Whiz Kid’s Challenge: Steer German Phone Company Into Future : Communications: He faces a daunting task in directing the bloated, state-owned giant onto the information superhighway.
The question is there for the asking: Is Ron Sommer the next superstar of German industry? Or is he merely a flashy future has-been, destined to buckle under the load of carrying Europe’s largest telecommunications firm into the 21st Century?
Whatever the answer, the decision Wednesday to name Sommer chairman of Deutsche Telekom has raised more than a few eyebrows in the clubby, predictable world of German industry. The former head of Sony USA and more recently chief of Sony’s European operations, the 45-year-old Sommer is, for starters, very young to be the head of a blue-ribbon German company.
His background sets him even further apart.
Born in Israel of a Russian father and a Hungarian mother, Sommer was a whiz kid who came away from Vienna University with a doctorate in mathematics at age 22 and never looked back. His German carries a distinct Viennese accent--and his hard-driving yet open style of management is more typical of the United States than Europe.
“Likable, approachable, warm . . . and very ambitious,” summed up Anne Preissner, an editor at Germany’s “manager magazin, “ who has tracked Sommer’s career and knows him personally. “His warmth radiates, but it’s deceptive. His charm is part of his strategy.”
Precisely because of his unusual background, Sommer’s appointment has been applauded here as a brave gamble on the part of the German government and a sign that it is serious about turning the lethargic, overweight, state-owned Deutsche Telekom into a real global competitor.
And it also sets the tone for a multibillion-dollar game now underway in which Deutsche Telekom is merely the largest of many players--that of privatizing state-run telecommunications monopolies throughout Western Europe and opening up one of the world’s richest markets to global competition.
Rules adopted by the 15-nation European Union require all member states except Spain, Portugal, Greece and Ireland to remove barriers to competition in telecommunications by January of 1998. The four countries that won exemptions from the deadline have until 2003 to comply.
European government and industry officials hope deregulation will cut phone prices and spur the development of new communications products and services, just as it has in the United States.
“It’s (Sommer’s appointment) a positive sign for Germany and for Europe,” said Hans-Peter Froehlich, a director of the German Economic Institute in Cologne. “He faces a huge task.”
Shortly after his appointment was announced, Sommer joked about the enormity of the job he had accepted. “I look forward to my new task because it isn’t just in my own eyes that it’s seen as the absolute challenge in German industry,” he said in a prepared statement.
It is hard to dispute that assessment.
As part of Germany’s mostly state-owned postal system, Deutsche Telekom’s roots extend back nearly five centuries. But a new era began in January, 1995, when the company was transformed into a stock corporation, with the government as the sole owner. The firm expects to be quoted on international stock markets as of January, 1996.
Although Telekom began to change slowly in the 1990s in preparation for the scheduled privatization, it is hardly a lean-and-mean corporation racing down the information superhighway. Its current staff of about 230,000 is judged to be about 60,000 too many; one of Sommer’s primary tasks will be to slim it down.
But in many areas, the problem is as much quality as quantity. The overwhelming majority of Deutsche Telekom workers are legally government employees, men and women who not only enjoy guaranteed job security but were also attracted to Telekom in part because they knew they couldn’t be fired. (Telekom officials say the slimming-down will be done through attrition, early retirements and other incentives.)
While many praise the technical potential that exists within the company, depressingly few innovations seem to reach the market quickly.
Itemized bills and toll-free 800 numbers have come only recently, while touch-tone dialing has been only partly implemented, a reality that means roughly half the country’s push-button telephones do little more than activate an old dialing disk.
Meanwhile, Telekom’s monopoly status frequently leaves customers with the impression that it hardly cares.
Basic services, such as telephone information, are so understaffed that they frequently exist in name only. After half an hour of busy signals, one customer finally managed to reach information--only to get a recording stating that he should call back later.
When a Berlin office manager recently called a Telekom customer service representative to complain that four months had gone by since she had requested an additional telephone line, she was told four months was a normal wait.
When the manager asked if she could have an explanation for the delay, the Telekom rep replied with a single word: No.
In his statement Wednesday, Sommer listed four priorities: to complete Telekom’s present reorganization, to oversee its successful privatization next year, to make it a major player in the highly competitive global communications industry, and to turn it into an innovation leader for the German economy.
Some believe he just might do it.
“He’s the right person to take apart this German monopoly,” Froehlich said. “He knows the markets, he knows the competitors and he naturally thinks beyond Germany.”
A colleague at Sony Europe who declined to be named agreed that Sommer was a good candidate to shake things up: “He had vision, yet his feet never left the ground. He was different.”
Yet others voice doubt, noting, for example, that Sommer’s success has been with groups only a fraction of Telekom’s size, mainly subsidiaries of the German computer manufacturer Nixdorf and Sony. Sony Europe’s staff is less than 10% of Telekom’s, and its turnover of $7.3 billion is about one-sixth that of Telekom’s 1994 revenue of about $45 billion.
“The danger is if he tries to do it all on his own,” said Preissner. “He needs a good, strong team to tackle an entity this size. He’s shown us that he likes to dazzle . . . but whether he’s prepared to let others dazzle with him is uncertain.”
