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Is wireless better in Europe?

CNET chats with Olaf Swantee, an executive vice president for the wireless carrier Orange. Swantee manages the company's operations in 11 countries in Europe and the Caribbean.

If you live in the United States and have used your cell phone on a European holiday, it's very likely you became acquainted with Orange. I'm not talking about the color or the fruit, but rather the cell phone carrier.

Incorporated in 1994 and now a division of France Telecom, Orange is the fifth largest telecom operator in the world with both wireless and fixed data networks. That's not a small feat by any means, particularly when you consider that the company employs 166,384 people and serves 182 million customers in 32 countries. What's more, it also serves as a roaming partner for U.S. GSM carriers.

Up until this week, the main thing I knew about Orange was that it was the debut iPhone carrier in France. On Wednesday, however, I had the opportunity to talk with Olaf Swantee, Orange's executive vice president of operations for Europe and sourcing. Born in the Netherlands, but now with a home in Switzerland and an office in London, Swantee oversees Orange's business in 11 countries in Europe and the Caribbean. Swantee was candid and informative as we discussed wireless growth in developing countries and whether cell phone networks in Europe really are that much better than in the United States.

Olaf Swantee Orange

Q: What is your business focused on right now?
A: It's much more about retention than acquiring new customers. First, we're focusing on after-sales services like customer care to make sure that our existing customers stay with us and spend more money with us.

The second key leader is efficiency. In mature markets you need to spend much more time defining the "how" than the "what." It's not so much about reducing costs, but about doing things better.

The third thing is new services. We really try to take our "people interface" really seriously. We want to make sure that our 90,000 employees working in call centers and in shops are installing things for the customer. We're helping people use their phones after they buy them.

That interface is the point of our differentiation, but it can't be just for free. This is something that operators are not used to. Mostly, they include [services and features] as part of a bundle or a package. In contrast, we're saying that there is a lot that's part of a bundle, but if you want something specific, you pay a small amount. We turn that interface into a profit center.

Q: A popular notion in the United States is that this market is behind Europe in wireless use and adoption. What do you think the differences between the two regions really are?
A: There are a few things. To start, the networks [in] the Europe and the U.S. are different. Most of the time it's CDMA technology [in the United States], but [Europe] has networks built around GSM technologies like HSUPA and HSDPA. Our advantage in Europe is that those technologies scale a little bit better. So we don't need to have LTE tomorrow morning.

In the United States, [LTE] is a much bigger priority because the current networks are not sufficient to cope with the data growth. That's an important difference. We can do with twice and three times the growth right now. It's fascinating that even in small countries like Armenia, where the GDP per head is a tenth of what it is in the United States, data use is 40 percent of our revenue.

Q: Did national governments and the European Union play a strong role in encouraging the development of wireless technology? That's the perception in this country.
A: I wouldn't say that the government created this difference. Rather, it's our focus on making sure that the network works. Also, we had the GSM standard for a longer period of time. That's a key reason. Interestingly enough, over time [CDMA and GSM] will converge into an LTE network. So in the next couple years, you'll see the U.S. and Europe having the same underlying wireless technology.

Then we need to look at how we bring the network to market. We segment much more in the way that we design plans and sell them to customers. So if you are a customer in the U.K. that uses a lot of SMS [text messages], then you would buy a service contract that's built around your needs, your device, and your contract duration. The U.S. is more advanced in the concept of the family plan, but Orange goes so far as to build out individual contracts. We can see the profile for a customer that's totally specific to their uses. We can build that.

We're also designing service plans that would put multiples devices, like phones and tablets, in one contract. I don't see that much in the United States.

Q: Are there different patterns in how customers in Europe use their phones?
A: Every country [in Europe] has its own particularities. There are markets like the U.K. where gaming and social networking are extremely important. We have countries like France where mobile TV and video-on-demand services are extremely important. So the applications are quite different by market.

In the United States, e-mail seems to be more important, but SMS is much more developed in Europe. But even there you have places where SMS is big, while in other places, like Eastern Europe, it's very small.

Q: You were just in Cupertino, Calif., meeting with Apple. What has the iPhone done for your business?
A: Like in the U.S. it's been a huge success, and the iPhone 4 is an even bigger success. We're the largest partner with Apple in terms of the number of countries where the iPhone is sold. We have 29 countries where we have the iPhone. We also develop our own applications for it.

Q: In the United States, handsets like the iPhone have really made smartphones mainstream. Is that happening in Europe as well?
A: The iPhone was the first touch-screen phone that made things really easy to use, and it came with an application base that developed quickly. It's been a huge success across the board, though Eastern Europe is an exception.

Currently, the iPhone's customer base is midrange to high end. Along with its equivalents, it touches only 25 percent of the total base, so we have an opportunity to grow. We still have 75 percent that [we expect to adopt smartphones]. And as that wave begins to move, it will be interesting to see what those success factors are. Lower-cost smartphones need to come to market to attract those customers, and we believe we'll see targeted smartphones (like a handset focused on social networking).

Q: Do you see the smartphone market growing accordingly? Who has been successful? A: There's very strong momentum and [the smartphone market] is developing very quickly. Samsung is certainly ahead of the curve along with HTC. Nokia is much more important in Europe. And RIM is on the rise in Europe, especially among consumers.

Q: Indeed, Nokia has been struggling in the United States for some time. But is it really doing all that much better in Europe?
A: What seems to be the case is that the farther it goes away from the U.S., the higher its market share. Nokia doesn't have a lot of market share in France, for example, but Nokia is incredibly important in Eastern Europe. And when you go to India and other places in Asia, Nokia is even more important.

Even in Europe we've seen that Nokia has lost share. Its smartphone range really isn't as powerful as the others on the market. Yet, Nokia continues to be very strong in feature phones and basic phones. If you take the Africa and Middle Eastern region, you'll see a lot of Nokia because those regions care about low-cost phones over smartphones.

Q: Has Nokia's dependence on Symbian held it back?
A: I think so. Symbian 3 seems to be really good, but the most successful smartphone companies either have made a good software platform or partner with a good software company. For Nokia, the transition from a hardware company to a software company has been a challenge. But if you take the most recent N series of devices, we're confident Nokia will get it right.

Q: What kind of effect has Android had in Europe?
A: It's a good platform. I've heard that in the U.S. it has a nerdy or enthusiast base, and I think that's the same in Europe. Because of the multitude of devices, it starts moving very quickly down the customer pyramid. It will become a very important platform and Microsoft's Windows Phone 7 has a very good chance to become very important in the marketplace as well. It's a good platform and Microsoft is behind it.

Q: Do you think we'll ever see one carrier that will cover all of the European Union regardless of national boundaries?
A: No, I don't see that for the foreseeable future for a couple of reasons. The largest countries in Europe have incumbent operators, not only in mobile but also in fixed. Typically, they're the largest employers in the country, so it's not likely those companies would integrate or merge with us or someone else.

The second reason is that we don't think it would bring a lot of value. When you merge with someone you can get a lot of benefit if you can share the same systems. But Orange has a decentralized model. If you go to an Orange country, you'll have a local company with a local CEO, a local network, and local call centers. We don't have as much synergy.

The third reason is that we can achieve some of the benefits of creating more of this one network through other means. Right now we have a joint venture with Deutsche Telekom where we merged the two networks. That will continue to happen; we will have more network sharing and technology sharing. But it's not necessary to merge to get there.

For business customers, we already offer one global contract through what we call the "Free Move Alliance." It's an alliance between multiple operators where we can offer one contract.

Q: Of all the countries where Orange operates, where do you see the most growth?
A: We're big in Africa and the Middle East, and we believe strongly in the future growth of that market. In fact, we have plans to double our revenue in that region and add about 125 million customers.

Q: What trends do you see in mobile applications?
A: Mobile banking and mobile payments are important for emerging markets like Africa. In countries where people don't have bank accounts, we use the mobile wallet as a banking service. We believe that also will become important in mature markets, for money transfers. For example, Polish immigrant workers in the U.K. can use the services to transfer money back home.

Q: Is data in emerging markets growing as fast as it is in mature markets?
A: Yes. In Africa and the Middle East our engineers have worked on voice-based SMS. Even in places with a high illiteracy rate, customers can text. We're also seeing that data growth is really ignoring economic differences. For example, you have places where the GDP may be very low when compared to mature markets, but mobile Internet is taking off even faster than the mature markets. That's particularly true where there is no fixed data infrastructure. Data also grows even during a real economic dip.

Q: Why is the mobile Internet growing so quickly in those places?
A: The mobile Internet combines personal data and location data with the global Internet and puts it in a real personalized package. That makes it extremely powerful.