Transcript for ‘Our network strategy’

Speaker key

IV - Interviewer
SP - Stephen Pusey


IV - Where do you focus your IT investment?

SP - We focus our IT investments in three principal areas; on our own organisation, to make us more efficient; on our customers, and vastly improving the customer experience, where the bulk of our investments go; and, of course, as well as new products and services, and the IT that brings those alive. For a look at our own organisation, we’ve recently this year invested very heavily, as part of a three year programme, to conclude it in a new ERP system, as it’s called, which is targeted efficiencies in finance, HR and supply chain operations worldwide.

The second area of major IT investment is on our customer experience, and this is where the bulk of our money goes: on online, on our retail, in our call centres and, of course, in our billing and, what we call, customer relationship management systems, to make the experience of our customers seamless across all the touchpoints as they make contact with Vodafone. The billing, particularly, has been upgraded in the last 12 months, as we move forward to an internet data era of propositions to our customers, to give them the flexibility in the products and the services that they buy from us.

The third area is new products and services. Lots of IT goes into this area. Some simple examples of that: this year we’ve launched the Vodafone Protect, the Vodafone anti-virus and malware protection, so that everything going through our customers’ devices, particularly smartphones, is protected; and find, lock and wipe, which is a service where, if a customer does lose their device, be it a tablet, a handset, we can find that on our network, we can lock it over the air, we can protect the content and wipe it clean, because it’s backed up on the Vodafone data centre. We’ve supported that with back-up and store, where we can back-up the address book, where we can back-up the content of our customers, in a centralised repository.

IV - What are you doing to keep ahead of customers’ changing habits?

SP - Our networks are changing very rapidly, because what our customers want to do with the internet has evolved very quickly. A few years’ back, we were driving to get ubiquitous coverage of voice. Today in Europe, for example, 99% of the footprint of Europe is covered by voice. Our first, and most important, ambition is to get the same coverage for data. Just short of 90% of the European footprint has 3G data coverage. Our customers are rapidly moving towards smartphones and tablets, and our ambition here is to maximise the capability in those devices with what the network can offer. So, we’ve introduced the Vodafone floor, the minimum experience that we expect to offer our customers to get the best out of those devices. Today, 82% of our European footprint is operating, as a minimum, at the 14.4 Mbps speed in the radio head, and most of it is way beyond that. In addition to that, we’ve been rapidly upgrading the backhaul, and the transport, and pushing fibre deeper, and all of these things conspire to get a more consistent and superior video experience, as well as improving the peak speeds.

IV - How are you managing your network costs?

SP - Firstly, data is growing. It’s a great opportunity for us. Our networks have experienced a 200% growth over the last two years in data that we have to carry and manage for our customers, and this great opportunity needs managing from a cost point of view. We try and keep our cost near flat year-on-year, and that’s a continuous goal we have for all the technologies in the company. We have a number of tools that we use. These range from things like network sharing, where we share the steel and concrete in the field, primarily, but mostly we incorporate new technologies. We stay on the leading edge of technology; things like single RAN. This is 2G, 3G, and 4G in one box that offers us up to a 40% efficiency in the cost of things like energy, by using that new technology. Today, 24% of our entire base uses single RAN, and it’s growing rapidly. In backhaul technology is where we’ve used products like IP microwave, which offer a dramatic efficiency in the amount of data that they can carry over the same footprint of spectrum. And lastly, and probably most importantly, the SMART part of the network. This is how we manage the throughput of video and web traffic, and how we make that ultimately very efficient, and get more for less, through the core of the network.

IV - What is LTE (Long Term Evolution)?

SP - LTE is the next generation of wireless. It stands for Long Term Evolution, and we’re big supporters at Vodafone. We were right at the forefront of developing this science, and we’re one of the lead operators to help develop it. What it means to a customer is it’s a step change in the experience. It will move your peak average experience, from a 6 Mbps connection to probably around 12 Mbps connection, a dramatic throughput improvement. It also improves something called latency, the ping time, the end-to-end connection, and that’s really important. We first launched this in Germany, and today targeting the rural areas, and now evolving into the metropolitan areas and we have over 35% of the German households that could be connected with an LTE performance.