BT: Network Man, Ricky Wong

Very inspiring article about how a man can grow from small to big in his career.

Business Times - 26 Jul 2008

Network man

Ricky Wong, chairman of Hong Kong-based City Telecom, tells AMIT ROY CHOUDHURY that Singapore's planned broadband network is all about attracting talent RICKY Wong's idea of future-proof technology is simple. It should be something his grandchildren will be able to use when they grow up.

As 46-year-old Mr Wong, co-founder and chairman of Hong Kong-based City Telecom (HK) Ltd (CTI), has two young children, it's obvious he is talking in terms of a couple of decades at least.
And he thinks the super-fast broadband network he has put up in Hong Kong, which connects 1.5 million homes in that city, is future-proof infrastructure his grandchildren will enjoy and find useful.

You need to remember how fast things move nowadays to understand the significance of Mr Wong's belief. Yesterday's cutting edge is today's obsolete technology.

Sub-megabit per second (mbps) connection speeds provided by dial up modems were state-of-the-art only a few years ago. Now a 100 mbps broadband connection, the highest Singapore has today, is already considered previous generation.

Cisco has called the Hong Kong cyber highway the world's biggest Metro Ethernet network. It can provide connection speeds of one gigabyte per second (gbps) and beyond.

The Hong Kong cyber highway was set up by Hong Kong Broadband Network, (HKBN), a wholly-owned subsidiary of CTI.

Mr Wong has now teamed up with local telcos StarHub and MobileOne in the Infinity Consortium to build Singapore's very own cyber highway - the Next Generation Broadband network, called Next Gen NBN or NBN for short.

Infinity is one of two bidders for the network. The other is the OpenNet consortium, led by Canada's Axia NetMedia and comprising Singapore Telecom, Singapore Press Holdings and SP Telecommunications.

One of these two consortiums will build the network and run it as the Network Operator - or NetCo.

Mr Wong comes across as a sincere man with a clear vision of what he wants to achieve and what the hurdles are.

He candidly admits that in this project there are plenty of wild cards. 'The oil price, interest rates, material costs, the regulatory environment and whether the current telecom incumbents will use our network - there are many unknowns,' he says.

As well as this: there is a fundamental difference between the Hong Kong example and what Singapore is embarking on. And that is the basic model being adopted.

In Hong Kong, HKBN is a vertically integrated service provider, meaning it owns the dark fibre and uses the bandwidth it provides to offer all manner of services.

Singapore has adopted a radically different model - an open access, no conflict model with the infrastructure owner not playing in the retail space, to ensure that it does not enjoy the competitive advantage by owning the network.

On top of the NetCo layer - for which the Infinity Consortium is bidding - there will be an Operating Company or OpCo, for which a separate bidding process will be held.

CTI is a pre-qualified bidder for this process, if it chooses to bid, when the bidding process is started by the government.

The OpCo will lease the bandwidth from the NetCo, then sell it to various companies which will use that bandwidth to offer all manner of retail services, from plain vanilla Internet connections all the way up to IPTV (Internet Protocol TV) and VoIP (Voice over Internet Protocol).

So, considering all the uncertainty, why is Mr Wong here? As he says himself, this job is not going to make him a billionaire. And anyway, he already has tonnes of money.

'I'm financially secure and I can retire because I'm the majority shareholder of CTI. But I still work hard because I enjoy what I do,' he says. Mr Wong has a dream - and that's what drives him. He wants to ensure that in five years there is fibre to most homes in Singapore and Hong Kong.

'Then these two cities will become a model for the rest of the world. The Americans and Europeans will come here to learn and follow us. We will become the technology leaders.'

And he adds an important point - maybe the big idea behind the building of the NBN. 'What is important is not how much bandwidth is used after the fibre is laid. Rather, what's important is that the bandwidth acts as a magnet to attract more talent. Attracting tech-savvy talent to Singapore is the real purpose of the NBN. If that is achieved, the NBN can be considered a success.'

Mr Wong reckons tech-savvy people worldwide will then see that Singapore is the best place to live, work and play - better than Silicon Valley, because it will have the best infrastructure.

Apart from this vision, Mr Wong loves a challenge, which is another factor behind his commitment to spend - as he says - half of the rest of his working life in Singapore if his consortium wins the contract.

To understand this urge to take risks and do something different, it's useful to know how Mr Wong's past experiences have made him a streetsmart - and contrarian - businessman.
'My first business was back in 1979 when I was 17 and had just finished my public examination at secondary school,' he says. 'I organised a summer school, got 400 students and made around HK$40,000,' he adds with a wry smile.

A few years later, when he entered Chinese University of Hong Kong to study electronics, he traded in textbooks. 'I used to bring in textbooks from Taiwan, where they were about 70-80 per cent cheaper than in Hong Kong, and sell them to fellow students. 'That helped make me self-sufficient while at university.'

After obtaining a Bachelor of Science degree in electronics in 1985, Mr Wong joined IBM in Hong Kong and worked for four years. After that, he migrated to Canada where he set up CTI in 1991. A year later he returned to Hong Kong to set up CTI there to provide competitively-priced IDD (international direct dial) services.

'In 1992 we did what was known as a call-back service - an alternative IDD service,' he said 'We did that until 1999 when we started to do simple re-selling of IDD.'

In 2000, CTI got a fixed-network licence in Hong Kong. 'We could do both international calls and infrastructure within the city of Hong Kong,' he says.

In the same year, CTI started a broadband venture. At the time, the idea that broadband could be a viable business was yet to sink in. But he went ahead. 'I wanted to take risks,' he recalls. 'I liked the challenge. I wanted to change the world. Everyone, including my parents, poured cold water on my plans, saying, 'Ricky, you know what you are doing? You are fighting with Hong Kong Telecom. They are huge, so what makes you so confident? Why are you wasting your time'?'

But Mr Wong politely told his parents: 'I know I can do it.'

His confidence came from the fact that CTI did it in IDD, so much so that at the peak, its market share was only 2 per cent lower than that of Hong Kong Telecom, now owned by PCCW.

Mr Wong recalls that in 2000 CTI was the last player to enter the local fixed-line market, unlike with IDD, in which it was the first to enter the re-selling market.

'The local fixed market deregulation started in 1995-96.' he says. 'And before we entered the market in 2000, three additional licences were issued - to Hutchison, Wharf and New World.'
As a result, CTI found itself up against a formidable foursome of blue chip companies - PCCW, Hutchison Telecom, New World Telecom and Wharf T&T.

At the time, broadband was very expensive in Hong Kong. It was a luxury product that cost from HK$300 to HK$400, Mr Wong recalls.

He, however, noted something that seemed significant, Although all of his major competitors were blue chip companies rolling in money, only one of them, PCCW, had its own network. The others leased network space from PCCW and other parties.

'So I said to myself, what's the difference in terms of service? Same chef, different waiter. Where is the choice (for consumers)?' says Mr Wong.

CTI decided to build a new network so it did not have to depend on the old networks to provide services.

But it was tough going. 'We didn't want to take the easy way out, so we built everything from scratch, because even if there is one inch of old cable in a network, that will become a traffic bottleneck,' says Mr Wong.

CTI faced many difficulties, as building owners were reluctant to let company engineers in to do construction work.

'I personally went to hold meetings with house owners,' Mr Wong says. 'They were mostly housewives and professionals who were not experts in telecommunications.'

He recalls talking until midnight, explaining to them the benefits of having high-speed connections to their homes. 'I used simple language to explain,' he says

Mr Wong feels that apart from being able to convince home owners, he was able to demonstrate to his staff that they had to be patient.

He notes that today, the incumbent player in Hong Kong provides around 8 mbps downlink and about one mbps uplink, while CTI's standard product is 100 mbps uplink and downlink. 'It's totally two generations up front and is not comparable.'

The CTI network is what is called a Category 5 network - the best there is on the market. Telephone lines are uncategorised or Category 0. Category 5, or Cat 5, as it is known, is the highest quality - the same as computer cabling.

'The difference between Cat 5 and a telephone line is the capacity we can put on,' says Mr Wong. 'With Cat 5 we can do 10, 100 and even 1,000 mbps (1 gbps).'

In Hong Kong, CTI offers two customer solutions. They can either use Cat 5, that is a high quality copper wire, or opt for an optical fibre line. The capacity limit of a Cat 5 copper wire is 1 gbps. With optical fibre, capacity is theoretically infinite.

'It's a future-proof technology,' says Mr Wong. 'We haven't come up with any alternative that is faster than fibre. It will be relevant for the next 20 years.'

And so what about the Singapore project?

Mr Wong feels very confident because there are, according to him, a lot of similarities between Hong Kong and Singapore. 'I think most of the households in the two cities already have a telephone line and a coaxial line for cable TV. The optical fibre will be an additional piece of infrastructure,' he says.

He, however, agrees that Singapore's open access model is radically different from his vertically integrated model in Hong Kong, but feels it's the only model that can succeed in Singapore.
'In Hong Kong we are all self-funded. We have no government support,' he says. 'But in Singapore, whoever builds the network will need government funding.'

While there are many similarities between the two cities, there is also a key difference, he says. And that is household density. In Hong Kong there are, on average, about 300 households per residential building, whereas in Singapore the number is about 80. 'So the construction cost is very different and that makes the whole business mode different.'

Mr Wong says he spent about HK$2.8 billion to connect 1.5 million homes. 'In Singapore it will definitely cost multiples of that amount to build a same-size network.'

As result, he adds, the Singapore NBN cannot be set up purely on a commercial basis, because the risk and return will not satisfy prudent investment criteria.

Singapore is not alone. Around the world, especially in European countries, the situation is the same, as it is in many other Asian countries, Mr Wong adds.

So if there has to be government support, it is only fair that the model should be open access with no conflict. 'It should be very low-risk, low-return kind of model, like say a water supply company.'

He reckons that for the system to work satisfactorily, the NetCo and OpCo should just provide the infrastructure. 'The competition should be at the retail level - the supply of different quality and type of services, like VoIP, karaoke, monitoring of the elderly etc. This is the right model to usher in a new network in Singapore.'

Mr Wong believes his company has one great advantage in the race to build the NBN - its experience in building in dense areas, using existing infrastructure and causing minimum disruption.

'While forming the (Infinity) consortium, I got a very good understanding of what is happening in Singapore,' he says. 'I even went down into one of the drains one rainy day to see how we can use them to build out the network. I saw we can utilise a lot of existing non-telecom infrastructure, like drains and bridges, to roll out the network, just as we did in Hong Kong. Our experience will come in handy.'

So the savvy Hong Kong businessman waits for the government to announce the winner of the bid to build Singapore's own cyber highway. And if the Infinity Consortium wins, Mr Wong is confident he will help build something his grandchildren's generation in Singapore will thank him for.