Here's How Pay TV Providers Are Changing the Way You Watch Television
Network equipment providers Changing the Communications Ecosystem?
-
Upload
frost-sullivan -
Category
Business
-
view
2.160 -
download
1
Transcript of Network equipment providers Changing the Communications Ecosystem?
Rebecca Watson, Program Manager
Communications Infrastructure and Convergence
Network Equipment Providers – Changing the Communications Ecosystem?
October 27, 2010
Contents
1. Introduction
2. Network Outsourcing Description
3. Outsource Business Model
4. Outsourcing Drivers and Restraints
5. NEP Outsource Strengths
Network Outsourcing Wins and Observations
2
6. Network Outsourcing Wins and Observations
7. NEP Outsource Challenges
8. Service Provider Outsource and NEP Outsource
Considerations
9. Long Term Implications of Network Outsourcing
10. Final Observations
Introduction
3
Network Outsourcing - A Definition
Stratecast defines network outsourcing as an arrangement between the
CSP and its network outsource vendor whereby the NEP is responsible for
total network operations and maintenance.
Other facets of a total network outsource arrangement may include:
• Planning, design and build out of new networks
• Planning, design and implementation on existing networks for
4
capacity builds, new technology implementation and/or complete
outsource of portions of the networks
• 1st level network operations support functions
• 2nd level and above support functions
• Long term contractual arrangements
• Asset and personnel transfer
• Risk and Revenue Share Arrangements
The Traditional and New Outsource Arrangement
5
Business Model Comparison
Traditional Outsource DetailsTraditional Outsource DetailsTraditional Outsource DetailsTraditional Outsource Details Total Outsource DetailsTotal Outsource DetailsTotal Outsource DetailsTotal Outsource Details
CSP is decision maker for content of and timeline for network upgrades and patches
Outsource vendor is responsible for network upgrades and maintenance
CSP is responsible for negotiation with and managing of network, IT, hardware, software other the entire vendor ecosystem
Outsource vendor is responsible for re-negotiating and/or assuming other vendor maintenance contracts and maintaining other vendor equipment
Outsource arrangement is typically for new network, network expansion and/or upgrade
Outsource arrangement is for management and maintenance of legacy infrastructure and may include network upgrade
Short term contract length; 1 to 2 years Long term contract length; 3-10 years or more
Outsource contracts with multiple vendors; one for network, one for billing, etc.
The CSP has a contract with one or two outsource vendors are the primary outsource vendors are responsible for other network and/or back office vendor equipment, contracts, and SLA
6
and/or back office vendor equipment, contracts, and SLA enforcement, etc.
CSP is ultimate decision maker for network design and implementation
Outsource vendor has ultimate responsibility for network design and implementation
CSP network and IT personnel perform various planning, installation and other duties
Outsource vendor provides entire staffing for management, maintenance and upgrades.
CSP network operations staff and outside contractors are the responsibility of the CSP including payroll, benefits, and other human resource functions.
Outsource vendor may hire CSP staff as well as employing internal staff and/or contractors
Contract negotiations with other network and back office vendors are the responsibility of the CSP and payment is the responsibility of the CSP.
Outsource vendors either assume existing contracts with other vendors and/or renegotiate new terms and are responsible for payment.
CSPs provided all customer-facing support functionality. The outsource vendor may have one or all level customer-facing support responsibilities.
Disparate customer support systems were used; one by the CSP and one by the outsource provider.
Single system back office systems are used by the outsource vendor and CSP.
Outsource Drivers Ranked in Order of Impact
RankRankRankRank DriverDriverDriverDriver 1 1 1 1 ---- 2 Years2 Years2 Years2 Years 3 3 3 3 ---- 4 Years4 Years4 Years4 Years 5 5 5 5 ---- 7 Years7 Years7 Years7 Years
1 Reduction of costs X X X
2 Acceleration of revenue and
time to market
X X
3 New technology X X
7
3implementation
4 Sharing and reduction of risk X X
5 Ability to bring next-
generation networks,
applications and technologies
to market quickly
X
Source: Frost & Sullivan.
Key Drivers Summary
Costs
Revenue Generation
8
New Technology
Bringing Applications to Market Quickly
Source: Frost & Sullivan.
Risk Sharing
Implementation of Trends
RankRankRankRank RestraintRestraintRestraintRestraint 1 1 1 1 ---- 2 Years2 Years2 Years2 Years 3 3 3 3 ---- 4 Years4 Years4 Years4 Years 5 5 5 5 ---- 7 Years7 Years7 Years7 Years
1 Internal culture X X
2 Cost effectiveness X X X
3 Due diligence requirements X X X
Outsource Restraints Ranked in Order of Impact
9
3
4 NEP risk assessment X X X
5 Ability of NEP to provide
services effectively and
efficiently
X
Source: Frost & Sullivan.
NEP Risk Assessment
CSP Culture
Cost Effectiveness Due Diligence
Key Restraints Summary
10
NEP Capability
Source: Frost & Sullivan.
NEP Strengths in Network Outsourcing
• Ability to support a multi-vendor environment
• Global infrastructure
• Expertise
• Personnel availability and capability to acquire personnel
• Credit and funding facility
11
• Credit and funding facility
• Research and Development
• Experience and References
NEP Outsource Challenges
Relationship Factors
CSPs wanting to continue to have control and input into outsourced
networks
Union and personnel issues with transferred personnel
Contractual Issues
Asset transfer of equipment or network outsource
NDA arrangements with CSP equipment vendors
12
transferred personnel
Communication between CSP and vendor after transfer on network
upgrades and outages
Ongoing relationships with vendors that are competitors
Availability of software license transfers for other vendor products
Contract negotiation with other vendors on competitive network
elements
NEP Outsource Challenges
Equipment Issues
Inconsistent adherence to maintenance dates
Equipment operated outside of specifications
Major Equipment Supplier Issues
NDA arrangements and proprietary equipment information
Software and other license transfers, number seats and other software
related items
13
Old equipment, due to be replaced, not operating at peak capacity
Cost to bring equipment to operating order
Obsolete or non-supported network elements
Uncooperative vendors and/or limited access for maintenance, product documentation, and equipment
upgrades
Network Outsource Arrangements
14
NEP Outsource Arrangements - 2010
Outsource Provider
Outsource Client Description of Outsource Arrangement
Nokia-Siemens Lightsquared – United States
NSN and LightSquared signed an 8-year, $7 billion agreement. NSN is responsible for the design and deployment, maintenance, management, and operation of LightSquared’s terrestrial mobile network. The network build includes deployed approximately 40,000 cellular base stations by 2015
Nokia-Siemens NII, operating as Nextel, Latin America
The agreement covers the management of NII’s networks across markets in Argentina, Brazil, Chile, Mexico and Peru. The scale of the contract makes it the first of its kind in Latin America and is one of NSNs’ largest, multi-vendor, multi-country managed services agreements
Alcatel-Lucent Vivacom - Bulgaria Outsource of end-to-end mobile network including transferring
15
Alcatel-Lucent Vivacom - Bulgaria Outsource of end-to-end mobile network including transferring approximately 600 employees to ALU
Ericsson Vodafone Germany Management of field services for Vodafone's fixed and mobile access and transmission network, and fixed core network nodes in Germany. The deal includes a personnel transfer of approximately 600 Vodafone employees
Ericsson Telefonica O2 UK Field maintenance services for radio and switch sites, spare parts management logistics support, network optimization and facilities engineering services
Ericsson Telefonica Brazil Operation of Telefonica's network operations center in São Paulo which is an extension of an existing agreement where Ericsson operates and maintains the new optical fiber network in São Paulo
NEP Outsource Deals - 2009 Previous
Outsource Provider
Outsource Client Description of Outsource Arrangement
Nokia-Siemens Orange – United Kingdom
Operations, maintenance and optimization of Orange’s 2G/3G mobile network including transfers of 470 line level employees to sub-contractors and/or to NSN direct employee status
Nokia-Siemens Orange - Spain Fixed and mobile multi-vendor network operation and management
Nokia-Siemens Embarq, Ltd. – United States
Ownership of Embarq’s (now CenturyLink) voice network and network operations center with employee transfers
Alcatel-Lucent Sunrise - Switzerland Mobile, fixed and broadband network outsourcing and employee transfers
Alcatel-Lucent Bharti Fixed network outsourcing and IP transformation
Alcatel-Lucent Reliance Telecom – This outsource arrangement involves a new joint-venture arrangement
16
Alcatel-Lucent Reliance Telecom –India
This outsource arrangement involves a new joint-venture arrangement between the two parties. The arrangement includes ALU providing network outsource services to Reliance as well as Reliance and ALU partnering to provide outsourcing services to other CDMA and GSM network operators
Alcatel-Lucent Global Crossing –Global
Operations, management and maintenance of Global Crossing’s IP/MPLS network infrastructure
Ericsson Yoigo – Spain TeliaSonera’s mobile operator in Spain has entered into an agreement that Ericsson is responsible for the operations management and maintenance of its 3G network. The operations management includes field services, the NOC and support of the hardware and software.
Ericsson Sprint Wireless and wireline network outsourcing including employee personnel transfer
Ericsson 3 Italia Extension of an existing network outsource arrangement for management of 3 Italia’s 3G network and its IS & IT infrastructure. The extension also includes provisions for Ericsson to upgrade the 3G mobile broadband access and core network.
CSPs have made a strategic decision to support next-
generation services and technologies, legacy portions of the
network are outsourced to the NEP
CSPs have made a strategic decision to support next-
generation services and technologies, legacy portions of the
network are outsourced to the NEP
CSPs do not have the expertise to run next-generation
networks and/or do not want to assume the risk of next-
generation products
CSPs do not have the expertise to run next-generation
networks and/or do not want to assume the risk of next-
generation products
Services Business Model
Services Business Model
ExpertiseExpertise
Service Provider Outsource Considerations
There are many considerations for outsourcing:
17
CSP networks are widely dispersed and there are geographic
areas that are far from the CSP core service area
CSP networks are widely dispersed and there are geographic
areas that are far from the CSP core service area
Mergers and acquisitions may drive CSPs to outsource a
portion or all of an acquired asset if bottom line profitability
Mergers and acquisitions may drive CSPs to outsource a
portion or all of an acquired asset if bottom line profitability
CSPs have multiple vendors and vendor products and
determine it is more efficient to outsource the entire network
to alleviate the time consumed by network equipment
upgrades, patches and scheduled maintenance
CSPs have multiple vendors and vendor products and
determine it is more efficient to outsource the entire network
to alleviate the time consumed by network equipment
upgrades, patches and scheduled maintenance
GeographyGeography
AcquisitionsAcquisitions
Multi-vendor EnvironmentMulti-vendor Environment
Source: Stratecast
Overall business objectives of the client, for example, is the client
willing to relinquish control of the network in its entirety
Overall business objectives of the client, for example, is the client
willing to relinquish control of the network in its entirety
Status of the network; what will it take to bring the network to a
reasonable operating level from both a re-design and equipment
status perspective
Status of the network; what will it take to bring the network to a
reasonable operating level from both a re-design and equipment
status perspective
Outsource ObjectiveOutsource Objective
Network ViabilityNetwork Viability
NEP Outsource Considerations
NEPs have many considerations too, the high level ones are:
18
NEPs must be able to successfully complete an in-depth and
sometimes lengthy disclosure process
NEPs must be able to successfully complete an in-depth and
sometimes lengthy disclosure process
NEPs consider the viability of asset and personnel transfers,
assumption and/or re-negotiation of existing maintenance, hardware
and software license agreements, and the status of the network
equipment
NEPs consider the viability of asset and personnel transfers,
assumption and/or re-negotiation of existing maintenance, hardware
and software license agreements, and the status of the network
equipment
Financial stability of CSPs, the commitments to other vendors and
contractual obligations and risks of sharing arrangements
Financial stability of CSPs, the commitments to other vendors and
contractual obligations and risks of sharing arrangements
Due DiligenceDue Diligence
Outsource DetailsOutsource Details
Financial and Risk Assessment
Financial and Risk Assessment
Source: Stratecast
Long Term Implications of Total Network Outsource
• The decision of when to retire legacy network infrastructure shifts to the
network outsource vendor as long as required services can be provided
• CSPs can concentrate on services, and more importantly customer service
• Outsource arrangements keep the door wide open to the business model
where the CSPs are truly able to focus on new, innovative services, and retail
operations
19
• Employment opportunities with CSPs shift from network-centric to customer-
centric
• Total network outsourcing has the potential to transform the CSP into a new
entity that can focus on its client base and not the network
Final Observations
• Total outsource changes the CSP and NEP relationship paradigm as
well as changing the definition of what each entity is…the CSP a true
provider of services versus a network operator and the NEP, and
network operator versus a product and services vendor
There is opportunity to ‘green up’ the network infrastructure
• Opportunity for network and back-office sharing
20
• Opportunity for network and back-office sharing
• Opportunity for market-centric providers to enter the market
• NEPs become more sensitive to CSP operations
Next Steps
� Request a proposal for or Growth Partnership Services or Growth
Consulting Services to support you and your team to accelerate the growth of
your company. ([email protected]) 1-877-GoFrost (1-877-463-7678)
� Join us at our annual Growth, Innovation, and Leadership 2011: A Frost &
Sullivan Global Congress on Corporate Growth (www.gil-global.com)
21
Sullivan Global Congress on Corporate Growth (www.gil-global.com)
� Register for the next Chairman’s Series on Growth: Integrated Marketing: Best
Practices in Demand Generation (November 2nd) (http://www.frost.com/growth)
� Register for Frost & Sullivan’s Growth Opportunity Newsletter and keep
abreast of innovative growth opportunities
(www.frost.com/news)
Your Feedback is Important to Us
Growth Forecasts?
Competitive Structure?
Emerging Trends?
Strategic Recommendations?
What would you like to see from Frost & Sullivan?
22
Strategic Recommendations?
Other?
Please inform us by rating this presentation.
Frost & Sullivan’s Growth Consulting can assist with your growth strategies
Thank You
Questions?
23
Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter
http://www.facebook.com/pages/Frost-Sullivan/249995031751?ref=ts
http://www.linkedin.com/companies/4506
24
http://twitter.com/frost_sullivan
http://www.slideshare.net/FrostandSullivan
For Additional Information
Jake Wengroff
Corporate CommunicationsInformation & Communication Technologies
(210) 247-3806
Becky Watson, Program Manager,
Communications Infrastructure and Convergence, Stratecast(A Division of Frost & Sullivan)
(303)695-7673
25
Perry Somers
Director of Business Development, Stratecast(A Division of Frost & Sullivan)
(360) 416-4982