OPINIONS

Network Modernization: Failing to plan is planning to fail

1. Technology

Technological advancement of mobile network elements has been phenomenal. With multi standard radio equipment operator is able to configure their base stations and radio elements over the air for different frequency bands and radio network standards. This creates unforeseen flexibility; however this would need to be planned very carefully at the network design phase.

There is a phenomenon which we have witnessed many times in the telecommunications industry – we tend to overestimate impact of new technologies in short term and underestimate their impact in long term. Think what happed with WCDMA. Now project a picture of LTE into same domain.

2. Regulation
At the same time regulators in many countries want actively liberalize the use of frequencies. This leaves the burden (privilege) to operators for making those difficult technology decisions. Some questions which will typically get asked: Which frequency bands and standards should I use and where? Should I bid for the new spectrum? What site grid and parts of the infrastructure should I reuse? What are my optimal site configurations? What is my vendor able to deliver?

3. Increasing competition between vendors
At the same time price erosion in mobile network elements has been faster than anybody had anticipated. From the network infrastructure equipment providers Ericsson continues to lead the pack but Huawei has emerged as a major challenger. NSN continues to grow somewhat but certainly all the operators would like to see at least three strong players instead of the market duopoly.

In light of this, many operators are forced to change their depreciation assumptions for their current network infrastructure. This has on one hand created a short term profitability pressure but on the other hand created an opportunity to modernize their network. Production costs are simply lower when new technologies are being used.
Operators are increasingly moving towards purchasing turn-key solutions from vendors. In this context, agreements with network vendors are increasingly more important: KPI / SLA, roll-out schedule commitments and vendor support.
Operators must have a solid network development strategy – this will drive the RFP process. Although all vendors might commit to similar KPIs there might be major differences in vendor’s technical solutions and fit with operator’s technology and business strategy.

4. Conclusions
Many operators have combined all of the above and have decided to modernize their mobile networks.
Short term competitive or profitability pressures drive the LTE rollouts. But operators should recognize that this is the exact moment of making decisions impacting long term business case. Suboptimal technology strategy (or no strategy at all!) and impaired network design will for sure yield problems in near future and kill all the addressable production cost benefits of new technology. My advice for operators is: spend wisely and make sure you’ve learned from the 3G-mistakes. Bullish bets seldom yield jackpots.