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|Managed Services: Developing at the Speed of Light|
The telecommunications market is highly competitive and dynamic as it is driven mainly by consumer needs. On the other hand, the networks’ complexity is constantly increasing due to the developments this market has been witnessing on its way towards the Networked Society. In this context, the need for expanding the reach and scope of Managed Services has become an urgent necessity due to the vital role Managed Services has played in the development of the Networked Society.
To keep up with the market growth and face its challenges, Ericsson widened the horizons of its Managed Services segment to include: Network Managed Services, IT Managed Services, Broadcast Managed Services and Network Sharing. Staffan Akesson, Vice President Managed Services, Ericsson, Region Middle East, provides a deeper insight into the segments of Managed Services as he discusses the different variables which gave birth to them.
The Constant Evolution
Akesson states that Managed Services are evolving very fast. Going back he says, “Concerns were centered on the network itself and how to manipulate cost reduction. However, the industry has evolved and converged as IT and telecom came together. Nowadays, operators are looking for value beyond the pure cost reductions; their demands are increasing due to the pressure exerted upon them upon their end users.”
Such increasing demands, Akesson continues, could only be met by diversifying the Managed Services solutions and propositions to keep up with the uptake of the market. In order to help operators meet the ever increasing demands of end users, Ericsson has expanded its Managed Services propositions by combing network and IT hence offering a unified solution across the whole network and platform capability for the operators. This in turn, has driven the evolution of Managed Services further.
IT Managed Services
Operators constitute the primary customer base for Ericsson as they are the main drivers of the trend. Akesson says, “We focus on operators as a primary customer base, especially those who have selected engagements with enterprises from different verticals such as media, transport, health care and utilities among others. Hence, we devised IT Managed Services to cater for these new segments.”
IT Managed Services lessens the heavy weight operators have to bear when dealing with their IT infrastructure across different verticals as Ericsson takes full responsibility of the IT with all the aspects comprising it such as application management and development, quality assurance and day to day operations and maintenance whether of the applications or the infrastructure.
Broadcast Managed Services
Convergence went beyond IT and network as another trend forced itself into the market: the convergence of media IT and telecom. This convergence led to the launch of Broadcast Managed Services.
Media, the TV industry in specific, is undergoing radical changes due to the transition to multi-platforms. Such developments left media broadcasters in need of services that combine Managed Services, technology and investments in playout operations, capabilities and competences. Akesson comments, “As Ericsson, we provide various types of services to broadcasters. In Managed Services specifically, we focus on managing the playout activities and providing the tools and processes for distributing the content. This is mainly an operational activity. At this stage we mainly focus on monetizing all of the broadcasters’ content and the backend of providing their services to their customers.”
He continues, “We have several customers worldwide. Recently, we have announced the acquisition of Technicolors Broadcast Services along with part of their broadcasting activities in France, Netherlands and UK. About 1000 people will be joining Ericsson as part of that acquisition. In this region we haven’t seen any deals yet. But there is a big media concentration on Dubai, and we are keen and interested to explore the opportunities in this segment as well in the Middle East Region.”
In the light of all the market developments, network sharing has become an established model in the mobile telecom industry. Talking about this segment, Akesson says, “This is an area of great potential. Operators around the world have great interest in exploring synergies not only on the operational level, but also on the infrastructure side as well through sharing passive equipment like sites or towers or even sharing active parts of the network such as transmission or even the complete radio network.”
Many operators in vast regions around the world are engaged in some form of network sharing. According to Akesson, in Europe, there are a lot of initiatives between operators in that respect. Some of them use Managed Services as a vehicle to consolidate and deliver networks on a whole sale bases and sell it back to the operators. On the other hand, other operators want to clean up their balances, sell up their assets either to a joint venture or a special purpose vehicle to get better return, invest their capital and thus focus on customer activities rather than on towers and concrete infrastructure.
Such patterns of behavior are key to the further industrialization of the telecom industry. Akesson comments, “On the long term basis, it doesn’t make a lot of sense to have several dedicated basic infrastructure in the same country. A lot of things can be shared, and this is all done to benefit users on a larger scale.”
Passive and Active Network Sharing
Akesson differentiates between two types of network sharing: active and passive. He says, “In the Middle East region, passive sharing is more dominant, as operators are slower to adopt active sharing models as their counterparts in Europe.” However, he adds there is a lot of interest in active network sharing as operators’ curiosity is rising for this type of concepts. According to Akesson, it is only a matter of time that operators in the Middle East follow the steps of those in Europe. He says, “The regulatory environment in Europe is encouraging these trends and supporting them. It will come to our region. In Africa we see a lot of activities on the passive sharing of infrastructure. So, the trend will gradually spread.”
Successful Reference Cases for Active Sharing
Ericsson has several projects around the world where it provides shared network solutions on the radio access networks side, both from a technological and a Managed Services perspective. There are several projects where operators share their infrastructure. UK is an example where most operators have come together to share their infrastructure all the way up to the complete radio network. Ericsson’s Managed Services are the enabler behind this ability to share networks as they help operators consolidate the networks and operate using a shared network.
The driving force behind this concept is cutting down both the OPEX and the CAPEX. This model is intended to help industry players whether operators, vendors investors or regulators to jointly capture opportunities and drive the development of the industry. What matters t the end of the day according to Akesson is that operators are able to provide deeper coverage in a higher capacity to the users at lower CAPEX and OPEX.
Network Sharing Challenges
One of the major challenges of network sharing is that operators may not be open to the idea of sharing their assets with other operators who most of the time happens to be their competitors. Akesson states, “The real challenge is convincing 2 or more competing operators to come together and share what is essentially a strategic asset, such as the network. The challenge resides in the fact that how can 2 competing operators come together and share their future plans and consolidate their separate strategies into one.”
Challenges are brought about by different factors according to Akesson. For instance, one operator might feel that they are stronger than others and feel threatened if they are to share their strength points with others. However, the Network Sharing was devised to deal with this compelling type of challenges. Akesson explains that the principal behind the development of network sharing is that existing or newly built network assets are offloaded to a third party and then provided as a service to multiple operators.
He says, “This is done in the presence or the contribution of a third party that is independent from these operators. This third party plays a role and consolidates between operators to build a network that would cater to both in terms of capabilities. Ericsson is there to serve multiple operators through handling and balancing their different and competing needs. The purpose of sharing networks is to bring financial and operational benefits to operators.”
2012: A Year of Progressions
During the first year, Managed Services was a question of “why”. However, that phase has been long forgotten. Managed Services have become a necessity, rather a must. The industry has matured and according to Akesson, “It is a matter of moving to the next level, beyond costs, quality and KPIs. It is all about customer experience. This is a fast growing industry and we are constantly looking for opportunities that help us grow. We can say the whole industry is adopting Managed Services which have become a large part of our business.”
Within this domain and throughout 2012, Ericsson will be focused on working with its existing customers to provide them with real valuable experiences and help them develop and move on to the next level. As per Akesson, “Keeping existing customers happy and satisfied is more important than chasing new clients.”