use their mobiles almost exactly as they use personal computers, and in other ways that change the business model for a lot of activities. For example, when they read books on their iPads, that puts pressure on publishers to change their business models. France Télécom has to get involved in more aspects of the media business, or else we become merely the provider of capacity on our channels — a utility company. And that doesn’t give us enough margin to build out the new-generation networks.

 
 
 
 
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