Changing of the guards at Canada’s largest telecommunications providers

Executive office shuffles at Bell Canada have many asking questions about the impact of these changes on Canada’s largest incumbent telephone company. But two analysts tell Network Letter that the executive changes at Bell are related to the departure of Michael Neuman. At Bell, Neuman resigned as president of Bell Mobility and Bell Distribution Inc. after a three-year tenure. Robert Odendaal, who joined Bell in 2004 to head up the company’s Video Services group takes on the additional role of CEO of Bell Mobility and Video Services. Alek Krstajic, formerly the chief marketing office in the consumer group, has been appointed as president of Bell Mobility. "Really the Bell shakeup came out of Michael Neuman leaving, and Michael Neuman did an amazing job there, and really had been a driver of the growth of the company. I think he had sort of wanted to move on for a little bit, and the people at Bell have been saying come and stay," Brian Sharwood of the SeaBoard Group tells Network Letter. Mark Quigley of the Yankee Group agrees that Neuman wanted to leave for a while and that the Bell changes were made to fill that void. "One of the things that had been knocked about was that Neuman left in the wake of the billing problems that Bell has been having for quite some time. But it certainly seems that that’s not the case," he says. "He committed to stay at the company (a little longer) to work through those things after already having announced his departure internally sometime last year. So from that perspective not a big surprise, and certainly the billing problems were not of his making – absolutely not." Bell Canada has had numerous billing irregularities that arose following a massive retooling of its backend system aimed at integrating billing across many of BCE Inc.’s business units. (For more on Bell’s billing problem, please refer to the Jan. 26/05 issue of Network Letter affiliate publication Report on Wireless.) The two analysts disagree on what the shakeup at Bell really means. Sharwood believes that Bell seized the opportunity of Neuman’s departure to make changes that will eventually lead to mobility no longer being a standalone division within the company, and he sees the changes as being temporary. "There was an opportunity open at Bell for them to take out the silos of mobility," Sharwood notes. He anticipates that Bell will reorganize its company around small business, enterprise and consumer. "The new billing platform, despite all the grief it has caused to many people will eventually be able to cross a lot of those barriers that have been created in the company. Mobility was driving the growth, but it was hard for the consumer section to use mobility’s assets and even harder for the enterprise and small business segments. Ideally, you want to have those assets easily accessible, so that people don’t have to jump down or across the company too far in order to get things to happen, especially on the business side…You don’t have to have mobility as a separate company. It doesn’t make sense. It’s a product, like the Internet’s a product, like voice mail is a product." He sees more integration between the mobility assets and the other divisions in the future. "Right now the way they sell mobility is a bunch of handsets and a bunch of minutes, and they try to maximize the dollars they get from them. That’s not innovative and creative. You could do all sorts of interesting things – tying voice mails in with the enterprise system, simultaneous ringing on your cell phones, corporate cell phone control, the ability for inventory management, security tracking – all this cool stuff you can do with cell phones that they’re not doing now." Quigley doesn’t agree, saying mobility will remain a standalone division. He highlights the creation of another tier of management as reason why the mobility division won’t be broken up. While Odendaal was named as CEO of Bell Mobility, Krstajic comes in as president. "They’re inserting a new tier of management, so I’m not sure what the end goal behind that is. Maybe this marks an upward path for Odendaal at some point," he says. Sharwood sees the pairing as a good one, describing both Odendaal and Krstajic as being competitive and entrepreneurial. He points out that Odendaal’s appointment will make the former BSkyB exectuive familiar with the other Bell operations while connecting him with a growing segment of the business. "My feeling is that they want to get him more involved with the rest of the company. He’s doing some innovative things out there, but how do you get him tied into the rest of Bell, sort of thinking about how do you get the video product tied in with the phones, and being connected to mobility is how you do it on an initial basis," he states. "Robert Odendaal likes to build things, grow companies, so don’t throw him in with the wireline, where all you are doing is fighting a losing battle with declining market share and it’s kind of depressing… But if you want to tie him back into the company, you’re going to get him more involved in the phone business because you’re going to have to get him to know more people in and throughout Bell. You need to give him some blue Bell blood because it doesn’t have it. He has BSkyB blood." Sharwood adds that Bell is likely waiting to see what happens with the telecom review panel announced in the budget (see lead article), because of bundling and other related issues. "I think for Bell the shakeup is sort of temporary. It was a bit of putting people in there for now to kind of keep the thing moving," he stated. "I think it’s a temporary move. Bell will keep them there for a while, but then they’ll eventually knock down the barriers and sort of break up the mobility assets to have them more effectively used across the company – they’re just not there yet." Quigley also noted that it’s interesting that Bell has established a VoIP group within its larger consumer group. "It’s certainly an indication from Bell Canada in terms of how important from a strategic perspective VoIP is going to be," he said. "Now a lot of what he (Close) is going to be able to do, of course, is going to hinge on what the CRTC says about VoIP. I think they are planning on coming out with something in April or May. It will define what Bell can and cannot do. So who knows, his role may not be as interesting as initially thought, depending on the CRTC." The CRTC held public hearings into the VoIP last September, after stating in a public notice is preliminary view that VoIP be regulated similarly to switched circuit systems. The CRTC states in Telecom Public Notice 2004-2 that VoIP services should be subject to the existing regulatory framework governing switched telephone networks, in keeping with its principle of a technologically neutral regime, including forbearance on the non-incumbents. Quigley also points out that Crull and Krstajic, who came from Rogers, both have experience with bundling, which will be important in Bell’s strategy moving forward. "My impression is that Krstajic spent more time at the cable side of the house (than the wireless at Rogers). But that said, he would have spent significant time at Rogers looking at their bundling strategy, which is certainly going to be key to what Bell Canada is going to be doing going forward, and wireless is going to play a substantial role in that bundled strategy," he added. "These changes in the leadership group in consumer are intended to broaden the accountability of some of the company’s most promising executives. They are designed to promote more effective execution and faster speed to market," noted Pierre Blouin, group president of consumer markets at Bell Canada, in a February 22 media release.

Changing of the guards at Canada’s largest telecommunications providers

News | 03/02/2005 5:00 am EST

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