Editor's Blog: Deutsche Telekom targets services

This week, as I mentioned in my last blog, saw me in Germany. I was really interested to find out all about that country's road-charging system - for heavy goods vehicles and limited to the autobahn, for now.

You can see what I saw on an excursion with a crew from the company administering the scheme, Toll Collect, here.

I wonder what the people from the UK Department for Transport think about the whole thing. Or even local representatives from bodies such as Transport for London, the people behind the soon-to-be-extended Congestion Charge.

It seems road-charging based on some kind of technology (wireless, number plate recognition and so on) is a 21st century phenomenon. Toll gates or taxing purely on fuel consumed - both currently in use - are judged too cumbersome or too imprecise by most higher-ups.

Though of course there is something to be said from simplicity - as readers constantly tell us whenever we write about more advanced systems. And oh yes, being 'tracked' by the state is never welcomed by a huge chunk of the driving population.

The providers of the German system, via various JVs and subsidiaries, are Deutsche Telekom's T-Systems unit. That services company has been expanding out of its home market more and more, and I was also interested to hear their wider pitch at the DT Internationales Presse Kolloquium in Berlin.

Clearly, DT is going through the big changes other major telcos are facing to different degrees. With a new CEO, the group put out a profits warning on Sunday. The expert analysis seems to be that there is pressure on the fixed-line and broadband units (so far, so obvious) but also the T-Mobile business has its issues, most notably declining margins (that roaming campaign - ouch) and even, somewhat unfortunately, the small matter of the declining value of the dollar.

T-Mobile may be upping its game in the US but every extra dollar it makes isn't translating into quite as many euros back in Germany.

Bottom line - all eyes on the management board look harder at growth areas... such as IT services.

So a unit like T-Systems faces more pressure. Even the head of international within that unit, Axel Knobe, admitted as much to me. But he was bullish.

T-Systems is targeting average growth of 20 per cent per annum until 2010, with 30 per cent of its business outside of Germany by then, said Knobe.

He added: "We are optimistic we can reach this target."

On the subject of being a combined ICT provider, he said: "We are the only supplier in Europe, maybe in the world, that can do both. We have two DNAs."

Interesting. My reckoning is that BT might argue with that, the same BT that has done markedly well in the services game, with stand-out wins outside the UK - in places such as Bavaria, for example.

Later on Knobe claimed BT has the combined pitch but has to turn to partners such as HP to implement contracts, for the IT nous. And that, he said, presents more risks than sticking with a T-Systems, where everything is under one roof. (That's largely thanks to the T-Systems heritage that saw it born out of the IT department of Daimler-Chrysler and DeTeSystem. I know, I was there, some six or so years ago.)

My guess is that economies such as the UK may look fertile to T-Systems (it's already done OK with T-Mobile here) but that's what everyone else thinks - from other Europeans, to Americans, to Indians, to the Japanese, even to UK providers, lest we not forget them.

For the record, the other countries T-Systems said it will target include Spain (the SEAT link to the VW IT business T-Systems took over is a leg up), France, Switzerland, Austria, Italy, then outside of Europe, Brazil and Mexico in the Americas, and then "potentially" Eastern Europe and China.

Services remains one of the most important growth areas in tech. We'll keep on following the area closely.

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