Recession opens door for new telecom business models: MTS Allstream

Since taking over as president of the enterprise solutions division at MTS Allstream Inc. about seven months ago, Dean Prevost has seen changes in the market, resulting from a slowdown in the economy and the ensuing recession. But despite the challenges facing the business market, he says there are opportunities that lie ahead for enterprise communications providers. Business customers are looking for ways to reduce costs and save on telecom expenses, while they ride out the economic storm, says Prevost, and this opens the door for companies such as MTS Allstream to give enterprises several options to address new market realities. Through unified communications, for example, telecom providers help businesses save real estate costs and other overhead by making it possible for employees to telework. MTS is addressing this opportunity with its recently introduced Virtual Workplace solution – a system that gives companies the ability to have a greater number of teleworkers or telecommuters. And MTS first piloted the virtual office system with its own employees. It now has upwards of 700 employees in Toronto and Montreal using the solution and more in other offices across the country asking for it. MTS is now selling the system to other businesses. In addition to the environmental benefits – the company saved 500 tonnes of greenhouse gas emissions since starting to use the product in-house two years ago – the Virtual Workplace product has enabled MTS to save millions in real estate costs and improve employee productivity by about 20%, according to Prevost. Previously chief strategy officer at MTS, Prevost sat down with Tech Media Reports editor Perry Hoffman at the Canadian Telecom Summit last week to talk about the changing enterprise communications competitive landscape and the opportunities that are ahead. Below is a transcript of the conservation. Tech Media Reports: You say that the recession has led to new and different opportunities. Can you explain? Dean Prevost: Don’t get me wrong, there are negatives to it as well. People don’t make quite as many phone calls and there’s a little less long distance. But on the positive side, we just launched our Virtual Workplace solution, we have got unbelievable demand for it because it’s fitting with two big vectors. One is green as virtual workplace needs particularly in cities like Toronto, or Calgary or Montreal or Vancouver grow and lead to lower commuting. Secondly, it fits with asking employees to do a little more with less. Companies are trying to get more productivity out of employees and if you erase two hours of commuting, employees are very generous, they usually give an hour back to the company. But it can add up to more than that by the time you stop having people darken your doorway and drop by for a chit-chat. We’ve now got almost 700 people by the end of this year are on Virtual Workplace in Toronto and Montreal. So it’s a very significant number. It’s taken us a couple of years to get there, but the good news is what we sell is something we’ve now done ourselves. TMR: I know you’ve only been on the job for about seven months, but how have you seen the competitive landscape in the enterprise market change or evolve over the past couple of years? DP: It hasn’t changed too much in terms of the raw players. You’ve got your big players – the Telus and Bell’s of the world – we’re a mid-sized player and you still have some folks who are still good but smaller players in the form of TeraGo or folks of that nature. In terms of the way the players act and operate though I think one good thing we’ve seen is everybody is a little more cognizant of doing better deals, more margin rich deals. I’m not saying that pricing isn’t as sharp as it used to be, but if I listen to the leaders of the other organizations they all talk about increasing the margin, increasing the profitability of their deals which is good news. We can be sharp but the enterprise businesses of all players has sometimes been in the hunt for the crazy marquee customer and you end up perhaps not doing a perfect deal. You’re going to wait a long time before it really pays off and that’s not great for an industry where you end up setting unprofitable price points. So I do hear the right language, now it would be good to see it translating into behaviour. TMR: Not that long ago the industry talked about having to get past re-price. Are we past that yet? DP: We still need to get past that: the pressure is still there. But it’s hard in the last six months to separate it from companies not having as much money. What I can’t tell you now is that if the re-price we’re seeing is a result of competition or the result of pocketbook shrinking. It’s probably a little bit of each. I do see a difference between now and 18 months ago. I think everybody realizes that all the assets have to contribute because, if I may draw my comments up one level, there’s not any place to hide anymore. Wireless is getting a little more challenged, residential services themselves are imperfect, there’s lot of competition coming in from cable and others. I believe the leaders of all the organizations are looking across their business and saying every portfolio has to contribute, including the enterprise portfolio. It’s different for us because it’s half of our revenue. TMR: How has the Bell/DND/Telus situation affected the market? DP: Everybody is very cautious. I think there are two lessons in those large market customers. One is the price points to win them are often pretty extraordinarily low. And the second thing is the win is a pyrrhic victory sometimes because the costs to move a large network are extraordinary and there’s a riskiness to it if not done well. I think we’ve seen some of those experiences. I would say we have a similar heightened caution about those kinds of events. We do have marquee customers and have had them for a long time. We want to keep them because they have a good anchor tenancy position within our business, but we are very cautious about only bidding on the contracts that a) we can win, and b) we can do. It’s not that we shy away from a large bid, we’ve done them as big as DND or any of the others, but we really make sure that when we take it on that we can do it. The key though is what you do after you win. TMR: Now may not be a good time in terms of overall business, but the opportunities ahead seem really encouraging. Talk about what some of those opportunities are. DP: As companies are operating in this difficult economic time, everybody is fundamentally rethinking their business model. I think what Canadian companies are realizing is that we may be not as far along in using technology to enable the way we do business as other countries. The use of broadband to connect offices, the use of virtual workplace solutions, virtualizing servers, virtualizing storage, etc, all of those concepts which are very rooted elsewhere in the world and have moved along very fast, but we’re a little bit further behind here in a typical Canadian way. Those require significant connectivity, very big bandwidth, very highly managed, very highly secure and always up networks. I don’t see that going away and I see the level of applications or content that companies want to move around increasing. To the land of telecom that’s just music to our ears. In addition to all that raw demand, you have that integration level which is becoming far more important. We love that space because that’s where the land of being huge doesn’t actually give you great advantage. Being really good at connecting the tough and messy stuff, that’s what I think will be a big value add in the time going forward.

Recession opens door for new telecom business models: MTS Allstream

News | June 22, 2009

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