Leadership Blog

Emerging Markets: Social Networks Transcend Borders

Monica Zlotogorski — Wed, 14 Oct 2009 10:11:00 GMT

By Monica Zlotogorski, Editor of TM Forum’s Inside Latin America and Vice Chair of TM Forum’s Latin America Advisory Board

When my grandfatheremigrated from Europe to Latin America in the early 1930s, he had verylimited means to communicate with the family he left behind. It tookhim 30 years to reunite with his mother and sisters living in theUnited States. Two generations later, we are still a family ofimmigrants, but thanks to progress in technology, I have had thewonderful opportunity to be part of my 5 ½-year-old niece’s life and“witnessed” (although virtually), my nephew’s birth this past April.

ThroughSkype, e-mail, SMS and many other ways to stay connected, I've beenable to stay close, despite the physical distance, with long-timefriends or develop new business relationships across the globethroughout the years.

The development of social networks hashelped people and companies in emerging markets to stay connected to agreater degree. More than eight out of 10 Internet users in LatinAmerica use online social networks. Social networks like Facebook, Hi5 and Orkut are rapidly growing in Latin America.Sometimes social networks used in emerging markets are home-grown.Moreover, according to Qzone (the leading Chinese social network),neither Facebook nor MySpace nor any other international socialnetworks can claim to be the single largest one in the world. Theworld's largest online social network: Qzone.

Social Networks Open Opportunities
While in developed markets we care about how to send pictures to our“BFF” or download the latest music hits or mobile games via our mobilephones or broadband connection, in emerging markets there’s anotheraspect to it that has more to do with social importance. For example,mobile data services can facilitate access to agricultural information,health care and money transfers (mobile banking).

A Pyramid Research report(the research arm of Light Reading Communications Network), “HealthcarePrograms in Emerging Markets: Opportunities for Mobile Operators,”concludes that “mobile technology's low cost and ease of use make itideal for improving the delivery of healthcare, education and othersocial services in emerging markets, opening up opportunities formobile operators and vendors.” The report suggests that “Africa andIndia are particularly prominent in the use of mobile technology forsuch causes, and there are encouraging results that suggest that theseprograms are having a substantial impact… The supporting roles ofmobile operators and vendors enabling various applications are alsocreating new opportunities.”

In a recent special report issued by The Economist(“The Power of Mobile Money: A Special Report on Telecoms in EmergingMarkets,” September 24, 2009), the importance of mobile penetration andits social impact is apparent. “… at current rates of growth it seemslikely that within five years, and certainly within 10, everyone in theworld who wants a mobile phone will probably have one.” The next stepis to enable Internet access, and thanks to the combination oflower-cost of laptops and cheap netbooks and mobile broadband (and alsothanks to the development of pre-paid billing systems), the connectedeconomy will become a global experience (according to Informa, therecould be 1.4 billion mobile-broadband subscribers five years from now).Still, the cost of access devices is too high for the purchasing powerthat some emerging markets can afford, but we appear to be on the rightpath.

According toa recent study, the addition of 10 mobile phones per 100 inhabitants indeveloping countries can contribute to an increase in GDP perindividual of 0.8 percent. The same report by The Economistreminds us that “in 2000 the developing countries accounted for aroundone-quarter of the world’s 700 million or so mobile phones. By thebeginning of 2009, their share had grown to three-quarters of thetotal, which by then had risen to over 4 billion.”

Thepower coming out of emerging economies goes beyond having more peopleconnected to mobile devices. The appearance of powerful enterprisesborn in those markets continues to develop. China’s two leading telecomequipment makers, Huawei and ZTE, are no longer viewed as low-cost,low-quality manufacturers anymore and have started to expand beyondemerging markets. Furthermore, ZTE already stated at the Telecom World2009 trade show that it intends to rank among the four biggesttelecommunications equipment manufacturers in the next three years, andwithin the next five to six years, its target is to get to at leastnumber three. Another example is the Egyptian Orascom Telecom that isnow providing services in Italy, Greece and Canada, or perhaps ChinaMobile, which has already established a presence in Pakistan and islooking into other markets in Asia.

With more and more peopleconnected to mobile networks and many home-grown corporations comingout of emerging markets and going global, can we predict what the worldwill look like in 10 years? Maybe not, but one thing I know for sure,the communications industry had a lot to do with how the world has beenshaping up in the past few years. “In the grand scheme of telecomshistory, mobile phones have made a bigger difference to the lives ofmore people, more quickly, than any previous technology… Mobile phoneswill have done more than anything else to advance the democratizationof telecoms, and all the advantages that come with it.”

I didn’t say this; it was The Economist.

Thetruth is social networking has the potential to create numerousopportunities within emerging markets for mobile service providers,application and software developers and other players within the valuechain. In future articles, we'll explore these opportunities in greaterdetail and shine a light on the innovative and original strategiesbeing played out in regions all over the world.

Emerging Markets: The View from the Middle East

Monica Zlotogorski — Mon, 14 Sep 2009 07:04:00 GMT

By Monica Zlotogorski, Editor of TM Forum’s Inside Latin America and Vice Chair of TM Forum’s Latin America Advisory Board

As TM Forum prepares for its Regional Spotlight in Cairo, Egypt next month (following the success of the Sao Paulo, Brazil and Buenos Aires, Argentinaevents), I’m reminded of an article I co-authored about the region lastyear and thought it would be interesting to see what has changed sincethen. (See article, “Swimming with the Sharks,” which appears on p. 63.)

Wewrote the article before the global financial crisis, and the mostapparent difference is clearly in terms of the decline of GDP growththis year. According to Bank of America Merrill Lynch Research, if weconsider the rich economies of the Gulf Cooperation Council (GCC) (*),the GDP decline has been significant. In 2009, the six economies thatare part of the GCC have show the following decline compared to theprevious year: Saudi Arabia declined from 4.2 percent to -0.2 percent;United Arab Emirates went down from 6.8 percent to -1.0 percent; Kuwaitfrom 5.6 percent to -1.9 percent; Qatar from 16.4 percent to 5.7percent; Oman from 6.4 percent to 1.5 percent; and Bahrain from 5.4percent to 1.8 percent.

The GCCeconomies are forecasted to grow in 2010, but we will not see the typeof increase from previous years. (Saudi Arabia 3.1 percent, United ArabEmirates 2.0 percent, Kuwait 2.0 percent, Qatar 8.1 percent, Oman 2.3percent and Bahrain 2.4 percent). According to The Economist, Egypt is expected to grow 4.4 percent in 2009 and 4.0 percent next year.

In our article “Swimming with the Sharks”, we indicated that: “…far from being homogenous, the $50 billion telecom market in the MiddleEast – one of the fastest growing in the world, with an annual revenuegrowth of approximately 12 percent per year, according to Delta CapitalBSC – is as diverse as the individual countries within this broad area.Some markets are more open than others, but overall, the telecom sectorhere, which was once dominated by state-controlled monopolies, isgrowing due to conditions that increase and allow competition amongregional and international service providers. Advances in technologyare also expected to open up opportunities within telecom and relatedindustries. This is especially true in the mobile sector.”

Whilethe current global economic environment is affecting other industrysectors in the region, the communications market has stayed fairlyshielded. Across the whole region, Informa Telecoms & Mediapredicted that penetration will reach 77.05 percent by 2012 (a numberof countries will have penetration rates well in excess of 100 percentby 2012, such as UAE, Bahrain and Qatar).

Growthrates will fluctuate widely between the advanced GCC economies (most ofwhich are mature mobile markets) and other less developed economieswith lower mobile penetration (where growth will be stronger). Clearly,there isn’t just one Middle East.

Inmore mature markets, such as the GCC economies, we are observing apredisposition to bundle services and offer single bills as a classicearly tactic to help retain customers, particularly in the mobilesector, where organic growth is quite challenging, due to highpenetration rates.

Opportunities Abound
A lot of interesting news has come out of the communications sector inthe region and we’ll continue to hear about some interestingdevelopments, I’m sure. Most recently, the Chinese equipmentmanufacturer ZTE recently expressed that they want the Middle East to “play a bigger role in the firm’s fortunes” and provide 30 percent of revenue,as the company expects to take advantage of the region’s 3Ginfrastructure projects (ZTE will deliver the largest WiMAX networkdeployed to date in Saudi Arabia).

Etisalat from the UAE, the fastest-growing mobile operator in the world right now,and Zain, the second fastest-growing operator in the Middle East, haveboth combined different network operations through a series ofacquisitions of smaller providers, which has added a mix operational complexity.The wave of mergers and acquisitions will continue to go on in theregion, creating a clear need for cost reductions from an operationalperspective, which will create several interesting opportunities forOSS/BSS suppliers.

Despite the global financial crisis, I stand behind my analysis on the Middle East from last year:“As change takes place at such rapid pace, the logical next step is tofocus on fixing issues related to high cost in delivering services,time to provision and service quality and reliability, in order for theregion to achieve further expansion. We are seeing today that regionalservice providers are focusing on perfecting their business models,products and services to sustain their profitable businesses in theup-and-coming future of an all-IP era.”

If you are doing business in the Middle East, don’t miss the Regional Spotlight in Cairo, Egypt on October 12.

(*) TheGulf Cooperation Council seeks to strengthen cooperation (in areas suchas agriculture, industry, investment, security and trade) among its sixmembers: Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United ArabEmirates.

Emerging Markets: The Global Mobile Transformation Unleashed

Monica Zlotogorski — Tue, 11 Aug 2009 14:32:00 GMT

Emerging markets will lead the global economic recovery in 2010, with countries such as China and India likely to show the most obvious signs of upturn, but prospects for other emerging economies are also promising. Developed economies are expected to grow about 1.7 percent next year, while emerging markets will increase their GDP by 4.9 percent, according to a recent report by Bank of America Securities-Merrill Lynch Research.

The term “emerging economies” was first used in 1981 by Antoine W. Van Agtmael of the World Bank. There are currently 28 emerging markets in the world, which constitute approximately 80 percent of the global population and about 20 percent of the world's economies. With most consumers located in emerging markets, we simply can’t ignore this fact and the unique, innovative consumer trends we see coming out of these markets.

In the communications industry in particular, companies have lagged the market’s recovery since March 2009, according to Bank of America Securities-Merrill Lynch Research. But despite the fact that there were wide variations across markets, emerging economies will continue to develop at a pace that will surpass developed economies and probably further influence the future of our industry, particularly in the mobile sector. China's communications market is already the second largest telecommunications services market in the Asia-Pacific region after Japan, according to Pyramid Research, and it will surpass Japan by 2014.

As we move towards a more customer-centric business model, we can’t ignore the power of 80 percent of the world’s population, and these consumers buy products and services, love or hate brands, influence their peers and demand services from their providers in their own, particular way. And as globalization forces continue to expand, these consumers can influence the wider “global village”. Service Providers in emerging markets are preparing for the future, and that is why they have continued to experience healthy growth in terms of IT spending this year despite the global financial crisis.

The Mobile Revolution

As the world becomes more and more mobile, the global communications market is expected to recover in 2010, with mobile data being the major engine of growth. Global mobile penetration is estimated at 60 percent and will jump to 84 percent by 2013, led by growth in India, China and other emerging markets. China and India will add 829 million mobile subscribers in 2009-2013, which will represent 44 percent of the world's total net additions during that period (Pyramid Research). Given this data, it’s clear that organic growth will come mostly from emerging markets.

Currently, China’s mobile penetration stands at just over 50 percent, in Indonesia it is at 63 percent, and India is at 34.3 percent (it is expected to pass 54 percent by 2010). But in other emerging markets in Asia, mobile penetration is close to/or has exceeded 100 percent (like Malaysia and Taiwan). Looking at other parts of the world, mobile penetration in Peru and Mexico has reached 66 percent and almost 75 percent, respectively. But in countries such as Brazil and Colombia, mobile penetration is already at 81 percent and 83 percent, respectively, and well over 100 percent in Argentina and Russia.

While there’s still room for organic subscriber growth in markets such as China and India, for the most part the future for service providers in emerging markets – that have focused so far on increasing connections – is going to be about increasing the level of additional, innovative services and improving the quality of their customer experience. Saturation is around the corner, and the increase of triple and quad-play offerings has turned the telco-cable competition increasingly fierce in many emerging markets.

In a recent column published in TM Forum’s Inside Latin America, Wally Swain, Senior Vice President Emerging Markets, Yankee Group, indicated that “churn management becomes even more critical of an issue, and keeping customers from churning is the best way to improve the bottom line. Prepaid churn management is all about using sophisticated data mining and CRM techniques to target offers that appeal to a particular client’s profile.”

Swain added, “This is the OSS challenge as penetration rises, growth slows and it is no longer sufficient to merely hang out a sign for clients to know where to sign up. Using advanced OSS tools to reduce prepaid churn and also the percentage of inactive customers is the route to an improved bottom-line in these difficult economic times.” And I would add, and this is the right strategy even beyond this challenging economic stage (and beyond Latin America).

The innovation of services has been in most instances about delivering an “integrated” offering that is mostly just about combining the bill with a discount for a package of services. That was a relatively easy move, but according to Ignacio Perrone, Industry Manager, ICT, Frost & Sullivan, the next step will be a much more significant and qualitative effort, as service providers move from bundling to what he calls “blending of services” but in an even more complex mobile world, determined by not just one device, but a scenario of multiple mobile devices per consumer and an overload of content.

What is consumed and how it’s consumed will change radically. How services are packaged, offered and paid for, will have to change too. This new, more complex type of convergence will further affect the customer experience. This is a challenge that affects developed and emerging markets at the same time. It is a world with more of everything, everywhere: services, devices, content, you name it.

According to Perrone, whoever understands it first and develops the necessary capabilities and appropriate business model will be the clear winners.

We don’t really know where the global mobile market will be 10 years from now, or how OSS/BSS systems will continue to transform themselves to support our industry’s needs. But one thing I know for sure, I’d be looking in emerging markets for clues. The customer is king, and the greatest percentage of future global subscriber growth is in those markets. Watch closely, many of the most innovative solutions are flourishing from emerging markets these days.

Emerging Markets: The View from Argentina

Monica Zlotogorski — Tue, 14 Jul 2009 22:36:00 GMT

By Monica Zlotogorski, Vice Chair, Latin American Advisory Board, TM Forum & Editor, Inside Latin America

Argentina is known for its great meat, wine, the tango, and for having one of the most successful national soccer teams in the world. But it’s also the third largest economy in Latin America and one of the G-20 major economies. Argentina’s economy grew at around 9 percent annually between 2003 and 2007 and close to 7 percent in 2008. Argentina is now facing slowing economic growth in light of an international financial crisis, but the World Bank forecasts that Argentina’s economy is expected bounce back 1.9 percent in 2010.

And this is where TM Forum delivered its second event in Latin America last month and its first-ever event in Buenos Aires. I have to confess that I was looking forward to attending this event more than any other TM Forum event this year, because Buenos Aires is an amazing city (probably one of my favorite places in the world), its architecture is quite unique (combining elements of Paris and Madrid, with very modern architecture and tall buildings), the food is great, the wine delicious, and the porteños (inhabitants of Buenos Aires) are some of the nicest people in the world.

But leaving personal preferences aside, the communications sector in Argentina has been growing at a fast pace in recent years, and that’s why we decided to deliver our second Regional Spotlight in that market. The event was a complete success, drawing almost 110 delegates and including case study presentations from ICE (Costa Rica), Telecom Argentina, CableVisión and IPLAN that discussed the use of TM Forum standards and best practices.

The Competition Heats Up

There are only 22.7 fixed-line phones per 100 inhabitants in Argentina, but Broadband and Pay-TV reached 35.5 percent (corporate and residential) and 61 percent (homes) respectively last year. Mobile penetration is even higher, achieving an impressive 117 percent penetration rate last year (90 percent of them prepaid). Some sources estimate that by 2013 the mobile market will reach a penetration rate of almost 130 percent.

If I have to summarize two or three of the most important recent developments in the Argentine communications sector, I would pick the fact that Argentina’s fixed-line incumbents will face additional competition from cable TV operators, such as CableVisión, as they offer voice services. Triple-play in Argentina will imply a potentially serious threat to telcos, and if there’s a market where the telco-cable competition is most apparent (at least to me), it’s in Argentina. The other element that will probably further shape up the landscape for Argentina’s communications sector is the recent announcement of Telecom Italia to sell its stake in Telecom Argentina (if the price is right and depending on antitrust rulings) and who will bid for the stake. Another important element is the arrival of number portability, which will present an additional set of challenges for Argentine service providers.

Strategies for a Growing Market

Penetration reaches the market saturation point at 70 percent, and Argentina’s mobile market is well beyond that point (I take wireless penetration as the indicator of market maturity/saturation). The country has a highly urbanized population, which contributed to the growth of Argentina’s telecom services. The introduction of more advanced services will continue to help boost revenue for operators and will help increase ARPU as subscribers boost their use of value-added services. Clearly, the focus for operators in Argentina should be on raising their ability to offer additional value-added services, bundle of services, triple/quad-play offerings, pricing strategies and postpaid strategies in order to guarantee future revenues.

But as markets approach maturity, the investment required to capture new customers also becomes higher. Organic market growth opportunities decrease, and expanding the customer base starts depending on the acquisition of other operator’s customers (as the existing pool of customers gets smaller), which makes the whole customer acquisition process a lot more expensive (and customers are much harder to keep as well). This is why operators in Argentina must provide a stronger focus on developing the value of the customer base and not simply the number of customers (customer acquisition is often the most costly and least profitable component of the overall customer experience).

But in the event of Argentina, that strategy is not enough. Argentina is characterized by a significant income inequality, which leaves a reduced market segment with higher purchasing power to target with added-value services. Therefore, Argentine operators should also focus on alternative strategies in order to be able to also attract and retain subscribers in a segment of the population with lower purchasing power, where costs are of greater importance.

That is why the reduction of internal operational costs to improve margins is key to offsetting market trends (that is, slowing customer acquisition and market saturation). Service providers in Argentina are challenged to transform themselves into leaner, more cost effective, agile and customer-focused organizations. As the Argentine market reaches saturation, operators are finding out that innovation through more advanced services is necessary, but no longer sufficient, as other operators are also increasingly offering the same types of services to the same pool of customers. Greater operational efficiency, combined with smart/differentiated branding and an enhanced customer experience, are essential to avoid the risk of getting squeezed out of the market.

In essence, it’s no longer a matter of one or the other, but achieving both, and Argentine service providers are already going through that path (see presentations by Telecom Argentina, CableVisión and IPLAN). Many of them have been looking into TM Forum’s technical work for solutions. Consequently, it’s no surprise that the event in Buenos Aires was so well attended.

Emerging Markets: The View from Latin America

Monica Zlotogorski — Wed, 20 May 2009 12:41:00 GMT

As the economy globalizes and emerging markets increase their participation in the global economy (and their relevance in the communications, information and digital media industries), so does TM Forum’s member structureHistorically, TM Forum membership has drawn more heavily from North America and Western Europe, however membership from other markets, such as Asia and Latin America has been increasing. TM Forum has been taking important steps in order to better serve this growing presence in emerging markets and continues to be very committed to these regions in 2009 and beyond.

The Latin American market is of particular importance for TM Forum. Service provider membership in this region covers countries such as Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico, Puerto Rico, Uruguay and Venezuela.

Here are just a few examples of TM Forum’s reach into this important part of the world. In October 2008, the Forum held a one-day summit at Futurecom in Brazil, which was tremendously popular.TM Forum produces an online newsletter in Spanish (Inside Latin America) and has the capability to deliver training courses in Spanish and Portuguese.

The most recent addition to TM Forum’s activity in Latin America is a series of upcoming one-day, country-specific and free of charge – Regional Spotlights – an opportunity for TM Forum members and non-members to come together to discuss business issues affecting digital media and communication services in their region, share successful solutions and strategies and network with their peers.

The Regional Spotlight events will come to São Paulo, Brazil on May 25 and, for the first time in TM Forum’s history, Buenos Aires, Argentina on June 22.

The Brazilian and Argentinean Markets At-a-Glance

The news is full of stories about the financial crisis and recession. But each market has shown a slightly different scenario. Brazil, Latin America's largest economy, may have reached the bottom and has started to rebound, despite the fact that the government has cut its growth forecast for this year from 2 percent to 1.2 percent. Although Brazil's economy could see a contraction in its GDP this year, its growth is expected to return at around 3 percent in 2010.

Brazil had 41.3 million fixed lines (penetration rate of 21.7 per 100 inhabitants), 150.6 million mobile phones (penetration rate of 78.1 per 100 inhabitants) and 10 million broadband connections and 53.9 million Internet users in 2008. Brazil is between the top 5 main cellular markets in the word, behind China, the U.S., India and Russia, and bigger than Japan. Brazil represents 33.5 percent of Latin America’s mobile market, 41.4 percent of Internet users and 40.6 percent of broadband subscribers.

Argentina, Latin America's third largest economy, has slowed sharply after 6 consecutive years of at least 7 percent annual growth. But according to recently released statistics, Argentina's economy grew at 2.6 percent in February compared with the same month last year, which is above the 2 percent median forecast. Argentina had 46.509 million mobile phones in 2008 (penetration rate stands at 117 percent, out of which 89.6 percent are prepaid) and 9.015 million fixed lines (penetration rate is 22.7 percent).

Service Providers: Lower Costs at All Costs

Alpna Doshi — Tue, 21 Apr 2009 13:12:00 GMT

As with any other major industry, telecom is suffering as a result of the global economic recession. But couple that with the ongoing trend of falling average revenue per user (ARPU) that’s plaguing providers in many parts of the world, and you have an even bigger crisis that can’t be solved simply by focusing on top-line revenues and freezing the bottom line.

Generally speaking, ARPUs are extremely low, so for providers to sustain their businesses they have to introduce new services to market much faster. So while the bottom line gets squeezed, they still need to make a profit. Service Providers need to do more with less as investments may fall, and they need to speed up major transformation programs and focus on cost optimization and innovation.

As market pace quickens, it is imperative for IT to change from its traditional perception of bottom-line cost management to a new role in top-line value creation. Instead of focusing exclusively on optimizing internal efficiencies, forward-looking information and communication technologies must support the business goal of achieving a competitive edge and long-term profitability.

Today it is more important for communications companies to target the right customers and avoid debtor losses through inefficient credit management processes.

After years in which fixed-mobile-substitution (FMS) was the center of attention, convergence is now taking its spot. While media companies have been feeling the effect of data digitization already for some time, telecommunication providers are just now putting an interest in converging technologies. Both mobile carriers with their “home zone” offerings as well as fixed line operators with their corresponding “one phone” offering are bringing a new point of view to the market.

Outsourcing Stays Strong
Even if the recession originated in the U.S., the impact is being felt in one form or another all across the globe. While providers of all persuasions are being negatively affected by the economic crisis, I am seeing that outsourcers have actually held up well, which makes sense since communications providers will offshore or outsource parts of their business to reduce costs even in boom times. So in leaner times, this ability to lower spending becomes even more critical, and outsourcing or offshoring can be a major part of this strategy.

I expect that offshoring and outsourcing will probably increase or at the very least continue at present levels. If you look at some of the major global outsourcers, they really are not in bad shape at all. For example, Accenture’s outsourcing revenues for a recent quarter were up 14 percent over the same period a year before; its outsourcing contracts are at their highest levels in more than four years; and it expects to improve its outsourcing profitability in 2009.

IBM’s strategic outsourcing business grew 8 percent in the third quarter of 2008 even as long-term signings fall. HP’s outsourcing revenues grew 15 percent and its division had its best quarter in history with record profitability and significant new wins. CSC also has experienced an increase in outsourcing revenues, but it has had to reduce its workforce to stay on target. So generally I’d say that global outsourcers are weathering the current situation just fine.

Major European outsourcers such as Atos Origin, Logica and Capgemini are also holding their own. They are expecting low growth for 2009, but to be honest that’s par for the course in this market, so they really have no major concerns. In fact new types of outsourcing have been introduced like Data Center Outsourcing, Desktop Outsourcing, IT Help Desk Outsourcing, WAN/Managed Network Outsourcing, Near Shore Business Process Outsourcing and much more.

The top-tier Indian outsourcers – Cognizant, Satyam, TCS, HCL Technologies, Infosys and Wipro – also appear to be in good shape going forward. While this market previously enjoyed phenomenal growth in the 35 to 40 percent range, that number will drop quite a bit as will talk about large transformation projects.

Focus on Cost Cutting
Long-term signings will decline, and rather than the big projects that have been touted in the past few years, we’re most likely going to see many more shorter-term projects where there is much more visibility into return on investment. Before the recession, most operators would depreciate their data center costs over the long term; but now it’s more about what advantages can you get over the next year after buying a system. So instead of seeing results in 10 or 15 years, they need them right now.

I would say this is definitely the reality for the larger telcos today.

For smaller providers, it may not be at this same level of concern, but they also do have to squeeze costs out of their business by consolidating their data center from a distributed environment to a common platform and utilizing such technologies as cloud computing and virtualization. Any possible means at their disposal to lower costs has to be utilized.

Service Providers need to focus on applying economies of scale to operations so that they can offer better, cheaper and more reliable applications. They can look at alternative pricing models and adopt current trends in technology outsourcing including application service provider, cloud computing, mobile enterprise and the Software as a Service (SaaS) platform.

The Future of Managed Services in Telecom
Managed Services began to gain a real grip and prominence as a distinct service offering following the financial pressures resulting from the telecom crisis of 2001-2002. A Managed Services provider can support several operators in a geographic region. It can also provide the necessary expertise for both transitioning between and managing existing technologies at a fast pace.

Analysis of current telecom industry trends and their likely development suggests continued expansion of the Managed Services market over the coming years. As the telecom industry matures, operators will continue to increase their focus on finances, supporting the use of Managed Services. The emergence of new technologies and converging networks will support a continued interest among operators. This leads to a higher potential for economies of scale and cost savings.

For example, Vodafone Europe wanted to manage the supply and distribution of spare parts for its mobile networks, including responsibility for logistics, warehousing, repair and replacement. The benefits drawn out of Managed Services were greater cost efficiencies through lower average prices as well as enhanced service levels.

Creating New Business Models
I think the watchwords for the next 12 months have to be competence and innovation. From a telco standpoint, being able to use innovation to increase the top line is critical; and from a supplier or system integrator point of few, we’re working in partnership with telcos to focus much more on increasing competency.

Presently when we face changing consumer and technological demands, companies are often stuck with costly telecom management systems and processes that fulfill neither their current nor future needs. For Telefónica in Latin America, the problem was revenue leakage from its range of different systems. T-Mobile in Germany wanted a partner to consult on ongoing and future transformations. These are daunting tasks, but we see hope. A proper telecom management transformation can turn this patchwork liability into an efficient tool for both cutting costs and generating revenue. This change requires a change in mindset. A broader business view must now drive systems and processes management, not technology.

I would also add standardization on the list of things providers need to focus on to bring down costs. All the work we’ve done in TM Forum with the Solution Frameworks (NGOSS), Business Process Framework (eTOM), Information Framework (SID) and the Application Framework (TAM) will help telcos to see where they need to cut down on any additional spending they may have.

If operators work jointly with TM Forum and the right suppliers and system integrators and eco-value-players, it’ll be a win-win situation in the near-term and go a long way to keeping everyone on the path toward profitability.

By Alpna J. Doshi, CSO Office, Global Business Head – Solutions Frameworks and Industry Native Solutions at Satyam Computer Services and Member of TM Forum’s Board Executive Committee

Providers Prepare for Their Future Survival

Colin Orviss — Wed, 11 Mar 2009 21:50:00 GMT

By Colin Orviss, Senior Vice President, Patni Telecoms Consulting and Deputy Chairman, TM Forum

It’s hardly news that we’re in a recession. The net effect on our industry is that Communications Service Providers (CSP) are planning for an expected reduction in revenues from their Customers (both consumer and enterprise) by revisiting the ROI of capital projects, making OpEx reductions and looking at other ways to remove cost from their business.

I’ve been trying my best to put an upbeat spin on things and although I believe that cost containment is prudent, I’m not that convinced about the projected decline in revenues. The reason for this feeling is that I compare our industry to comfort food. During times of stress and uncertainty – which we seem to have in abundance these days – people tend to turn to food that reminds them of good times. In our case, the comfort comes from talking to and feeling close to loved ones or friends through social networking. Effectively, our industry is the “human interaction and emotional support” facilitator for people who are being challenged by what’s going on in the world.

Communications services are a part of most people’s everyday lives as well as being the engine of the economy – when was the last time you went even half a day without making or receiving a call, looking at e-mail or surfing the Internet? In these times, if you’re a consumer concerned about having enough liquidity, you tend to look out for better deals for things you need, cut down on things like going out for meals and entertainment and generally watch the “pennies”. Our industry enables you to maintain a “reasonable” quality of life by enabling movie downloads and surfing the Internet for deals and, through the likes of video Skype, keep in touch with remotely located family members.

In addition, we’re seeing corporations cut back on travel, but there is still the need for interaction with clients and colleagues. This is where conferencing (both video and voice) will become a far more cost effective meeting enabler than doing it across a table in person. Yet again this becomes our revenue rather than it going to the airlines. Bottom line is that due to the indispensable nature of communications, I believe CSPs are actually going to fair pretty well.

Moving Beyond the Bit Pipe
But to ensure the continued success of the communications industry, CSPs need to structure themselves not only to facilitate the more efficient delivery of their standard services (broadband connectivity, voice, mobility) but also to make e-commerce function better – with the CSP sharing in this new revenue model. We as an industry need to learn how to monetize this, which goes beyond just being an enabler and participating in transactions.

We still very much act as though we’re merely the bit pipes and the facilitators for various transactions. But when there’s a commercial transaction (micro-payment, Internet purchase, etc.) that needs to be charged, why shouldn’t it be done using our payment engine (prepaid or post-paid) – we need to remember that our billing systems are the largest (and probably best) micro-transaction engines in the world! And for this, we should charge a service fee similar to what credit card companies receive.

CSPs are in an excellent position to move well beyond the bit carrier mentality and into one of providing much more value-add. After all, in today’s world, I believe that Customers trust their CSP much more than their financial institutions! So CSPs need to be constantly innovating and offering much more, whether it’s additional services, alternative media, streaming content, and also moving into financial transactions.

But the challenge will be to recognize that these new services are part of a different business model. It’s not just pipes they’re selling anymore but the complete package.

Transformation and Partnerships
Alongside branching out and getting into new lines of businesses, CSPs also need to look inward into their operational model and related business processes. What these companies tend to do is initiate business transformation programs to help with doing things more efficiently, but surprisingly there are still many CSPs around the world that lack the automation necessary to be truly streamlined and efficient even with doing these programs.

While it’s probably not a good time to undertake a radical, massive (and costly) transformation program, CSPs should recognize that now is the time to implement a controlled transformation – not only to meet cost containment goals - but to enable them to capitalize on ways of working differently (and more efficiently). This change covers such things as increasing the amount of self-care, reducing/simplifying the number of market offerings, reducing the plethora of back office applications and automating manual processes where possible, moving more to IP as their preferred delivery enabler but doing it in an intelligent fashion.

This means upgrading existing or buying new COTS solutions, substantially limiting the amount of customization (just because you had it or did it in the old system(s) you probably do not need it in the new system), engaging with partners who will share risk (and paying them against delivery of measured business value rather than a function) and incentivizing your organization to deliver value to your Customers.

As much as transformation has become the buzzword of the day for communications, another key area for CSPs that goes along with transformation is partnerships. CSPs themselves aren’t sure what they are going to look like in five years’ time so being definitive about the end state of their transformation initiative is tough to define to the level necessary to make a program work. They have to change the traditional supplier/purchaser relationship into something more of a partner-based model in order to forge stronger ties with companies that are going to work with them on this important journey – and assist them in adapting to the change that will undoubtedly occur. If they’re the right partner, their global experience should be invaluable.

So whether you’re a mobile provider that wants to move from predominantly voice services to a full services broadband company, a cable provider that’s gunning for the fixed-line guys, or a traditional wireline operator that doesn’t want to become irrelevant, all CSPs need to stop taking their Customers for granted and instead really look at making their business more efficient, automated and nimble in order to succeed.

The Future of OSS

Sanjay Mewada — Tue, 10 Feb 2009 22:37:00 GMT

With Operations Support Systems going through a metamorphosis, Sanjay Mewada, Vice President of Strategy at NetCracker Technology, identifies four key trends driving this change: industry consolidation, network and IT convergence, the emergence of a services and content ecosystem and the demand for user-generated services.

By Sanjay Mewada, Vice President of Strategy, NetCracker Technology

The Operations Support Systems (OSS) industry is undergoing fundamental change, and in five years, OSS will be very different from what it is today. Four main trends are driving the change: industry consolidation, network and IT convergence, the emergence of a services and content ecosystem, and the demand for user-generated services.

Industry Consolidation
The OSS industry, which has traditionally been highly fragmented, has been consolidating rapidly. This consolidation has been driven by communications service providers (CSPs) that are demanding strategic solutions that they can use to transform and future-proof their operations environments. Rather than having hundreds of OSSs, one for each service, network and operations function, they now require solutions that span multiple services and domains. CSPs are drastically reducing the number of OSSs they manage — and they are reducing their vendor list to a few strategic partners.

Billing and CRM vendors, equipment providers, systems integrators and software and applications vendors all recognize the value of OSS and the importance of adding it to their product portfolios. At this time no one can accurately predict which merger and acquisition business model will prevail, but it is clear that OSS will hold center stage.

Mergers and acquisitions among OSS and BSS vendors — for example, Oracle’s acquisition of MetaSolv and Amdocs’ acquisition of Cramer — have created individual companies that address multiple back office functions. These mergers create the possibility of integrated software suites that manage all activities from initial customer contact to service fulfillment and billing.

In addition, network equipment providers have begun to invest in OSS — as demonstrated by NEC’s stated intention to purchase NetCracker. This acquisition — through the addition of NetCracker’s OSS — will enable NEC to provide more complete hardware and software solutions for CSPs.

Nancee Ruzicka, an analyst in Stratecast’s OSS/BSS Global Competitive Strategies organization, states that the need to manage services and customers in a separate Service Layer — instead of in the network element — is compelling equipment vendors to broaden their businesses. “They are doing this by taking a bigger stake in OSS,” she says.

“Just as IBM transformed its focus from hardware to software, network equipment providers are making major investments in their software businesses,” observes Roz Roseboro, Senior Analyst in Analysys Mason’s Global Telecom Software practice. “This is partly in response to hardware pricing pressures, but is also recognition that software can be a sustainable, competitive differentiator.”

In addition, the convergence of network and IT domains is creating new synergies. Martina Kurth, Research Director, Carrier Operations & Strategies at Gartner, points out that CSPs are deploying next-generation content services, and this is forcing network and IT to find a common OSS solution that manages across both domains. “As a result, we expect more IT and network equipment vendors to pursue OSS mergers and acquisitions,” she says.

Equipment, software, and platform vendors have all been making substantial investments in OSS because they recognize that OSS is critical to the success of CSPs — and to themselves.

Investment in next-generation OSS can:

Create sustainable differentiation for vendors;
Enable CSP business transformations;
Build long-term, strategic relationships between vendors and CSPs.

Consolidation has the potential to strengthen the entire industry by producing more powerful OSS, stronger relationships between vendors and CSPs — and CSPs that can respond quickly and cost effectively to their customers’ multi-dimensional demands.
The challenge is to realize this potential — to develop integrated OSS that deliver complex services, manage across network and IT and assure customer experience.

Network and IT Convergence
To remain competitive, CSPs must deploy next-generation, content-rich converged services. These services typically utilize both network and IT infrastructures.

While continuing to manage the Network Layer, CSPs must now focus more strongly on the Service Layer — on the end-to-end management of the service and customer experience. Ruzicka’s research shows that service providers are overwhelmed by the volume and complexity of network, IT, partner and customer elements that need to be monitored and managed.

What’s required is an integrated OSS that can manage converged services and network and IT resources from a single platform. This integrated OSS must enable service creation, delivery and assurance over diverse infrastructure from switches to servers, from multiplexers to multi-access terminals, across OSI Layers 1 through 7 and from the core network to the premises.

The OSS must be fully configurable and capable of modeling any service, device or application. It must be standards based and built — from presentation layer to core — using modular, scalable technologies such as J2EE, Java and SOA. Fully open internal and external APIs are required to minimize integration effort and cost.

OSSs built on proprietary architectures are not flexible, do not scale and cannot manage across network and IT domains and should be replaced.

Nancee Ruzicka summarizes the situation: “The only way that CSPs can control their operations — from content management to device configuration to billing — is with automated, integrated OSS that are consistently implemented across all services and products.”

Services and Content Ecosystem
Competition is driving CSPs to provide next-generation converged services. At the same time, the traditional CSP value chain is evolving into a services and content ecosystem in which service elements are bought and sold by CSPs, content providers and software vendors. In this ecosystem, CSPs cooperate as well as compete with content providers.

The continued growth of this ecosystem is inevitable, and CSPs will need to participate in it to remain competitive. The ecosystem requires a whole new business model — and a new, integrated, service-centric OSS that understands how services are created, configured and assured, and also understands what resources are invoked.

“To automate third-party interactions and to facilitate the monetization of content services, CSPs must expose re-usable elements, such as presence or location,” asserts Gartner’s Kurth. “How well a CSP exposes its OSS capabilities to third parties will determine its success.”

Telecom software plays an essential role in delivering and managing content services. “For example, Service Delivery Platforms manage the creation and delivery of services and metadata,” says Analysys Mason’s Roseboro. “They also ensure that device configurations and settings are optimal for subscribed services.”

By distributing secure, high-quality services and content, CSPs can monetize the ecosystem. To do so, however, requires an OSS that can manage services across multiple networks as well as partner boundaries, and that can create service bundles from individual service elements. “To remain competitive, CSPs must participate in a secure, cost-effective ecosystem that is easy for third parties to utilize,” says Stratecast’s Ruzicka. “At the same time, CSPs will ultimately be responsible for the quality of service experienced by their customers.”

User-Generated Services
The services and content ecosystem makes it possible to create and deploy customized services for narrow target markets, including the market of one, thereby setting the stage for an explosion of user-generated services. This means that service creation, distribution and customization will migrate to end users and to a diversity of end-user devices.
“Over the next five years, we expect considerable carrier investment in new distributed OSS architectures that underpin the ecosystem as well as user-generated services,” says Kurth.

According to Ruzicka, “This user-centered environment requires an integrated, automated, and scalable OSS that is device and service independent.” It also requires that end users be given real-time access to the OSS using intuitive interfaces that allow them to create services, invoke resources and manage quality.

The OSS infrastructure must be supplemented with business processes and rules. “To give customers choice and control while preventing them from making configuration errors, CSPs must implement automated bullet-proof processes,” cautions Ruzicka.

Providing scalability and security as well as real-time access and rules-based service creation is a significant challenge to developing the OSS of the future. A fundamental shift in the way users acquire, share and manipulate content is already taking place, however. CSPs who embrace their users and the services ecosystem will open up a world of new possibilities — and new markets — that will enable them to grow and prosper.

OSS: The Next Generation
The emergence of a services ecosystem and the proliferation of converged, user-controlled services are driving the need for a next-generation OSS that is flexible and scalable and that provides secure, real-time access to end users.

The next-generation OSS must enable an ecosystem that delivers unique services and content. It must provide a foundation for the new business models critical to the success of CSPs. And finally, it must manage any service or application, for any device, over any infrastructure, whether network or IT.

“For the foreseeable future, most implementations will not have the integration to interact with the services ecosystem and deliver converged, user-controlled services in an optimal or cost-effective manner,” concludes Ruzicka. But she goes on to state that “The next-generation OSS and its benefits will ultimately be delivered.”

CSPs must push forward with integrated OSS that can meet the challenges of the future. Their competitive position and ultimate success depend on it.

The Next Phase of the Age of Communications

Phil Dance — Tue, 10 Feb 2009 22:33:00 GMT

The power used to be in the computer. Now it’s in the communications networks that connect them together.

By Phil Dance, Managing Director, Technology Exploitation, BT

In today’s world of next-generation communications services like streaming video-on-demand, location-based services and more, it’s clear that the role of the communications providers—the carriers—is only going to grow. Fifteen years ago – in the pre-Internet age – computers ruled. Now, arguably, the connections between computers rule.

Demand is growing at a phenomenal rate, from business and from consumers. Services like YouTube, iPlayer, Google Apps and iTunes are turning the world multimedia.

Just 10 years ago, we would have thought it odd to even dream about the dramatic shift in how we watch television. But now we don’t think twice about time-shifting using a DVR or simply streaming last night’s new episode of our favorite show. We’re essentially getting broadcast quality television when and where we want it.

Businesses too are incredibly dependent upon email and intranet information, and their employees depend upon broadband and mobile data to stay in touch whether they’re at home or out on the road.

All of this means that we’re starting to see increased pressure on communication networks to keep up with the volume of traffic. People expect the networks to keep up with their expectations and demands, whether it’s watching a seamless, stutter-free streamed TV program or downloading a large presentation file into their email inbox. You have to remember that the Internet was really built for very basic 64Kbps services, and new services need new, more powerful and stronger networks to carry all the extra traffic.

Next-Generation Communications
BT’s next generation network is called 21CN, and our aim is that we and other carriers will exploit this to create innovative new services for people and businesses across the UK and globally. We are also committed to enhancing the local loop, the connections between the telephone exchanges and the local distribution points (Fiber to the Cabinet or FTTC), if not the household or business themselves (with Fiber to the Premise or FTTP). FTTP will deliver headline speeds of up to 100Mbps while FTTC will deliver speeds of up to 40Mbps. We are also investigating technologies that can increase those speeds to more than 60Mbps.

But there’s a similar and arguably bigger revolution coming in the world of business, and that is cloud computing. Cloud computing can be tricky to define, but many people regard it as the third age of computing. The ‘big iron’ mainframe of the ’60s and ’70s was replaced by the client-server model in the ’80s, and now that client-server model must give way to the cloud model, which is looking like it will become the dominant model for computing over the coming years. Why is this?

These traditional ways of computing required lots of capital expenditure (hardware, software) and, on top of that, businesses would also often need to invest in expensive maintenance contracts, and more often than not expensive consultants and specialist contractors – plus have a host of integration and compatibility problems to overcome. The complexity meant that implementation timescales were measured in many months and maybe years.

But cloud computing doesn’t require large up-front expenditure, and it runs on somebody else’s infrastructure. The licensing model allows for users to be switched on and off and the pay-as-you go approach of accessing applications means that you get only what you need when you need it. It is also potentially much faster to implement and is inherently more flexible.

And if this seems all very much of the future, it isn’t: a growing number of large corporations are trialing this approach, including Taylor Woodrow and Telegraph Media Group in the UK.

Another big advantage of this model is that people can be more mobile. The predominance of the mobile worker’s laptop, which is increasingly creaking at the seams with software designed to manage and synchronize and make secure data on that machine, can be left to let the user do what they want to do unhindered. And in an age where people need to work in a more flexible and mobile way, whenever and wherever they need to, that must be a good thing. And it doesn’t need to be a laptop – even a smartphone will be able to access files and attachments and email over the cloud.

Cloud computing is likely to be the dominant model of the coming decade at least, and this means that the network becomes even more important. Networks and computing power will be distributed across individuals in the organization and not be centered on major links between central major sites.

So all this is seeing a shift in emphasis from pure computing to communications – or rather to converged computing and communications where the two are working as one single, cohesive entity. The challenge for BT is to exploit this – and that is exactly what we are doing.

Is your IP migration with or without migration?

boardblog — Thu, 13 Nov 2008 15:45:00 GMT

Johanne Mayer
Director, Alcatel-Lucent
Special responsibility for representing Suppliers

While most service providers undergoing an IP transformation have a migration strategy, there are network operators who are taking a quantum leap and transforming WITHOUT doing a migration! Bold move? Absolutely! Will it cost them less? Can they do this without causing negative customer churn? The answers often depend on how the transformation is planned and managed.

If we look at all the money being spent in testing the multitude of possible combinations in migrating the traditional services such as Frame and ATM to Ethernet and IP with or without interworking functions in between, it's clear that migration costs are significant and not without risk. So should you emulate an existing service or develop an advanced service as a replacement? Should you "push" (i.e. force) or "pull" (i.e. via marketing or incentives) your customers across? Experience shows that it's key to assess a business case that considers the total cost comparisons, critical assumptions, as well as a market analysis of the assumptions and potential churn impacts.

Do you have an opinion? Drop me a line to discuss...

Johanne joined Alcatel-Lucent in 1994 through the Newbridge acquisition and Lucent merger. Currently, Johanne is director communication for the global Systems and Applications Integration services group. Johanne is the spokesperson for OSS, Applications and network management products and solutions with industry analysts and the press as well as an officer of the TM Forum. She is a frequent speaker at conferences such as Management World, BBWF, 3GSM, IQPC and TeleStrategies and represents Alcatel-Lucent at various global forums. During her 20 years in the industry, she has worked as a support engineer, a product manager and marketing director, always focused on the Carrier operations.

A graduate of the University of Ottawa, Johanne holds two Bachelor of Science degrees: an honours degree in Mathematics with Co-op, and a second degree in Computer Science. She also holds a patent on Frame Relay Congestion Management.