Arun Bansal, head of South East Asia and Oceania region at Ericsson, explains why the company’s managed services business is expanding to cover new trends, from network sharing to cloud services, and even beyond the telecoms sector itself.
Telecomasia.net: What are the top trends currently driving the managed services business?
Arun Bansal: There are different factors in different markets, but in general, there are four key drivers. First: it’s a cost driver for some operators. Second: handling the complexity of the networks. With IP coming in, modernization, data growth and signalling complexities, operators are looking at outsourcing that to partners like us to handle that. Third: greenfield opportunities like what we’re seeing with the NBN in Australia, where operators are building a new network not necessarily just for themselves, but in a way where they need to focus on their core business of selling subscriptions and services to end users, so they look for outsourcing partners to allow them to do that. And fourth, particularly in the Asia-Pacific region, is service assurance. There are a lot of operators working in multiple countries that want to provide a seamless end-user experience when it comes to data services and that adds more complexity to the network, so they need partners with global scale to run it effectively and focus on the end-user dimensions.
The telecoms market is undergoing a transformation on several levels, from infrastructure consolidation to all-IP platforms and cloud services – is that broadening the scope of managed services as well?
Absolutely. Network is only one component. You also have the IT component, and we already have operators offering cloud services to enterprises, and we’re managing that for them too. Another aspect coming up in some parts of the world is network sharing, where we merge a couple of operators’ networks, providing efficiency gains, rationalizing the existing networks and then operating it. We’re doing that already, and we work with operators to create an open-access model, a carrier’s-carrier model, or passive or active infrastructure sharing – whatever they require – together with our managed services offering.
What are the challenges involved in that from a managed services perspective?
It requires a lot of planning and forethought, because in some countries the regulations either don’t allow it or restrict the ways you can do it. You get into areas like frequency ownership that determine the extent to which you can share networks. Also, operators have different reasons for considering network sharing, so our solution has to help them achieve the goals they have in mind – is it a time-to-market issue, is it about geographical coverage, is it to block a new entrant, is it to take on the No.1 operator in the market, is it about economies of scale? Then you can look at network sharing models that can achieve their goals.
How big will the managed services business overall be in Asia-Pacific?
It’s definitely heating up in Asia. A lot of operators are interested in having someone handle the network complexity for them with the data and IP signalling, and others are building new networks. They’re facing increasing pressure to build up revenues, they want to be more efficient and focus on consumer demands for better services, and they will look to outsourcing partners to rationalize their cost base, improve their end-user services, and have management attention on the right things. Also, network sharing is a big area coming up in Asia-Pacific, where we’ll see more and more operators going in for that kind of solution.
What criteria are operators looking for when shopping for a managed services partner?
They look for someone who can run the network the same as or better than themselves, who can provide global scale, provide global benchmarks, has a proven track record and help them reduce their costs. Lower opex is a driver for most operators around the world, though the reasons for doing it vary. In Europe it’s a case of finding ways to accelerate transformation of the organization as they become more data-centric, and move to things like cloud services and working with OTT players, which is not an easy transition for them. In Asia, operators tend to be more concerned with improving process efficiency and implementing best-in-class tools.
What does Ericsson bring to the managed services game that the competition doesn’t?
We have the global scale, and we have the credibility of running multi-vendor networks in more than 55 countries, supporting more than 800 million subscribers. We understand the complexity of the network better than anyone else in the industry. We have been in this business for over ten years now. And we’ve invested over $1 billion in developing best-in-class tools and processes that deliver the best performance even in multi-vendor networks, whether there is Ericsson equipment or not.
The people aspect is important too – you need people who can interact well with the operators, and we have over 20,000 people in Ericsson doing managed services who were in-sourced from operators around the world. That’s important for operators because they want to work with partners who understand the business and the culture. That's why we're the world leader in this space. We signed 54 managed services contracts in 2010, and in June we were named Telecom Managed Service Provider of the Year by Frost & Sullivan. And in Q1 this year alone, we signed nine managed services contracts, five of which are extensions and expansions
What are Ericsson’s plans to further develop its managed services portfolio?
Well, managed services is no longer just limited to telecoms operators as such. We are diversifying, and taking our learning from pure telecoms networks into other areas. Apart from things like data centers and the cloud, which I mentioned, we’re moving into areas such as broadcast media. For example we have a contract with MediaCorp of Singapore, and we are running TV4, a TV station in Sweden. And that diversification will continue to grow as we expand into other areas, such as SaaS, for example.