VODAFONE GROUP CTO: why the most exciting time to work in telecoms is now

CTO Interviews

Johan Wibergh was the unanimous choice for the Group CTO of the Year Award 2018, leading Vodafone on an ongoing journey of transformation and innovation and ensuring it is best placed to make sure 5G thrives rather than fails. He talks to Graeme Neill.

First of all I do work too much,” Johan Wibergh laughs towards the end of our interview. Maybe so given his tech responsibility for some 500+ million customers, but then he lists his hobbies, spanning photography, food and fitness, coupled with several book recommendations (especially Matthew Walker’s Why We Sleep, if you are in need of your next read). Even while the books are usually consumed in the audio format rather than paperback, it does beg the question of where he can fit in his Group CTO duties. It seems clear that he relishes the challenge, set hours of the day be damned.

Wibergh made the jump to Vodafone from Ericsson three years ago, where he had spent almost two decades. Why make that change after so long? Nice company car? Excellent salary? “I don’t have a car,” he laughs, perhaps partly answering the question. He adds: “I did 19 years at Ericsson and the last six and a half was as head of the networks business. It was more than 50 percent of the company’s revenue. When you have done something for six and a half years, you start to think ‘what’s next?’. There wasn’t probably a next step for me at Ericsson. I lived abroad twice and I wasn’t done with that. [I thought] it would be nice to live abroad again.”

Living abroad previously meant Brazil and the United States. This time around it’s brought him to Marylebone, central London, where he walks to Vodafone’s nearby offices in Paddington each day. He says: “I’ve been extremely pleased to move here. I really enjoy London. First of all I think it’s a very beautiful city, the architecture is so nice. English people are extremely friendly and it’s very easy...to like it.”

It’s not quite poacher turns gamekeeper but the shift from vendor to operator requires a change in mindset. Wibergh says both companies have more things in common than are different but says Vodafone’s culture, led until this October by Vittorio Colao, is what stands out as a differentiator. He says: “There is a lot of speed of acting, understanding something then acting on it quickly. Another thing is a very good culture in Vodafone about really knowing your things. People are extremely knowledgeable and Vittorio has really trained up the organisation. If you go to Vittorio with something you know he will ask you five million questions. You better make sure you have the answers. Management is really on top of things and knows the details.” For cynics perhaps viewing this as veiled criticism of his former employer, Wibergh is quick to stress that he was outlining the positives of his current one. 

How this will change when Nick Read swaps his Chief Financial Officer role for Group CEO remains to be seen. Read’s appointment is just one aspect of a Vodafone undergoing wider change. The operator has been working to transform itself and prepare for the years ahead. Staff and skills are central to this but the fight is more difficult than ever. For some time now, Vodafone hasn’t just been competing with Deutsche Telekom, Orange and the like for fresh talent; it is fighting against the allure of Silicon Valley and the bright lights of digital giants or plucky upstarts. It and other telcos are also battling against the attraction of someone striking out on their own; working on their idea in a garage with the aim to become the next Facebook or Google.

Vodafone is a 27 year old brand so how can it keep up? Wibergh admits it is a hard fight to employ the next generation but says it has recruited more than 600 people in IT and digital across Europe in the past three years. During the past six, 8,000 people have been hired to work in IT development, operations testing and the like.

Wibergh lays out Vodafone’s advantages: “First of all I think we have a strong brand, which helps. The brand is well-known, quite modern, loaded with things like speed etc. We have a fairly exciting technology environment, we have a network that handles 500 million customers, mobile, fixed - we can wholesale to reach more than 100 million households with fixed broadband, we operate as our own in almost 40 million households...It’s one of the biggest networks in the world in terms of traffic.”

He adds: “We’ve an advanced technical environment so you can actually do quite a lot of things. We have very strong skills on the network side but a lot of the new things are happening in the digital space where you compete with whether they are going to go to Google or Facebook.” He drily adds: “These guys have pretty strong brands also.”

 

Change within

The external recruitment side of digital transformation is one thing; forcing internal change is another. The skillset of a 22 year old IT graduate will be very different to that of a Vodafone lifer at her desk for some 20 plus years. To overcome this, there’s Vodafone University, a company-wide scheme to bring new proficiencies to staff.  

Wibergh ultimately leads the technology strand of the courses, which have trained up more than 10,000 people during the past three years. He says: “We have to make sure that we balance between people coming in with new skills and working with people that maybe don’t have those skillsets. There’s a general philosophy that it’s better to have our own employees to work on new exciting stuff.”

He smiles: “You can use external people for the less exciting stuff.” But he admits that is easier said than done; without at least training up staff in the “less interesting stuff” you are not going to have a well-rounded workforce. He says: “You need to prioritise your people and make sure they have the right competencies.”

Digital transformation within an operator is the inevitable reaction to an industry in flux, shifting from LTE to 5G and anticipating and hoping to capitalise on the wave of the Internet of Things. Between his chairing of NGMN and Vodafone’s multitude of trials and research across its markets, Wibergh has been among the most vocal about 5G’s potential, and where it could fall apart.

Delivering his 5G elevator pitch, he splits it into short term and long term models. “In the coming two years, what will drive 5G deployment will be smartphones and a cheaper way of delivering data. It will be more driven by countries like China, who has a greater need to get more mobile capacity. 5G then becomes a more cost effective way of pushing it out.”

He adds: “But if you take a step back and talk about what happened with 4G and 5G. 4G was really about enabling smartphones. 4G came just after the iPhone and Android phones and really made smartphones great. 5G, if you look at the coming 10 years you will say that this is when IoT really happened and really became big. That doesn’t technically mean that everything needs to use 5G.” He pauses. “That’s a long elevator ride!”

Efficiency gains are something Wibergh has argued as an advantage of 5G for some time, but it’s hardly the sexiest use case. The Vodafone Group CTO begs to differ:  “As an industry we are not known for being capitally efficient. If you look at it we are not really earning enough to pay back the cost of capital...People go wrong and look at what you make based on Ebitda but Ebitda is before all of the investments, whether it’s spectrum or equipment. If you look at profitability for operators, we are not doing that great.”

It’s fair to say that Wibergh is pessimistic about 5G’s short term revenue potential, hence the focus on efficiency. The first wave of 5G phones will likely be the generation’s most expensive, which is hardly encouraging for a mass market revenue success. He says: “There will be some [sales boost] but it’s not proven. That’s what the industry is debating. Some are bullish and say there will be a lot of revenue opportunities; some are bearish and say ‘no, it will be hard’. We have certain ideas but it’s not obvious that we are going to be able to generate a lot of revenue growth.” He adds: “Short term, it’s not a great business case financially but it’s not an option not to be out there. Vodafone is a technology leader so it’s not an option to be late in the market versus your competition.”

Of course, 5G’s consumer appeal is not just centred on smartphones, Given his background in IT, his memories of playing Pong during the 1970s, and Vodafone’s recent sponsorship of e-gaming, I ask whether he has tried low-latency gaming through a 5G network, one of the most commonly cited short term use cases. “Not yet. Not yet,” he deadpans. “No-one has offered it to me.”

Pocker-faced frivolity aside, he shares the opinion of BT/EE’s Fotis Karonis, who told me last issue that 5G should be a platform for others to innovate on top of. Wibergh says: “For the various people and the applications, it is for them to innovate on that. We need to put in place something that makes it easy for other companies to innovate and produce some great things. It’s not up to us as operators to have a great deal of expertise in every vertical like this. We need very much to put in place an easy infrastructure that other companies can innovate and create...new services.”

When I suggest operators need to build in a 5G equivalent of SMS, very much an example of user generated telco innovation, he agrees and adds: “Having the SMS capability gave us a lot of applications that utilised that and drove traffic. When it comes to low latency, we are looking at MEC, mobile edge computing. It’s enabling these things in the right way [that will] create new services.”

This is where the longer-term gains come in with the Internet of Things. Wibergh presents it as a toolbox, with enterprises able to tap into the cellular LTE-M and NB-IoT technologies now and 5G for more data hungry or super dense requirements in the future. He works alongside the consumer and enterprise IoT teams, ensuring the operator’s network is fit for purpose. The variety of opportunities within the Internet of Things also means the future is slightly hard to predict, argues Wibergh. “I’m not sure what will come first and in what order these things will come.”

 

Breadth of testing

Use cases aside, Wibergh is non-committal on Vodafone’s 5G launch. It could be 2020, could be sooner, could be later. But its research activity has demonstrated its desire not to be left behind. It has set up three testbeds, diplomatically using each of the three major vendors. Spain is home to its research with Huawei, Italy with Nokia and Germany with Ericsson. It used Mobile World Congress in Barcelona to demonstrate a 5G data call in partnership with the Chinese vendor. It plans to use its Milanese testbed to roll out 100 5G sites by the end of 2018. The work with universities taking part in the three testbeds also gives it a potential source of new graduates.

He is bone dry about how he has to balance this desire not to be left behind and the appetite to explore 5G’s potential, with the challenge to sell this internally to those who will pay for it. He says: “On one side you say ‘we are launching something, we are not going to have much revenue short term and it’s only going to cost you, yes, we need to buy some spectrum so a few billion euros on that and we need to buy new equipment but we have to do it’. So we end up in a little bit of a debate on that,” he says, impressively straight-faced.

“If you look at the investment over a time period, you will get cost savings on the data and that’s why you need to think about it. On the other hand, we have been very clear to the market that what we are doing with these things fits within our regular capex budget.”

Like most western European operators, he looks to China as the dream, “where spectrum costs basically nothing”, as he puts it. However, this is tempered with his view that 5G is effectively an “add-on” to LTE, meaning Vodafone can use existing sites and undergo a more gradual build out. He adds: “It is correct that 5G will use high frequency spectrum, which will go shorter distances than others. But since we used beamforming, that makes the signal go longer so the grid that we have that is built for 1800MHz sites fits nicely for 5G.”

He says 5G’s implementation should be easier than 3G, at least on the technology side if not necessarily the business side. He says: “As a decent add-on to a 4G network it gets a little bit easier than to put in 3G. 3G was very difficult because the technology was much more immature. The products were bad, worse quality and there was a lot of software quality problems when it came to 3G. The reason was there was so much functionality on the 3G products and the quality of the software was not good enough.

“The industry learned so when we did 4G, at least what I remember from what Ericsson did, we reduced the functionality to the killer functionality of quality. The need to improve quality was really high and it was really high on the products. They performed really well so it was a great customer experience. We hope the same thing will happen with 5G. It’s important to have a high quality performance rather than a bunch of different features.”

 

Reinvention 

Preparing for 5G has also meant Vodafone reinventing its network. Legacy is being stripped out – “we have plenty of legacy,” he says with some understatement. It’s never a straight swap of old for new because “we have to balance between what the economic lifecycle is and what’s the stability of the new products versus the legacy products”. Nevertheless, 3G will be switched off first in the Netherlands in 2020, followed by other markets. 2G will follow around 2025, with a small chunk kept for M2M and roaming.

Then there’s OCEAN, Vodafone’s attempt to stitch virtualisation and cloud technologies into its network. It was launched two years ago, beginning with the shift of its voice and network core across the Group to virtualised architecture. This was followed late last year by implementing a cloud native container-based software environment, as well as further exploration of automation.

Compared to its 5G work, Vodafone has largely kept progress of OCEAN under wraps. In a way, it has been subsumed by something much larger as Vodafone began exploring how cloudification could transform and introduce more consistency and automation into its network, IT and enterprise services.

Wibergh describes automation as central to the operator’s digital transformation, which explains why it joined ONAP last year to collaborate further within this space. The Linux Foundation-led project is aiming to build an open-source neutral platform for network, infrastructure and service automation. Its membership of more than 50 telcos accounts for more than 60 percent of the world’s mobile subscribers.

Momentum is growing after the completion of ONAP’s first project last year. In Vodafone’s view, ONAP represents an opportunity to move beyond a proprietary virtualisation model, which in effect Ocean was. How confident is Wibergh that it will succeed? He says: “From my viewpoint what’s most important is that we get one framework...my top priority is to have one set of standards around this. Priority number two is one set of standards. Priority three; one set of standards. I would compromise anything to get that in place. I’m extremely supportive of any initiatives that can achieve one set of standards.

“There’s a lot of momentum around ONAP. I hope that will succeed and I don’t mind us stopping doing things if it means I can get one set of standards established in the world. All this work is hard to get people to agree to.” As any telco working on any standards project will testify.

Wibergh says ONAP’s original architecture was aimed at one big operator in one country; something that wouldn’t work for Vodafone, “a small operator in many countries” as Wibergh puts it. But he is undeterred by the challenges facing the industry.

Between automation, transformation and the next generation of telecoms, plus his extra-curricular activities, one might think there aren’t enough hours in the day for Wibergh to tackle these tasks. But he is undeterred about the challenges facing the industry. He says: “There’s a lot of really exciting stuff happening in technology. We are lucky to live in this time period with so many things going on.”  

 

Judges’ verdicts

Caroline Gabriel, Co-founder and Research Director, Rethink Technology Research Said:

Johan Wibergh has led a coordinated and visionary strategy to include new technologies in an increasingly heterogeneous network. He also recognises that technology upgrades are not enough on their own, and the Digital Vodafone program aims to leverage the improved networks to support greatly enhanced customer experience.

The judges were also impressed by Wibergh’s high level of public profile, including his chairmanship of the NGMN Alliance. These activities ensure that Vodafone is represented in many important initiatives, and which contribute to the global progress towards next generation platforms.

 

Kester Mann, Principal Analyst, CCS Insight Said:

Johan was the stand-out candidate for the Group award having overseen impressive improvements to both Vodafone’s existing networks and the development of a range of new technologies. His efforts were illustrated by improving network reliability metrics and good gains in Net Promoter Score.

We were particularly impressed by the consistent progress made across Vodafone’s broad European footprint, which includes many markets exhibiting vastly different characteristics. The company’s efforts in NB-IoT stood out as Johan oversaw both the development and launch of this new technology.