Taipei Times: Where are your headed in the US and what are your career plans?
Joseph O'Konek: I am going to Seattle and will be the head of the western region for AT&T wireless domestically. I don't know how many customers AT&T wireless has in that part of the country, but in terms of revenue, that region has about three times more revenue than Far EasTone (遠傳電信).
The market in North America is very different with penetration [low] at about 55 percent -- a very different market from Taiwan.
PHOTO: GEORGE TSORNG, TAIPEI TIMES
It is very exciting for me, I have been out of that market since 1993, so I am very excited to go back. AT&T is interested in learning a little bit from the international perspective and this is the first time they have brought in an executive who worked in the wireless industry outside of North America. So they are kind of excited to have me and I am excited to go.
The other thing is AT&T wireless is converting from a CDMA to a GSM system [like in Taiwan], and they are pretty energetic about setting up networks across the United States.
Japan-based NTT DoCoMo is a large investor in AT&T wireless in North America.
With different systems in place such as CDMA, GSM, TDMA, the market in North America is much more complicated from the standpoint of consumers. That's the biggest challenge and personally I think that's one of the reasons why the market penetration hasn't taken off.
The scale of the country is so different in terms of geography, so even after 20 years they still don't have the kind of pervasive coverage Taiwan has.
Taiwanese consumers really have great services, and they should be very happy because no place else in the world has this kind of coverage.
TT: Why you are leaving your current position?
O'Konek: Five years is also a logical time from the business perspective. When you look at the accomplishments over five years, we [helped the company grow] and took it public.
When I first came here, I only expected to stay for three years, so the five-year- stay is longer than I have planned originally, but I feel good because we -- the business and the company we created, the culture -- those kinds of things are going to be sustainable.
TT: AT&T wireless directly and indirectly owns about a 21 percent stake in Far EasTone, so will AT&T appoint the next vice president of Far EasTone?
O'Konek: Actually most people don't realize that AT&T didn't appoint me. Far EasTone made a global search back in 1997 to find me and that's the same thing the company is doing right now, both AT&T and Far EasTone engaged in that process.
The perfect candidate is someone who runs a company with billions of US dollars in terms of revenue, someone who works in Asia and has a wireless background and a real plus would be someone who speaks Mandarin.
TT: Over your five-year stay in Taiwan, what major progress has the telecom sector made?
O'Konek: It's clear when you look at Taiwan's wireless market that it's had a highly successful deregulation in terms of the benefits brought to consumers, and in terms of company profits.
So the timing of the deregulation helped and also the convergence that took place with the Internet, from 1997 to 2000, those factors coming together really helped this industry.
The other aspect is that when you look at some of the things unique to Taiwan, such as the launching of dual band and tri-band phone services that were very innovative back in 1998.
Comparing Taiwan with other markets, there was also a lot more marketing in the early days, when we look at the mix in Taiwan of the marketing dollars spent on advertising and true promotions.
TT: What is the toughest part of dealing with the government's Ministry of Transportation and Communications (MOTC) officials? Do you think the government has successfully leveled the playing field for all operators?
O'Konek: I think it's still an ongoing challenge. If you looked at the challenge we faced back in 1997, we all worried about the separation of Chunghwa Telecom Co (中華電信) and its owner, the MOTC -- that's still a conflict that needs to be resolved.
You can walk into any one of their shops today ... and how are they allocating the costs of that shop? Is the wireless company paying the market price for [space in stores]? Come on -- they have some of the best real estate in Taiwan and it's government subsidized because [the government] owns it.
Some of those cost advantages are still unclear. That's still a concern and a frustration.
The other challenge is the way telecom regulations are set up. If we wanted to raise prices we couldn't.
Because of rate regulations, the government will never approve price increases. In Hong Kong when prices kept dropping, operators simply implemented a price increase.
I think once the market hits maturity, you go to have the ability to price the services [to make up for] the cost of building the next generation network. In a free market situation, pricing and services should be totally open -- that's one of the things [that the government is stifling] here in Taiwan.
TT: What are the pros and cons of being an expat working for a Taiwanese firm and what kind of challenges did you have to overcome?
O'Konek: One of the things you have to overcome is being a leader when you don't speak the language -- the ability to really interact with first-line employees such as the people on the phones doing customer service or in the people doing sales in shops.
That was a challenge but I overcame it by spending more time getting to know and understand what the issues were and really listening to interpreters.
When I first got here in September 1997, I came in half way on the project, and we all sensed the frustration going on between the challenges of working between different cultures.
The other aspect of this was -- it's not negative, but it's just a fact -- that we found some employees, especially senior executives had never worked for a family business, while fundamentally Far EasTone is as you know [a family business].
So you have the dynamics of a family business structure [in combination with] local staff, people coming from AT&T, and those coming from other multinational firms. All these people were trying to learn about wireless industry -- that was dynamic of things when I came in to Far EasTone in 1997.
TT: Realistically, when do you see third-generation (3G) services actually reaching the man on the street?
O'Konek: You will see true wide-band CDMA 3G network capability in late 2003 or early 2004, when you really have handsets or other devices that substantially [make 3G services] better than 2.5G.
Just like TV didn't kill radio or movies, there is room in this environment for the new emerging technologies to co-exist with [existing technologies] for a while.
Again, with nearly 100 percent [mobile] penetration [in Taiwan], not everybody is going to go out and buy the next new thing next year.
That happens over time, to get the migration, and some compelling reasons, such as content is needed.
In Taiwan, from 1998 it took about two years to get 25 percent [mobile services penetration], and once you got 25 percent it just took off.
We've seen the same phenomenon in every consumer product in the 20th century.
TT: What do you think Taiwan or Far EasTone's next step should be? Head to China like everyone else?
O'Konek: From a company perspective, I wouldn't say the direction to go is clear since China is going to protect its cash cow, and telecom is a cash cow. Basically the market in China is still a monopoly under government control.
Will any Taiwanese wireless operators set up in China and run their own brands in the next five years? I don't predict that will happen. That means our opportunity is to leverage content and experience here to create some partnerships [with companies in China].
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