After four years at TeliaSonera in Stockholm, overseeing the commercial development of mobile services in seven countries, then as vice president and head of brands for 16 countries in Eurasia, Piret Mürk-Dubout has come home.
Her post in the Swedish company that is the majority shareholder of Eesti Telekom has given her plenty of international experience, placing her in an array of different business communities and environments, from Oslo to Kathmandu, as well as many former Soviet states.
Prior to that, Mürk-Dubout, whose background is in media and economics, as well as law, was a board member at EMT, the leading mobile operator in Estonia. And before that she had the task of rebranding Elion, the leading broadband operator, in charge of communications and marketing at the former Estonian telephone company, transforming it into the business we know today.
Mürk-Dubout speaks with animation, even excitement about her new role at Eesti Telekom. In September this year, AS EMT, Estonia’s leading mobile phone service provider, and Elion Ettevõtted AS, Estonia’s leading internet provider merged with Eesti Telekom. The group has 2,100 employees in Estonia, a large payroll in a small country. In 2013 Eesti Telecom showed profits of nearly €42m, a 3% rise on the previous year’s figure.
The morning we meet, she is busy preparing for a presentation, the launch of the MyTV service which offers recordability, film libraries, and 20 TV channels available on all screens and devices. It’s the first service of its kind in Estonia.
“Innovation is in our DNA in Estonia,” Mürk-Dubout tells me. “Every year we have a goal to introduce a society-wide improvement in our industry. This year we are introducing a way to watch and record your favourite TV programmes via mobile.” While it is not a completely new idea, it is the logical first step after a merger between a mobile phone company and an internet service provider.
Eesti Telekom has certainly seen remarkable changes over the last 20 years. What started
as a state-owned enterprise in 1991 after Estonia re-established independence and restructured its telecommunications sector, has now turned into one of the Baltic’s largest mobile operators.
“We have seen tremendous change over the last 20 years, especially in the way our services are consumed. What we can be proud of is that our company has been a part of the E-Estonia story, the transformation of technology, devices, and innovations.”
By E-Estonia, Mürk-Dubout is referring to the many e-initiatives implemented in Estonia. Mobile parking or m-parking, for example, was introduced in 2000 and today 90% of parking revenue comes via mobile. The system has now spread throughout the world and is used throughout Europe, North America and elsewhere.
“We can also be proud of how well we have contributed to the e-society. We were the first in the world to offer m-voting”. Citizens can vote via mobile, an innovation that has changed the ecosystem of Estonian society, according to Mürk-Dubout. “How can we make your life easier? This is our main goal. Then we offer the best quality networks and services.”
However futuristic and scary they might seem, Estonians have been very welcoming to e-initiatives. In the last decade, the Tallinn government has launched such e-services as e-banking, e-tax, e-health systems, and mobile-ID. “Estonians have a passion for new technology”, Mürk-Dubout says. “But with new technology comes new responsibility. Development brings a digital divide.” That is why part of our business strategy is to contribute to various educational initiatives. “When e-banking was introduced, together with the banks, we contributed to the education of 100,000 elderly people,” she says proudly.
Among other educational initiatives was Tiger Leap in 1996. This innovative project prioritised information technology infrastructure and allowed schools to access computers and the internet. It is thanks to these efforts that Estonia’s citizens have become tech-savvy, and the project continues to this day.
“Tiger Leap showed us how to navigate through the digital world – how to find services, what services are available, what are the risks, as well as educating parents. Together with the Ministry of Education we are implementing online security initiatives, including an educational programme for teens.”
“Telecom companies are becoming the omnibus of social buzz,” Mürk-Dubout says. “More [devices] have the intelligence to talk to us, to tell us the facts. Eesti Telekom wants to be the platform between the organisation and these things, the translator for different software applications if you will.”
With change comes disruption as well. Technological development has been very fast in the telecoms industry. Nordic investors have made considerable investments into technology and communication networks. The Estonian sector is one of the most developed in Central and Eastern Europe.
Estonia is covered by digital mobile phone networks, and according to the last census in 2011, there are more mobile phone contracts than residents.
“The rapid technological development has impacted us in a much greater way than the printing press, or even the technological revolution. Services come to us via different screens; they follow us. We are looking for a way to communicate and navigate in the future, and I think telecom is a big part of that.”
Estonian telecoms is a highly competitive field. Eesti Telekom has a strategy for remaining a leader in this fast-paced market. “Our engineers, sales and service people are proud that we always strive for the best quality networks and services. We are striving for the most loyal customer base, and how does one do this? By having the largest amount of satisfied customers. We work with our customers and listen to their concerns. And most importantly, we innovate.”
To Mürk-Dubout, innovation and reliability go together. “Obviously not everything is seamless when it first hits the market. That is why we offer early services – services still in beta testing, to the public. You need to test and fail in order to test and succeed.”
One of the goals of the recent merger between EMT and Elion is to focus on more customer sectors, to create a new generation of telecom company to further Estonia’s e-society. In addition to the MyTV service, EMT and Elion will offer the fastest internet in Estonia, allowing for download speeds of up to 300 Mbps in EMT 4G and Elion fibre broadband networks. That’s not as easy as it sounds. While the industry is embracing and moving forward with new technologies and innovations, the question remains, where does the money come from? One of the biggest challenges facing all telecom companies is how to monetise these developments? Telecom companies were previously sustained by a service (telephone calls, for example) which people do not need to pay for anymore. EMT has supported 2G, 3G, and 4G at the same time. All of these need development and investment. “We have customers still using 2G. We have to please everyone,” explains Mürk-Dubout.
That does not change the fact that business margins are falling and shareholders are getting concerned about the future. Service revenues in local currency, excluding acquisitions and disposals, decreased 4.7% (Q3 2014 vs Q3 2013) due to EU regulations and lower voice traffic. Mobile service revenues grew, supported by solid data revenue growth. Top players must provide services on existing networks, but in different ways. “The future means a huge investment in bandwidth and more internet network capabilities because volumes are already high, and are continuing to grow. The entire industry is challenged with how to monetise on this volume of growth in Internet and data.”
“The future is in the internet. There will be no more voice minutes for voice calls, even if it is a significant part of our revenue. We will flourish in the future with more unique business models between different partners.” Unique business models and partnerships have already been implemented. EMT recently teamed up with Swedish music streaming site Spotify. The partnership has resulted in more than 1,000 customers after the first month and 20,000 followers of special Estonian playlists. Spotify has drastically changed the music industry by competing with piracy. They offer access to millions of songs for free or via subscription. “I just love their vision”, says Mürk-Dubout. “They wanted to create a service better than the one piracy was offering”. And they did it. Spotify has now launched in over 90 countries.
“The way we partner up is the new business model. We will probably see more partnerships between different companies.” She explains the money will come from these different and unique partnerships, from things like the cloud business, data models, applications and platforms, and the way in which we transform signals, protocols, and applications.
From 2013-2014, Eesti Telekom in co-operation with Estonian leading banks Danske Bank, Nordea Pank, SEB Pank, Swedbank and the retail group Tallinna Kaubamaja (Tallinna Kaubamaja, Selver) piloted the project Bank Payment Card in Mobile. The pilot project tested a prototype of the Estonian NFC Mobile Wallet service named My Wallet. The service allows a mobile phone to be used as a regular bank card. In order to pay for goods, the user, instead of inserting the card to the terminal, must lightly touch the terminal with the phone. “There will be money,” Mürk-Dubout says reassuringly.
“There will still be services people are willing to pay for with cash, but the industry itself needs to be ready for a huge transformation. We are looking forward to that and are excited”.
With the launch of Apple’s ApplePay, everyone is wondering when mobile payments will come to Estonia. Piret explains they are working on it. It also depends on partnerships. “We are also trying to understand what mobile payments are and what they would mean for Estonians”. Can mobile payment add more value to an e-society? “We think consumers and businesses would be willing, but we need to understand the security implications.”
In comparing Nordic and Baltic markets, the most obvious difference is of course purchasing power. Pricing packages in the Nordic countries are flat because of the consumption of data. In cities with metro systems, the population consumes more data.
The EMT/Elion merger allows for new services, bringing the company into a new stage in the industry. “Integration is unique in Estonia because telecom services co-operate with other services. This is not happening yet in the Nordics.” Sweden, however, is innovative technologically. They were the first country in the world to launch 4G.
“It has been a good experience to work in different business environments,” Mürk-Dubout reflects, “The Baltic market is highly competitive. Latvia and Lithuania are struggling with technological infrastructure. However, we have been able to cooperate and study from each other’s successes and failures.”
Estonia remains at the forefront because of the willingness to co-operate from all sides – telecom and government. It is also about the country’s readiness for risk taking, of being in the right place, at the right time.
“We were also lucky,” confirms Mürk-Dubout. “We did not have any legacy 20 years ago. There was no [telecoms] law, no infrastructure. It is more about overcoming and adapting.
I’m happy to be back here. The way we innovate and the way our customers are willing to accept innovation and new services is astounding”.