In a marriage of convenience, carriers are signing temporary dotted lines to outsource their network management to vendors as they migrate to the next generation of wireless technology.
The trend, which concedes to vendors a pivotal role in positioning carriers for the new technologies, moves the operator focus to customer care and provision of richer services.
“It signals the end of an operator as the old school utility company and the birth of the operator as a dynamic service provider,” said Adam Guy, a senior analyst with Strategis Group.
Major vendors and carriers involved in this trend range from Nokia Corp., Nortel Networks, L.M. Ericsson to AT&T Wireless Services Inc., Telcel, VoiceStream Wireless Corp., BT Cellnet plc and Cable & Wireless plc.
“This makes the carrier the link between the cool stuff, or rich services, and the customer,” said Guy, “and that’s how the carriers can differentiate themselves from the competition. The value added is not in operating the networks.”
Nokia, under its Complete Network Management System or NET ACT, has signed a GPRS contract with AT&T Wireless to deliver ready, triple-mode Nokia UltraSite base-station radio solutions as well as plan and implement services to enable early deployment of third-generation technology.
“This unique cooperation represents a new era in the wireless industry, and we are excited to work together with AT&T Wireless to design and build this world-class 3G service platform for their customers,” said Tim Eckersley, vice president, Nokia Networks.
The deal could make AT&T one of the first carriers to offer advanced mobile multimedia and data services.
“This technology choice, based on open standards and open interfaces, benefits from global economics and will be cost-efficient to build and operate, add the highest value to end users and offer opportunities for global seamless services,” said Mohan Gyani, president and chief executive officer of AT&T Wireless Services.
The contracts also allows Nokia to build a 1900MHz EDGE/GPRS/UMTS test network on the AT&T Wireless campus in Redmond, Wash., as well as establish a center to develop mobile Internet technologies and applications.
“The center will be an environment where AT&T Wireless, Nokia Networks and Nokia Mobile Phones will come together to produce end-to-end solutions to offer multimedia services and applications to customers,” according to Nokia.
Like other major vendors, Nokia has several such contracts around the world.
Ericsson has also entered a deal with Telcel to deploy a GSM/GPRS network in Mexico and to continue the rollout of TDMA voice service. The agreement, which should provide Telcel with the largest cellular network in Latin America, allows Ericsson to build, operate and transfer a complete GSM/GPRS voice and mobile Internet solution.
“This agreement includes the complete Ericsson GSM portfolio from prepaid voice to advanced GPRS mobile Internet with application enablers, mobile positioning and more,” said Roland Nordgren, chief executive officer of Ericsson Mexico.
Nortel Networks has signed up to 80 such contracts, prominent among them are with BT Cellnet and Cable & Wireless.
In a $1.4 billion, 10-year deal with Cable and Wireless, Nortel will manage the buildout and operation of the Cable & Wireless Voice over IP network.
“For a program of this scale and complexity, we needed a vendor we could rely on,” said Mike McTighe, chief executive officer, Global Operations, Cable & Wireless.
With BT Cellnet, Nortel will work with suppliers and subscribers to develop new GPRS wireless Internet applications from the idea stage through testing and market introduction.
“This joint initiative really sets our companies apart by bringing together the very best combination of technology, content and know-how for mobile application delivery,” said Tony Greaves, director, group products and services development team, BT Cellnet.
The deals are not always with big providers.
“The smaller networks are often cost efficient,” said Mike Walters, Nokia’s 3G marketing manager for North America.
Walters said the vendors usually offer proposals to the carriers, which have to select which part of their networks specific vendors will handle from base stations, switching network, packet networks, network planning to operational support.
“It is not unusual to share it,” he said. “In the U.S., for instance, with VoiceStream, we may only supply base stations and in another carrier, we may work on their switching networks.”
The vendors often take over networks with support from the carrier staff.
Keith Dunphy, director of global market development for the service provider segment for Nortel Networks, said vendors face a few challenges, including determining the right operational model for customers using oustourced solutions, customer phasing and network phasing.
“We keep an eye on customer requirements throughout,” said Dunphy.
The vendors also train the carriers’ personnel until they can handle the networks on their own. In some cases, the vendors handle operations for upward of 10 years, while some are as short as six months.
Guy said the arrangement is timely because it prepares for the full arrival of virtual operators.
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