Movers & Shakers Interview with Dan Mårtensson, Telenor Sweden’s head of telematics

Movers & Shakers Interview with Dan Mårtensson, Telenor Sweden’s head of telematics

Vishnu Muralidharan: How would you characterise Telenor's presence in the European telematics market? What are the major products and services you offer in the telematics space?

Dan Mårtensson: If you look at telematics, Telenor is focusing strictly on connectivity within the telematics machine to machine aspect, meaning SIM card with telematics functionality for telematics use, airtime as well as developing a communication platform for telematics connectivity. It is my belief and that of external market analysis firms that within the M2M industry, Telenor Sweden is the leader in the telematics industry.

VM: We are witnessing an increasing number of telecom and mobile service providers entering into the telematics space. What opportunities do you see in the telematics space for a company like yours? Are you approaching the market from a navigation perspective or are you focusing on features and services like eCall and core telematics?

DM: First of all, we see many mobile operators and other service providers operating in the telematics space. But, not all have been through the whole way. What we see is the price plan of standard GPRS data plan bundled with embedded SIM and pushed to market. Telenor has been doing telematics connectivity for more than ten years, since 1996. You need more than GPRS-rate plans and embedded SIM to succeed, you'll need a telematics solution in business logics, operations and technical set-up, to be able to deliver best in class connectivity solutions – Telenor has that. That's why we are currently leaders in the field. If you look at opportunities, we see specific opportunities within connectivity. More specifically, services like eCall, pay-as-you-drive and fleet management, overall core telematics are growing rapidly and becoming more centralised. In other words, the customer is buying telematics connectivity and using all the products on a global basis and not buying locally.

VM: Telematics will become a success only if a strong ROI case is defined; from your perspective is there a true ROI case for mobile operators to enter into the telematics space?

DM: We can benefit from the existing technology that we have, our experience, delivery chain and many other things. Mobile operators can handle high volumes, with some adoption that as well can be a benefit in the telematics area. We also benefit from low churn rate, meaning losing existing telematics customers, so, there is no real retention cost. Also, there is a long-term relationship and revenue stream for us, e.g. if the SIM card has been embedded in the car, then the SIM card will live as long as the car is functional. There is great potential in this field and is one on the core areas of our focus in the telematics space.

VM: In case of companies like Telenor entering into the telematics space in Europe, what type of business model do you work on? Who takes control of the final customer and what are the possible revenue streams?

DM: It is the immediate customer and not the end customer who is our focus. For example, a customer might be an OEM such as Volvo. In that case, Volvo is our customer as well as a customer/partner. The business model that we work on is a non-traffic blocking business model where we like to find a way of handling the needs of our customers. When Volvo sells a car there is only a one-time fee with no subscription charges for the end-customer, therefore we mirror that model towards our customer. Another customer's needs may be different and their business model might differ. So it varies from case to case. Here we have a set of billing practices for common businesses model and a set of platforms that is very flexible and will cater to different segments and customer needs.

VM: There is an increasing shift towards mobile phone-based navigation with more handsets shipped with GPS. Do you think this trend will continue and mobile phones will become biggest enabler of navigation by 2012?

DM: I think the trend will increase with more and more handsets shipped with GPS. I don't think people will use their mobile phones as a personal navigation device (PND) in cars in the short-terms though. So, I am not sure whether mobile phones will be the biggest enabler of navigation by 2012 or not, but I do think that the navigation trend and use of mobile phones for personal navigation will certainly increase from current levels.

VM: What do you think is the reason for the European location-based services (LBS) market not taking off compared to US market where operators like Verizon (child tracker, friend finder, etc) have been highly successful with their LBS offerings?

DM: If you look at specific services like friend finder; my personal view is that the general European feels a lot safer than his American counterpart. I also think that the integrity is a bigger cost in Europe than in the US, where everybody is involved in homeland security to ensure safety and security. But I also think there are other obstacles. Today there is no clear business model, no key driver, no real win-win situation in the LBS offering. You have to find a way of getting a win-win situation if you would like to beat the market.

VM: Do you think mobile operators will stick to consumer mobile-based LBS like friend finder, local search, social networking and traffic information, or focus on telematics services like emergency call, breakdown assistance, stolen vehicle tracking, etc?

DM: From our point, we put more energy and money into telematics services such as eCall, Pay-As-You-Drive, etc. That is where we see the biggest potential, but I also think there will be many consumer-based services that will run in parallel – it depends on the operator. While some will concentrate on consumer services, others will focus on core telematics.

VM: In terms of pay models, we have witnessed in the past the failure of subscription-based telematics service models in Europe. What type of pay models do you think will succeed in the European market?

DM: If you look at the payment model or business model, it has to be non-blocking; you have roaming issues in Europe that you don't have in the US, however you can push the traffic in Europe by good pricing and quality specific for telematics and for that product and service. Also, you need a solution that is adopted for telematics services and, like I said before, it is not just about taking data rate plans but more about being the best- in-class telematics supplier for connectivity. This reminds me of one service we had done very well, one that had a good price model and non-blocking traffic business model and a flat rate at the European level and global level. It is all in place today and will continue to develop. The pricing will be more competitive, the business model will be better in future and it will be more efficient and easy for our customers to expand theirs business.

VM: What role do you think advertisement-funded telematics and location-based services will play in the European market? We have already seen a few such services on the market by companies like Jentro; do you think this will be the future for mobile- based services?

DM: Within the consumer application of LBS, there is the possibility of building advertisement-based telematics solutions. You have to find more than one winner, you have to find the way to get the business in the right direction and advertisements can be one of the ways to get into business. If you look at eCall and PAYD, both of which have an embedded solution, you will see an evolution in offerings from the customers when the technology improves from 3G to 4G and thereon. There is the possibility of building all telematics value added services into the car such as video on demand, remote diagnostics, etc. Also, I think the pricing and roaming charges will decrease in the coming years. Such services would also become very simple to use without too many parties involved in the hardware and software.

VM: Finally, where do you think Telenor as a company will be placed in the European telematics and LBS space five years from now? What type of services and business models will you focus on then?

DM: The increasing use of telematics has just begun and will grow rapidly in the next five – ten years. It will be an easier world in the future; there will be many more operators to look into M2M telematics. Many mobile operators will have to start from scratch and have a long way to go in learning about telematics; delivering and operating telematics connectivity, because it is totally different from the traditional subscription, because traditional subscription are best effort services, but telematics subscriptions are business critical. Connectivity is critical for mobile telematics subscriptions, if they breakdown and if there is downtime, it will directly affect customers, that's why you have to build the right class and a completely different solution to cater to a telematics customer.

I see Telenor being in the lead both now and in five years time and continuing as one of the biggest connectivity suppliers on a global basis. This can be achieved by ensuring a secure and reliable technical solution adopted for telematics needs, by having the right business logics and by having an operational leverage and customer service management, all adapted to telematics needs as it differs from a mobile subscription. We will see the increasing need for securing overall reliability and quality. Customer service will become more critical and the need to provide a better quality platform will increase. I also think that telematics is very fast moving part of the telecommunication sector, and if you want to stay in the lead you have to adapt continuously to the market, you need to offer good customer service and pricing. And I am sure we will be there to provide it.

Dan Mårtensson is head of the Telematics division of Telenor Sweden, responsible for telematics, M2M & wholesale for the Swedish and other foreign markets. He is also responsible for the Telenor Group's Centre Of Excellence of Telematics/M2M.

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