Didier Lombard knows a thing or two about boom and bust. The last time the telecoms and technology industries weathered a crash, when the dot-com bubble burst in 2000, he was the French Government’s ambassador in Silicon Valley.

Mr Lombard took up his role as France’s ambassador-at-large for foreign investment in 1999 as the dot-com boom neared its peak and left in 2003 by which stage share prices had been hammered and hundreds of businesses had gone under.

The £25.1 billion acquisition of Orange in 2000 brought France Télécom to the brink of bankruptcy once the dot-com bubble burst. But Mr

Lombard argues it was also the group’s saving grace as it was the key to reengineering the company.

Under Mr Lombard’s strategic plan, launched when he took over as chairman and chief executive in 2005, France Télécom rebranded the majority of its activity, including mobile, internet and fixed line, under the Orange brand. From 8 million customers in 2000, the Orange network now boasts around 118 million around the world, two thirds of France Télécom’s customers. “When we rebrand our activity in one country the commercial activity usually increases by 20 per cent,” Mr Lombard says. “It is one of the most valuable brands worldwide.”

As well as witnessing the full force of the crash, he also saw the power of innovation to rebuild a shattered industry. Mr Lombard sees himself as an innovator at heart, as much as a chief executive, and he sees innovation and investment as the key to France Télécom riding out the current recession.

This time round, although France Télécom is in much better shape (in 2002 it was teetering on the brink of collapse, saddled with ¤70 billion in debt after a buying spree by a previous chief executive, Michel Bon), the telco industry has its own challenges beyond the global credit crunch.

Revenue from traditional voice calls has been declining for several years, while neither mobile data nor mobile advertising has yet proved to be the money spinner operators had hoped. Innovation is therefore more important than ever, Mr Lombard says.

“Our approach to the problem is very simple,” he explains. “We are in a very competitive world, a very innovative world. The product, the service, everything in fact, moves every six months. The portfolio of offers to our final customers changes every month. Especially in \ which is one of the most competitive markets. So it’s obvious that a group like us needs to have brilliant innovation to differentiate us from our competitors.”

The day Mr Lombard flew in for our interview he had a perfect example of how innovation transforms people’s lives. Before take-off in France, the crew of the private flight he was on told him that they would not be able to land at London’s City airport because of fog. Not one to take no for an answer, Mr Lombard got out his iPhone (which Orange sells in France, although no longer exclusively thanks to the French regulators), clicked on an application and revealed a satellite view of the airport. “Look,” he told them, brandishing the phone. “No fog.” The plane duly took off and he made it on time for a day of meetings.

Innovation was also the impetus for his trip to London as he had come to announce to staff that Orange was launching a so-called technocentre in the UK. At the lab in Bristol, 80 staff will focus on creating a new wave of mobile and broadband applications and services. Mr Lombard expects to see the first set of products and services from its Bristol team in the second half of this year. One application in the pipeline is a service that will track all forms of public transport in London and show where there are delays and which is best to take — bus, train or Tube.

Orange’s technocentres, which bring together research and operational teams, form part of Orange Labs, a global network of more than 5,000 staff across 19 countries that spend their time coming up with new ideas. The labs are responsible for many of the 8,500 patents already registered with Orange and France Télécom.

Mr Lombard’s obsession with innovation goes back to his first days in the telecoms industry. He started his career in 1967 in France Télécom’s research and development division creating new products for satellite and wireless technologies. Between 1988 and 2003, he worked with the French ministry for research and technology and the ministry for the economy, finance and industry.

Mr Lombard says that he took the idea for technocentres, which “provide a kind of platform where research and operational communities meet and transform the innovation into a product”, from the motor industry. “The car industry had the same problem in the 90s,” he said. “They came up with marvellous innovation which never happened in the car. So they created technocentres at that time. We copied that idea.”

One hindrance to Mr Lombard’s mission to spread innovation is one that is common to any telco boss: regulation. His message to Ofcom, and other regulators, is to speed up and get tougher when enforcing policy.

“Dynamic regulation is key to ensuring innovation reaches the customers as quickly as possible,” he says. For example you’re still waiting for what we call “naked ADSL”, while in France this was deployed two years ago. Naked ADSL means broadband without the need to pay for a phone line. “I think this is something UK customers would not say no to.”

The problem is not an understanding of the issues, he said, but enforcing them. “In the UK, the rules are there they just need to be applied. It’s obvious that there is always a regulation problem because the technology evolves very quickly,” he says. “Every month you have to change a product and the regulatory framework is defined for ten years.”

The biggest challenge telecoms operators face, says Mr Lombard, is that the internet has freed customers to decide what services they want. He says: “If they want to have free telephony to call their nephew abroad they find the service on the net. If they want to have video on demand they have video on demand. They don’t like to have it predefined.” Companies that do not keep up will lose out, he says.

He must be doing something right. France Télécom has met or raised key financial targets Mr Lombard put in place when he became chief executive three years ago. And despite the downturn the group reconfirmed its guidance at its third-quarter results in late October and expects organic free cashflow for 2008 to exceed the ¤7.8 billion delivered in 2007.

Mr Lombard continues to position Orange at the forefront of the new internet age. Five years ago when he joined France Télécom he pushed the group down the path of convergence, bringing together its mobile, fixed and internet businesses.

In March this year he is due to launch a second strategic plan and convergence is still at its heart. He hopes to see a fully converged service, including IPTV and mobile TV, in the UK within the next two to three years.

CV

Born: Feburary 27, 1942

Education: École Polytechnique and École Nationale Supérieure des Télécommunications

Career: 1967 France Télécom, research and development; 1988-2003 French Government, ambassador-at-large for international investment from 1999; 2003 France Télécom, executive senior vice-president; 2005 chief executive and chairman.

Family: Married with three sons

Other interests: Wrote a book, The Second Life of Networks, about how networks of all kinds - human, social, creative and financial - are forming around the high-speed pathways of the 21st century.

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