The cutting edge of communication

It's been nearly two years since Vodafone Malta has had to deal with competition in the mobile sector. David Lindsay speaks to Vodafone Managing Director Joseph Grioli on how the market has mushroomed, consumer trends and what the company plans for the future.

It's been a little over a year since I last interviewed you, how has Vodafone fared with the advent of competition in the sector?

We experienced competition for the first time last December and we are not unhappy with the results, in the sense that our subscribers have more than doubled since the last time we talked. At the moment we have more than 130,000 subscribers. Effectively there is a Vodafone in practically every household.

Last year I had expressed my consternation over the fact that we were not being allowed to reduce prices. We have now been let free in a sense, prices have been reduced and the result is that we now have over 130,000 subscribers, the competition claims it has 60,000. Accordingly, the local market as a whole has grown from 50,000 to just under 200,000 in the space of a year.

However, these figures do not imply that all these subscribers spend money. We welcome the fact that our service is accessible to all, which is part of our decision to make a world in which people can contact each other in an easier way. We have invested tremendously in terms of both capacity and coverage and now we're in a better position to offer the best of these crucial elements.

There was an issue of network congestion the last time we spoke, have these problems been ironed out?

There is no network congestion today. Last year we were having a lot of problems with the Planning Authority issuing permits for our base stations, which at the time were taking some two to three times longer to be approved than they are now. Those problems seem to have disappeared. Last time we spoke we had some 20 stations which we were not being allowed to fix, since then we have fixed more than 100 and we're happy to say that our customers are a lot better off now.

It appears that the market will reach a saturation point in the near future, in what ways are you looking at expanding your business. Will you be offering new services or products?

As far as voice is concerned, an increase in business can only come from improved and lower minute rates. But obviously we are looking at other services and we believe that, as a group, data will represent 50 per cent of our revenue in four to five year's time.

The sky is the limit with data, we're talking about m-commerce, e-commerce, even taking photographs with a mobile and sending them straight to a recipient.

Realistically speaking, how far away are the Maltese operators from offering these types of technologies?

Malta is not far away from anywhere. We installed a GPRS network this year, which is in line with the rest of Europe and we have customers using GPRS on a trial basis free of charge and the trial has been extended and is still going on. This is the same situation that is taking place across the rest of Europe. All operators in Europe are waiting for more reliable hand sets to become available on the market.

We are currently in the middle of the road, as GPRS is what we call the 2.5 generation. There is going to be a third generation, which is UMTS.

Concerning data, these technologies offer a far superior speed and, although you are always on line with the Internet - like ADSL - so you don't have to dial in, you are always on line. Importantly for the customer, we will only be charging customers for bursts of data as one downloads and sends files.

When a customer downloads or requests data, that is a single burst. Again, when a customer sends an e-mail, that's another burst, or packet, of data. This pricing system will be very beneficial to the customer, who will find that their bills are much smaller than expected - especially when downloading data from the Internet, which can sometimes take several minutes or sometimes hours. This could become less expensive than downloading data from a fixed line.

Has the opening of the numerous Vodafone outlets across the Islands helped in increasing your subscriber numbers?

We have 1,400 dealers selling our top up cards and connection packages. As such, we opened these locations not to compete with our customers, but to give better service to our clients.

Although we do sell our own products, more than 70 per cent of the people that enter our shops are there for matters of customer care, for general information, such as how to program a phone or give instructions on how to use new products. So it's a one-to-one exercise in customer care. In fact, I prefer to call them customer care centres as opposed to shops.

What kind of consumer trends have you seen develop over the last couple of years, in terms of the types of packages being bought or services used?

Over the last year the average age of our subscribers has been reduced with the input of many 14-year-olds and sometimes even younger. Most of these are SMS clients. In Malta we are processing something close to 70 to 80 SMSs per subscriber per month, while the average in Europe is about 45.

However, there is a reason for that. SMS in Europe is not as ridiculously priced as it is here. We've created such a huge differential between the price for a minute of voice and an SMS, a differential that induces people to use SMS instead of voice.

Typically in the UK an SMS costs 10p, compared to an average of about 20p for a voice call. Here the average phone call can be anywhere between 18 and 22 cents per minute, while SMSs are two or three cents, which is ridiculously cheap.

SMSs have become quite a phenomenon, but I wonder how long it will stay like that. This is particularly apparent in the sending of SMSs to overseas countries. We are now being, or will be, charged termination costs in excess of two cents. Accordingly, it will not be sustainable to send SMSs abroad for just two or three cents.

At the moment operators are not charging each other for termination of SMSs internationally, but over the next six months we will be charging each other for terminating.

The Internet is causing the problem really, not by mobile operators. One can find numerous Internet sites where SMSs can be sent for free, which means that we are terminating SMSs here for service providers abroad and we are not getting paid for it although they are using our network. This will have to change.

We belong to the GSM Association, which regulates these matters and, while they won't tell us how much to charge each other, at least a decision has been taken that charges should be instituted. These providers are misusing the service. For example, you can find service providers in South Africa selling SMSs at five mills and they can do it because they are not paying out termination costs.

Have there been any developments in the sphere of Maltacom's 20 per cent shareholding in Vodafone Malta?

I think you should ask the government about that. The government has legislated that Maltacom should be out by 1 June 2001 and it's up to the government to ensure that laws of the country are honoured.

Furthermore, the question as to whether Vodafone will be taking the 20 per cent stake is really for the Vodafone Group to decide.

What new products and services does Vodafone Malta have in the pipeline?

While we have several upcoming innovations, at the moment we are experimenting and will soon be launching Virtual Home Environment, which is already working in some countries.

The virtual home environment allows one when abroad to, for example, use all of Vodafone Malta's short easy to remember numbers - such as 909 for mailbox, 247 for customer care - the same as though you were in Malta. The idea is that wherever our customers are, they are virtually at home. Eventually, even 09190 for directory enquiries will be available in the scheme.

We have several other products in the pipeline and our customers will be kept up to date with what is available on a world wide basis. We guarantee we will not fall behind the rest of the industry in terms of availability of products.

It is the declared vision of the Vodafone |Group to set the pace in the industry in all countries in which we operate.

Our company has four values that express our passion for our customers, our people, our results and the world around us. The Vodafone Group lives on these values and perhaps achieved the great success it has achieved around the world because of these strong values. As part of the Group, we live these values, and our customers are assured that they get the best all round.

These values are in action, we don't just sponsor Ferraris and Manchester United - we aim to give value to our clients.

We are not on a mission to be the cheapest in anywhere, our ambition is to be the best everywhere- one cannot be both the cheapest and the best. Accordingly, being the cheapest is not one of our values, but being the best is definitely our strongest value.