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MCI IntervIew

Big spenderIn his first interview since becoming Group CTO of Vodafone, Steve Pusey talks about the breadth of the role, his technology choices and a high speed roll out in India.

That every telecoms vendor in the market should want to cultivate a relationship with

Steve Pusey is unsurprising. As global CTO of Vodafone he wields massive, if unspecified, financial resource. Pusey will reveal only that his total budget for 2008 is “a very large number”, easily large enough, indeed, to inspire tokens of respect from suppliers eager to win themselves a portion.

Unfortunately for Pusey, the rules dictate that he can accept no such offerings. He once jokingly told a sup-plier in a meeting that the only thing he could accept was a cup of tea, he says. Soon after, an ornate urn full of tealeaves was delivered to his office.

Such inducements used to be fa-miliar elements of the pitch—in all likelihood they’re still well used by many companies. “But back when that was a regular part of the game,” says a faux-rueful Pusey, “I was a vendor.”

In 24 years at Nortel, Pusey rose to become the Canadian supplier’s presi-dent for EMEA. In September 2006, he crossed to the other side, bringing the technical breadth acquired at Nortel to a Vodafone that was beginning to stretch itself beyond the familiar ter-ritory of cellular operations into other forms of connectivity.

He reveals that it was four months into his job at Vodafone that he began to feel comfortable with the “size and scope of what we’re doing.” Certainly from the outside it looks like a big job: Vodafone has equity stakes in 25 operations worldwide (18 of which are wholly owned) and a further 40 partners across five continents. More than 240 million customers depend on the decision-making and operational performance of Pusey and his team for their connectivity.

Adding to the workload is the fact that, at Vodafone HQ, the CTO doubles as the CIO—a job spec that is mirrored at the individual properties.

This is not, however, a specified company policy, says Pusey. “It’s just

matured that way, it’s common sense. Our world is a collision of network and IT and web-based services. All the enablers that allow us to bill and support our customers, the authen-tication, authorisation—they’re all applications in data centres that need the IT department in sync with the network. We very much have one voice for that in Vodafone,” he says.

Vodafone has built its success on cohesion and standards and Pusey is in no hurry to devolve responsibility for key technology choices down to the individual properties. “We’re not happy just to let different operations try out different things,” he says. “We’re much more joined up than that. Of course we’ll try different things, like WiMAX and LTE but we’ll do it together, so

everyone will get to see the results of the trials as a community.”

Pusey calls his team of in-country CTOs together once a month to share ideas and experiences, leading to debates on the future technology strategies of the group as a whole that he characterises as “quite aggressive”. The latest trial that Vodafone is set to embark upon is IPTV. “We’ll do that in one country and all the CTOs will fly in and have a good look and, collectively, we’ll form our opinion,” he says.

The Vodafone that Pusey and his senior management colleagues see going forward is a firm providing total communications. “Suddenly we’re in lots of spaces all at once,” he says, a development that leads him to identify a financial trend at Vodafone going »

Pusey says that four months into the role at vodafone he became comfortable with "the size and scope of what we're doing."

mike.hibberd@informa.com

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MCI IntervIew

MCI IntervIew

into 2008. Vodafone’s capex guidance for the financial year 07/08 projects a year on year increase to between £4.7bn and £5.1bn. The growth is in part down to greater variety in Voda-fone’s operations.

“I see something of a mix-change going forward,” he says. “We’ve ac-quired new properties with Tele2 and we’re doing self-build in a number of other properties; unbundled local loop, primarily. That takes us into buying new types of technologies—wireline, DSLAM, DSL, VDSL and beyond. IPTV as well. So we’re into a new era of expenditure, which will accelerate in 2008.”

Historically Vodafone, like all pure mobile players, has marched beneath the banner of fixed mobile substitu-tion—the more minutes that shift from fixed to mobile the better. Now the carrier has fixed plays as well, does such a strategy remain logical?

“FMS is something we still press very hard on,” says Pusey. “As you look toward total communications, DSL is an integral part of it and also underpins our thrust into the busi-ness segment. We can service SMEs with connectivity services and then build on that with a mix of mobility and convergent services. We see it as very complementary but that doesn’t mean for one minute that we won’t keep pushing to get an unfair share of the fixed minutes as well.”

Investment in the core capability of wireless service provision will not suffer, he says. And in Vodafone’s mature markets 2008 will see the firm focus on HSPA. “You will see us upgrade our HSPA footprint to grow speeds and capabilities. We always carry on with our commitments to national footprint. But there is definitely going to be more hotspot and penetrative investment to deal with capacity growth with the drive towards data, because data isn’t a ‘one-size-fits-all’ spread across a given country,” he says.

Pusey reports that he is satisfied with the performance of his 3G net-works. Data access usage is growing healthily with data cards and USB modems proving popular in 2007 and forecast to do better in 2008. HSDPA performance of 7.2Mbps is already in place in some Vodafone networks, Pu-sey reveals, and will be implemented across the portfolio this year as the firm aims to provide a consistent service across its footprint. Uplink performance will also be addressed, he says.

“It’s not just about the downlink. So far I haven’t seen too many services that require symmetry but, as soon as you start doing peer to peer traffic, you have to think of the uplink as well as the downlink.”

Greenfield build-outs are rare for cellular carriers these days, given how few licences are be-coming available. But Vodafone snagged one such opportunity in

December 2007 as part of a con-sortium that won the second li-cence in the Middle Eastern nation of Qatar. Services are expected to launch this year. So, does Steve Pu-sey prefer the blank canvass of the Greenfield deployment for the op-portunities it provides to learn from previous challenges?

“Greenfield is exciting,” he says, “you get a clean sheet of paper. But, if you go into any of the big coun-tries in Europe, you’d see a state of the art infrastructure and if you had that clean sheet of paper there, you’d probably build what you’ve already got in place.”

Far more familiar are post-acqui-sition evolutionary build-outs. This, says Pusey, is one of Vodafone’s core skills. “We’ve become pretty good at assimilating legacy and mov-ing forward. That’s a forte of this company, from a technical point of view,” he says. Nowhere is this more effectively illustrated than in India, where Vodafone is engaged in a build out “the like of which Europe has never seen,” according to Pusey.

“In India you’re looking at 2,000 base stations a month. Lots of Eu-ropean countries have 12,000 base stations, so we’re building a large European country in 12 months at that rate. That’s a tremendous build programme.” Such is the scale of the deployment, says Pusey, that it ought not to be described as ‘emerg-ing’. Nonetheless, he says, “emerg-ing markets are a big part of our capex spend.”

India has also become a proving ground for advanced outsourcing strategies from Vodafone. In De-cember the firm established an independent tower company with its Indian rivals Bharti Infratel and Ideal Cellular. The firm, Indus Tow-ers, will provide passive infrastruc-ture services to all Indian operators. Vodafone has also outsourced its entire Indian IT estate to IBM. »

career history

» Steve Pusey, joined vodafone Group Plc on 1st September 2006 as Global Chief technology Officer. Steve is responsible for all aspects of vodafone’s networks, It capability, research and Development and supply chain management.

» Prior to joining vodafone, Steve was one of the most senior executives at nortel and held the position of executive vice President, and President, nortel eMeA.

» He joined nortel 1982 and gained a wealth of international experience across both the wireline and wireless industries and in enterprise applications and solutions. During his time as President of europe from 2001 to 2005, he managed far-reaching change programmes that led the region back to significant growth.

» Steve Pusey gained telecoms and microelectronics qualifications prior to spending several years with British telecom and is a graduate of the Advanced Management Program at Harvard University.

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MCI IntervIew

MCI IntervIew

It is a strategy that Vodafone is embracing wholeheartedly, although not every element of the operation can be released. “You have to look at your sustainable differentiation and what underpins your brand and customer offer,” says Pusey. “In this respect I don’t see us outsourcing the core network to anybody in a hurry—or our ability to create and deliver services across it.

“Where the radio estate is con-cerned, you have to take it country by country. In a mature market, where countries are saturated with base stations you might look for cost im-provements from outsourcing. In a market like India where you have a massive build to carry out, you want to do it economically.”

Pusey argues that outsourcing en-hances the engineering control that he has over the networks. It also frees up “more capex to spend on the custom-ers,” he says. “Look at how we offer differentiation for the customer. It’s not in the concrete and the steel, but it is in the radio and the backhaul. So any model that allows us to dramatically reduce concrete and steel by sharing sites or leases and rentals but allows us the flexibility to add competitive advantage with the radio and backhaul is a good thing,” he adds.

As to whether a cost management exercise like Indus Towers could ever become a profit centre, Pusey is un-sure. That, he says, is “one for the commercial guys.”

India, emerging markets, 7.2Mbps over HSDPA in mature territories, out-sourcing, these developments will all feature in both Pusey and Vodafone’s immediate future. Further ahead, Pusey talks of the point on the evolu-tionary roadmap where peak speeds of 28.8Mbps are obtainable. This, he says, will provide sufficient quality of performance for his customer base for several years.

Beyond that Vodafone is publicly neutral on technologies, is a member of the WiMAX Forum and the NGMN (Next Generation Mobile Networks) group and is clearly keeping its op-tions open. Pusey’s boss, Arun Sarin, warned the LTE community at 3GSM World Congress 2007 that it was threatened by the faster development of Mobile WiMAX.

And yet the firm’s only ‘4G’ com-mitment so far has been to LTE. Late in 2007, Vodafone announced that it would collaborate with US carrier Verizon Wireless, in which it holds a 45 per cent stake, on the devel-opment of an LTE strategy for the US market. Verizon is a CDMA2000 operator and has long been viewed from without as the technology misfit in the Vodafone portfolio. Now that it is moving to LTE, however, can we expect a closer relationship between the two firms?

“I couldn’t comment on that com-mercially,” says Pusey “But from a technology point of view it’s a strong voice in the industry when Vodafone and Verizon are collaborating on some-thing because of the pure scale. That’s not to the exclusion of everyone else because we work very closely together in NGMN. But it gives a boost to the vendors because they realise we’re se-rious and it gives them the confidence to put their R&D dollars in the right place,” he says.

Managing the supply chain is the third broad element of the Vodafone CTO’s job. Recent waves of consolida-tion among the vendor community have had little impact on the products that Pusey buys from his pool of five radio suppliers.

He sees it as part of his responsibil-ity to keep the vendors competitive with one another: “It’s not good to have

one vendor miles ahead of the others if the others are somewhere else in your footprint,” he says.

“You can sometimes see up to a year’s difference between the lead vendor and the back of the pack. We try and manage that deliberately; we don’t ever share who the vendor is that we’re talking about but we continually remind all the vendors of advances in technology and where they sit in terms of the leading edge. It’s in our interests to encourage everyone to keep a certain pace of technological advancement.”

In part Vodafone manages that through its own research and devel-opment programme, an activity that Pusey is keen to reference. “We get reported a lot for the costs of technolo-gies but we’re accelerating innovation as well,” he says. “That’s a very big agenda item for us.”

In conversation Pusey plays down the size of the task in front of him. “Other people have much bigger jobs,” he says. But the breadth of technolo-gies that are in operation, evaluation or preparation for rollout—and the scale and geographical spread on which those technologies will be imple-mented—is unmatched in the industry. Humility aside, there’s no escaping that kind of magnitude and there’s probably a sliver of honesty in Pusey’s joke that top of his list of objectives for 2008 is to keep his job. n

India, emerging markets, 7.2Mbps over HSDPA in mature territories, outsourcing, these developments will all feature in both Pusey and vodafone’s immediate future

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