An increasing number of fixed and mobile operators are outsourcing the management of their network infrastructure. Operators can now concentrate on optimising costs, increasing revenues through improved service quality and prioritising crucial business processes, says Ashish Chowdhary. Co-sponsored feature: Nokia Siemens Networks

Ashish Chowdhary: managed network services bring
a powerful combination of network efficiency and
quality assurance



Chennai global network solutions centre: one of three
designed to help customers get to market faster
through ‘round-the-clock’ project management

Outsourcing and offshoring business processes to external partners has been a huge growth industry in recent years, and has played a vital part in helping to maintain the competitiveness of many companies.

While much of the early activity revolved around non-core processes, the way in which some markets evolve — or sometimes undergo rapid, revolutionary transformation — has opened up opportunities to outsource processes that would once have been unthinkable.

Such a situation is now playing out in telecoms, with communications service providers (CSPs) in both mobile and fixed markets outsourcing the management and optimisation of what has been seen as an absolutely core asset — the network infrastructure — to create a market that will be worth more than $21 billion by 2013, according to analyst Informa.

“We see the uptake of managed services for infrastructure increasing significantly now that very large providers such as Orange in the UK and Spain are signing deals for outsourcing their mobile network operations,” says Ashish Chowdhary, global head of managed services at Nokia Siemens Networks.

“Both mobile and fixed CSPs around the world are signing up for a range of network outsourcing contracts as they seek to differentiate themselves through the services provided to meet growing demand from their customers for superior service experience. In developed markets, especially, network coverage and voice quality are no longer significant differentiators for CSPs — and that has fundamentally changed the business focus for many providers.”

Meanwhile in developing markets such as India and China — where the race is on to sign up literally millions of new subscribers a month — CSPs are looking for partners with competences gained from similar large scale rollouts at a rapid pace that can help deliver the necessary coverage and capacity.

As Chowdhary adds, there are different business challenges facing CSPs in various regions, but there are clear trends and pressures. “These challenges range from the need for rapid network roll-out in emerging markets to a pressing requirement to optimise and drive down opex and capex in mature markets where the huge rise in fixed rate data and video traffic is putting great pressure on margins.

“Leveraging managed service for networks, CSPs can optimise costs, increase revenues through improved service quality, coverage and usage, and prioritise crucial business processes that are now really core — in particular, customer acquisition and retention. Managed network services bring a powerful combination of network efficiency and service quality.”

As a survey into customer behaviour by Nokia Siemens Networks reveals, a majority of ‘churners’ who leave for a competitor, for both fixed line and mobile services do so because they are dissatisfied with factors such as service quality, customer care, and cost and billing.

Network coverage and voice quality are not the main factors, especially in developed mobile markets. In fact, in the UK, voice quality on mobile networks is not a churn factor at all, while in Germany customer care is a huge reason to defect in fixed broadband — cited by 62% of respondents (source: Nokia Siemens Networks Acquisition and Retention study, 2009).

“Our research points the way to what can be true differentiators for CSPs in mature markets,” says Chowdhary. “And while network coverage and voice quality are still major factors in emerging countries, many CSPs in these markets will soon face the same shift in priorities as in developed markets, and they may not have the economies of scale to roll out more reliable networks with wider coverage.”

Today, it is not a mobile operator that runs the world’s largest wireless network, but managed services providers, which together ensure that several hundred million customers receive the services they have signed up to.

“At Nokia Siemens Networks alone we manage networks for more than 220 million broadband and mobile customers on behalf of their CSPs — and it gives us extensive knowledge about many local and regional markets,” says Chowdhary.

Nokia Siemens Networks, he adds, recently invested in a third global network solutions centre (GNSC), in Noida, close to India’s capital, Delhi.

“We are pioneering an innovative, centralised global service delivery model that goes beyond near-shoring of very specific activities and competences by enabling the delivery of integrated services remotely from a few key global locations,” says Chowdhary. In addition to being in the heart of one of the world’s fastest growing mobile markets, the new centre complements the company’s two other GNSCs in Lisbon, Portugal and Chennai, India.

“This network of GNSCs is designed to help our customers get to market faster through ‘round-the-clock’ project management, ensure high network and service performance and improve service delivery efficiency while reducing risk,” he adds. “Our global delivery model gives CSPs access to automated tools and processes, and multivendor technology competence, on a world scale.”

Of the millions of customers benefiting from this approach, nearly 16 million are customers of Orange UK and will be under the Nokia Siemens Networks umbrella. “Under this major five year contract, we will manage, plan, expand, optimise and provide maintenance services for the Orange UK 2G/3G mobile network for the next five years,” comments Chowdhary.

“The deal will deliver improved quality of service and enhanced coverage for Orange UK’s mobile subscribers, while driving operational efficiency.” It includes the full range of 2G/3G network operations including network planning and optimisation, spare parts management and turnkey network rollout services. Orange will continue to own and strategically plan its network.

As Chowdhary adds, the fact that very large CSPs such as Orange are now moving to managed network services — despite having good economies of scale of their own — marks a decisive shift in business focus. “Up until recently it was mainly smaller players that lacked in-house competence and scale that had turned to outsourcing.”

It would be wrong to assume, adds Chowdhary, that cost is always the major consideration when outsourcing networks. “Yes, we can deliver average savings of about 20% — and for some CSPs it could be even more. But for those at the lower-end, cost savings may not be the key objective — instead the primary driver could be to help shift management focus to activities critical to the real core of the business.”

Contracts such as that at Orange also involve managing maintenance subcontractors and transferring staff from the CSP to Nokia Siemens Networks — some 230 are joining from Orange, with others moving to the field maintenance company.

“They are complex contracts that take a lot of due diligence on both side to complete,” says Chowdhary. Much of the cost savings come from the ‘resource elements’ of managing network services such as staff and tools — although technology also plays a role through optimising radio transmission, and saving energy costs with more efficient management.

Certainly, where outsourcing has come under the microscope in recent years is on the suitability of the contracts and the way they have worked out in practice. “We spend a lot of time to get things right –only doing deals that make sense for both the CSPs and ourselves,” says Chowdhary.

“We are known for a consultative sales approach and our focus on people involved with any transition to Nokia Siemens Networks. We also respect the fact that some CSPs have taken some steps towards outsourcing and then pulled back, perhaps several times, for many reasons. The timing has to be right.”

Another — and contentious — area where managed services is starting to play a part is in the trend for CSPs to share network infrastructure, which will cover not just physical structure such as towers and office sites but may also embrace radio access too, if regulators permit. “With technology such as LTE [Long Term Evolution] coming soon for mobiles we will see yet more pressure to cut the costs of massive data and video transmission, and the idea of network sharing is likely to get a new lease of life,” says Chowdhary.

“It is a big challenge for CSPs to partner with competitors — but one way to iron out conflicts is to outsource network coverage to a ‘netco’ type provider — and then focus on brand, service delivery and experience.”

In turn, the door is open for CSPs to contemplate radical business transformation into pure play service companies — and models such as the various MVNOs already exist to prove they can work.

So if the network is no longer a CSP’s most valuable asset, what is? “I think that’s easy to answer,” concludes Chowdhary. “It’s the relationship with customers and the integrated databases that drive superior experience. The network is only one part of the picture and who better to manage it than suppliers who know the equipment inside out and in all world situations.”  GTB

For more information: www.nokiasiemensnetworks.com/managedservices

Who’s outsourcing?

Orange UK: Full range of 2G/3G, network planning and optimisation, turnkey network rollout services, network operations, field maintenance activities and spare parts management

Orange Spain: End-to-end managed services covering network deployment, monitoring, maintenance, design and optimisation services of the mobile and fixed multi-vendor network to increase efficiency and reliability

T-Mobile Austria: Managed services agreement for build and operations of mobile backhaul network

Tata Telecom, India: Pan-India launch of GSM mobile services

Embarq, US: Seven-year agreement for fixed voice network operations

Oi, Brazil: Operation and maintenance of 25,000 sites from 35 vendors, including network monitoring, maintenance, spare part logistics and repair

Deutsche Telekom: Strategic managed services partnership and creation of Nokia Siemens Networks Deutschland to target the growing market in multivendor field services

Ainacom and DNA, Finland: Network operations outsourcing

3GIS, Sweden: Outsourcing operations of 3 and Telenor shared network

Vodafone Australia: End-to-end managed services from monitoring and break/fix, to network performance and capacity management