Telefónica Group held its latest biennial Encuentro event at the end of November 2017. The conference, which saw a string of presentations from senior Group management, was streamed across the telco for employees, and set out Telefónica’s assessment of where it is on its transformation journey, and made an even more ambitious assertion of where it expects its final destination will be.

Encuentro 2017 presented an energised Telefónica, with event production values that are perhaps more traditionally associated with the glamorous internet behemoths, featuring extravagant lighting and video displays. There were even echoes of a rock concert as Chief Data Officer Chema Alonso took to the stage accompanied by Chief Commercial Digital Officer Mariano de Beer and Telefónica Global Resources’ Chief Executive Guillermo Ansaldo sporting electric guitars, (presumably fake) tattoos, and heavy metal wigs.

The gags and razzamatazz appear to have been part of an effort to drive across a message that Telefónica is not a staid telco, but instead a future-focused visionary more in line with the internet giants already at home in the digital arena.

Telefónica notes the bad habits of ineffective telcos…

The first main presentation, and the only major Telefónica talk that was open beyond an internal audience, saw Group Executive Chairman José-María Álvarez-Pallete outline a series of problems that the telco mind-set is causing in the current environment.

Álvarez-Pallete said that Telefónica, as a near-hundred-year-old company surrounded by younger, more agile giants, had struggled for the following reasons:

  • Being slow to shut down legacy systems.
  • Internal structures fostering an environment where staff work in silos.
  • A cultural mind-set that sees more constraints than opportunities.
  • A tendency towards over-complicating processes, and passing these complexities on to customers.
  • A reluctance to genuinely partner and collaborate with other market players.

These perceived faults in the culture of Telefónica were, naturally, used as a means of highlighting the change Álvarez-Pallete is attempting to undertake at Telefónica, encompassed by the latest aspiration the Group is advocating — to be seen as “open, bold, trusted”.

Platform approach built on a network foundation

Telefónica’s digital transformation plan had initially been enshrined when Álvarez-Pallete was Chief Operating Officer in the We Choose It All strategy declared at the Encuentro Telefónica 2015 event, with its associated, slightly clumsy, “onlife telco” tagline (Telefónicawatch, #102). Now he has reached the summit of the Group, he has accelerated transformation efforts.

Álvarez-Pallete said the rise of digital services “is going to have a greater impact than what we sensed two years ago” as he called for Telefónica to pick up the pace. Technologies he declared of rising significance were: “blockchain, cloud, the autonomous car, virtual and augmented reality, mobility, 3D printing, [and] wireless technology”.

Even before the Choose It All programme started, technological transformation had been underway at Telefónica for several years, with programmes such as the UNICA virtualisation drive. However, the Executive Chairman now appears to be prioritising bringing that transformational culture from the engine room into the rest of the company.

“ Digitalisation, big data, and artificial intelligence are changing everything, transforming all the productive models. It is key to innovate, to bring more value to our customers, and to make better business decisions. ” — Álvarez-Pallete.

Platforms built on fibre

The platform-based transformation the Group is undertaking is dependent on Telefónica’s strength in infrastructure at its foundation, and Álvarez-Pallete indicated he expects to continue investing in the network fundamentals.

Looking to existing concrete achievements, he highlighted Telefónica’s UNICA-driven leadership in virtualisation, the rapid progress made in fibre and LTE rollout, and the adoption of a platform-based business model that is exploiting emerging digital technologies.

By 2020, Telefónica now wants to see 370 million premises passed with its fibre network, with 2.5 million kilometres of optical fibre deployed — an additional million compared to the current network.

That the fundamental nature of networks is changing was also reiterated by Álvarez-Pallete as he talked of the potential of a converged and virtualised infrastructure for fixed and mobile services.

“ It is not important if our network is fixed or mobile because those attributes are going to be diluted over time… [we will build a] unique network, virtualised, in the cloud. A contextualised and predictive network that understands what is happening and anticipates it, [which] is reconfigured to adapt. A network that is capable of moving, getting closer to where it is needed and evolving. ” — Álvarez-Pallete.

Álvarez-Pallete wants to finish a marathon with a sprint

As noted above, a significant amount of the necessary transformation work at the core of Telefónica has been completed or is well underway, and Álvarez-Pallete suggested Telefónica is on the last mile of the digitalisation roadmap.

However, as a seasoned marathon runner, the Telefónica chief should be well aware that this mile may be the toughest.

More to come?

As well as the longer term Group aspirations, it is worth noting that, in previous years, the internal strategy day has been followed in relatively quick succession by structural and managerial changes within the telco.

Additional detail on the messages and priorities of the Telefónica top team, including its operating business leaders, is also likely to emerge in the coming weeks.

Further consideration of the potential impact and consequences of the Telefónica presentation will feature in a future Telefónicawatch.

Netflix a special guest

Encuentro 2017 saw a keynote speech from Reed Hastings, Chief Executive (CEO) of Netflix, which is becoming an increasingly significant competitor with Telefónica in the Spanish video market and beyond (see separate report).

Hastings focused on the opportunities for collaboration, and praised the strengths of Telefónica’s fibre network infrastructure as a way of delivering Netflix services to Spanish consumers. The Netflix CEO’s talk centred on the importance of customer experience as a fundamental element of his company’s ongoing success, a message that chimed with Telefónica’s prioritising of experience in its own strategy.

While Hasting’s presence generated speculation of an upcoming deal between the two companies, it also worked as a symbol of Telefónica willingness to cooperate, and potentially collaborate, with its competitors. It indicates the telco has come a long way since it was regularly railing against the unfair advantage that companies such as Netflix were benefiting from as a result of the disparate levels of regulation imposed on telcos and internet companies in Europe (Telefónicawatch, passim).

Encuentro 2017 was more open than previous iterations of the event, which were generally management-only affairs. Perhaps partly in the spirit of openness, and partly because streaming a live event to 125, 000 employees is more technologically-manageable, the 2017 Encuentro was available to all Telefónica staff, whatever their grade.

The event included a tribute to the former Group Executive Chairman César Alierta, who now oversees Telefónica’s charitable foundation. Telefónica also held a minute’s silence for Guatemalan employees killed during an incident at a Movistar store in the country (see separate report).

Image: Telefónica.

Table of Contents

EXECUTIVE BRIEF

GROUP

Management update

Álvarez-Pallete hits fast-forward on digital transformation [p6]

  • Telefónica notes the bad habits of ineffective telcos…
    Platform approach built on a network foundation
  • Platforms built on fibre
  • Álvarez-Pallete wants to finish a marathon with a sprint
  • More to come?
  • Table: People movement highlights
  • Netflix a special guest

GLOBAL RESOURCES

5G

Ericsson and Telefónica show faith in agnostic transport… [p12]

… ZTE also trumpets transport 5G trial with Telefónica [p13]

  • Telefónica’s multi-pronged 5G strategy

Cloud services

Commvault cloud compatibility flagged by Telefónica [p15]

Telefónica Business Solutions

PrimeTel turns to Telefónica for DDoS [p16]

Telecom Infra Project

Telefónica builds TIP role, links with Facebook on LatAm [p17]

  • Telefónica takes to TIP

DIGITAL SERVICES

LUCA

LUCA progress celebrated by Telefónica [p19]

  • Data transformation begins from within
  • LUCA product portfolio
  • Big Data a boon for Big Society, while looking out for the little guy
  • LUCA seen working with España to boost business portfolio

IoT

Telefónica Thinx big on IoT [p23]

  • Telefónica provides flexible opportunity for certification
  • Gartner names Telefónica as Leader for managed M2M

Open Future

Wayra Germany puts startups to work [p24]

LATIN AMERICA

Argentina

Movistar backs Ericsson 5G test lab in Argentina [p27]

Brazil

Netcracker Vivo deal stretched to 2020 [p28]

Fortinet powers Vivo SME cybersecurity offering [p29]

Chile

Telefónica Chile picks Ericsson for UNICA [p30]

  • Ericsson gets rewarded for embracing UNICA principles
  • As Ericsson picks up UNICA work, ZTE stresses its own importance
  • More evidence of Blanco’s belief in UNICA progress
  • Telefónica Chile an innovation leader

Colombia

Telefónica Colombia picks Coriant for 100G interconnect services [p34]

  • Coriant and Coltel portrayed as BFFs
  • Coriant and Telefónica beyond Colombia

Mexico

ZTE upgrades Mexico network for 400G speeds [p35]

  • ZTE promises a future-proof core
  • ZTE making its presence felt as a key Telefónica partner

Venezuela

Telefónica invests EUR2.5bn (officially) to expand 4G to six cities [p36]

EUROPE

Germany

SIAE trumpets O2 Germany transport SDN trial [p38]

  • Heinze means business on virtualised transport networks
  • Telefónica relaxed on Germany fibre plans
  • Existing relationship

CyberThreats protection launched for German enterprise [p41]

Spain

Telefónica backs plastic for Gigabit home [p42]

UK

O2 partners ip.access on enterprise customer analytics [p43]

FURTHER READING

INDEX

Index

Symbols

21st Century Fox
Sky plc 9, 41

A

Advanced 5G Network Infrastructure for Future Internet Public-Private Partnership (5G PPP) 12, 13
AI 17
Alastria 21
Alphabet
Google 35
Android 28
Google x
Project Loon 35
Amazon 41
América Móvil
Claro 31
Apple
iOS 28
AT&T
BellSouth 9

C

Carbon Disclosure Project 8
China Mobile 13
CK Hutchison 13
Climate Group 8
CNMC 41
Cohere Technologies 13
Commvault 15
Coriant 34

D

Deutsche Telekom 13, 17, 38, 39
DIT 9

E

Entel 31
Ericsson 12, 13, 27, 30, 31, 32, 34, 36, 39
European Union 12

F

Facebook 17, 35
OpenCellular 17
– Telecom Infra Project 17
Fortinet 29

G

Gartner Group 24
GSM Association (GSMA) 9

H

HBO 41
Hewlett Packard Enterprise 31, 32
HP, Inc 31
Huawei 13, 15, 23, 30, 31, 32, 34, 39

I

IBM 9, 17
Infinera 38
ip.access 43

J

Juniper Networks 13, 38, 39

K

KKR 7, 13
Korea Telecom 13

M

MásMóvil 9
McKinsey & Co 9
MVNOs 9

N

NEC 28, 38
Netcracker 28, 38
Netflix 6, 41
Nokia 13, 30, 34, 39
Nokia Networks 34
NTT 38

O

Osiptel 31

P

PrimeTel 16

Q

Qualcomm 23

R

Regions
APAC
China 13
– – Malaysia 13
EMEA
Austria 13
– – Europe 6, 9, 12, 23, 24, 31, 32, 37, 39, 42
– – Germany 13, 17, 23, 24, 31, 32, 34, 38, 39, 41
– – Italy 13, 38, 39
– – Portugal 41
– – Spain 6, 8, 9, 13, 16, 19, 21, 23, 27, 31, 41, 42
– – UK 9, 19, 23, 24, 43
Latin America 9, 17, 19, 24, 26, 28, 30, 31, 32, 39
Argentina 12, 13, 15, 23, 27, 31, 32
– – Brazil 9, 13, 15, 23, 28, 31, 34
– – Chile 12, 13, 15, 23, 30, 31, 32
– – Colombia 31, 32, 34
– – Costa Rica 31
– – El Salvador 31
– – Guatemala 30, 31
– – Mexico 15, 31, 32, 35
– – Nicaragua 31
– – Panama 31
– – Peru 13, 15, 17, 31, 32, 35
– – Uruguay 9, 31
– – Venezuela 36
North America
USA 15

S

SIAE Microelettronica 13, 38, 39
Sigfox 23
SoftBank 13

T

Technolgies
QR codes 28
Technologies
2G 9
– 3G 9, 36, 43
– 4G
LTE 8, 12, 23, 27, 31, 35, 36, 39, 43
5G 12, 13, 27, 30, 32, 35, 38, 39
– Bluetooth 43
– Broadband 39
– Business/Operations Support Systems (BSS/OSS) 9, 28
– DWDM 34
– Ethernet 13, 42
– GPS 43
– GSM 9
– ICT 32
– IMS 30
– IP 17, 30
– LPWA 23
– M2M 24
– MIMO 13, 27
– NB-IoT 32
– Network functions virtualisation (NFV) 30, 32
– NGN 12
– OpenStack 15
– R&D 13
– SMS 20, 28
– Software defined networking (SDN) 35, 38
– Telematics 13
– TV 41
– VoD 41
– WLAN
Wi-Fi 28, 42, 43
Telefónica Group 6, 8, 9, 17, 20, 23, 24, 28, 38
Associates and investments
CARTO 9
– – Sigfox 23
Digital services
AURA 9, 21
– – LUCA 9, 19, 20, 21
– – M2M 24
– – Open Future 9, 21, 24
– – OTT 9
– – Synergic Partners 19
– – Telefónica I+D 12, 17
– – Wayra 9, 24
Digital services Thinx 23
– Europe
Germany 38
– – giffgaff 9
– – O2 9, 38, 43
– – Spain 9, 21, 41, 42
– – Telefónica Deutschland 34, 38, 39, 41
– – UK 9, 43
Executives
Alierta, César 6
– – Alonso, Chema 6, 19
– – Álvarez-Pallete Lopez, José María 6, 7, 8, 45
– – Ansaldo, Guillermo 6
– – Arias, Miguel 9
– – Blanco, Enrique 32, 39
– – Bomura, Alessandra 28
– – Calvo, Omar 35
– – Caro Bernat, Juan Manuel 9
– – Cortez, Pedro 36
– – De Beer, Mariano Sebastián 6
– – Del Val, David 17
– – Garcia-Palencia, Jacobo 9
– – Gardelliano, Ernesto 9
– – Gascon Carús, Jose Manuel 9
– – Gilpérez López, Luis Miguel 41
– – Haas, Markus 39
– – Heinze, Thorsten 38
– – Ikeda, Claudio 9
– – Lacal, Charo 9
– – Martín-Villa, Gonzalo 9
– – McDonald, Steve 9
– – Meggs, Gavin 9
– – Oslé, Sergio 9
– – Rava, Federico 27
Shen-Hsieh, Angela 17
Ex-executives
Blasco, Luis 9
– – Jordan, Phil 9
– – Short, Mike 9
Global Resources 6
5TONIC 12, 13, 27
– – Telco4Telco 16
– – Telefónica Business Solutions 15, 16
– – Telxius 7, 13, 16
– – UNICA 7, 8, 12, 30, 31, 32, 35
Latin America
Argentina 9, 27
– – Brazil 9, 28, 29, 34
– – Chile 30, 31, 32
– – Mexico 35
– – Vivo 28, 29
Movistar+ 9, 41
– Products and services
Movistar+ 9, 41
– – pay-TV 41
Tesco 9
Twitter 45

U

UNICEF 21
United Nations 8
University of Surrey 13
5G Innovation Centre 13

V

Verizon Communications 38
Virgin Group 19
Vodafone Group 9, 39
Germany 39
– Spain 9

W

Walt Disney 41
Wind Hellas 16

Z

ZTE 13, 30, 31, 32, 35

About

About Telefónicawatch

Report: #121
Published: November 2017
Next report: December 2017 / January 2018
For more information visit: Telefónicawatch