Service Providers : Reinventing for Success

Today, telecom operators across the world are under pressure to develop
next-generation technologies such as next-generation network, 3G, WiMax, etc, to
meet the changing market demands. The situation is compounded by the slowdown
which is leading to issues like inadequate liquidity and credit crunch.

“There is a definite interest on the part of service providers in the country
to reduce the capital expenditure (capex) as well as operating expenditure (opex).
They are looking at various technologies as well as business models to bring
down the operational expenditure. There has been a lot of interest in the arena
of data centers, contact centers as well as other technologies,” says Vish Iyer,
vice president, service provider, West, Cisco India.

Though Indian telcos are not as severely hit by the slowdown as their
American and European counterparts, there is certainly an interest in upgrading
technologies as well as business processes, which will help them in bringing
down opex. It is not just the slowdown but other factors such as quality, and
the need to efficiently manage the ever-increasing traffic, which is leading
operators to seriously think of innovative ways and means to reduce costs.

“Our consulting business is seeing a lot of traction and customers seek
professional consultancy in efficiency consulting. In 2050, communication
service providers will need to be ultra-efficient. The CSP of the future will
need to serve a worldwide population of 9.1 bn. It will need to process and
carry a proportion of more than 200 tn minutes of voice traffic free. It will
need to develop, process, distribute, and support many advanced applications
such as interactive remote video and biometry. It will have to be an integral
part of a sustainable ecosystem,” says Michael Kuehner, head, sub-region India,
Nokia Siemens Networks.

Tech Up

There has been an increase in the adoption of technologies that can help in
the reduction of operational cost for a service provider.

“Needless to mention, the choice of technology plays a significant role in
the success of telecom operation. Hence, besides cost of operation, other
factors like standard based worldwide deployments, future-proof also play an
important role in technology selection,” says Prasenjit Khuntia, country
manager, Tellabs India.

“Since ARPU is decreasing while minutes of usage are increasing, there is no
option for service providers but to look for means and ways to reduce cost,
which would ultimately help them in increasing their profit. Apart from that,
every new operator is looking at faster rollout of services and how to save
maximum in this rollout,” says Tuhin Mukherjee, associate vice president,
telecom business, Emerson Network Power (India). Emerson is one of the leading
power management firms in the country and has recently come out with various
solutions to help service providers combat the effects of recession. The company
is also currently working with three greenfield operators

Recently, it launched a power management solution, Power System and
Environment Monitoring (PSEM) in the Indian market. It claims that the solution
is already deployed at 10,000 sites in China. “It is basically a monitoring
system which can remotely help in power management. Diesel misuse is one of the
major problems for service providers. With this system they can see actual
consumption in real-time. A service provider can save up to 20% of opex with the
deployment of this system,” says Mukherjee.

The company feels that there is a strong interest in alternate sources of
energy and this is likely to become a strong trend in the coming two years. “We
are planning to launch a charger unit that can alternate between solar and wind
energy, depending on the availability and requirement. This is mainly
considering the interest of service providers in the country,” Mukherjee added.

These apart, there is a movement towards IP-based networks, which goes a long
way in reducing costs for service providers. “There is a definite movement
toward IP-based networks from TDM, which also helps in reduction of opex.
IP-based networks are simpler and easier to handle. There is an increased demand
for IP-based architecture,” says Iyer. “There is also a strong interest among
service providers for interactive voice responses and data center technologies,
which can help in overall cost reduction,” he adds.

While Chinese telecom company, ZTE has recently come out with Software
Defined Radio (SDR) base station, which supports GSM and WCDMA simultaneously
within software rather than requiring separate hardware components like current
base stations. The company claims that this is contributing in reducing opex.
With SDR technology, mobile operators will be able to extend the lifespan of
their network systems, hence, decreasing total cost of ownership and
significantly lowering investment risks.

Ericsson also recently came out with Tower Tube, an innovative construction
that houses base stations and antennas, encapsulating in aesthetic,
energy-efficient and low environment impact towers. “It is basically a concrete
tower which has a lower environmental impact than traditional steel, consuming
up to 40% less power from a life cycle perspective,” says P Balaji, vice
president (marketing & strategy) at Ericsson India Pvt Ltd.

New Models

Business models are also undergoing a sea change to meet newer demands.

Outsourcing and infrastructure sharing are two prominent business models
which have evolved in the recent past and are likely to gain popularity in the
coming time.

“Most service providers have shown increasing interest in outsourced O&M
services. Active and passive equipment O&M outsourcing services on site is
helping the service providers to reduce opex,” says DK Ghosh, CMD, ZTE.
Moreover, infrastructure sharing is going to be a reality soon, with greenfield
operators also looking at infrastructure sharing with new and existing
operators.

In its recent report, Ovum states that network operation is not core to the
network equipment providers' business and these recent contracts show that
managed services have come of age.' The move suggests a major shift in the
telecom space with operators no longer seeing their networks as a core function
of their business.

“Managed services have come of age for tier-I operators to feel comfortable
stepping back from the day-to-day management of the network, provided they have
a strong relationship with a trusted supplier,” says Kuehner of NSN.

Another development is the recent initiative by ZTE to offer a portion of the
$15 bn credit line from China Development Bank to the Indian telecom operators.
This move will help ZTE partner with global telecom carriers and will go a long
way in enhancing its market competitiveness and ultimately achieve a win-win
situation in key focus markets like India. It goes without saying that this
initiative holds special significance for telecom operators in a fast growing
market like India, where a large number of new players are all set to launch
services and the existing players have drawn up large-scale expansion plans to
offer 3G services and penetrate rural markets. Industry sources say that the
company has already committed a part of its fund to Indian service providers,
and Reliance is one of the beneficiaries of the scheme.

The Indian telecom industry is also witnessing the emergence of Asset Light
method, which implies that companies can use equipments for a rent instead of
purchasing them. This is likely to appeal to new operators, who would like to
reduce their financial risk, especially in the current economic environment.

It would suffice to say that operators are fast realizing the importance of
technology in reducing the overall operational cost. Emerging business models
are further helping them in this regard.

Gagandeep Kaur

gagandeepk@cybermedia.co.in