OSS/BSS outsourcing makes gains: Large carriers remain reticent, while smaller players open arms

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Carriers are changing their minds about outsourcing pieces of their operations. The decision for carriers to put units of their business in others’ hands is beginning to increase in popularity – not at a rapid speed, but it’s being considered.
Historically, the thought of giving part of their network operations to anyone else and losing a portion of control made carriers nervous. And if they did decide to do so, it was on binary terms. Carriers would either outsource everything or nothing at all, and the common choice was nothing. However, Ari Banerjee, program manager of enabling technologies for Yankee Group, said carriers are starting to hand out some behind-the-scenes network operations, but will never let go of the core network management.
“The expertise they have in-house around managing their network cannot be matched by an outsourcing company,” Banerjee said. “It’s easier for them to maintain that stuff themselves. And I’d be skeptical about outsourcing the core network.”

Billing, I.T. up for grabs
So what is getting let go? The two big areas seem to be in billing and I.T.-related components. Comverse, a global outsourcing company, manages many billing platforms for mobile operators in the United States. Will Rotch, CTO at Comverse, said another area they’re becoming more involved in is managing value-added products, for example, hosting mobile instant messaging. When a new customer to any carrier wants an application right away, a third party can step in to implement that app right away.
“We can potentially just turn up a server over night and plug into a network,” Rotch said.
Rotch said Comverse’s servers act as a “traffic cop” managing the traffic of mobile instant messages as they go back and forth within the network, helping that application launch, even if only temporarily.
Shahid Ahmed, global wireless technology lead for Accenture, another outsourcing company, said Accenture tends to see requests for help with auto management, activation and processes.
“It’s very much a rudimentary set of tasks that could be done by anybody else,” Ahmed said.
Ahmed also said they’re beginning to see carriers look to outsourcing in some functional areas including network planning and design, deployment through network operations and most popular, testing.
“We’re seeing a lot of traction with testing being completely outsourced,” Ahmed said.

Ad delivery
Telcordia also helps carriers with billing and policy control needs, but Grant Lenahan, executive director and strategist at Telcordia, said its biggest strategic move is to help carriers with advertising. The company provides technology infrastructure to deliver ads to a phone. If a carrier enlists Telcordia to help with advertising, Telcordia then keeps a profile of each customer so that subscribers will only get ads that they care about.
“If you’re near a theatre and we know there’s a band or show playing there that is similar to genres you like, which we’ve learned from you’re downloads, etc., we’ll send you an ad for that,” Lenahan said.
However, Lenahan said the profiles and information are protected so advertisers don’t know personal customer information.

Cost concerns
These examples are a few of many services and operations that certain carriers are handing over to third parties. So, why now? Well, cost is always an issue and many agree that getting rid of certain services can save carriers money.
“Operation expenditure is expensive,” Banerjee said. “Some are saying, ‘Why don’t we just outsource and make our lives a little bit easier?’ “
The fact is they’re just beginning to open up to the idea a little more, not fully embrace it. Outsourcing is a gradual process for carriers, at least for the big players, and they aren’t going to give away their baby (the network) that easily.
Even though outsourcing remains unpopular with the larger carriers, these outsourcing companies remain hopeful the trend will catch on. Verizon Wireless recently proposed to buy Alltel Communications L.L.C. and Comverse has been managing the Alltel’s prepaid system for the past six months. Comverse said they signed a multi-year contract with Alltel and hope when and if Verizon Wireless comes on board, it will take a good look at the success of the relationship and let the contract run its course.
Accenture believes that as next-generation networks come into play, carriers’ infrastructure will become more I.T.-centric.
“That’s when we’ll see a turning point, when carriers say, ‘We’re already doing a lot of outsourcing in I.T. and my network is starting to look like an I.T. shop, why not outsource?’ ” Ahmed said.

Smaller operators
Mobile virtual network operators, on the other hand, are more apt to hand over more network operations and never turn back. Lenahan said unlike large carriers, MVNOs have different concerns to worry about.
Indeed, last week MVNO and landline carrier Embarq Corp. announced a seven-year deal with Nokia Siemens Networks under which NSN will manage Embarq’s network operations for its voice networks. As part of the agreement, 265 Embarq employees will become NSN employees.
Jim Hansen, senior VP of Network Services at Embarq, said Nokia Siemens has scale that Embarq could not duplicate without a major investment of funds. This is Nokia Siemens’ first managed network contract in North America.
“Nokia Siemens Networks and Embarq are signaling to the market that the shift to managed services for network operations is coming to North America on a larger scale. As competition increases and the need for differentiation becomes more prevalent, operators are finding that in order to be agile and operationally efficient, their core competency must transition from operating their networks to focusing on the
constantly changing needs of their end-user customers,” said John Marcus, an analyst with Current Analysis Inc.
MVNOs are “marketing people, but not network technical people and we may be able to speed it up faster than they can,” Lenahan said.
Banerjee said MVNOs are comfortable with outsourcing their network because they’ve been doing it all along. They never had to build a network and can just leave it alone, but use the network to provide services.
“For example, Boost Mobile is an enterprise customer off of Sprint Nextel and because Boost is just providing content services, it’s never invested in the network,” Banerjee said.

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