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Interview:
Paul Budde, Managing Director, BuddeComm
- 10th July 2003
Media Man Australia secures
an in depth interview with the Managing Director of
BuddeComm, Paul Budde.
This
will be of great interest to readers, as many people
know that MMA Director, Greg Tingle, was both a Telstra
and Optus "Salesperson of the Month". Greg
plans to write a book, which will include a chapter
on the Australian telecommunications business.
What's
your background?
I
hold a marketing degree at the Institute for Marketing
(Netherlands) where he graduated in 1973. I worked
for Rank Xerox as a product manager in Amsterdam from
1973 to 1978. In 1978, I started my own business which
specialised in marketing consultancy. Since 1978,
I have been involved in setting up electronic transaction
and information systems in Europe, using in-house
communication networks and videotex (now called Internet
and Intranet). I was involved in Europe's first broadband
cable TV pilot in the early 1980s.
How
did you get into the position as one of Australian's
foremost experts on telecommunications?
In
1983, I came to Australia and, as Managing Director
of Paul Budde Communication Pty Ltd, have provided
management consultancy services in relation to electronic
services and communication networks since then. My
company BuddeComm has written a marketing report for
Telstra Australia on the implementation of Viatel
(the predecessor to the Internet in Australia); developed
Telebank for the Commonwealth Bank, the world's first
nationwide electronic home-banking service; advised
Telstra on the development of Electronic Yellow Pages;
and worked together with the Australian conglomerate
Lend Lease on their in-house online communication
service (Intranet). We also designed and managed TAFEtext.
This electronic information system provides a range
of education applications throughout TAFE NSW (400,000
students) and was one of the first true Intranet sites
in Australia.
I
advise leading IT&T companies on strategic developments
and business opportunities in the telecommunications
market. Clients include: AT&T, Telstra,
Optus, AAPT,
MCT, Telecom New Zealand, Sharp, Fujitsu, IBM, Cisco,
Compaq, Hutchison, PowerTel, Equant, Hewlett Packard,
Honeywell, ICL, Siebel, Ericsson, Alcatel, Lucent,
Krone, NEC, Oracle, Nortel, Nokia, Siemens, Energex,
Sybase and GPT.
I
am frequently interviewed on radio and television
current affairs and news programs, as well as by the
leading national and international financial and business
press. I am quoted in company prospectuses and his
knowledge of the industry is a valuable resource at
the governmental level.
In
the Information Industry section of the 'Power 2002:
who really runs Australia' - published by the Australian
Financial Review magazine. Paul Budde, from Paul Budde
Communication, is acknowledged for his influence as
a prominent analyst.
What
are the biggest issues in the industry? eg over charging,
identity theft, poor customer service....
How
to harness the potential that new technologies have
to offer both for our society (life style) and our
economy. Our industry has a lot to offer in modernising
our economy and stimulating innovations. In all of
this a balance need to be established between national
interest issues and economic viable commercial developments.
The telecommunications network for example is to a
very large extend a natural monopoly, so regulations
will always be needed to secure national interest
issues. Monopolies can easily be misused and there
are plenty examples of this in the Australian telecommunications
and broadcasting markets.
This
leads to over charging especially the mobile phone
industry is currently under the spotlight for this,
monopolies also create mediocre services which in
turn leads to poor customer service, the telecommunications
industry is amongst the poorest performers in this
sector, even worse than the banks.
Technological
developments also lead to unwanted developments such
as misuse by criminals, security breaches, identity
theft, SPAM, etc. This also requires ongoing vigilance,
but above all international cooperation between governance
bodies, which in itself is quite a challenge.
What
services do you offer?
We
publishes over 50 Research Newsletters and Reports
and we operate what is believed to be the largest
telecommunications research service on the Internet
(www.budde.com.au) with over 3,000 customers in
70 different countries.
I
also assist organisations on all aspects of the electronic
media including advice on:
· Telecommunications research and extensive
information on convergence, interactive services and
networks
·
Market, company and country analysis
· Strategic and business plans regarding application
of telecommunications and superhighways
· Advice to senior management Strategic Workshop
· Over-the-phone advisory service
· Website (www.budde.com.au) and electronic
information service for Intranets
· Information transfer and management training
to in-house staff.
Quite
'famous' are my monthly Roundtables, each one addressing
different business issues. So far all event have been
sold-out, indicating the interest they receive from
the industry.
What
have been the highlights of your career?
There
have been several. The thrill of starting my own business
back in 1978 and the move to Australia in 1983 had
of course a massive impact not only business wise
but also family wise as the Budde clan also includes
my wife Louise, she play a key role in the business
too, and my three kids who all have become real Aussies.
The
fact that notable organisations such as the Governments
of the USA, UK, the Netherlands and Belgium and the
UNESCO are amongst our customers, make me feel very
proud. Most international telcos such AT&T, BT,
Deutsche Telekom, Telstra, Telecom New Zealand SingTel,
Optus, MCI are all using our services.
Other
highlights include my position as a consultant on
telecommunications and broadcasting for the Australian
Macquarie Dictionary publications, and the inclusion
of our information for a range of prestigious government
publications. (ABS, Foreign Affairs, Department of
Communications, DIST).
And
to top it off the ATUG
industry award for services to the industry which
I received in 2000. Communications Day, Australia's
leading daily news source for the communications industry
announced me as the Industry Advocate of the Year
in its 2000 Readers Poll. I already mentioned my listing
in the AFR's 'Power
2002. While not related to my telecoms business another
highlight certainly has been the fact that in 2002
I was awarded the inaugural NSW Heritage Volunteer
Award for my involvement in the Convict Trail Project
- the preservation, restoration and promotion of the
240km long Great North Road between Sydney and the
Hunter Valley.
In
Australia, is Telstra the only real financial winner
from Broadband?
So
far yes, and this company is in a very strong position
to financially profit from every single broadband
activity in this country as they control most of the
retail and all of the wholesale activities in this
market. But nevertheless the ISPs are massively moving
into broadband as well and will be able to pick up
some of the crumbs that will fall from Telstra's plate.
Regulatory changing will very slowly improve the financial
position of these companies. Also new infrastructure
operators are moving into this market these player
are taking a much more 'open network' approach and
be it slowly this is going to open up other new opportunities
for new players in the market. It is also important
to note that broadband will be a facilitating technology
that will allow all businesses in one way or another
to profit from it: e-commerce, content provision,
e-publishing, tele-education, tele-health and a very
large number of services we haven't thought of yet
will all be developed by innovative companies who
will be using the new network. As an example my company
now generates 40% of its revenues from electronically
based products and services , delivered via our website,
and it has enable us to sell and market our services
in a cost effective way around the globe.
Are
the Telstra and Optus SLG's (Service Level Guarantees)
good enough?
I
have to answer this in two ways. First of all it is
a shame that the level of customer services has to
be guaranteed through regulations. The companies involved
should have provided good levels of customer services
without regulations.
On
the other hand the SLGs are stifling competition as
these regulations apply across the board. For example
a small telco in a regional city could get slammed
with the same multi million-dollar fines if something
goes wrong as the fines Telstra get for their national
services, these smaller players therefore will think
twice before offering such a service.
What
will be the outcome of the war between file sharers
and the big 5 music recording labels?
In
the end the music industry is doomed to become the
loser, they actually are already the loser as file
sharing is still continuing. Like all 'vested interests'
industries they will have to stop doing business the
old ways, they will need to look for innovative ways
to maintain their relevance in the marketplace. Eventually
broadband networks will become so sophisticated that
the musicians themselves can make their music available
directly to their fans and customers. I am already
aware of artist who have set up such arrangements,
perhaps yet not in a commercial way, but that is easy
to change as soon as that start making sense. The
incumbents can try to protect their 'record industry'
but in the end it is the music that count and this
doesn't necessarily need to be delivered anymore through
the middlemen in the music industry. The same will
apply to movies, free -to-air television and a range
of other content.
Will
ITV ever been done right in Australia?
There
is nothing wrong with iTV, people will use it, but
they don't want to pay for it and at this stage the
broadcasters are unwilling to offer it as an extra
service as there is not a revenue stream they van
tap into to compensate them for the costs. Let alone
that they can make a profit from it. ITV will start
in iAdvertising on pay TV systems. Pay TV operators
can individually address their customers already through
the set top boxes. Digital TV makes it possible to
built individual commercial relationships with individual
customers or groups of customers. This of course will
be of interest to the advertising industry. That will
deliver the industry with a revenue stream that will
allow them to introduce iTV. On the back of this interactive
entertainment will also be introduced, but indirectly
paid for through iAdvertising.
Where
did Optus ITV loose the plot?
Optus
tried to establish iTV as an individual profit
making service and as indicated above that was
the wrong strategy, as customers are not prepared
to pay for it. Optus doesn't have the same affiliation
with the advertising industry as for example News
Limited and PBL,
both shareholders in Foxtel. So Foxtel has far
more expertise in this field than Optus. Furthermore
the company was not prepared to make the necessary
investments to move into a fully-fledged digital
cable TV environment. Foxtel has put $600 million
on the table to do just that.
How
many complaints each year does the industry Ombudsman
receive?
This
is a sad confirmation of the poor levels of customer
service in the industry. The telecommunications
Ombudsman receives over 70,000 complaints per
annum. The banking industry receives around 7,000
complaints.
Will
the COTTS cases be brought back into the spotlight
(I am writing a book, and will include my Telstra
and Optus days).
I
think that the most ugliest elements of poor customer
service are now much better controlled. At least a
minimum level of cultural change has taken place at
Telstra that will hopefully prevent the most severe
cases of customer service misuse. However, it is inevitable
that a slow moving bureaucratic utility such as Telstra
will always produce 'bug-passing' situation where
in the end the customer will become the casualty.
However, I think that in those situations a rapid
response will prevent situations such as the COT cases
in the 1990s.
What's
your view on call centers for Telstra and the like,
being set up abroad in places like India, where the
staff members change their name, to sound, well...Australian?
Do you think this is misleading the customer, and
deceptive conduct?
It
all comes down to management. If you do have good
management, a rarity in the industry, than you will
be able to utilise international services effectively
without negatively effecting local customer services.
I am very much in favour of sharing the benefits of
our industry with others and the Indians have proven
to be experts in this field, so why not using them.
Where things go wrong is when this is purely based
on cost savings without having the appropriate business
processes in place to secure very high level of local
customer service. But don't blame the Indians for
this, blame the local (Australian) management teams.
How
common is cyber stalking?
As
with all other crimes and misbehaviours 99% of all
people are normal, honest trustworthy people, it is
the 1% that is causing the problems. I always like
to warn companies to not punish 99% of your customers
because of the 1% that is creating the problems.
Any
predictions on what other telcos in the Australian
market will "get out of town" ie die?
Over
the last 3 years we have seen some very dramatic exits
in the telco market. In 1999 we had 11 telcos with
revenues above $100 million, there are now 6 left.
From the 800 ISP, 500 are still around. I think the
worse is over. Still a lot of consolidation will be
required, but this will take place at the top end
of the market. Clearly the number of mobile operators
is unsustainable and also the number of telcos that
are offering services to corporate customers will
see further rationalisation. On the other hand for
every failure ten new companies will arrive, this
time that will happen in the broadband markets, here
there re already 200 companies active, two years ago
this market didn't exist. This will be followed by
a revival of the dotcoms, new companies that will
concentrate on services and content delivered over
the broadband network.
Do
you believe that "Three" was over hyped?
Why?
Similar
to iTV people do like mobile data applications
such as pictures, but they don't want to pay for
it. 3 has invested $3 billion in a service that
people basically only want to use to make telephone
calls, there is significant competition in this
market and 3 is offering effective call charge
price competition and based on that is wining
customers, however there is no way in the world
that they will be able to deliver a decent return
on their investment anywhere on this side of 2010,
and even than it is questionable if the will ever
recoup that money, let alone make a profit. 3
will eventually only be able to survive after
some massive write offs.
Do
the hardware manufactures like Nokia, Sony, etc, "dumb
down" (limit etc etc), the technology deliberately?
explain.... (listen to the Lee Tien, EFF interview
@ http://www.mediaman.com.au/interviews/tien.html
I
don't think so, but what is happening is that these
players first hype up the market (WAP, GPRS, 3G, etc)
than they expect the telcos to make massive investments
( i.e. place big orders with them) and they will start
producing. Of course what is happening that they know
that they have hyped up the market and that when the
telcos don't order they get cold feet and they drag
their productions, this than leads to availability
problems of handsets, infrastructure, etc.
Where
are the main growth opportunities in the Australian
telecommunications business?
I
already mentions the many opportunities that will
be possible through broadband and its sister technology
digital TV. IP (Internet protocol) based developments
are going to not only turn voice into a very cheap
data product it also allows the networks to become
far more intelligent. The telephone network will in
fact become one big computer network. This will have
lost of opportunities for software and application
companies, data centres CRMs, ASPs and other related
IT companies, convergence is the key here and we haven't
seen the start of it yet.
What
Australian telecommunications bodies exist to protect
the customer?
There
are several regulatory bodies and it has been argued
that the industry is over regulated. The ACCC would
be the most powerful body looking after all (commercial)
trade practice issues. The ACA looks after the technical
issues, including safety, security, heath care, etc.
The ABA plays a key role in content protection on
TV and the Internet. All industries also have self-regulatory
bodies and processes in place. Than there is also
as I mentioned before the Telecommunication Ombudsman,
in charge of all consumer issues and for most people
the first port of call.
What
else should we know about you and Budde Comm?
Regarding
our research we offer money back guaranteed services,
if our customers are not happy they don't have to
pay for their report, for the Roundtable they attended
or for consultancy services that they receive from
me. I offer all my customers free access to myself,
they can call or email me for a quick advice, a contact
name or a direction for a particular issue. I am more
than happy to extend this service to your readers.
(website:
www.budde.com.au, email: pbc@budde.com.au)
...end.
Editors
note: A most interesting interview, that will have
the telecommunications and media industry talking.
I need to finish my book, so I can use some of Paul
Budde's quotes.
Links:
Budde
Comm
ATUG
Telecommunications
Industry Ombudsman
Telstra
Optus
Profiles
Paul
Budde
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