ASIA MAJORAsia is a booming market with its own unique challenges, but it continues to set the pace for fibre rollout and mobile users

news in brief

3 Timeline A round-up of some of the major stories reported in our daily news service www.totaltele.com

business And finAnce

7 Fibre economics The long-term returns for incumbents from rolling out fibre don’t look good, but telcos must still forge ahead with their plans.

neTwork sTrATegies

10 Operator FTTH business models Most operators still are not committing to large- scale fibre-to-the-home deployments, but there have been some key recent announcements.

Technology Trends

14 Self organising networks (SON) self-organising networks promise to help mobile operators manage their infrastructure and to control spiralling costs.

operATor sTrATegies

18 Sustainability operators need to communicate their sustainability strategies more clearly or they could lose out commercially.

sTATisTics

20 Prime numbers global Voip subscribers, enterprise networking equipment and wireless data revenue growth.

leAder contentS

nick Wood Assistant Editor

Total Telecom

BuSIneSS AnAlySIS for telecomS profeSSIonAlS JULY/AUGUST 2011

Asia is a continent that tests to its limit the telecoms industry’s ability to span

borders and shrink geographic distances, as players grapple with a broad range of challenges and needs. There is no doubt that it is a booming continent. in the fixed broadband market alone, Asia is the fastest-growing region by connec-tions in the world, according to the broadband forum, increasing by 16.2% during the first quarter of 2011. Asia’s 226.4 million broadband connections already represent 42% of the global total.

This is in a continent where vast numbers of consumers in countries like india and china will experi-

ence the internet for the first time via a mobile device. “it is a very challenging position to be in,” said bill barney, ceo of network opera-tor pacnet, during communicAsia in singapore in June. “Asia is too big, too different and too diverse,” he continued. “There are first-world and third-world countries within 20 miles of each other.”

in fact, within a convention hall’s distance of one another Japan’s nTT docoMo was outlining its plans to extend nfc services to south korea

Asia is too big, too different and too diverse

to cater to the demands of interna-tional travellers, while india’s Vnl was explaining how its solar-powered base stations deliver basic wifi and gsM services to rural communities (see p.18 for our article on sustainability in telecoms).

connecting all these seemingly disparate Asian markets to the world at large is a huge web of subsea cable systems that are vulnerable to the high levels of seismic activity in the region, and the rising volume of shipping as intra-Asian trade is driven by local economic growth.

fibre networks will play a major part in that growth. european countries would do well to follow the fibre lead of countries like Japan and korea; but as our stories on p.7 and p.10 show, many western nations have a long way to go to catch up as operators grapple with the economics of business models.

Asia’s mobile operators face many network challenges as subscribers soar, and self-organising networks could play a part in managing their infrastructure in future (p.14). but Asia-focused telcos face other unique challenges. According to pacnet’s barney, if March’s earth-quake off the coast of Japan had struck 35 miles further south, Asia would have lost 80% of its connec-tivity to the us. “The successful [business] model for Asia is going to be very different from the rest of the world,” concluded barney. n

clIcK Here

to reAd on

your IpHone/IpAd

July/August 2011 www.totaltele.com 3

tImelIne

was agreed between Verizon and Tata communications. And Telmex signed a deal with cisco to provide telepresence services in Mexico.

Amdocs buys BridgewaterAmdocs agreed to buy bridgewater systems in a deal valuing the company at about us$214.2 million.

ICANN to extend Net domainsicAnn approved a plan to increase the number of internet address endings, or generic top-level domains (gTlds), from the current 22.

M2M joint venture expandsTeliasonera joined the machine-to-machine (M2M) communications alliance set up by orange and deutsche Telekom earlier this year. The agreement will extend operations to scandinavian and baltic countries.

UK spectrum trading beginsofcom gave clearance for uk mobile operators to start trading spectrum in the 900-Mhz, 1800-Mhz and 2100-Mhz bands.

Facebook integrates Skypefacebook signed an agreement to integrate skype calling into its social network, a week after google announced video calling in its google plus service.

Tata increases Neotel shareindian operator Tata communications increased its stake in south African fixed line operator neotel from 49% to 61.5% by acquiring Telecom namibia’s share.

2014. data charges will decrease from E0.90 per megabyte next July to E0.70/Mb in 2013 and to E0.50/Mb in 2014. Text messages and incoming calls will be capped at E0.10 from next July. operators will also have to open up their networks so customers can take a separate contract to use other providers for overseas roaming.

Nortel patents sold offA consortium of companies won the auction to buy the patent portfolio of nortel networks for us$4.5 billion, beating off google which had bid $900 million. Apple, eMc, ericsson, Microsoft, research in Motion and sony will now receive more than 6,000 patents.

News Corp gives up on BSkyBnews corp shelved plans to buy the remainder of pay-TV company bskyb, after bowing to political pressure in the wake of a phone-hacking scandal involving news international newspaper the news of the world.

Business

Mobile payments venturesMobile payment developments moved on apace as the uk’s three largest mobile operators—everything everywhere, o2 and Vodafone—said they will form a mobile payments joint venture; in denmark operators Telia, Tdc, Telenor and 3 joined forces to develop a single system for nfc m-payments; ericsson launched an m-payments service across seven european countries; and Visa acquired south Africa-based mobile payments company fundamo for us$110 million.

Vodafone gets control of EssarVodafone bought partner essar’s 33% stake in their mobile joint venture in india for us$5.46, taking its interest to 74%. Vodafone entered the indian market when it bought a 67% stake in hutchison essar for $11.2 billion in 2007.

Polkomtel sale agreedpolish businessman Zygmunt solorz-Zak won the bidding to buy polish mobile operator polkomtel for 15.1 billion zlotys (roughly E4.5 billion), beating off Telenor and Apax partners. Vodafone will receive approximately E920 million for its 24.4% stake in polkomtel.

EC sets new roaming capsThe european commission is imposing new price caps for voice and data roaming within the eu. retail price caps for making voice calls will be reduced from E0.35 a minute now to E0.32 from 1 July 2012, E0.28 in 2013 and E0.24 in

Ericsson buys Telcordiaericsson bought us oss/bss company Telcordia for us$1.15 billion. The deal means around 2,600 Telcordia staff will move to ericsson including president and ceo Mark greenquist.

Netherlands net neutrality firstThe netherlands became the first country in the eu to mandate net neutrality when it passed a law to ensure that isps cannot differentiate between different types of online traffic.

News Corp sells Myspacenews corp agreed to sell the Myspace social network to specific Media, a digital media and marketing company, for $35 million. news corp bought the site in 2005 for $580 million.

Telepresence dealsorange business services and Telefonica struck a deal to provide telepresence interoperability across their networks; a similar partnership

A roundup of the major stories in telecoms in the past month, as reported in our daily news service www.totaltele.com

Source: TeleGeography

MPLS VPN / Ethernet VPLS providers in selected cities

TeleGeography research shows Ethernet deployments lag far behind MPLS VPN deployments, both by service provider and by geographic market. The availability of IP VPN and Ethernet VPN services also differs by region. TeleGeography identified 39 IP VPN providers in Europe, 34 in Asia, 31 in the US & Canada, and 19 in Africa and Latin America. Ethernet VPN services are less widely available in all of these regions, but the difference is particularly great in emerging markets.

Num

ber

of s

ervi

ce p

rovi

ders

Tokyo New York London Moscow Mumbai São Paulo

35

30

25

20

15

10

5

0

n VPNn VPLS

©2011 Telcordia Technologies, Inc. A

ll rights reserved.©

2011 Telcordia Technologies, Inc. All rights reserved.

for revenue with your customers’ demand for new services isn’t easy.

Fortunately, Telcordia has been solving the world’s toughest communications challenges for nearly

three decades. We’ll help you get it right as you deliver innovative new services, operate more

efficiently, and drive revenue. Because when you’re backed by our expertise, you’re positioned to soar.

The greater the

challenge, the greater the need to

Balancing your need

www.telcordia.com

Tel_GIRBaseJumpr_TTPlus_210x279.pdf 1 6/23/11 12:01 PM

neTWORKs

LTE networkspccw’s uk broadband subsidiary confirmed plans to roll out an lTe network in the second half of this year; in singapore M1 launched commercial services while singTel plans to follow by year end; canadian operator rogers communications launched commercial lTe services in ottawa; deutsche Telekom launched services in its first major city, cologne; and in south korea, sk Telekom and lg uplus both launched services while kT corp said it will launch in seoul in november.

Telecom NZ separationThe new Zealand government passed a bill to enable the separation of Telecom corp into separate retail and network businesses. foreign investors will be able to take a majority stake in the retail part of the operator.

Network sharing in DenmarkTeliasonera and Telenor announced a network-sharing agreement in denmark. The companies will build a joint mobile network and establish a common infrastructure company to operate 2g, 3g and lTe networks. The deal covers radio access networks, including antennas, towers and transmission equipment.

Telstra NBN agreementTelstra signed agreements to sell its fixed copper lines into the country’s A$36 billion national high-speed broadband network.

Sprint-LightSquared dealsprint nextel and lightsquared reportedly signed a 15-year deal to jointly deploy and operate the latter’s wholesale lTe network. The deal, said to be worth

$20 billion, would see sprint becoming a wholesale customer.

MVNO launchesuk-based lycamobile launched an MVno in france; swiss telco cablecom will enter the mobile market via an MVno agreement with orange; and china Telecom plans to launch an MVno in the uk next year.

Belgium awards 3G licencebelgium’s fourth 3g licence was issued to the sole bidder, a consortium made up of cable operators Telenet and Tecteo, for E71.5 million.

Vodafone outsourcingericsson signed a five-year deal to manage Vodafone italy’s fixed and mobile networks. it already provides managed services for Vodafone in germany, the uk and the netherlands.

Spain/France auctionsspain began auctions of spectrum in the 800-Mhz, 900-Mhz and 2.6-ghz bands, aiming to raise up to E2 billion. And france set deadlines of 15 september and 15 december respectively for bids for 2.6-ghz and 800-Mhz spectrum, aiming to raise at least E2.5 billion from the auctions.

Fastweb IP backbone dealfastweb selected nokia siemens networks and Juniper networks to increase the capacity of its ip backbone network in italy.

China Telecom moving to IPchina Telecom selected Alcatel-lucent to provide equipment for an iMs deployment due to be rolled out to six provinces covering 120 million people.

Australian spectrum auctionnbn co was the biggest winner in Australia’s auction of spectrum in the 2300-Mhz band.

tImelIne

c&W’S World WoeSThe third profit warning in 12 months at Cable & Wireless Worldwide led to the resigna-tion of chief executive Jim Marsh and called into ques-tion the company’s demerger from C&W Communications, completed in March 2010. Chairman John Pluthero, who presided over the demerger, will take over as CEO from Marsh (pictured) in order to assume a more hands-on role in the business. C&W World-wide now expects Ebitda in the year to March 2012 to be 5%–10% below market expectations with a similar impact on cash-flow; and it has halved its fiscal 2012 dividend to 2.25 pence as a consequence of reduced cash flow forecast. The company said sales orders in the first 10 weeks of the year have been slower than expected, and as a result gross margin will be below current market expectations. C&W World-wide in March announced a £10 million investment in cloud computing in a bid to offset the decline in demand for fixed-line services. “I’ll be looking to take a more radical approach to building on our hosting, cloud and data ser-vices business,” said Pluthero. “It has been easy to lose sight of what this business could be; it is my intention to reas-sert and realise that future.” The company says it will “accelerate the investments necessary to deliver growth” in those areas. C&W Worldwide shares have fallen 65% since the group demerged from its international arm. Senior independent director John Barton will become chairman of the company and Penny Hughes will be the new senior independent director.

PEOPLE

New Inmarsat CEOrupert pearce will take over as chief executive of satellite company inmarsat from 1 January 2012. current ceo Andrew sukawaty will become executive chairman.

AT&T Labs appoints new headkrish prabhu was appointed head of AT&T labs, replacing ceo keith cambron, who is retiring. prabhu started his career at AT&T bell labs in 1980 and was ceo of Alcatel usA and Tellabs.

RIM streamliningblackberry maker research in Motion said it will cut jobs and restructure the company after delays in launching its latest line of smartphones.

Telekom’s new European headgermany’s deutsche Telekom appointed claudia nemat from consulting firm Mckinsey to head up its european operations from october.

Bharti restructuringindia’s bharti Airtel will split its organisation into separate consumer and business operations. reports suggest that could lead to up to 2,000 job cuts.

Telefonica cuts agreedTelefonica reached an agreement with labour unions to cut up to 6,500 jobs over three years.

Cisco readies job cutsreports suggest cisco systems could cut up to 10,000 jobs, or about 14% of its workforce.

CORRECTIONin the June issue we wrongly said that AT&T launched smartcloud enterprise. we should have said that it is an ibM product.

4 www.totaltele.com July/August 2011

© 2011 Verizon. All services are provided by Verizon in accordance with certain rates, terms, conditions, and restrictions set forth in Verizon’s tariff s or in applicable agreements between Verizon and the carrier.

verizon.com/wholesale/globalsolutionsVerizon Global Wholesale serves: Carriers - Wireless Providers - ISPs - Cable Operators - Resellers

Verizon Mobility Solutions has everything you need to satisfy your small business customers. With our white label services, you can off er wireless handsets, modem cards and accessories branded as your own. And with the reliability of Verizon behind it, you can provide your customers with the best service. You take the credit, Verizon Global Wholesale will take care of everything else.

You on the outside.Us on the inside.

VZWH3129_Army_PrintAd_Total.indd

VZWH - Verizon Insertion Print Ads - Army of Phones

Verizon Global

CMYK

210mm x 279mm .186mm x 264mm .125”

Total Telecom Plus Jul/Aug 2011

100%

VZWH3129

InDesign CS5

-

7July/August 2011 www.totaltele.com

european incumbent operators and altnets face a considerable chal-lenge to make returns on their

investment in fibre networks over the next ten years, but they cannot afford to slow down deployments in the face of stiff competition from cable operators. That is one of the key conclusions in a recent report from Arthur d. little and exane bnp paribas on superfast broad-band in europe that shows cable operators still are in the driving seat with telcos needing to catch up.

“cable operators have the lowest cost to upgrade their access network to super-fast broadband,” say the analysts in the report Superfast Broadband: Catch up if you can. “The move not only creates value for them but also is likely to increase their overall profitability.”

Across the nine european countries analysed telcos have connected only 1.5% of households with superfast broadband, defined as offering at least 50-megabits-per-second download speeds. The analyst companies say 4% of households in those countries have been passed with fibre-to-the home networks (fTTh), 16% with Vdsl and 34% with docsis 3.0 cable technology.

but they say services are set to expand: cable operators are upgrading more than 90% of their footprint to docsis 3.0, and incumbent telecoms operators already have announced E18 billion in capex by 2015 to roll out fTTh to 16% of house-holds and fibre-to-the-cabinet (fTTc)/Vdsl to another 28%. if those plans are followed through, that would represent 44% household coverage compared to just 20% today. what’s more, they esti-mate E18-E40 billion of additional capex that has yet to be announced by incum-bents in the nine countries studied in the report (Austria, belgium, france, germany, italy, the netherlands, portugal, spain and the uk).

but it is clear that operators are taking a considerable risk when it comes to

return on that investment. while the report outlines the very different situa-tions in each country assessed, in general incumbents should expect deployment of fibre to be “just about neutral in terms of return on capital employed [roce] in the long term”.

in fact, the analysts say roce for incumbents typically could fall from 14% on average for a european fixed-line operator in 2010 to just 12% in 2021 following fibre rollout, using a set of base case assumptions: rollout in very high-density areas (predominantly cities); retail broadband share of 50%; superfast broadband Arpu of E53-E55 per month; significant re-use of existing infrastruc-ture such as ducts; and excluding wholesale revenues (see table on p.8 for full roce and capex/opex estimates).

The picture is even bleaker for altnets: “Alternative carriers will not be able to make a positive return from their fibre investment on a standalone basis, even in the long term,” say the analysts. They estimate roce for altnets of -13% on

fTTh in 2021 and -14% on fibre-to-the-building (fTTb) networks.

in order to address the situation altnets will need to reduce capex and opex signif-icantly through network sharing, securing access to existing ducts and focusing on rollout in very specific locations—selected cities or even streets—where they can guarantee high penetration. Alternatively, they could make use of wholesale fibre services where available, but that would lead to loss of differentia-tion; compounding matters, the analysts expect european regulators to be less accommodating to altnets on fibre networks than on copper infrastructure.

cable operators remain the best placed to profit, using docsis 3.0 technology. They face the lowest cost to upgrade their networks and already enjoy roce of 25%–40%—likely to rise or be main-tained at an average level of 38% in 2021 given the incremental investments modelled in the report.

but in spite of the economic challenge, it seems that operators remain sanguine.

BuSIneSS & fInAnce

The long-term returns for incumbents from rolling out fibre don’t look good according to a new report, but telcos must nevertheless forge ahead with their plans. By Ian Kemp

F I B R E B U S I N E S S M O D E L S

pAIn AND GAIN

units 2011e 2012e 2013e 2014e 2015e 2016e >2021e

Homes passed 000 20 74 156 288 451 603 800

Penetration % % 8% 36% 38% 35% 33% 30% 30%

customers (end of year) 000 2 27 58 101 147 181 240

New 000 0 5 12 20 29 36 48

Upsold 000 1 15 33 56 82 101 134

Retained 000 0 6 14 24 35 43 58

Arpu, partly incremental €/month 30.6 32.0 33.4 34.8 36.1 37.4 43.7

New (full ARPU) €/month 53.0 53.5 54.1 54.6 55.2 55.7 58.5

Upsold (incremental ARPU) €/month 13.0 15.1 17.2 19.2 21.2 23.1 32.0

Retained (full ARPU) €/month 53.0 53.5 54.1 54.6 55.2 55.7 58.5

revenues €m 0 5 17 33 54 74 126

New €m 0 2 6 10 16 22 34

Upsold €m 0 1 5 10 18 25 51

Retained €m 0 2 7 13 20 26 40

Model summary in base case FTTH rollout for a typical incumbent operator

Source: Arthur D. Little, Exane BNP Paribas estimates

‘Altnets will not be able to make a return from their fibre investment on a standalone basis’

World Communication Awards 2011...

...new shores

Book your table! Don’t miss the global communications

event of the year

www.worldcommsawards.com

Organised by:Sponsors:

2011

World Communication Awards For global communications providers

7 November 2011 The London Hilton on Park Lane

8 www.totaltele.com July/August 2011

BuSIneSS & fInAnce

The report authors say of the 94 tele-coms, media and technology companies, as well as local authorities and utilities, interviewed for the report “the vast majority…expect incumbents to benefit from the move to superfast broadband”. They say “the financial risk is worth taking given the potential positive strate-gic benefits [of] market share protection or recovery”.

indeed, the base case scenario for oper-ators can be improved considerably if they are able to increase market share and/or Arpu. An incumbent operator with 50% market share and E65 Arpu could expect to generate a 23% roce—compared to 12% roce for the base case of 50% market share and E55 Arpu—but a telco with only 40% market share and E45 Arpu would generate a negative roce of -4%. The base model assumes 50% retail broadband market share for a typical incumbent, 20% for a cable opera-tor and 20% for a typical altnet.

factor in wholesale revenues and incumbents can expect to improve their returns further. for example, capturing 50% wholesale market share could increase Arpu by E15—based on a E6 increment and adding the substituted average unbundling price in europe of E9—and take the long-term roce of an incumbent’s fibre project to 15% compared to the base case 12%; 75% wholesale market share could raise it further to 17%.

The wholesale opportunity is highest in countries where alternative operators already have high broadband market share: france, the uk, italy and germany. however, that opportunity might not materialise at all if alternative carriers invest in their own fibre infrastructure as they plan to do in france and italy, for example (see story on p.10).

in terms of capital expenditure, the analysts estimate network upgrade alone—constituting 75% of total cumulative

units 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

revenues €m 0 5 17 33 54 74 92 106 116 121 126

OPEX €m 1 5 13 23 35 47 56 62 66 67 68

Network Opex €m 1 4 10 18 26 34 41 44 46 47 47

Incremental

service Opex €m 0 1 3 6 9 13 16 18 20 20 21

eBItdA €m (1) 0 5 10 19 27 35 44 50 54 57

EBITDA margin % ns 3% 27% 30% 35% 36% 38% 41% 43% 45% 46%

EBITDA/customer €/month (75.6) 0.8 9.0 10.4 12.6 13.6 14.9 16.5 17.8 18.9 19.9

cApeX €m 11 40 58 91 111 102 76 41 17 5 2

Capex/sales % ns ns ns ns 207% 138% 83% 39% 15% 4% 1%

Network deployment €m 11 29 44 74 93 88 63 35 14 4 1

Customer activation €m 1 11 13 17 18 14 12 7 3 1 0

eBItdA-capex €m (12) (40) (53) (81) (92) (75) (41) 3 33 49 56

Cumulative capex €m 11 51 109 200 311 413 489 530 547 552 554

per home connected € 7,450 1,907 1,868 1,986 2,123 2,282 2,294 2,301 2,305 2,306 2,307

Cumulative

network capex €m 11 40 84 158 250 338 402 436 451 455 457

per home passed € 525 533 540 548 555 561 566 569 570 571 571

D&A €m (1) (3) (5) (10) (16) (21) (24) (26) (27) (28) (28)

D&A/sales % ns (47%) (32%) (30%) (29%) (28%) (27%) (25%) (24%) (23%) (22%)

Net PPE €m 11 38 63 119 158 200 210 214 199 192 173

Post-tax EBIT €m (1) (2) (1) 0 2 4 8 12 16 19 21

Post-tax ROCE % (8%) (5%) (1%) 0% 1% 2% 4% 6% 8% 10% 12%

Model summary in base case FTTH rollout for a typical incumbent operator

Source: Arthur D. Little, Exane BNP Paribas estimates

capex—to be E150 per home passed for cable operators moving to docsis 3.0, compared to E188 for fTTc/Vdsl for an incumbent and E525-E750 for fTTh. but while fTTc/Vdsl requires much lower capex it is only a short-term fix in terms of profitability, say the analysts. operators taking that route will need to upgrade to fTTh eventually in order to compete with the higher-speed services offered by cable operators—100-300 Mbps for docsis 3.0 compared to 30-50 Mbps for fTTc/Vdsl—and the strategy will to some extent lead to a duplication of capex in the long run.

yet even where operators do invest in fTTh, the consensus is that Arpu uplift will be limited or non-existent unless they are able to sign up significant numbers of customers to new services: “we are not convinced that customers are ready to pay for faster speeds, so Arpu upside will mainly depend on operators’ ability to offer new, additional services.” in many cases that means triple-play services with differentiated bundles and richer TV offerings includ-ing video-on-demand and high-definition or 3dTV. in turn, those TV and video revenues could be threatened by over-the-top service providers.

The table on p.7 shows estimates for Arpu and revenues for a typical incum-bent operator to 2021, taking into account: new customers gained from competitors as a result of superfast broadband rollout; customers upsold from the operator’s basic broadband offering; and retained customers who would otherwise have churned to competitors. The analysts conclude that an incumbent investing in superfast broadband could expect to keep its circa 50% retail market share of broad-band customers, but those which do not could see share falling to 33%.

but it is clear that there is still a long way to go, with operators starting from current penetration of superfast broad-band technologies at very low levels in europe. The analyst companies estimate just 4.7 million customers in the nine countries by the end of last year, repre-senting penetration of 3%: 2.3 million for docsis 3.0, 1.2 million for fTTc/Vdsl and 1.1 million for fTTh. n

‘The financial risk is worth taking given the potential positive strategic benefits’

www.totaltele.com/world

WORLDORLDRe-imagine Global Communications

2 Day Conference, One Whitehall Place, London 7 – 8 November 2011

Valuable insightsn Extensive 2 day conference agenda

n Meet and network with 200+ senior level delegatesn Interact with representatives from all areas of the industry

n Hear from 40+ expert speakersn Participate in interactive debates and discussions

n Showcase your company to the marketn Cultivate new relationships and build on existing ones.

To find out more and book your place email: world@totaltele.com

Sponsors:

Book before

19 September 2011

and SAVE up to £4,600

10 www.totaltele.com July/August 2011 July/August 2011 www.totaltele.com 11

F T T H B U S I N E S S M O D E L S

Most operators still are not committing to large-scale fibre-to-the-home deployments, but there have been some key recent announcements. By Joanne taaffe

Speed LIMITS

netWorK StrAteGIeSnetWorK StrAteGIeS

Advances in the performance of xdsl mean operators can deliver content such as high-definition (hd) film and multi-ple-player gaming services over existing copper networks, say analysts.

As things stand, many operators consider their networks are able to meet end-users’ current demands. “i don’t need 100-Mbps [services] at home [today],” says grabenhofer at nokia siemens networks.

in addition, there are signs that opera-tors may struggle to charge a premium for retail fTTh access. “There is not a lot of evidence that [operators can charge]…a premium,” says wood at Analysys Mason. “The studies we’ve done show almost no difference whatsoever. it’s very difficult to compare it at a retail level, but if you compare it at a wholesale level there is a bit of a premium for Vdsl and fTTc [fibre-to-the-cabinet services].”

Arthur d. little and exane bnp paribas in their report Superfast broadband: catch up if you can say operators face a challenge raising demand for fibre services and in increasing broadband Arpu. “There is no clear demand for faster internet access and superfast broadband does not come with a specific killer app,” say the analysts. but the report says fibre will become a key facilitator of the digital home, and says the operators it interviewed for the report overwhelmingly say the main application that can drive uptake is hdTV, followed by multiscreen entertainment, connect-ing devices such as tablets and smartphones to home broadband, video-on-demand and gaming.

The report says while there are consid-erable differences in pricing and competitive conditions for superfast broadband—fTTh and next-generation cable—operators moving from Adsl to fibre networks could expect to see an uplift in blended median Arpu typically in the region of E13 per month compared to current levels (see story p.7).

indeed, in many cases operators will have to wait a long time to see a return on investment (roi): up to 20 years, depend-ing on the region covered. bT openreach, for example, estimates it will have a 12-year return on investment in fTTc and fTTp infrastructure in the uk,

fujitsu grabbed headlines in April when it announced plans to invest up to £2 billion to lay fibre to five

million homes in rural areas of the uk. Across europe, however, operators continue to question the current need to invest in extensive networks, leaving largescale fibre-to-the-home (fTTh) deployments few and far between.

“in general operators are relatively reluctant at this moment [to deploy] fTTh. we see opportunistic deploy-ment driven by government or competition, but a lot of what is called fTTh is fibre to the kerb,” says Jürgen grabenhofer, head of transport and core marketing at nokia siemens networks.

Alcatel-lucent, too, says it is not seeing extensive fibre infrastructure plans. “rollouts [in europe] have been disap-pointing,” says richard loveland, the company’s director of marketing for wireline access.

According to the oecd, fibre repre-sented just 1% of all broadband connections in france at the end of last year and 0.5% in spain and germany (see chart p.11 top). eastern europe and

scandinavia lead the way, with fibre representing 29% of all broadband connections in the slovak republic, 26% in sweden and 16% in norway. but even those countries are considerably behind deployments in Japan—where 58% of all broadband connections are fibre—and south korea (55%).

The fibre To The home council—which is due to release new figures at broadband world forum in september—says there were 8.1 million fTTh subscribers in europe at the end of last year and 33 million homes passed; exclud-ing russia there were just 3.9 million fTTh subscribers. but some operators have made key fibre project announce-ments and spending commitments in recent months (see box on p.12).

several factors have undermined the business case for private investment in fTTh in much of europe today, includ-ing a lack of clear consumer demand, argue analysts. “There is a real demand-side [problem]; when [fTTh] has been deployed [demand] has not been particu-larly strong and that [has] made operators sit up,” says rupert wood, principal

analyst at Analysys Mason. “Take-up levels in france have been pretty poor,” for example, he says.

french regulator Arcep reported 516,000 fTTh and fTTb subscribers at the end of the first quarter of this year, out of a total of 21.774 million total broad-band subscribers.

That lack of demand is not just evident in europe. new Zealand’s second largest operator Telstraclear last month with-drew its 100-Mbps broadband service in christchurch and abandoned plans to launch in wellington, blaming a lack of demand. According to Telegeography, the government’s wholesale fibre-to-the-premises (fTTp) ultra fast broadband initiative will enable isps to deliver 100-Mbps fibre services at much lower costs than retail operators from 2015.

Analysys Mason’s recent studies suggest that trends in consumer broadband usage are shifting away from the consumption of ever higher quantities of fixed broad-band capacity and towards mobile usage. “[The trend] is not moving to ultra high-speed media-intensive [usage]. it’s moving to lighter [data consumption] and value in portability,” says wood.

The development of a new ecosystem around higher-speed mobile networks and smartphones isn’t the only change.

Superfast broadband penetration, end 2010

n Homes passedn Homes connected

4%

16%

34%

0.7% 0.8% 1.5%

Homes passed by technology, 2010/2015

60%

50%

40%

30%

20%

10%

0%

Source: Arthur D. Little / Exane BNP Paribas

Cable FTTx FTTH

n 2010n 2015e

Hom

es p

asse

d (%

of h

ouse

hold

s)

34%

20%

4%

46%49%

21%

Percentage of fibre connections in total broadband subscriptions (Dec 2010)

‘There is not a lot of evidence that operators can charge a premium for high-speed fibre services’

Leading fibre-to-the-home/building penetration, Europe, end 2010

Lithuania

Sweden

Norway

Slovenia

Slovakia

Russia

Denmark

Latvia

Estonia

Portugal

Finland

Netherlands

France

Romania

Czech Repulbic

Italy

Turkey

n FTTH subscribersn FTTB and LAN subscribers

Household penetration (economies with greater than 1% household penetration)0% 5% 10% 15% 20%

Source: FTTH Council Europe

Bulgaria40%

35%

30%

25%

20%

15%

10%

5%

0%FTTH/B FTTC/VDSL DOCSIS 3.0

Per

cent

age

of h

ouse

hold

s

Source: Arthur D. Little / Exane BNP Paribas

Japan

Korea

Slovak Republic

Sweden

Norway

Denmark

Hungary

Czech Republic

Iceland

Portugal

Netherlands

Turkey

Italy

Poland

Finland

Switzerland

France

Ireland

Spain

Luxembourg

Austria

Australia

Germany

Canada

New Zealand

Greece

Belgium

0% 10% 20% 30% 40% 50% 60%

Source: OECD

58%

55%

29%

26%

16%

12%12%

12%

11%

6%

3%2%

2%2%

1%

1%

1%1%

0.49%0.48%

0.47%

0.45%

0.44%

0.41%

0.24%

0.20%

0.05%

12 www.totaltele.com July/August 2011 July/August 2011 www.totaltele.com 13

netWorK StrAteGIeS

on fixed or mobile networks.in some countries operators, utilities

and technology companies could consider wholesale strategies to be the best economic option. some governments also are taking that route, with the model already in place in singapore and set to be adopted in Australia and new Zealand through their national next-generation network initiatives.

Ad little / exane bnp paribas in their report say the wholesale opportunity for operators in the countries it has studied in europe is highest where alternative carriers have high broadband market share—france, the uk, italy and germany—and lowest where cable oper-ators are the incumbent’s main competitors—belgium, Austria, the netherlands and portugal. but they say the wholesale opportunity for incum-bents may not materialise if altnets invest in fibre: it cites projects announced by

iliad, sfr and bouygues Telecom in france; and a possible joint venture by fastweb, Vodafone and wind in italy.

in some countries there is still hope that broadband competition will be suffi-cient to drive investment. The level of competition in the uk helped spur the decision by bT openreach to invest £2.5

billion in its fibre network, which it plans to extend to two-thirds of uk homes and businesses by the end of 2015 (25% fTTh). The project includes spend of around £132 million to roll out fibre in the county of cornwall—with some £53.5 million of that coming from the european regional development fund—one of the rural regions that could otherwise have missed out on fibre infrastructure.

yet the sums of investment needed to provide widespread fibre may have been easier for private companies to swallow a few years ago, when the business case for fTTh was less muddied by questions over how consumer usage is changing and whether operators can charge for content or develop new wholesale models. “lots of european [stakeholders] ques-tion whether they have missed an opportunity,” says Accenture’s orr. “it probably would have been more effective [to invest in networks] earlier.” n

netWorK StrAteGIeS

which is relatively densely populated, according to a spokesman. Analysts say bT has estimated the cost of a national fibre rollout as equating approximately to £1,000 per household passed.

“The roi for fTTh is 12 to 17 years, which makes it extremely challenging for traditional operators,” says stuart orr, head of european communications at

Accenture. “who pays? end users? [And is it funded by] government bonds? or [by sales of] content?”

nevertheless, there is hope that addi-tional capacity will spur the usage of new services such as 3d TV, high-speed gaming, or the delivery of health, educa-tion and other social services over very high-speed broadband connections. if

people are presented “with a genuinely two-way pipe…all kinds of cloud and upload become much more viable” and the use of broadband may change, says wood at Analysys Mason.

in addition, operators could encourage very high-speed broadband take-up by offering premium services exclusively over fTTh. “if the operator tries to price the service based on available bandwidth it doesn’t resonate,” says Ana pesovic, wireline marketing manager at Alcatel-lucent. “[instead], operators can consider offering services, such as premium sport, uniquely over fibre in order to encourage the transition.”

operators could also use fTTh to explore new business models, such as providing huge pipes of bandwidth that make “the expensive clobber of quality of service in streaming…an expensive irrel-evance”, says wood. in turn that could circumvent some net neutrality concerns currently playing out in europe.

but for other operators the success of over-the-top content services raises doubts about their ability to charge for their own differentiated content.

Much could also depend on regulation in individual countries in future, should european regulators support service-based competition and make it hard to develop new wholesale or charging models that place a premium on over-the-top content providers’ services. karl wermig, head of ngA customer solu-tions, eMeA, at Alcatel-lucent, says europe’s operators are currently wonder-ing: “do i have to let everyone use my network? There are a lot of politics and economics involved.”

in June, for example, the dutch parlia-ment banned mobile network providers from charging customers extra for using over-the-top internet calling and messag-ing services such as skype and whatApp. currently, Vodafone in the netherlands charges customers an additional fee to use skype on smartphones and T-Mobile prohibits subscribers from using it alto-gether. The dutch parliament’s move raises questions about how much leeway operators have to develop new wholesale or consumer charging models whether

Operator plans: some recent fibre project commitments

The European Union’s ambitious goals for member states to provide very high-speed broadband access networks mean governments will be under pressure to do more to encourage FTTH build-out. The European Union’s Digital Agenda 2020 has set a target of providing all EU citizens with broadband access above 30 Megabits per second (Mbps), with 50% or more households accessing speeds of over 100 Mbps, at an estimated cost of between E250-E300 billion.

In the UK, BT’s announcements have spurred other companies to plan competitive strategies. Fujitsu plans to spend £1.5–£2 billion to roll out fibre over the next 3–5 years, of which around £500 million is expected to come from the UK government. It says in order to develop a sustainable wholesale economic model and attract national retailers—it is already talking with Virgin Media and TalkTalk as possible customers—at least 5 million homes need to be passed. And Telefonica’s 02 in June announced it will conduct commercial FTTH trials in the UK towards the end of this year; 02 has carried out significant local loop unbundling in the UK.

Several other key FTTH projects in Europe have been announced in recent months. In March, Deutsche Telekom set out its strategy to connect 160,000 households in selected districts of 10 German cities to FTTH this year, enabling downstream speeds of 1 Gigabit per second (Gbps) and upstream speeds of 500 Mbps. The incumbent has previously said it will cover 36% of households with superfast broadband by the end of 2012, of which 10% will be FTTH. Analysts at AD Little / Exane BNP Paribas estimate Deutsche Telekom has earmarked capex of E5 billion for FTTx rollout.

In June, TeliaSonera said it will invest more than 8 billion Swedish kronor (about E900 million) in fibre networks across its territories by the end of 2014, with some SEK5 billion of that earmarked for Sweden and the remainder for Finland, Denmark, Norway, Estonia, Lithuania and Latvia. It has set a target of covering 1 million homes in Sweden with direct fibre broadband connections and a further 1.3 million households in the Nordic and Baltic countries during the period.

France Telecom earlier this year set out plans to reach 60% of households, or some 15 million homes, with FTTH by 2020, with an interim target of 10 million households by 2015. The operator said it will spend €2 billion to the end of 2015 to build out the network. Iliad is targeting 4 million households; and Bouygues Telecom and SFR at the end of last year signed an agreement to co-invest in fibre networks in high population density areas targeting 3 million homes, while the companies also have plans to build their own fibre networks.

In Italy, 2.5 million homes had been passed and there were 348,000 fibre subscribers by the end of last year, according to the FTTH Council Europe. Telecom Italia has said it plans to cover 10% of households with fibre by 2016 and has committed up to E3.4 billion in capex; and a E2.5 billion joint project between Fastweb, Vodafone and Wind aims to bring FTTH within reach of 10 million people in Italy’s fifteen largest cities by 2015.

In Spain, Telefonica has said it will extend its fibre footprint from around 300,000 homes at the end of February to 1 million by the end of this year. It has committed around E1 billion in capex so far.

According to the The FTTH Council, Eastern European countries lead the way when it comes to FTTH subscriber penetration in the continent currently, with Lithuania in the top spot at the end of last year followed by Sweden, Norway, Slovenia and Slovakia. In May, Lithuanian operator TEO said its FTTH network covered 570,000 households, roughly half the country’s population.

Globally, China is set to dominate the FTTx market. In a new report Ovum predicts that China’s FTTx subscribers will reach 100 million in 2016, representing more than 50% of the world’s subscribers. In July, China Telecom selected Alcatel-Lucent as a vendor for its Broadband China Fibre Cities project, which this year aims to connect 26 million people to high-speed Internet services. The operator says by 2015 it will cover 100 million households with FTTH and aims to have some 30 million FTTH subscribers.

www.totaltele.com/breakfast

Breakfast briefings in 2011mHealth Update - 14 September mHealth is revolutionising healthcare on every level - social, environmental, and economic. What are the opportunities for operators?

Global 100 Operators - 18 October In 2010 we predicted a shake up in the global operator rankings due to M&A activity. As the 2011 report comes to market, we examine whether these changes have materialised and look at the current drivers behind the new rankings.

For more information or to book your place, please contact breakfast@totaltele.com

Breakfastwith

Breakfastwith

Breakfastwith

Breakfastwith

Breakfastwith

Breakfastwith

Breakfastwith

Talk to us, and get involved today!

FTTH and FTTC/VDSL, end 2010

100%

75%

50%

25%

0%

Source: Arthur D. Little / Exane BNP ParibasSE NL BE AT DE PT UK IT SP FR

n Passedn Connected

(% o

f hou

seho

lds)

14 www.totaltele.com July/August 2011 July/August 2011 www.totaltele.com 15

do not work in real time and do not use feedback from the network—from the device and the base station.”

Many operators view son as a key development that puts real-time exper-tise into on-site equipment. They say this will help them to contend with growing network complexity while also benefiting service quality.

“This [son] is a big area and there is a lot to be gained from it,” says Tommy ljunggren, vice president, system devel-opment, technology solutions, business area mobility at Teliasonera.

“Mobile systems are becoming so complex that we can’t have an engineer looking at every site, every day,” says bellégo. “if we do not have son we have to rely on our optimisation engineers, and since the systems are becoming so complex solving any on-site issue will take time.”

Moreover, son also benefits operators’ revenues if they are able to convince users to upgrade to lTe and more advanced data services. “such optimisation improves user experience,” says bellégo. That is a vital consideration for orange which wants to ensure that users’ experience of lTe is superior to the services they have been used to. “when we launched 3g, there were difficulties; the performance was not good enough,” says bellego.

An example benefit of son is the auto-matic neighbour relation (Anr) between base stations. when a terminal discovers a new base station’s signal, it forwards the information to its existing base station and that initiates the setting up of neigh-bour relationships.

ericsson first demonstrated Anr using a chipset from Qualcomm and Teliasonera’s live network in november 2010. “After only a 20-minute drive test the network had established the vast majority of the Anr that had been manu-ally planned prior to that,” says Thomas norén, head of lTe at ericsson. “we did not drop one single call. had there not been any neighbour relations prior to that, no user would have noticed.”

without Anr an operator must first plan the network to establish the desired relationships. This is then verified using a drive test that identifies any spots in the

Mobile networks are becoming so complicated that operators are turning to self-organising

network (son) technology to help with their management. proponents say that only by using son technology will oper-ators be able to manage and optimise their networks without operational costs spiralling out of control; in addition, the ability to optimise the network in real time could considerably benefit opera-tors’ revenues.

one operator which has implemented son across part of its network has already added 29,000 new subscribers and reduced churn by 7,000 users in a year, according to consultancy solution Matrix. That could lead to considerable revenues and a payback period of less than one year (see table below).

but there is a mismatch between what wireless operators want in terms of son and what vendors are offering. son tech-nology is part of the Third generation partnership project’s (3gpp) long Term evolution (lTe) standard, and vendors are focusing on son for lTe. yet

operators want son to span all their networks including 2g and 3g.

Telekom Austria has assessed the son offerings of five vendors. “what we have learnt is [that] son is a fabulous experi-ence in 4g [lTe],” says Armin sumesgutner, head of network planning at Telekom Austria. “what we haven’t seen so far is the full integration across a single radio access network.” currently, Telekom Austria is adopting a single radio access network (rAn) architecture where only one vendor’s equipment is used at a site. This allows for optimisation across the wireless standards, both for son and in terms of such issues as antenna design and site power consumption.

Vendors have invested their r&d dollars preparing for lTe and view addi-tional investment in son for 3g as wasteful, says Johannes ritter, a partner at solution Matrix, which has worked on son with operators including kpn, T-Mobile and Vodafone. “operators [only] want to buy what nobody offers: son end-to-end for voice and data on 2g, 3g and lTe,” he says.

Moreover, son has limited value to operators currently: lTe is only now being deployed, and optimisation requirements are limited because those networks are lightly loaded. “All the issues around coverage, bandwidth, utili-sation, optimising between neighbouring cells to avoid interference—all the things son can do—are currently not a press-ing problem in lTe,” says ritter.

son enables the fine-tuning of param-eters to enable optimisation of a network’s capacity and coverage, says kamakshi sridhar, director of the wireless cTo organisation at Alcatel-lucent. The adap-tation is performed by algorithms within the base station that use measurements from end terminals.

“one aspect of lTe that makes it suited to son-like algorithms is that more intelligence is pushed into the base station,” says sridhar. “There are now more opportunities to automate what was previously done manually.” There is also a specified interface between base stations that aids information sharing.

The operations, administration and management (oA&M) systems of an operator are used to configure the network’s initial policy and parameters to ensure it starts up in a defined state. The son algorithms, distributed across the base stations, then provide key perform-ance indicators to the oA&M systems.

using the indicators, the oA&M system decides whether to expand or contract the boundary conditions within which son operates. “There is an inner fast [son control] loop between the terminals and the base stations, and a slower outer loop set by the oA&M,” says sridhar.

operators already have two decades of experience in optimising their networks manually. “The main difference [with son] is that these [network planning] algorithms have been done outside the network on standalone hardware,” says yves bellégo, manager for network tech-nical strategy at orange. “The algorithms

tecHnoloGy trendS

Self-organising networks promise to help mobile operators simplify the management of their infrastructure and to control costs, but challenges remain. By roy rubenstein

tecHnoloGy trendS

S E L F - O R G A N I S I N G N E T w O R K S

Self SERVINGAbbr. Scheme description

CCO Coverage and Capacity Optimisation Optimises cell coverage and capacity for idle and active

users in downlink and uplink per evolved UTRAN Node-B

(eNB) in terms of Quality Class (QCI)

ESO Energy Saving Optimisation Switches off part or all of an eNB to save power usage

(cost); reactivates when needed for capacity

IR Interference Reduction Identifies sources of interference and manages power

reductions e.g. switch of home eNB when user not home

PCI Automatic Physical Cell Identity Automatically allocates Physical Cell Identity (PCI) —

collision free (PCI unique in an area) and confusion free

(neighbouring eNB PCI are unique)

MRO Mobility Robustness Optimisation Reduces handover (HO) related radio link failures, through

optimal configuration of HO parameters to avoid too early,

too late and wrong cell handovers

MLB Mobility Load Balancing Optimisation of cell reselection and HO parameters to

balance load between LTE cells and between different

radio access technologies

RO RACH Optimisation Minimises Random Access Channel (RACH) power and

delay through optimisation of RACH parameters

ANR Automatic Neighbour Relations Optimises neighbour list as plug and play feature for

optimised HO. Also provides self healing for self or

adjacent cell/site failure

ICIC Inter-Cell Interference Coordination Co-ordination of radio resource management functions

between cells to control inter-cell interference

SON standards: 3GPP defined use cases

Source: Aircom International

network where calls are dropped due to an absence of a relationship between base stations. A second network planning iter-ation is required, as is a further drive test. “we consider the Anr feature quite important as a missing neighbour rela-tionship is a typical source of non-quality,” says bellégo at orange.

son will also benefit the ability to introduce heterogeneous cells in lTe (Total Telecom+, July 2011). “one thing making things more complicated is that as we go to small cells there are a lot of different interference scenarios that are not typical of macro cells and that are going to need to be understood,” says James seymour, senior director of the wireless cTo organisation at Alcatel-lucent. “with optimisation techniques we can let the system manage itself.”

for heterogeneous cells to work requires well-defined son standards to ensure interoperability between different vendors’ equipment. “one of the more advanced son algorithms is inter-cell interference coordination,” says steve bowker, cTo of Aircom international.

“if people are rolling out heterogeneous networks, [the cells] have to operate across that boundary and co-ordinate interference; interoperability is key if the son is to work.”

despite such benefits, operators are concerned that son does not cover their 2g and 3g networks, which are still their main assets. “The operators have a problem to solve and in the next few years the networks will reach their peak of complexity,” says neil coleman, director of marketing at network analytics and optimisation company Actix. “They are managing multiple networks and their need for reducing services effort in the networks is here, and it is really not being serviced by vendors and by the standards committees.” This, he argues, opens the door for independent software vendors.

large vendors also acknowledge opera-tors’ needs. “son needs to cover multi-technology networks; it can’t be limited to lTe only,” says outi keski-oja, product line manager, network optimisation, at nokia siemens networks. “This is one area where the vendors’

Year 1 figures only Self Optimising Network (SON)

Increase in gross adds (subscribers) 29,000

Reduced churn (subscribers) 7,000

Revenue per subscriber €220.00

Revenue increase due to new gross adds €1,540,000

Revenue increase due to churn decrease €6,380,000

totAl IncreASe In reVenueS €7,920,000

Gross margin percentage 40%

Gross margin €3,168,000

Total number of node Bs 8,000

Percentage of node Bs saved 5%

Number of node Bs saved 400

Capex and Opex saved per Node B €48,000

capex and opex saved €19,200,000

SON hardware Investment €12,000,000

SON software Investment €5,000,000

eBItdA €5,368,000

return on Investment (roI) 32%

payback period in years 0.9

Potential savings through self-optimising network deployment

Source: Solution Matrix

16 www.totaltele.com July/August 2011

tecHnoloGy trendS

networks. “[by doing that] they could get a son—maybe not fully automated but much less manual than now,” says ritter.

indeed, that would be vastly superior to many operators’ current setups. solution Matrix says one small european operator has been identifying bandwidth and dropped call problems only when complaints at its call centre rise above a certain threshold. “They then send out a guy to measure,” says ritter. even the largest european operators only have probes in 40% or 50% of a country, cover-ing 80% of the traffic.

ritter advises operators to adopt son in stages. “They can optimise an area and end up deploying a lot less equipment using son,” he says. in his company’s operator example for a typical lTe network, based on 8,000 enodeb base stations, son can reduce the total needed by 400 (5%). Assuming each base station costs €40,000 and the same amount again is spent in operational expenses over five years, the son-related savings equate to €32 million (see table p.14). “son does this; humans can’t. Tuning each cell and countering interference [manually] is like playing 3d chess,” says ritter.

Another son challenge is that only self-configuration is active so far; self-optimisation is still to be proven in a large, live network. “self-optimisation routines within the equipment itself are not live yet,” says bowker at Aircom. “Vendors are trialling things but none of the commercial deployments are using self-optimisation.”

operators must also ensure that hand-sets incorporate support for son. “The situation now is that the network is a little bit ahead of the devices on many things,” says ericsson’s norén.

These practical son issues will preoc-cupy operators for some time. but longer term, they expect son to broaden its scope and optimise users’ service experi-ence. “we are in the starting phase: a lot of technology and network planning issues,” says sumesgutner at Telekom Austria. “but we also see the necessity for a broader set of parameters to be recog-nised and optimised by the [son] system [to enhance user experience].” n

There are three main elements that make up SON: self-configuration, self-healing and self-optimisation. Self-configuration adds functionality to simplify network deployments while self-healing enables a base station to undertake fault detection and fault recovery. “In 2G and 3G networks over the years, a hardware fault in a base station has required a manual restart,” says Keski-Oja at Nokia Siemens Networks. “Now as part of the self-healing, this reactivation is done in an automated way after certain alarms are raised.” Meanwhile self-optimisation, the largest of the three categories, incorporates features that set the optimal values for the network elements as part of the trade-off between coverage and capacity.

The main SON efforts in 3GPP Release 8 focused on simplifying network configuration. These include automatic neighbour relation (ANR) where a newly deployed base station is made aware of its neighbours based on terminal input. Other features include auto cell ID planning and ‘plug and play’. “Each base station needs a separate cell ID to not interfere with each other,” says Alcatel-Lucent’s Seymour. “Plug and play figures out what IP address the base station should have.” These are tasks that previously have been performed manually.

The SON focus in Release 9 is network optimisation. For example, base stations can communicate their respective loads to enable traffic balancing between 3G and LTE networks. There are also mechanisms to improve user cell handover performance. Network optimisation is extended further in Release 10 to improve coverage and capacity. Alcatel-Lucent is pushing for features to be added to Release 10 to extend SON into the core of the network to benefit the user experience. For example, SON could decide which network—WiFi, 3G or LTE—to place a user based on factors such as their profile and applications they are using rather than solely air interface considerations. “If I [an operator] have a Gold User, I may never want to put them on 3G,” says Seymour.

Self-organising networks: the development stages

stories vary a lot; we provide son func-tionality for all these technologies.”

providing son across a vendor’s wire-less standards equipment helps, but Telekom Austria stresses that its networks use technology from multiple vendors. “what we don’t see is an approach of inter-working,” says sumesgutner. “This is a big issue, because what it takes is full optimi-sation and this can’t be achieved with the existing tools we have from the vendors.”

one way to manage multi-vendor equipment is by adding an extra vendor-independent layer. “The vendors have no interest in that [extra layer] as it would be the kiss of death [for them],” says ritter at solution Matrix.

Actix provides son functionality to nec, but it also provides a layer above son. “we provide an abstraction layer which allows operators to focus on the overall network quality as experienced by subscribers rather than focus on vendor-specific technology issues,” says dirk stachorra, son product manager at Actix. here son elements are monitored and used as input for a broader network optimisation, such as maintaining quality while minimising manual effort, and where decisions are made over a longer timescale than son.

Third-party network optimisation players such as Actix and Aircom have a

role here, says ritter, but the deepest understanding is what happens within the hardware and that is the equipment vendors’ domain; only so much can be done with standards-defined interfaces coming from the hardware.

yet if operators are denied the full picture, there are additional techniques they can use, says ritter. one is to insert probes and use active testing in their networks. both provide extra informa-tion and reduce operators’ need for drive tests, also a key goal of son.

“drive testing is expensive: up to €400,000 per test,” says ritter. Moreover, a drive test only covers a specific area and is by definition retrospective. “you may do it only every nine months because of cost and that is too late,” says ritter.

Active testing places a hardware device in the network to simulate customer behaviour, but this too is expensive. several devices are needed in base stations across a country if dropped calls, cover-age, bandwidth and latency issues are to be monitored across the network.

in a 3g network probes are used with the radio network controller (rnc) to measure traffic in real time. Typically, 40 rncs are needed per operator, per country. using probes and active testing, operators can eliminate most drive testing while optimising their 2g, 3g and lTe

www.asiacommsawards.com

Asia Communication AwardsCelebrating the success of Asian telecoms, globally

For more information about 2012 Asia Communication Awards email: aca@totaltele.com or call: +44 (0) 207 608 7065

Asia Communication Awards

The Winners...

Organised by: Founding Partner: Asia ICT Partner: Sponsors: Event Partners:

Operator of the YearSmart Communications

Vendor of the YearHuawei

Wholesale Operator of the YearPacnet

Emerging Market InitiativePacific Bangladesh Telecom

Best Content ServiceSK Telecom

Best Cloud ServiceSingTel

Best Business Solution Comviva Technologies Ltd

Innovation AwardSyniverse

Green Technology AwardSmart Communications

Customer Service Initiative SK Telecom

Outsourcing Company of the Year Comviva Technologies

Best Mobile Strategy Comviva Technologies

Social Media InitiativeQtel’s Virgin Mobile Service (QVMS)

CEO of the YearLi Yue, China Mobile

18 www.totaltele.com July/August 2011 July/August 2011 www.totaltele.com 19

Report findings: how some operators fared

The enterprise companies taking part in the Verdantix survey—entitled Green Quadrant Sustainable Telecoms Europe 2011—had combined revenues of more than €175 billion, and the executives questioned were all in senior positions with oversight for European operations. The companies represented a cross-section of industries including banks, high-tech manufacturing, transport and business services.

In order to rank the 18 operators, Verdantix collected data across 50 criteria analysing telecoms solutions that support sustainable business goals. Ten sustainable technology and business categories were analysed: video/Web collaboration; sustainable hosting; cloud computing; sustainability consulting; smart meters and other remote monitoring (m2m) solutions; intelligent building solutions; fleet telematics; telecommuting; sustainable equipment and handsets; and sustainable vertical market solutions. The operators were also measured according to strategy and execution, energy and carbon management, and environmental and social performance.

Among the conclusions from the research company, Orange leads the European market on fleet telematics; BT has the leading video collaboration services; and Telefonica leads the way in intelligent building solutions. Vodafone achieves best-in-class scores for its smart meters and other m2m solutions, while SFR has strong conferencing, hosting and cloud services. Telenor is strong in smart metering services and has strong video/Web conferencing capabilities; Telekom Austria also has strong video/Web conferencing and hosting services. Cable & Wireless achieves strong scores in video and Web collaboration and sustainable hosting, while Colt scores highly for its hosting solutions. Telecom Italia has class-leading services for smart meters, intelligent buildings and fleet telematics; as does Verizon for both its hosting and cloud services. Deutsche Telekom achieves top scores for both its conferencing services and cloud computing.

operAtor StrAteGIeSoperAtor StrAteGIeS

Operators need to communicate their sustainability strategies more clearly or they could soon be at a significant disadvantage and lose out on key contracts. By Ian Kemp

reSponSIBle TALKS U S T A I N A B I L I T y

emissions have fallen to 759,000 (see table bottom right).

but operators still have a long way to go when it comes to engaging with large enter-prises on sustainability. only five of the 15 interviewees in the Verdantix study regard telecoms service providers as important or very important for their sustainability initi-atives (see chart), and the research company says in general the executives had a low awareness of the sustainability services offered by operators.

while the numbers might not be seen as statistically significant, the interview-ees were all buyers of sustainable telecoms and iT services at companies with combined revenues of E175 billion. This year’s customer panel rated telcos as less important to sustainability than the participants in the 2010 survey, suggest-ing that “telco marketing departments need to up their game”, says Verdantix.

“we are not that aware of what tele-coms providers have to offer,” said one executive at a technology company. “Telecoms providers need to have a facil-ity where they can provide an overview of the services that they are providing. This should clearly explain their footprint.”

in fact some operators already are taking greater measures to bolster their csr messages. bT, orange, Telefonica and swisscom submit their sustainability report-ing to external verification by a third party; and swisscom, for example, integrates its csr statistics into its financial report. “Telcos such as orange and swisscom have started to apply an integrated commercial approach to sustainability across all their products and services,” says Verdantix. “by 2012 we expect many of their competitors will follow this approach.”

Verdantix says the global e-sustainabil-ity initiative (gesi), backed by many leading operators, has published a standardised calculation methodology for carbon savings and predicts that telcos will adopt this approach from 2012. it says swisscom currently leads the way in this respect by including all its sustainable services in the scope of its web-based co2 calculation tool, and also highlights orange as having extended the scope of its calculation tools to cover cloud services and telecommuting. n

Aggressive marketing by some operators of their sustainability credentials could be paying off

as pan-european enterprises look to bolster their environmental strategies. but other big-name telcos are in danger of missing out on enterprise and public sector contracts by not getting their corporate social responsibility (csr) messages across.

A new survey by Verdantix, on the perceptions of sustainability strategy decision-makers at pan-european compa-nies, ranks AT&T, bT, orange, swisscom and Telefonica as the operators leading the way in the provisioning of sustainable telecoms services. Their concerted moves to apply sustainability across their prod-ucts and services, coupled with in-depth organisational commitment to sustaina-bility, are proving key to their ability to

impress purchasing executives, says the research company.

“Telecoms operators [that] can’t communicate their own energy, environ-ment and sustainability performance are now at a competitive disadvantage,” says Verdantix director david Metcalfe. “This is particularly true when bidding for public sector telecoms contracts.”

The third annual study compared the sustainable telecoms solutions—encom-passing energy, environment and social metrics—of 18 of the largest operators providing services in europe, based on interviews with 15 decision-makers in pan-european enterprises. “from 2012, poor performance on sustainability will become a significant competitive disad-vantage,” conclude the report analysts.

As Total Telecom+ has shown, some operators are actively talking up their

environmental credentials—one of the key elements of sustainability—by providing statistics on how they are tack-ling emissions in their own organisations and through technologies such as video conferencing and telepresence, solar base stations, machine-to-machine (M2M) communications, and server and storage virtualisation (Total Telecom+ March). france Telecom/orange and deutsche Telekom both have set a target of reduc-ing co2 emissions by 20% by 2020 compared to 2006 levels; and bT aims to reduce its carbon emission intensity by 80% by the end of 2020 from 1997 levels, having already reduced them by 53% since that base year.

bT, which says it is “one of the top 10 consumers of electricity in the uk”, this year won planning approval for its first wind farm; it aims to generate around 1% of its uk electricity demand from the farm by 2012 and 25% of its uk energy needs from renewable sources by 2016. The operator this year also set up a new climate change procurement standard requiring all its suppliers to measure carbon emissions and set reduction targets.

bT was the telecoms sector leader in the dow Jones sustainability index—seen by many as the key measure of compa-nies’ sustainability initiatives—in europe from 2002 to 2009, but has been over-hauled by Telefonica for the past two years. Telefonica in its latest corporate responsibility report says in 2010 it achieved “over half of [its] target 30% reduction in electricity consumption in networks established in 2007”.

in 2010 Telefonica’s worldwide group co2 equivalent (co2e) emissions stood at 1,990,772 tonnes, up from 1,851,247 tonnes in 2009 (but it points out that brazilian operator Vivo and its wholesale services division were added to the group during that period). bT says its gross worldwide co2e emissions have risen from 1,627,000 tonnes in 1997 to 1,723,000 tonnes to the end of March this year, but claims net

co2e (kilotonnes) 2011 2010 2009 Base year Change 2010 Change 1997

1997 to 2011 to 2011

Scope 1 204 212 249 414 -3.5% -51%

Scope 2 1,470 1,490 1,487 1,156 -1.3% 27%

Sub total (scope 1&2) 1,675 1,702 1,736 1,570 -1.6% 7%

Scope 3 49 49 73 58 _ -15%

Total emissions (gross) 1,723 1,751 1,809 1,627 -1.6% 6%

less purchases of:

renewable electricity 571 574 590 – -0.5% –

cHp low carbon electricity 301 312 318 – -3.4% –

3rd party electricity

consumption (uK only) 92 77 67 – 18.9% –

total emissions (net) 759 787 835 1,627 -3.6% -53%

BT carbon emissions, summary year ending 31 March 2011

Source: BT

‘From 2012 poor performance on sustainability will be a significant competitive disadvantage’

How important are these suppliers to your sustainability programme?

n Very important n Important n Neutral n UnImportant n Totally unimportant n Not applicable

Telecoms hardware suppliers

IT hardware suppliers

IT consultants

Telecoms service providers

Environmental consultants

Software providers

Verification providers

Not for profits

Energy consultants

Financial auditors

Management consultants

40% 20% 13% 13% 13%

27% 20% 20% 7% 20% 7%

20% 7% 13% 7% 33% 20%

13% 20% 40% 7% 13% 7%

7% 20% 40% 13% 13% 7%

7% 13% 40% 7% 27% 7%

7% 13% 20% 13% 33% 13%

7% 20% 47% 27% 13%

13% 53% 13% 7% 13%

33% 33% 33%

33% 7% 27% 33%

Source: Verdantix

How important are these functions to your sustainability programme?

n Very important n Important n Neutral n UnImportant n Totally unimportant n Not applicable

Facilities management and energy

Corporate social responsibility

Procurement/supply chain

IT/telecoms

Finance

Health, safety and environment

Manufacturing

Sales

Marketing

Strategy

Human resources

Legal and regulatory affairs

Logistics/distribution

53% 40% 7%

53% 13% 27% 7%

40% 33% 13% 7% 7%

40% 20% 27% 13%

33% 13% 40% 7% 7%

20% 20% 27% 13% 20%

20% 7% 40% 13% 20%

13% 13% 40% 13% 13% 7%

7% 20% 40% 13% 20%

33% 47% 13% 7%

20% 67% 7% 7%

13% 60% 20% 7%

13% 53% 20% 13%

Source: Verdantix

20 www.totaltele.com July/August 2011

prIme numBerS contActS

edItorIAl4th Floor, Welken House, 10-11 Charterhouse Square, London EC1M 6EH +44 (0)20 7608 7030; newsdesk@totaltele.com

totAl telecom+Ian Kemp ian.kemp@totaltele.com Editor +44 (0)1626 835 703Michelle Young m7chelle@gmail.com Art Editor

totAl telecomMary Lennighan mary.lennighan@totaltele.com Editor +44 (0)20 7608 7069nick Wood nick.wood@totaltele.com Assistant Editor +44 (0)20 7608 7046

contributing editorsroy rubenstein royruben@netvision.net.il Israel Ingrid Lunden ingridlunden@gmail.com London Joanne taaffe jtaaffe34@gmail.com France Ken Wieland ken2wieland@yahoo.co.uk London

AdVertISInGHEAD OFFICE, LONDON nick carter nick.carter@totaltele.com Sales Director +44 (0)20 7608 7065leonie Holmes leonie.holmes@totaltele.comSales Manager +44 (0)20 7608 7041chin nyenwe chin.nyenwe@totaltele.comSales Manager +44 (0)20 7608 7052

UNITED STATES AND CANADA KCS International T +1 717 397 7100 F +1 717 397 7800 Karen c Smith-Kernc – East KarenKCS@aol.com Alan Kernc – West & Canada AlanKCS@aol.com

JAPAN Hiroko Kujime kujime-pbi@gol.compacific Business T +81-3-3661-6138 F +81-3-3661-6139

AdVertISInG productIonPlease forward all advertising material directly to: production@totaltele.com Aleisha Bryant +44 (0) 7608 7042

mArKetInGTally Judge tally.judge@totaltele.com Marketing Manager +44 (0)20 7608 7076ruth clark ruth.clark@totaltele.com Marketing Executive +44 (0)20 7608 7047

eVentSCharles Georgiou charles.georgiou@totaltele.com Project Manager +44 (0)20 7608 7071

SuBScrIptIon/cuStomer SerVIceSAleisha Bryant aleisha.bryant@terrapinn.com Customer Services Executive +44 (0) 7608 7042 or subscribe free at: www.subscription.co.uk/totaltelecom

M A N A G E M E N Trob chambers rob.chambers@totaltele.com Publisher +44 (0)20 7608 7077Greg Hitchen greg.hitchen@terrapinn.com Chief Executive Officer

totAl telecom eVentSWorld communication Awards www.worldcommsawards.comWorld Vendor Awards www.worldvendorawards.comtotal telecom Worldwww.totaltele.com/world

Total Telecom Plus is published by

© 2011. All rights reserved.

Terrapinn Holdings Ltd registered office: 4th Floor Welken House, 10-11 Charterhouse Square, London EC1M 6EH

$20 billion Value of the global optical networking

market by 2016. (Ovum)

WeStern europe leAdS In VoIp SuBSVoice over iP subscribers reached 120 million worldwide by the end of last year, an increase of 12.6% during 2010 and 2.9% during the fourth quarter, according to new statistics from Point topic. the analyst company defines VoiP as a subscription service that does not require a Pc, so includes Pstn-type services but excludes skype. Western europe leads the way by region with subscribers growing by 8.6% last year to reach 39.2 million. in terms of countries, the us, Japan and France account for nearly 70 million of the 120 million total. the us is the leading VoiP nation with over 26 million subscribers, most of which take services from cable companies; in Japan there are 24 million VoiP subscribers; while France has 18.6 million. Point topic estimates 93% of broadband subscribers in France also have a VoiP service, compared to 72% in Japan and 30% in the us.

fAll In netWorK equIpment SAleSworldwide enterprise networking equipment sales fell in the first quarter of the year, according to infonetics research, in large part due to slowdowns in the public sector. After record growth in 2010, enterprise ethernet switching market revenues fell 12% to us$4.2 billion in the first quarter compared to the fourth quarter of last year and 9% compared to the first quarter of 2010. worldwide wireless lAn equipment revenues decreased 8% to $698 million compared to the final quarter of 2010, but were up 17% year-on-year. enterprise router sales totalled $797 million in the first quarter, down 14% sequentially and down 3% from the quarter a year ago, marked by declining mid-range router sales and strong low-end sales. All major regions saw sequential declines in enterprise router sales in the first quarter of 2011, and only Asia-pacific and central and latin America posted increases year-on-year, boosted by the financial sector and–counter to the worldwide trend–the public sector.

WIreleSS dAtA reVenueS to SoAriHs isuppli forecasts global wireless data service revenues will rise at a 9.1% compound annual growth rate from 2010 through 2015, more than twice the 4.5% growth of overall wireless operator business. in 2015, data revenues will rise to us$337.9 billion, it estimates, representing more than 30% of the total wireless service market, compared to us$218.1 billion and 24.4% in 2010.

HSpA SetS recordSwcdMA hspA connections reached 500 million worldwide by the end of June, making it the fastest growing wireless technology ever says wireless intelligence. The research company says 19 million hspA connections are being added each month and forecasts one billion connections by the end of 2012. There are now 350 live hspA networks across 132 countries worldwide, and 88 hspA networks across 50 countries have been upgraded to hspA+ with a further 52 upgrades planned. lTe networks are also showing rapid growth, reaching one million connections just 18 months after the first commercial network launches and expected to grow to 300 million by 2015.

Region 2009Q4 2010Q4 YOY % increaseAsia-Pacific 29,102,717.00 33,890,259.00 16.45eastern europe 1,182,440.00 1,412,987.00 19.50latin America 3,769,670.00 4,371,200.00 15.96north America 27,867,110.00 30,795,894.00 10.51South and east Asia 5,805,000.00 7,338,000.00 26.41Western europe 39,248,238.00 42,656,731.00 8.68Global total 106,975,175 120,465,071 12.61

Source: IHS iSuppli

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0

2010 2011 2012 2013 2014 2015

n Total service revenues n Data revenues

GloBAl WIreleSS cArrIer reVenueS (uS$ mIllIonS)

VoIp SuBScrIBerS By reGIon

Source: Point Topic

$50 billion value of NFC mobile contactless payments

worldwide by 2014 (Juniper Research)

Opportunity in technology innovation for Carriers

Maximise the opportunities Ethernet presents for Cloud ServicesGain definitive insights on how Ethernet can enable Cloud Computing through C-level addresses from BT Innovate & Design, Level 3 and XO Communications.

Navigate and debate the possibilities posed by Ethernet ExchangesHear the future of Ethernet Exchanges debated by key carriers including Interoute, Deutsche Telekom AG, Hutchinson Global Communications and Tata Communications.

Optimise your network to attract new business and accelerate revenue growthExplore the solutions to monetize your Ethernet offering and learn from Colt Communications, NTT America and GTS CE about the future technologies that will ensure Ethernet continues to lead the Carrier market. Meet and exchange ideas with other leading Carriers during the 10+ hours of joint networking with our co-located event ‘Carriers World’.

BOOK NOW! online www.terrapinn.com/ethernet | email sarah.pegden@terrapinn.com | phone +44 (0)207 242 2324 | fax +44 (0)207 242 1508

Organised by:

Sponsored by:

27 – 29 September 2011, Guoman Tower Hotel, London, UK

Co-located with: Key speakers include:

Clive SelleyCEO

BT Innovate & DesignCIO

BT Group

Jack WatersCTO & President of Global

Network ServicesLevel 3

Tim WuAuthor

“The Master Switch”

Rajiv DattaCOO

AboveNet

Content Provider Partner:

Opportunity and strategy for wholesale carriers and telcosNavigate the challenges of eroding voice margins and search for new revenue growthHear Voice debated by key carriers including BT Wholesale, iBasis, Deutsche Telekom ICSS and Orange and learn where to generate revenue for the future. Examine the VAS on the market and discover how to differentiate your offering.

Maximise the opportunities presented by content deliveryGain insights from carriers already boosting revenue through delivering quality content, including Level 3, Telefonica, Du, Virgin Media and Eircom.

Optimise your services through building strategic marketsExplore the impact of consolidation in the industry and learn from Telecom Italia Sparkle, Telefonica and Deutsche Telekom ICSS about the importance of partnerships in the new telecom era. Build your own partnerships with over 10 hours joint networking with our co-located event ‘Carriers Ethernet World’.

27 – 29 September 2011, Guoman Tower Hotel, London, UK

Organised by:

Sponsored by:

16th Annual Event

Sally DavisCEO

BT Wholesale

James CroweCEO

Level 3

Mike MilleganPresident of Global

CarriersVerizon

Rakesh BahsinCEOColt

BOOK NOW! online www.terrapinn.com/ethernet | email sarah.pegden@terrapinn.com | phone +44 (0)207 242 2324 | fax +44 (0)207 242 1508For more information please contact Samantha Graves

tel +44 (0)20 7092 1241 | fax +44 (0)20 7242 1508 | email samantha.graves@terrapinn.com | web www.terrapinn.com/carriers | booking code InterComms

For more information please contact Samantha Graves tel +44 (0)20 7092 1241 | fax +44 (0)20 7242 1508 | email samantha.graves@terrapinn.com | web www.terrapinn.com/ethernet | booking code InterComms

www.terrapinn.com/carriers

www.terrapinn.com/ethernet

Key speakers include: