Telenor’s Sandberg Discusses Virtualization

Norway’s Telenor is knee-deep in its digitization efforts, which also includes re-training current employees as well as hiring new ones with different skill sets.

During Mobile World Congress, in Barcelona, Telco Transformation sat down with Bjørn-Taale Sandberg, head of Telenor Research, to find out more about his company’s digital transformation.

Telco Transformation: What is the biggest issue that needs to be solved for the industry?

Bjørn-Taale Sandberg: If I look at this from Telenor’s point of view, and obviously we’re a big part of the industry, the big challenge for us is to digitize our operations in all matters and respects. By that I mean three things really: digitizing the core or operation going from the spoke to virtualized on the network side. That's happening, we're doing that, and that will only accelerate with 5G. So that's one big thing. The second is digitizing our distribution. Our operations are analog to a large extent today. We still distribute hundreds of millions of SIM cards so our distribution is physical. We have more than a million points of sale in Telenor Group (Nasdaq: TELN), all told, and that needs to change going forward. A very big part of our digital journey is to go from physical, or analog, to digital when it comes to distribution of services.

The third is AI, or Big Data analytics. To really make that an integral part of all we do, not just sales, or marketing, which is the pretty obvious place to start, but putting it into our products, putting it into customer care and, over time, into networks. We operate the networks and then have the networks operate themselves. So that's the third part of the big change that's coming and to some extent, perhaps the most difficult one because of the skill sets that are needed.

TT: How do you change the skill sets with existing employees or do you hire new employees with IT or Web-scale backgrounds? That’s a cultural transformation, right?

BST: It's all of that. We have more than 30,000 people internally now. We can't replace all of them and we wouldn't want to. So retraining, re-skilling is perhaps the most important part of the equation. Obviously, you can accelerate this by bringing on new talent as well. We have said that we are going to hire another thousand employees with new skill sets in order to accelerate this. But most of it has to be done through re-skilling.

TT: You have a program in place for re-skilling your existing employees?

BST: Yes. We call it the Strategy Execution Program. That name is a bit misleading. It's really a training program where we take everybody--starting from the top and down through the company--through a course. It's a significant investment in time for people. There's a course in lean programming, in service design, in rapid prototyping, in new ways of thinking about customers and problems. You get new tools, and you get very concrete, practical training on how to do this with the team you work with on a daily basis. We're taking the whole management teams in most of our units, starting from the top as I said, through this training now by sending people to school and by doing it virtually online.

That's one example and that's a big investment in terms of hours that's put into this. It's not an attempt to make everybody into lean programmers--that's not what we want because we need traditional Bell heads or telco types as well--but to give everybody an understanding of the ways of working and tools and techniques that you need in order to succeed in a software world where services need to be built in three weeks rather than half a year and all that.

So that's a very concrete thing we're doing. Like most companies we have our own Chief Digital Officer [Jon Gravråk] who is going help us with part of this. Our HR division is very involved in building this skill base. We are reorganizing to make this go faster. So all this is happening, and it's happening quickly now.

The felt urgency is that we, the same as all telcos, see that the traditional growth we have in the number of subscribers is slowing down. There's growth in the consumption, but our ability as an industry to monetize on that is not as good as it should be. So our revenues from that are not growing as fast as our costs from serving up that data. We need to do something and everybody understands that's a combination of digitizing the core operations, thus cutting costs and becoming more relevant for customers, and looking for new products and services. And doing that in a much more agile way than we have. This is just the same story that you probably hear from all telcos, right?

TT: That's a lot to do without disrupting your current subscribers. You're moving to a hybrid network?

BST: What we're doing now is that we are running two big projects. We call them "One Asia" and "One Europe." In those projects we're looking at rebuilding parts of the telco stack, virtualizing parts of the telco stack. The idea is to serve more than one operation from sort of one location with at least parts of all of the functionality on a virtualized stack. So that's the headline of what we're doing. That's our starting point.

We think that 5G, when that comes in a few years, is going to accelerate things. Exactly what 5G is going to mean for us, I'm not going be too bullish about right now. We believe that 4G will sort of grow into 5G in many respects. At least with the core virtualization that'll happen before 5G. Obviously, new radio technologies will come with 5G, network slicing might not come before 5G, that kind of thing. But we believe the whole process of virtualizing in the networks will accelerate with 5G. And at the moment we are part of the standardization work on 5G. We're part of the research work on this, and we expect that we will also be doing 5G trials this year and next year. None have been announced yet, and I'm not going to do that now, but that'll probably happen. I don't think any operator's going to say they're not planning for 5G.

— Mike Robuck, Editor, Telco Transformation