Pass the network

Operators can reduce opex by passing the management of their network
Sanjay Sinha says outsourcing is a growing trend in MEA.
Sanjay Sinha says outsourcing is a growing trend in MEA.

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Operators in the Middle East and Africa are increasingly outsourcing the management of their networks to vendors who are better placed to improve the efficiency and quality of networks.

The past few months has seen numerous deals. For example, in June Indian operator Bharti Airtel signed a five-year managed services agreement with vendor Ericsson for its African operations. Under the agreement, Ericsson will manage and optimise Airtel’s mobile networks in Africa, allowing the telco to focus on customer service. Meanwhile, Zain Iraq is also in the final stages of outsourcing its network to Ericsson.

Sanjay Sinha, head of global services, sales, Middle East, Nokia Siemens Networks, says that outsourcing globally started around 2002 to 2003 and really took off between 2004 2005. “The main reason for that was that the operators felt it was time for business transformation,” he says. “They needed to concentrate on getting the subscribers and the end users had also grown in their demand for quality, so there was a big need to concentrate there.”

Operators were also becoming increasingly keen to hand over management of the network to vendors – who were perceived to have more expertise of running networks – allowing the telco to concentrate on the end user and marketing.

Operators were also facing increasing opex pressures. “The very reason that vendors could come in and do more or less the same thing for less cost was also a very great driver,” Sinha says. “The reason why we can do this as a lesser experience is because of our experience globally. We have an expert team who can do the same thing over and over again.”

Nokia Siemens Networks, which also has a number of managed services contracts in the MEA region, has taken outsourcing a step further by develop a system called GNOC, which stands for Global Network Operating Centre. With this system, the vendor controls numerous different operators’ networks from a central operating centre, or GNOC.

Nokia Siemens Networks currently has five GNOCs around the world. Sinha describes them as “competent centres” from which the vendor can remotely monitor and control key components of the networks it is managing. “You can see all the operational issues, you can monitor and correct them and make changes from the GNOC,” Sinha says. “What we said was: ‘look we are taking over so many managed services cases and how do we put all of that learning and all of that expertise and know-how under one roof? With the GNOC we created one centre where we had each and every expertise and we could control networks around the world from the GNOC itself,’” Sinha says.

The GNOC model allows Nokia Siemens Networks’ to centralise the outsourcing, although the vendor also maintains a “regional layer” of expertise to handle the local needs of its clients’ networks. Sinha adds that there is also significant flexibility in the model.“We can go anywhere from a full centralisation to the GNOK or we could do part centralisation, part regional, or we could do a portion with centralisation and regional and then we could do the rest locally on the ground,” he says.

In the past couple of years, operators have started to look for additional services from vendors. Indeed, Sinha says that the trend has moved away from vendors just maintaining the network to offer a greater level of assistance in terms of helping the operators increase their revenues. “That is the next level, to go to something called the service management,” he says. He adds that the next stage for Nokia Siemens Networks is to progress from the GNOC to a Global Service Operating Centre. “This will allow us to monitor the end user experience, not just the network. That is where we are moving to, which will help ensure end users are happy if they get flawless calls, data transfer and so on.”

Sinha adds that there is a “whole array” of tools available to help the vendor isolate and fix the faults in a network and then correct them remotely or locally. To improve service quality, vendors look at various key performance indicators and service level agreements.

“There is a whole area of KPI and SLAs. KPIs are mainly on the network side looking at issues such as how many call drops, quality of calls, data rate experience on mobile and what kind of congestions you face in the network. There are also performance indicators which measure call qualities while you are making calls.”

If it is a problem in the telecom network, Nokia Siemens Networks classifies the problem according to its severity and has set time scales and methodologies to correct them. Staffan Akesson, vice president of managed services for Middle East and Africa, Ericsson, also said recently that operators are increasingly looking for an “integrated model” whereby they work with one strong managed services partner who takes an end-to-end responsibility of the converged network on a long term strategy to manage network and IT. This marks a shift from a more fragmented approach that operators have traditionally adopted, where they work with a number of different partners.

“The current trend is that operators are moving from network-centric operations to customer-centric business globally, and we see this as the main trend in the MEA region. “We are investing in resources and developing our capabilities to support MEA operators in this transition of managed service operations,” Akesson added.

Operator’s perspective

One operator that is in the process of outsourcing its network is Zain Iraq. The telco said in June that is was planning to outsource the management and maintenance of its network to Ericsson. Emad Makiya, CEO, Zain Iraq, said that deal is “in its final stage of negotiations” and should be completed in a few weeks.

“Ericsson is chosen as the partner for Zain Iraq to manage the whole network for a period of five years. The final figure is not known precisely because negotiation is still undergoing,” Makiya told CommsMEA.

Under the deal, Zain Iraq will move around 300 employees to work with Ericsson. Makiya expects Zain Iraq make opex savings of between 10-15% starting from second year of the agreement. The CEO said he expects the main benefits of the deal to include increased operational efficiency, reduction of operational costs and improved network performance and customer experience.

He added that “enhanced operational and network capabilities” will also help to support Zain’s growth aspirations in Iraq. Zain Iraq will be able to focus on the core business of serving customers and developing future services, Makiya added.

Models of outsourcing

There are numerous different models of outsourcing to suit the needs of different operators, according to Sinha. An outsourcing deal could range from just certain key areas of the network being run by the vendor to a full outsourcing of the active and passive network.

“You can pick and choose any area but then outsourcing is about taking the whole network and giving it to the vendor. It makes sense for most vendors to do end-to-end,” Sinha says.

Many operators are also looking to outsource the management of their passive infrastructure, such as the cell tower and power supply, and this is also an area that vendors such as Nokia Siemens Networks are building their expertise.

Fuel in particular is a specialist area that can cause problems for operators in remote areas. “Fuel management is also a very specific area of outsourcing. Our solution is more based on optimising or automating the whole process, so it’s about finding a clever solution to provide power to the base stations. “If fuel is very expensive then it might make sense to provide a green solution,” Sinha says.

One of the challenges of outsourcing is to ensure that the transition progresses smoothly, and Nokia Siemens Networks has a dedicated transition team to ensure this happens. “There are two big elements to it,” Sinha says. “One is the governance model: The network is owned by the operator. We are running it on their behalf but we must establish a strong governance model which is different for every case.

The transition team analyses the network and conducts due diligence which can take anywhere from two months to six months. “We try to analyse each aspect of the network and what is to be controlled, who is running it currently and contracts, such as SLAs, they have,” Sinha says. “The governance model as well as the transition team and the due diligence done before we actually start the outsourcing are three critical pieces.”

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