German fixed network operators are also being forced to take a new look at their strategies in the light of market change and the availability of new technologies. We spoke to Dr. Hai Cheng, COO at the Versatel Holding GmbH, an alternative broadband operator in Germany, about the company’s positioning and strategy.

DMR: VoIP suppliers such as Skype and Co. are eroding the network operators’ voice revenues. On top of this there is a clear trend towards the substitution of the fixed voice services by mobile. Even though growth rates in the broadband markets remain high there is now a lot of capacity available in the UMTS networks and operators are working hard to win customers for their mobile networks.


What do you have to do to continue to grow as a network operator under these conditions?


Dr. Cheng: We are convinced that differentiation through the supply of the best cost-benefit relationship will remain our recipe for success in the future. A further major factor for success is high quality in customer service. As you know, our strong growth is mainly based on broadband connections. We know that voice is necessary for our customers, but that it is going to play a diminishing role in terms of turnover. The fact that mobile operators are also trying to use substitution effects for broadband business doesn’t worry us too much. With the present extremely rapid developments in fixed broadband and actual and potential related services, such as a variety of video applications, mobile is not going to be able to offer a competitive price offer in the near future.


DMR: A significant share of your turnover is still generated by voice minutes.


How are you preparing for the rapid decline in these revenues?


Dr. Cheng: Future turnover can mainly be secured through the use of appropriate flat rates and the combination of different services into attractive packages. We will however still offer value added services which are based on voice, such as 0180 numbers. With the shift to VoIP numerous other value added services in the category "enriched voice services" are of course possible. Here it is important that we understand from the start which of these services are perceived by our customers as offering real added value and for which they are therefore willing to pay.
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