OPINIONS

Vendor Management in an environment of shifting Network Outsourcing Models

The present economical climate, the rapid substitution of traditionally relatively lucrative circuit switched services by more bandwidth hungry but less revenue generating packet switched services and the related introduction of new mobile broadband technologies like LTE force Mobile Network Operators to rethink their cost structure, their place in the mobile services delivery value chain and especially their way of operating the mobile service delivery infrastructure.

As a result Mobile Network operators will need to work together with partners and increasingly resort to operational models like outsourcing and network sharing in order to keep their business profitable. Analysts are presently predicting that since no positive business can be made for the parallel roll out of a variety of LTE networks in one single market, Mobile Network Operators will to a large extend rely on shared and/or outsourced LTE infrastructures.
We already see examples of these types of symbiotic partnerships in the UK market with initiatives like “Cornerstone” in which Vodafone and O2 work together on a sitesharing basis and “Everything everywhere” in which T-Mobile and Orange go one step further by creating a third, jointly owned, network operating company that takes care of the mobile service delivery for both brands.

Are these initiatives a sign of things to come in other markets as well and what will be the role of the role of the regulators in this. Will they stimulate it, will they oppose it or maybe even enforce it?
So are Mobile Network Operators willing to sacrifice their own control over their Quality of Service in case of for example Radio Access Network sharing in return for costs savings and if network quality is not a differentiator anymore what will be the future differentiators?

There are different degrees in which outsourcing or sharing of operations, infrastructure and/or services can take place ranging from sharing radio sites to the complete pull out by operators from the entire network ownership and operations. Even core processes like billing and CRM may be left to managed service partners.

In addition the definition of what is an MVNO may be shifting. If there’s companies that provide all required services and interfaces for wanna be operators in a managed services fashion, then anybody can become a mobile service provider and maybe the traditional Mobile Network Operator will be push in a role of wholesale provider. And what about for example Coca Cola, HSBC, Carrefour, FC Barcelona, Apple, Facebook or Google as mobile service providers?
What is interesting though, is that for example the latter enterprise is probably not intending to depend on external managed services partners as they are presently even investing themselves in network infrastructure and maybe in the future even in mobile network infrastructure since pretty soon mobile internet devices will outnumber fixed line PCs
So does size matter and will the big brands be the winners? Maybe there will not be a wave of outsourcing networks and network operations by Mobile Network Operators but a wave of insourcing of mobile broadband delivery capability by big brands for which mobile broadband connectivity might just a means to an end.

However returning to the at moment generally accepted paradigm of Mobile Network Operators shedding (parts of) their network operations to outsourcing partners there is still a lot to win in making this mode of operation a more successful one. If outsourcing is driven merely by arguments of cost reduction, contracts are usually based on penalties. Managed service partners will stick to SLA’s and will have little incentive to go the extra mile. If the managed service partner on the other hand is evaluated on performance and profit related matters and shared risk reward models are in place, then the chance of a prosperous cooperation for the mutual benefit for both the operator and the managed service partner is significantly improved.

But how to measure the performance of an outsourcing partner in such a case? How does one establish the level of success of outsourcing. How can an operator manage its vendor? Omnitele renders a Network Performance service and as an independent party, Omnitele will deliver an unambiguous finding on the quality of the delivered services that subsequently can be input to the settlement process between operator and managed service partner.

A well tuned Performance Management service, which consist of a sequence of a measurement, an analysis and a problem resolution process, is a major contributing factor to a high quality of service level. Therefore Performance Management itself is a good candidate for outsourcing to a managed service partner. The underlying arguments for this are that a knowledgeable outsourcing partner will be able to deliver an adequate definition of fitting KPIs, select the set of the relevant input data streams (drivetesing, OSS counters, Interface probes, CDRs, etc.) and have the intelligence in correlating various network information streams with the result of finding an adequate solution to observed network performance degradation. This will not only result in cost saving for the Mobile Network Operator but also render added value and efficiency to the Performance Management process.

Either way , when applied as a tool for measuring the performance of a managed service partner or as outsourced Performance Management service itself, it is of paramount importance that the end-customer perceived service quality is taken into consideration when determining the service performance level. Also customer differentiation should be applied when resolving network performance problems by giving the resolve of problems that affect high-usage and key customer groups the highest priority. We are therefore aiming at creating a managed services that will deliver “Customer Experience Focused Remote Performance Management”.