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TCS+ | How Openserve learnt to love ‘open access’
In this first in a series of interviews with Openserve executives, TechCentral’s TCS+ speaks to the company’s chief commercial officer, Phila Dube, about its business model, how it works with partners and why it has embraced the concept of “open access”. Openserve, which is a subsidiary of the Telkom Group, is South Africa’s biggest telecommunications infrastructure provider with more than 170 000km of national fibre footprint and fibre broadband connections into homes in all provinces across South Africa. In this episode of TCS+, Dube unpacks: • His role in Openserve, where he oversees the company’s market-facing activities such as business development, product lifecycle management, commercial economics, operations, and marketing and communications; • The changes that Openserve has been through in the past 10 years, and what these mean for the market, including the company’s internet service provider partners; • All the markets that the company is involved in, from home and business broadband to national long-distance links and subsea cables; • The advantages and challenges associated with Openserve’s chosen go-to-market model of B2B2C, or business-to-business-to-consumer; • Openserve’s plans to further expand and commercialise its network assets; and • Why the company became a champion of the open-access model. Don’t miss this opening interview in a fascinating series about one of South Africa’s most important infrastructure operators.
- Duration:
- 22m
- Broadcast on:
- 05 Aug 2024
- Audio Format:
- aac
(upbeat music) - I'm Duncan McLeod and this is TCS plus the Business Technology Show from Tech Central which is brought to you today by OpenServe, the telecommunications infrastructure provider and subsidiary of Telcom Group. Now we have a series of interviews lined up with OpenServe in the next little while. So I'm looking forward to delving into the business in greater detail. So if it sounds interesting to you, please do subscribe to the show. You can do that on YouTube at youtube.com/techcentral or simply search tech central one word in your favorite podcasting app. Hit the subscribe button and you'll never miss another show from the publication. Now to kick off this series, I'm thrilled to welcome OpenServe Chief Commercial Officer Pila Dubé into the studio. Pila has been with Telcom in various roles for more than 20 years now as Chief Commercial Officer of OpenServe. He oversees the company's market facing activities and these include business development, commercial economics, commercial operations and marketing and communications. Pila, welcome to Tech Central. Thanks for making the time. - Thanks Duncan and also thanks your listeners and thanks for having me on your show. - It's a pleasure. So Pila, you've been at Telcom for more than two decades. You must have seen considerable change in the organization in that period. What have been some of the highlights for you? - Yeah, I think for me it's probably not just been the change in the organization but also even in the sector itself. So some of the highlights would have been the listing of Telcom. - Yeah. - The handling of the Waracom in that generation of Telcom owned 50% of Waracom at some point. There's been many changes. I mean, even in the market itself, the introduction of the many operators, competitors and the space that we play in. And also just seeing Telcom and OpenServe just advancing the way that we had over the last couple of years. I think it's been fascinating for us just looking back here. - And it's OpenServe has of course been through big changes itself over that period of time. There was the effect of unbundling. I don't know if that's the right term but OpenServe has been corporatized. It's now a subsidiary of Telcom where it was very much a division of Telcom previously. So now it's got its own P&L lines, I presume. It's run as a separate entity as a business. Tell me a bit about the OpenServe of today and what your role is as chief commercial officer. - Yeah, so OpenServe is basically the connectivity provider in the South African market. So in that separation and the forming of OpenServe is an infrastructure network infrastructure provider for the Telcom group. We then moved all the infrastructure assets of Telcom into OpenServe and then OpenServe runs as a separate entity with its own board, its own ex-core. But we provide the services also to Telcom channels like Telcom Retail, PCX and all the other external channels like Amoeb or whether it's after host or those other ones. - And you're expected to treat Telcom and Amoeb and everyone else with the same, to give them the same attention. - Believe me, I do so. - You do. - Okay. - Unfortunately, for me, each one of them accuses me of treating the other one, giving the other one preferential treatment. - Or does it still go on? - It still happens, I mean, so, internal channels, they're not getting being advantaged and external channels also believe that we're giving the internal channels advantage and that's not happening. We actually treat everyone at arms length, at arms length with each of our channel partners. My role, obviously, is just to make sure that I commercialize the investments that we've actually made in the business in terms of fiber and network infrastructure, create value propositions and communicate those value propositions also to our markets. So hence, business development, product lifecycle, management and marketing and comms as well. So we also do commercial operations as well. So I'll make a work office operations, pricing and costing of products. So it's the whole suite of portfolio. That's just purely about commercializing the infrastructure there. - Sure. - Yeah. - You joke about the ISPs and Telcom and playing off each other. But I mean, I imagine the market is very much happier with the arrangement as it is now, compared to what it was 10 or 15 years ago. - Definitely, definitely. In fact, if you look at our, I think it's something we do publish as well. So if you look at where the, in the fiber space and the ISP space, most of our business now in OpenServe from a broadband perspective comes from other channels other than Telcom. - Right. - And I think about 65% of it, yeah. - Okay, okay, okay, that's quite significant. So what is, describe OpenServe for me. I think consumers think of OpenServe, they think probably think fiber, first of all, but they will probably also think mobile and wireless infrastructure. But OpenServe is much more than that. Just give me a quick picture of what OpenServe looks like today. What is it you offer to the market? - No, so if you just look, if one just looks at OpenServe, so we provide connectivity to various segments in the market that we operate in. We have structured ourselves into three broad portfolios. So we've got the mass market portfolio, which looks after consumer and small and medium businesses. And then we have the enterprise and public sector looking after the businesses, large, medium to large businesses and as well as the public sector. And then we've got career and global 'cause we also have a lot of customers and career. Now businesses split kind of like a third each. I think that's something, I think the market really doesn't appreciate it's much easier for people just want to compare us with just one F and O because they provide development to the home, but actually we're much larger than that. It's a third of each of those three businesses, I think for us, yeah. So we provide value propositions that fit that type of market and that's why we split that way. So that 'cause you kind of something generic that suits everyone. Businesses demand things that are different. So from your normal residential broadband customers and your career customers buy for consumption, not for reason, for an example. So they need to be treated in a specific way as well. - One thing that I think people don't realize is the extent of the fiber infrastructure that opens up actually operates. Everyone thinks as you mentioned of fiber to the home, maybe some fiber to the business as well, but you've actually got over 100,000 kilometers of fiber connecting even the smallest towns in South Africa. I mean, a lot of that legacy infrastructure that's been put in, but you maintain it, you develop it, et cetera, et cetera. How important is that infrastructure to South Africa's economy? - It is very important. I mean, it's actually more than 100,000, but let me say 170,000 kilometers of fiber that we have nationally. - That's very important. I think if one thinks about connectivity in South Africa, you cannot think about connectivity without opens up by the way. So I think almost everyone in this country, even other carriers in the South African market, I think they are in the connected somehow. All our core network, there's very little of legacy infrastructure that remains in our network. Almost everything in the core and application is fiber now. So where there still remains that little bit of legacy infrastructure is on the access side, and that's what we're working to replace. That's mostly what we're working to replace, but mostly with fiberized almost the entire network. We provide the services to carriers. I mean, you speak about mobile now, so mobile operators. They also buy backhaul from us to connect the base stations. You've got businesses connecting their branches and they do MPLS or point-to-point or go into cloud. Then you've got fiber to the home. You've got small businesses also operating. So we play in the entire spectrum of connectivity really. And we're not just fiber as well, so when one thinks about capabilities, that's it within opens up. Of course, we're about connectivity. So we're not defining ourselves from using technology. We define ourselves using what we do, which is connectivity. So we've got fiber, we connect with microwave. Obviously, I mean, we're still doing copper in those days doing copper, but we don't do much of copper. We also got satellite in the toolbox. There could be some areas that are hard to reach. So we'll reach them with other technologies as well. And what about the mobile network? Is that also maintained and built by OpenServe? The entire backhaul in the mobile network is with OpenServe, but the RAN equipment and the mobile network sits with telecom consumer. So it's in consumer ASIA. So the RAN sits there, but the backhaul sits with OpenServe. Understood, understood. And then, of course, OpenServe, as I understand, is a big investor in undersea cables as well, which are some of the systems that you're invested in that connects South Africa to the world? We are on wax. We are on easy. We are on set three. And most of those, we actually operate them as well in South Africa, because we've got three lending stations in Transini. We've got Aza, Fontaine, Kipton. We've got Malpostrand. We also have a fiber pair on Aquiano as well. So we have a partnership that we have with Google. We provide them with terrestrial connectivity, and they provide us with the fiber pair on undersea. And we also have capacity in other cables as well, so that we are not directly invested in. Because for us, it's about not just connecting South Africans locally, but it's also to connect them globally as well. So in South Africa, we connect it to the world, and in the world, we connect it to South Africa as well. So we provide that connectivity. OK, OK. Now, OpenServe operates on a model that you describe as BBC. We're not talking about the British broadcasting, but rather business to business to consumer. What are the upsides of that model, and what are the pitfalls of that model? It's really an exciting model, because it's business to business to consumer. So it's an exciting model in that, because we're a wholesaler, and we unapologetically wholesale, I think, is OpenServe. So we go to market via channels, except for those that buy for consumption, but we go to market via channels. So there isn't a direct relationship between OpenServe and the end users, even if they are on our infrastructure. Because our channel partners, I think, own those relationships with the customers. The upsides of it is that it gives you a broader diversity of businesses that can take your infrastructure to market. I mean, whether one thinks about system integrators, do you think about ISPs, or do you think about mobile operators, do you think about other carriers as well? They want to buy, because everyone can leverage of the investment on infrastructure that we have made. So that's the huge benefit of it. And then it also excites competition, because, I mean, then they all have to compete for these customers. And I think the other part of it that we probably kind of like, maybe not really talk a lot about, but it's the fact that it contributes significantly to the entrepreneurial development in the country. That means if you wanted to run a business in the space of connectivity, you can actually use our infrastructure. So those are really the opportunities that it creates, and the benefits that it creates for us as OpenSEV. I mean, it gives us also the reach in terms of footprint, because some of our channel partners are where we would never have been as OpenSEV ourselves. Otherwise, we have to change the structure of the organization if you really wanted to go to all of those. So broadly, those are the opportunities. Does it have its own pitfalls? Yes, it does. So some of the challenges. But it's things that we can always work around and work on. So some of the challenges that you get to have, for example, is that our channel partners are not entities of OpenSEV. These are independent businesses. Yeah, they're kind of representing. They've got their own strategies and their own plans. I mean, they don't want to sell to these type of customers, or they want to sell to those ones, the way they package their products. You know, they've already done their own market definition. So as we invest in infrastructure, we always need to make sure that we align with our channel and partners to make sure that once we've invested, someone is going to be able to take those services up and push them through to the market. So hence, we're always also making sure that we are developing and enhancing our channels, developing where we can develop other channels or enhancing and complementing the existing channels. We actually do that as well. So do you engage quite actively with your ISP partners? I mean, how closely do you work with an ISP, for example, in delivering services to that end user? Very, very close. We take a lot of inputs, actually, also from them, around what the market requires. Because, like I said, area, I mean, we don't deal with the end users directly. So that relationship mainly is with the ISPs in that case. So they know a lot more about what the customers are expecting. So we get a lot of input and also just also helping us go the right direction around where we actually have to roll out the fiber infrastructure. So we don't just go anywhere. So we say we are demand-led. I mean, they also close up to that demand. So they will then be able to direct us in terms of where we need to go and roll out. So we're pretty close up. I look after business development and relationship management in open-self. So I do get to meet ISPs quite a lot as well. And our customers quite a lot. And I've got a team also that does that. OK. I know that your financial results, Sarami Tokobong, often talks about the attachment rate of the fiber and open-self and how that's the market leading position that you in. I forget the exact figure. I think it's over 50% if I'm not mistaken. It's for $8, $2, $9, $4, $8, $9, yeah. Yeah. But that's pretty good in this market. I think the average is probably sitting around 30%, 35%. And you do that through demand analysis, working with the ISPs to determine where the take-up is likely to be. Yeah. So by the way, it's around 35% in the whole market if you include open-self. If you exclude open-self, it's even lower. So we've really done well, I think, in that it's the way we have approached it in the market because we've followed where the customers are. It's been demand-led. We've been wanting to connect to our customers rather than just roll out infrastructure. And the other thing, I think, that's been quite a big differentiator for us has been not just the value propositions that we've put out in the market, but just the network experience. So the customers, once they're connected on our network, want them to stay connected. We don't want-- there shouldn't be a term when then they are not connected. And we therefore make sure that the support also works well. So when the service goes down, we're able to quickly respond to those issues that the customers have. I'd like to spend a moment talking about open access. What Telcom wasn't always in favor of open access, it changed its tune some years ago now, actually quite a long time ago now. And the company now has open access religion, if I can call it that. You are very much committed to the open access model. First of all, what is open access for those who don't understand the concept or haven't heard of it before? And secondly, why is open source so in favor of it? OK. So yeah, so open access, like you say, I mean historically, must just also remember Telcom used to be a single entity with the wholesale and retail businesses. So everything that the wholesale and the network and infrastructure business did was just to serve the needs of the retail businesses. So the separation of open access, of open service, in fact, has been mostly also just to pronounce that open access thing that we have now. So the way she just want to drive it, an open access, what it means is everyone should be able to have access to the infrastructure that we've rolled out and advance their own business and their own interests. So we can invest and then close others out. And we've seen that that's part of the reasons why open service has been so successful in the market, because we've got everyone who can, should take advantage of the infrastructure that we've rolled out and offer their own services and innovate on top of it as well. So because innovation, I always think about this, that connectivity is the most underrated and understated component of innovation. And so when you just think about this podcast we have here today. It's the base layer of innovation. But nobody talks about it. So every digital innovation has an assumption around connectivity. So as open as the sort we exist for, so open access enables it. So because then anyone can actually access in that infrastructure, we've made it a point that we don't compete with our channel partners as well. So we don't have our own channels. So because we want to enable them, we want them to succeed. Our success is dependent on our channel partners succeeding. So we also therefore need to enable them and make sure that we put out in the market what is right out there. They're much closer to it. They can innovate. They can develop their own solutions around our infrastructure. And they can serve the market whichever way that they want to serve without the restrictions of us being a closed network. And also by the way, if you're a closed network, you then also have kind of limited your chances of being out there in the market. Because then only one channel can be there out there for you. So it's good for open service, good for telecom and it's good for the industry. Yes, definitely. Definitely, yeah. OK, OK. Now I want to touch on something that you described as your connect led strategy. Tell me a bit more about that and its significance to open service. I think you just touched on our connectivity rate sitting at 48, between 48 and 49%. That's also the result of this connect led strategy. What we're saying is when we roll out infrastructure, we're following demand. We're going to where the customers are. Secondly, we want to leave the customers that are in that area or the premises that we pass, we want to leave them connected. In fact, what we've even done, we started as a campaign and we've finally just implemented as our go-to-market approach is what we call tripe before you buy. So wherever we go to areas and roll out fiber infrastructure, we connect a customer for free and we leave them with a free internet for 30 days. And whilst it's still going to have to decide who the ISP is going to be for no charge, we just want to make sure that we've connected those premises and the customers have access to infrastructure. Because the other thing is also people have to experience fiber. Fiber is very-- it still needs to reach the point where people just understand it as a service. Because other people just think of it as a very technical thing. And so intimidating when you say someone who fiber. But once people have experienced it, they will know what it is. So super high speed scalability, low latency. So that's what the customers have experienced it. Then they would want to stay connected. So when we talk about connect-led strategies, we follow demand. We want to connect our customers when we leave. We want to leave them connected. We don't want to just roll out and then work our way and think we can come back later and sell. So when the customers give the customers the opportunity to experience fiber as well so that they actually can stay connected. Yeah. And fiber, of course, is a lot more reliable. I remember the days of DSL. And personally, my line was going down often. Today, I have fiber and it's rock solid. Less prone to whether increment, whether issues, and all of that fiber breaks, if they happen, it's just once in a while. But copper, I mean, copper theft and all of that. I mean, fiber is much better. I mean, our fault rate, if we just look at our network now, our fault rate is like super, super low. Because I mean, it's mostly on fiber. When it was still copper days, I mean, it was quite high. Yeah, for sure, for sure. Just lastly, as chief commercial officer of OpenServe, what are your key focus areas going forward? What are your key priorities for the next couple of years? For the next couple of years, we are looking at what are the evolving needs of the market? We continue to evolve our value proposition. We've done a lot around pricing, I think, in the market. I mean, as you'd know, customers are continuously demanding more for the same, in fact, more for less, not even the same, so they're demanding more for less. A lot of content is being produced. There's a lot of value-ed services that are coming up in innovation that demands a lot of bandwidth and data. And so customers are using more and more and more of the of connectivity services. And yet, because we're a connectivity provider, it's that layer that, like I was saying earlier, it's kind of like unseen. So connectivity is kind of like unseen. So we just want to bring that up. And we also want to look at opportunities. How can we play as open safe? Just above that pure connectivity layer, so that it's actually visible to our customers, what it is that connectivity provides to them. And we have come up with quite a lot of innovative solutions as well, just to make it easy for our internal partners, providing end-to-end products and services. Because in the current world, you know, so where the ISPs work is, they buy a fiber line, then they add their own internet, and whatever value added services in they sell it. That means that you have to have your own technical capabilities, your own processes and things and systems that they actually do have and support. We want to take away also all of that and be able to provide an end-to-end solution so that our channel partners can focus on what they do best, you know, which is saving their customers. So for us as open safe, we also want to focus mostly on rolling out our infrastructure and making sure that it's available to as many South Africans as possible, obviously, with the availability of Cape pegs, and because that also still is a big role. - You've got to watch the money. - Yes, exactly. You've got to watch the money. I used to be in finance, I spent most of my alias in finance. So for me, it's always in my head as well. So we need to make money out of this as well. So our focus, I think, over the next couple of years is just to look at what are the other opportunities that are available for us as open safe. How is the market evolving from a technology perspective? How are our users also evolving? I'm always driving a point within the commercial team that we need to be kind of outward focused, not inward focused. Let's look at how do customers experience our services? Can we design things that can meet their needs? You know, so it shouldn't just be about us, what do we want, but it's also what do they want out there? - Excellent, well, these have been fascinating insights into the workings of open serve. I think our audience will have found this fascinating. Pila Dubey is chief commercial officer at open serve. Thank you so much for sharing your insights with the Tech Central audience today. I'm much appreciated, thank you. - Thank you, thank you, Duncan, and thanks for having me, and thanks also to your audience and thanks for listening. Yeah.