CEO Spotlight: SmarTone’s Douglas Li

CEO Spotlight: Douglas Li, SmarTone

31 AUG 2015

Douglas Li, who has been at the helm of Hong Kong’s fourth ranked operator for almost two decades over two stints, is stepping down this week.

In a candid and open interview, he told Mobile World Live that it was time to move on (he’s reached retirement age) and joked that his successor would likely be much less of a pain to the board than he has often been.

Over the last year Li has spearheaded two diversification initiatives in segments where he anticipates strong growth. In early August the operator announced a mobile marketing platform designed to help retailers understand their customers better and act on the information generated. And a year ago it launched a healthcare app that allows users to track their exercise and diet and monitor everything from blood pressure to glucose level and share the data with healthcare professionals and family and friends.

In our latest ‘Spotlight’ operator CEO feature, Li shares his views on those launches as well as the schizophrenic nature of pricing in Hong Kong, 5G vendor hype and the narrow value of analytics.

MWL: More than a year ago, you said you were starting to see a more sensible approach to mobile tariffs in Hong Kong. Have you seen much progress since then?
Li: I do see some progress, but it’s been very slow because for some peculiar reason no one has the nerve to push up prices by a reasonable amount. I mean doing it HKD10 [$1.29] at a time is very weak. And they are worried about losing customers. On the one hand they say these are the customers no one can make any money out of, and on the other hand their behaviour indicates that they are worried about losing them. They are kind of schizophrenic. I don’t understand it.

Another thing is that none of us are getting a lot of business from new customers. The bulk of our revenue comes from existing customers on existing contracts. The trick is to renew them when they are out of contract at a new price. Surprisingly a lot of operators are not doing that. So you need to have the nerve to say to customers that time is up and we’re going to raise prices in 30 days.

MWL: What is the long-term pricing trend?
Li: We are getting more disciplined and saying to our customers they need to pay more because costs are going up. Some are also slowly following us, but others are still hesitant. So it’s moving along, but it could be a lot quicker and should have started long ago.

MWL: Why is everyone talking about 5G now?
Li: Because the equipment vendors want to. Honestly, that’s the whole problem with our industry — they have to be real careful. I know they are hungry for business, but the trouble is they are driving the industry into the ground. We’re barely recouping our investments, and now they’re asking us to plow more money in there for a purpose that is not yet entirely clear.

“We’re barely recouping our investments, and now they’re asking us to plow more money in there for a purpose that is not yet entirely clear.”

It’s based on speculation about the Internet of Things, or whatever else comes along, and all this hype about speed. Please! What is the biggest growth in mobile networks? Everyone knows it’s video, but can you watch a video quicker? Do you want to fast forward to view it? No you don’t. You don’t need that much bandwidth. Just do the optimisation of the video and make sure the quality is good and that’s already a great step up from what most people are experiencing in the rest of the world.

Do it properly and you don’t need speed.

MWL: But it’s not just the vendors making the push. Operators in Japan and South Korea are talking up their plans for launches by 2020.
Li: That’s because they have nothing else to say. The marketing teams are saying let’s go for speed because that’s the easiest thing to sell. The fact that it’s misleading is kind of neither here nor there and lost on everybody.

We’re supposed to believe all the promises, which they never deliver. And in any case, even if they deliver it’s of no consequence in the real world. I just want to watch a passable video on my screen – it’s not that big and I don’t need 4K and I don’t even need 2K. I just need a couple of megs.

MWL: How is SmarTone making use of improved data analytics?
Li: We have all the latest analytics in place, but quite frankly I’m not convinced that we have found what to do that is beneficial to the top line. We’ve been doing that years, but I still haven’t found the killer app for that.

In a highly transparent, competitive market, there is not a lot you can analyse that the customers don’t already see themselves. We try to look at behaviours, but there isn’t a lot you can do when the market is giving away 15 gigabytes of data at a cheap price. You don’t need analytics for that. Overall globally the markets are degenerating to that.

MWL: A year ago SmarTone launched an e-health app. What’s been your experience in working with the healthcare sector?
Li: We’re trying to do something in healthcare, but the opposition we have come up against in the medical industry has to be seen to be believed. And the government has also been useless. The medical profession and the government need to vastly improve productivity in the handling of patients with chronic diseases.

“We’re trying to do something in healthcare, but the opposition we have come up against in the medical industry has to be seen to be believed. And the government has also been useless.”

They need to drive this improvement because the medical system won’t be able to bare the strain of all these people being afflicted. So there is a critical need for productivity enhancement, but it effectively has to be driven by the government. But when the Hong Kong Hospital Authority and the medical establishment are not moving, when none of them can see the big picture, it’s like blowing in the wind. They do nothing.

They confess that their hands are tied because the whole structure is stuck.

MWL: What is your goal and what can be done to push the initiative ahead?
Li: You need to promote self-help and encourage people to be more disciplined in looking after their health and wellbeing and you need a system that can monitor and treat all these people without increasing headcount or facilities.

That’s what our HealthReach app was suppose to do. But it has been very hard work. What we have is capable of making a major contribution to reducing healthcare costs.

I think it has to be driven by government. We’re also trying to do a deal with an insurance company and they are very slow as well. That just goes to prove that as an industry we move very quickly compared to others.

MWL: What’s your long-term view?
Li: I have faith in the two areas that we’ve chosen: healthcare and e-commerce. With e-commerce we are taking a different approach and the consumer doesn’t have to pay at all. I’ve tried to come up with a free service. It’s the first time in SmarTone’s history that we offer something for free – we have a reputation for being stingy and charging for everything.

“It’s the first time in SmarTone’s history that we offer something for free – we have a reputation for being stingy and charging for everything.”

MWL: What advice would you give a new CEO joining a mobile operator?
Li: Start on a path toward transformation if you’re not on the way to doing it already. I can’t say exactly what that would be, but you need to have the core enablement ready. We made that transformation long ago, which was essential to do the stuff we do. We started in the 2G days not knowing what the future would bring, but we knew it would generally be related to the open internet. Our focus was on the organisational structure and mindset – the soft skills. The focus wasn’t on the network, which is a given. We moved away from pure engineering and added a service platform driven by IT.

That [transformation] affects the way you run things and the way you train people. If you leave it too late, it becomes very difficult.

MWL: What are your plans after you step down?
Li: To have some time to myself and my family, and perhaps move on to something away from telecoms. After all, I’ve been trying to push SmarTone away from telecoms for years.

Author

Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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