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The operator interview – Garrett Johnston, MTS: The true smart pipe
Garrett Johnston, group director of strategic marketing for Russian operator MTS, talks openly about how operators need to move to a more co-ordinated way of doing business
The world of the mobile operator has become very formal over the years. The earlier pioneering spirit, exemplified perhaps by the leather jacket 
wearing, volcanic-dust eating, Hans Snook, has been replaced by the earnest dark suits, controlled by the financial markets. Garrett Johnston is slightly different.
While it would be pushing it too far to suggest that Johnston is some sort of maverick, his fluency in eight languages (“with intermediate capacity in several more”), the massive ring on his finger (seriously, it’s about the width of two normal knuckles) and the purple v-neck sweater (with scarf) mark him out as not stamped from an identikit corporate mould.
Career wise, it’s pretty orthodox. There is the previous job as chief marketing office of Kivstar, the background working his way within the communications and IT industry within names such as Spectel, CapGemini, World Com, Alcatel. And that background gives his thoughts on the current state of the mobile market some weight.
On the potential for mobile:
“98% of the customer wallet is untapped by mobile. The most important customer experience currently is based on how you pay your bill. That’s throwback thinking – think about what that does to the user experience.
“We should be building a platform that we offer to host applications, and market applications, to the right customer at that right time. We have 100 million customer profiles. If you can publish APIs that can show those profiles to the right applications, that’s the most valuable service you can provide. If you had to go to the supermarket and queue in one aisle for tomatoes and another for cucumbers, that’d be mad. But that’s what operators ask us to do to access services.”
On the move to co-creation and open innovation:
“At MTS it was about growth and customer acquisition, about who can get there the fastest. Now that has shifted from acquisition to demand stimulation and customer retention.
“Services come to the fore. Service becomes the key thing. Our DNA, where people think of us being strong, is in the business segment. That could be seen as limiting, but in Russia the SME market only accounts for about 28% of GDP, compared to 80% in the EU. So that market is going to grow, and with it a growth in personal branding. That segment has a high sensitivity to data applications and high network dependencies. So we can take the brand values we have in the business market and move that to the mass market. Increasingly everyone is a brand.”
“We have a huge job to support that brand promise. That also means the brand has to be customer-centric, supporting co-creation and open innovation. It’s about getting the customer involved in creating services. Co-creation might involve idea contests, moderated forums. Just pushing services out to the end users doesn’t differentiate you, and is not viable going forward. That model might work when you have 10 or 50 services. But not when you are talking about 200,000 applications and 100 million customers. If you look at O2 Litmus, that’s a co-creation platform that is quite advanced”.
On the smart pipe:
“We could be a lot more than just be a pipe with open APIs. We could say to a brand we have this profile, in this location, with this kind of car – anonymise that data and do a lot more with it. There should be money in providing the DHL service for bits – providing the logistics, the QoS, the transaction support. That’s a true smart pipe.”
MTS Fact File:
Mobile TeleSystems OJSC (MTS) claimed 91.33 million subscribers as of December 31, 2008, and provides services in Russia, Ukraine, Uzbekistan, Turkmenistan, Armenia and Belarus.
In the first quarter or 2010 it turned over, as a group, $2.48 billion, up 23% on the year before, slightly down on the final quarter of 2009.
The Group had 102.3 million subscribers as at the end of March 2010. 69.3 million of those are in Russia – giving the operator a 33% market share.
ARPU in Russia sits at about the 240-250 Rouble range (7.5-10$), with value added services growing as a share of overall ARPU to 22.7% in Q1 2010.
About Garrett Johnston
Garrett Johnson is group director of strategic marketing for Russian operator MTS