As mobile operators around the world strive to push down their cost of operations, they are increasingly outsourcing their network to equipment vendors. Nokia Siemens is looking to leverage its expertise in this area to get a larger pie and India, with its low-cost advantage, has emerged as the key to the company's services strategy. Business Line caught up with Armando Almeida, Global Head of Services for Nokia Siemens, to understand the challenges of delivering a smart network without increasing the cost for mobile operators.

Has the concept of ‘Managed Services' moved beyond emerging markets to developed countries?

Managed Services is beginning to happen globally. In developed countries there are a number of operators opting for managed services, such as Sprint and Clearwire in the US; Orange in Europe, VHA in Australia. There are other significant opportunities that are being discussed.

Compared with last year, there are much larger opportunities this year. With the smart-phone proliferation and huge surge in data on networks, combined with rapid technology evolution, operators are increasingly recognising the significance of managed services to improve efficiency. So I see acceleration in this area.

Is there anything that is stopping operators in these countries from adopting managed services model?

It is a matter of trust. The network is the lifeblood of an operator and so far viewed as core to their business. It is from network that they make money.

So operators want to be careful and outsource their networks to vendors they can trust their networks with. But as the market evolves, operators become Communications Service Providers (CSP) focusing on exploring new revenue opportunities by launching new services, and customer retention and acquisition.

This is causing a shift towards this model of managed services to address the issue of high operational expenditure and overall operational efficiency.

The other interesting issue that's being discussed is what is next in managed services. India is an example of that. We are doing basic managed services where we have dealt with the issue of operational expenditure; and quality of service is better but now everyone wants to know what's next. At Nokia Siemens Networks, we are taking our Managed Services to the next level of Services Management and Customer Experience Management. We are enhancing our solution portfolio to help operators evolve from a network-centric approach and bring focus on the services and individual subscriber experience.

While managed service is good for the operator, doesn't it result in lower margins for vendors such as NSN compared with the traditional business of selling boxes?

We are constantly analysing this question. When you take a managed services contract, you take over the fixed cost of the operator, converting it into operational expense for them.

As vendors, our effort is to then improve the efficiency in network operations through tools, processes and operating models to provide best-in-class operation of network for the operator. Moreover, Managed Services contracts are typically long-term contracts. We feel we are in the business of making our customers more competitive in the market place by improving their OPEX and CAPEX efficiency. It is a partnership that we are at the beginning of.

The other aspect to this that we have found is that mobile operators around the world spend around 250 billion Euro on operational expenditure. Of this 70 per cent is internal spend and whatever we are doing as vendors addresses only 30 per cent of that spend. So, globally, there is a huge amount of activity that's still not outsourced so those are the areas where we can focus.

Do you see the Services contributing a higher share to NSN's overall revenues?

At present, Services business accounts for 47 per cent of NSN's revenues. This is the largest percentage by any vendor.

In India, NSN has been managing voice networks so far. Does the concept of managed services change as more of data gets used?

As data usage gains significant momentum and smartphones surge into networks, the way we “manage” things also gets changed. First, to handle this data, networks get “smarter”, meaning lot more automation, lot more IP. As networks become smarter, most of the control will be done remotely.

So we can control networks from anywhere in the world, which allows us to do it in the most efficient way from the best suited location.

That's how India comes into the picture. Every single part of the network will be smart, including cables, antennae. Once you have too many smart things you have to bring it into a centre remotely. There will be fundamental changes in the way we deliver services as the end-customers' expectations increase. Their expectation from service experience as well as individual experiences will also become sophisticated.

Our Managed Services is evolving to address these expectations and helping CSPs around the world, and in India now, to provide superior experience to end-users. We are piloting some of these with many Indian customers and at the same time our Global Network Operations Centres (GNOCs) in India are getting ready to provide service/customer-level view to the CSPs.

Operators have started rolling out 3G in India but the quality of service is poor. What is the problem?

We cannot comment on whether quality is good or bad. But over the last four months, Indian operators have rolled out 50,000 3G sites across the country. This is a huge number that is unheard of in most countries. So it is not an easy task. Some operators in Latin America took three years to do what Indian operators have done in four months.

NSN now has two global delivery centres in India. How significant are your operations here?

Clearly, India is very significant for us. We have more than 9,000 services employees in India. In the two GNOCs in Chennai and Noida, we have over 2,000 global service delivery experts.

In managed services, the networks managed by us are adding 7 subscribers a second. About 80 per cent of all subscribers on networks managed remotely by Nokia Siemens Networks globally are managed from these two centres in India. Going forward, I see significant increase in utilisation of our centres in India.

What's next for NSN in the services space?

In the world of tomorrow we need to create a liquid network, which, like water, is flexible. For example, today you have a situation where during the day the mobile networks at the city centre get a lot of traffic and in the night, as people go home to the suburbs, the usage migrates to outside the city. So the network needs to adapt to this sudden shift in traffic.

Another example is when you download content from a particular portal, the request goes from the nearest base station to the Internet. Then, if another person who is nearby also wants the same content, it has to go through the same route all over again.

Why not keep the content in a buffer on the network? NSN is going towards this and we launched our liquid radio this January. We have to be ready for it.

> tkt@thehindu.co.in

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