EMOBILE: the mobile broadband revolutionist - Huawei
EMOBILE: the mobile broadband revolutionist - Huawei
EMOBILE: the mobile broadband revolutionist - Huawei
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Voice from Operators<br />
Perspective<br />
Tao of Business<br />
Winners<br />
02/09<br />
Initial issue<br />
Internet puzzle: how can<br />
operators solve it?<br />
<strong>Huawei</strong> views on future<br />
industry trends<br />
<strong>EMOBILE</strong>: <strong>the</strong><br />
<strong>mobile</strong> <strong>broadband</strong><br />
<strong>revolutionist</strong><br />
Vodafone Romania: growth<br />
from one 2G/3G network<br />
China Mobile powered by All-IP
At <strong>Huawei</strong>, we know that simple ideas can lead to big things. In much <strong>the</strong><br />
same way a tiny acorn can grow into an oak tree, we strive to realize your<br />
full potential through innovative products and solutions.<br />
We devote 43% of our entire staff of over 82,000 people to R&D, which is<br />
just one of <strong>the</strong> reasons why <strong>the</strong> world’s top telecom network operators<br />
choose us as <strong>the</strong>ir partner.<br />
We are committed to looking after your needs every step of <strong>the</strong> way. B y<br />
putting you first, we grow your business to be as lasting and enduring as <strong>the</strong><br />
oak tree itself. That’s why at <strong>Huawei</strong>, we help you realize your potential from<br />
<strong>the</strong> simplest of ideas, to ultimate success.
02/09<br />
Initial issue<br />
Editorial<br />
Sponsor<br />
<strong>Huawei</strong> Technologies Co., Ltd.<br />
Publisher<br />
<strong>Huawei</strong> COMMUNICATE Editorial Board<br />
Consultants<br />
Hu Houkun, Xu Zhijun, Xu Wenwei<br />
Tao Jingwen, Huang Chaowen, Yu Xiangping<br />
Editor-in-Chief<br />
Gao Xianrui (sally@huawei.com)<br />
Editors<br />
Xue Hua, Pan Tao, Julia Yao<br />
Xu Ping, Xu Peng, Li Xuefeng<br />
Joy Zhou, Chen Yuhong, Liu Zhonglin<br />
Michael Huang, Joyce Fan, Wang Hongjun<br />
Mike Bossick, Gary Maidment<br />
Art Editor<br />
Zhou Shumin<br />
Contributors<br />
Zhu Yonggang, Hou Jinlong, Zhang Xinyu<br />
Lu Xingang, Xiong Wei, Xie Jingping<br />
Yan Yun, Zhang Qin, Mei Zheng<br />
Xu Yan, Cao Jianhui, Wu Yanning<br />
Sato Masako, Yang Xiaoxu, Robert Fox<br />
Tel: +86 755 28780808<br />
Fax: +86 755 28356180<br />
Address: A10, <strong>Huawei</strong> Industrial Base,<br />
Bantian, Longgang, Shenzhen,<br />
China 518129<br />
E-mail: HWtech@huawei.com<br />
Publication registration No.:<br />
Yue B No.10148<br />
The information contained in this document is for<br />
reference purpose only, and is subject to change<br />
or withdrawal according to specific customer<br />
requirements and conditions.<br />
Copyright © 2009 <strong>Huawei</strong> Technologies Co., Ltd.<br />
All Rights Reserved.<br />
No part of this issue may be reproduced or<br />
transmitted in any form or by any means without<br />
prior written consent of <strong>Huawei</strong> Technologies Co., Ltd.<br />
Winning <strong>the</strong> game<br />
Mushrooming growth, rushing revenue streams and skyrocketing share<br />
prices are <strong>the</strong> goals of most telecom companies. In pursuit of <strong>the</strong>se ideals,<br />
a close eye should be kept on development and market trends, <strong>the</strong>n select<br />
one or more successful enterprises in <strong>the</strong> industry as a benchmark, drawing<br />
upon <strong>the</strong> strength of o<strong>the</strong>rs to avoid costly and unnecessary mistakes.<br />
In <strong>the</strong> past decade, <strong>the</strong> telecom industry has experienced dynamic<br />
growth and rapid development. In spite of ups and downs, transformation<br />
has continued unabated. New concepts, technologies, and models<br />
emerge in an endless stream driving <strong>the</strong> industry into new realms of<br />
communication. In 2009, against <strong>the</strong> backdrop of a global economic<br />
downturn, <strong>the</strong> telecom industry needs to adapt to meet new challenges<br />
and seize all opportunities to create even broader development space.<br />
As a comprehensive telecom equipment and solution provider,<br />
<strong>Huawei</strong> pilots <strong>the</strong> same course as <strong>the</strong> operators. Development trends in<br />
communications technology, including full-service operations, <strong>mobile</strong>,<br />
<strong>broadband</strong>, and <strong>the</strong> Internet, expansion of communications networks<br />
around <strong>the</strong> world, increasing market competition and technology upgrades<br />
create tremendous pressure and numerous challenges for all of us in <strong>the</strong><br />
industry.<br />
There are many questions such as: What is <strong>the</strong> best way to ensure<br />
a smooth upgrade of current networks while protecting investment?<br />
How do you improve ARPU while reducing OPEX and CAPEX? How<br />
can materials, land, and man hours be saved while fulfilling <strong>the</strong> social<br />
responsibility of environmental protection, energy conservation and<br />
emissions reduction? How does a company enlarge <strong>the</strong> scale effect to cope<br />
with fierce competition in <strong>the</strong> global communications market? …<br />
To ring in <strong>the</strong> spring of 2009, we introduced this new publication, with<br />
a keen focus on creative solutions for dealing with <strong>the</strong> myriad of challenges<br />
in <strong>the</strong> current telecom operations market. Successful players in <strong>the</strong> global<br />
telecom market are invited to share <strong>the</strong>ir thoughts, reflections, and<br />
experiences in strategic conception, market operations, and technological<br />
choices. In <strong>the</strong> columns -Tao of Business and Perspective, senior industry<br />
experts are invited to elaborate on industry development trends and<br />
evolution. By probing a host of Winners around <strong>the</strong> world, we will share<br />
with you <strong>the</strong>ir wisdom, experience, and vision.<br />
We believe today’s rewarding practice promises to give you success<br />
recipes for <strong>the</strong> future.<br />
For electronic version and subscription,<br />
please visit www.huawei.com<br />
Kevin Tao<br />
President of <strong>Huawei</strong> Global<br />
Technical Sales Dept.
Voice from Operators Perspective Tao of Business Winners<br />
02/09<br />
Initial issue<br />
Internet puzzle: how can<br />
operators solve it?<br />
<strong>Huawei</strong> views on future<br />
industry trends<br />
<strong>EMOBILE</strong>: <strong>the</strong><br />
<strong>mobile</strong> <strong>broadband</strong><br />
<strong>revolutionist</strong><br />
Vodafone Romania: growth<br />
from one 2G/3G network<br />
China Mobile powered by All-IP<br />
02/09<br />
Initial issue<br />
WHAT’S<br />
INSIDE<br />
Voice from Operators<br />
01<br />
Bharti Airtel: leading <strong>mobile</strong><br />
revolution through innovation<br />
Bharti Airtel is on a journey of<br />
excellence through innovation. This<br />
journey definitely has no destination.<br />
O<strong>the</strong>r than that Bharti Airtel will<br />
continue to be a catalyst to India’s<br />
economy and an engine for <strong>the</strong><br />
economic growth. –Manoj Kohli,<br />
CEO of Bharti Airtel<br />
07<br />
<strong>EMOBILE</strong>: <strong>the</strong> <strong>mobile</strong> <strong>broadband</strong><br />
<strong>revolutionist</strong><br />
<strong>EMOBILE</strong> is Japan’s newest and<br />
fastest growing <strong>mobile</strong> operator. In<br />
less than two years, it has already<br />
carved out a strong niche in <strong>mobile</strong><br />
<strong>broadband</strong>.What are its unique<br />
business model and future ambitions?<br />
Dr. Sachio Semmoto,<strong>the</strong> founder,<br />
Chairman and CEO, will tell us.<br />
Perspective<br />
11<br />
<strong>Huawei</strong> views on future industry<br />
trends
Tao of Business<br />
25<br />
AIS keeps Thailand smiling<br />
15<br />
Internet puzzle: how can<br />
operators solve it?<br />
Kevin Lee from In-Stat:<br />
Operators are in quite a<br />
predicament with value-added<br />
Internet services. But <strong>the</strong>y are<br />
too big and slow on <strong>the</strong> uptake,<br />
not able to move as quickly as<br />
<strong>the</strong> small companies. How can<br />
operators solve <strong>the</strong> puzzle?<br />
28<br />
31<br />
PCCW builds a CDMA<br />
<strong>broadband</strong> bridge<br />
Reliance: growth has no limit<br />
35<br />
Orange dreams come true<br />
18<br />
Winners<br />
21<br />
Inspiration from<br />
Internet business models<br />
Internet reinforces its leading<br />
position with a growing<br />
penetration rate and fast-increasing<br />
user base. Can telecom operators<br />
transplant <strong>the</strong> Internet-related<br />
technologies and successful<br />
business models, so as to find a<br />
new profit stream?<br />
Optus: opening up <strong>the</strong> outback<br />
39<br />
42<br />
45<br />
China Mobile powered<br />
by All-IP<br />
MegaFon transforms and<br />
prepares for 3G<br />
Vodafone Romania: growth<br />
from one 2G/3G network<br />
In April 2008, Vodafone Romania heaved a sigh<br />
of relief: They no longer had to deal with <strong>the</strong><br />
maintenance of independent and complicated 2G<br />
and 3G networks.
VOICE<br />
FROM OPERATORS<br />
Bharti Airtel<br />
leading <strong>mobile</strong> revolution<br />
through innovation<br />
“What is most innovative about Bharti Airtel in my opinion is <strong>the</strong>ir business model and how <strong>the</strong>y<br />
construct <strong>the</strong>ir company. It’s quite different from <strong>the</strong> rest of our industry,” recommended by Craig<br />
Ehrlich, former Chairman of GSMA. At GSMA Asian Congress in November 2008, Mr. Manoj Kohli,<br />
President and CEO of Bharti Airtel delivered a keynote speech <strong>the</strong>med Leading Mobile Revolution<br />
through Innovation, and shared with <strong>the</strong> industry peers <strong>the</strong>ir key to success.<br />
By Manoj Kohli, CEO of Bharti Airtel<br />
Seizing <strong>the</strong> huge potential<br />
India has <strong>the</strong> second largest population in <strong>the</strong> world.<br />
In a couple of decades, India will probably surpass<br />
China in population. The GDP growth rate, which<br />
was around 9% in India has marginally come down<br />
to about 7%. This is actually a sustainable growth rate,<br />
given <strong>the</strong> current global financial impact of today. The<br />
GDP of India is about USD1 trillion and grows at a rate<br />
of about 8% a year. In six years, we can double <strong>the</strong> GDP<br />
to USD2 trillion .<br />
The India telecom sector will be a catalyst to <strong>the</strong><br />
growing economy and continue to show healthy growth<br />
both in customers and traffic at a very speedy rate.<br />
Inflation has fortunately come down to 6% from a high of<br />
over 12%, meaning that <strong>the</strong>re is more and more disposable<br />
income coming to <strong>the</strong> telecom, media, and Internet<br />
services from o<strong>the</strong>r sectors. Luckily for Bharti Airtel, a<br />
zero-debt company, financing is not a problem. We can<br />
finance <strong>the</strong> growth and lead future growth in a very robust<br />
way.<br />
The <strong>mobile</strong> penetration is quite low at around 27%,<br />
with over 346 million <strong>mobile</strong> subscribers as of <strong>the</strong> end of<br />
December 2008, among <strong>the</strong>m over 84 million are Airtel<br />
(wireless) brand users. Unfortunately, <strong>the</strong> <strong>broadband</strong><br />
penetration is as low as 0.42% with over 5.3 million users.<br />
The good thing is that now <strong>the</strong> government is promoting<br />
<strong>broadband</strong>, targeting to reach 20 million <strong>broadband</strong><br />
subscribers by 2010. The <strong>broadband</strong> revolution is<br />
following <strong>the</strong> <strong>mobile</strong> revolution and <strong>the</strong> Indian economy.<br />
Clearly, India has deep domestic demand and fantastic<br />
potential for growth in <strong>the</strong> next few years.<br />
Key drivers of telecom growth<br />
Based on <strong>the</strong> prediction for <strong>the</strong> next five years for<br />
1<br />
Win-Win / FEB 2009
Bharti Airtel is on a<br />
journey of excellence through<br />
innovation. This journey<br />
definitely has no destination.<br />
O<strong>the</strong>r than that Bharti Airtel<br />
will continue to be a<br />
catalyst to India’s economy<br />
and an engine for <strong>the</strong><br />
economic growth.<br />
— Manoj Kohli, CEO of Bharti Airtel<br />
FEB 2009 / Win-Win<br />
2
VOICE<br />
FROM OPERATORS<br />
Under our unique business model, we assume <strong>the</strong> roles of supervisor, planner,<br />
governor and quality control inspector. By partnering with strong global partners,<br />
we are able to successfully develop and focus on <strong>the</strong> core competence.<br />
<strong>the</strong> Indian telecom industry, <strong>the</strong> wireless subscriber base<br />
should grow from around 350 million in 2008 to 500<br />
million in 2010. It is safe to say that India is <strong>the</strong> second<br />
largest market after China, but still a very large market<br />
with only a 61% projected penetration rate by 2012. The<br />
wireless revenue could be about USD37 billion in 2012.<br />
What are <strong>the</strong> key drivers for growth? The most<br />
important thing is an affordable tariff, which is about<br />
1.5 cents/minute. That is why <strong>the</strong> MOU in India is about<br />
513 minutes a month. Second, incomes are rising, not<br />
only in <strong>the</strong> urban areas, but also in <strong>the</strong> rural areas.<br />
Third, I can remember <strong>the</strong> handset price at <strong>the</strong><br />
beginning was USD200. We now have handsets that are<br />
USD20. This is definitely a big trigger of growth.<br />
Fourth, rural economic prosperity is certainly going<br />
up. In India, close to half of <strong>the</strong> economy is rural, and it<br />
is a cash economy. The money doesn’t go through banks.<br />
We have covered about 400 thousand out of a total of 600<br />
thousand villages.<br />
Fifth, <strong>the</strong> youth segment is going to develop. According<br />
to demographic analysis, young people are <strong>the</strong> highest<br />
percentage of <strong>the</strong> population in India. As many Asian<br />
countries are aging, <strong>the</strong> Indian population is becoming<br />
younger. The youth segment is important for all of <strong>the</strong><br />
telecom operators in India.<br />
Finally, new technologies like 3G are going to be<br />
launched in India in 2009, providing ano<strong>the</strong>r very good<br />
growth opportunity.<br />
The India telecom industry began taking off in 2003.<br />
During <strong>the</strong> last few months, we saw over 10 million net<br />
added subscribers per month in India. I don’t think any<br />
o<strong>the</strong>r countries in <strong>the</strong> world have achieved this kind of<br />
figure. It clearly shows that operators in India have rolled<br />
out <strong>the</strong> networks very swiftly and rolled out distribution<br />
close to customers, including <strong>the</strong>ir homes and offices.<br />
Innovation-Airtel’s key enabler<br />
India is <strong>the</strong> most competitive and a very hard-fought<br />
market in <strong>the</strong> telecom world. There are now about 11<br />
to 12 players in every state. In October 2008, three<br />
international brands including NTT DoCoMo, Telenor<br />
and Etisalat entered India and heated up <strong>the</strong> competition.<br />
We at Bharti Airtel welcome competition, and believe we<br />
can actually become stronger as new competition enters<br />
<strong>the</strong> marketplace.<br />
Bharti Airtel continues to lead <strong>the</strong> market, and our<br />
leadership is due to our commitment to affordability for<br />
Indian customers. Offering world-class, innovative and<br />
world’s most affordable tariffs at 1.5 cents/minute, we have<br />
achieved more than 33% of <strong>the</strong> regular GSM market share<br />
in India. More than half of our new customers are coming<br />
from <strong>the</strong> villages.<br />
Unique business model<br />
Innovation was not a choice for us, innovation was<br />
a necessity for us. For achieving <strong>the</strong> lowest costs for <strong>the</strong><br />
production of minutes in India, we need to have <strong>the</strong> lowest<br />
cost possible. We <strong>the</strong>refore launched in 2002 a unique<br />
business model featuring outsourcing <strong>the</strong> five big portions<br />
of our operations.<br />
First, we outsourced our network to leading<br />
international vendors. In <strong>the</strong> network partner selection, we<br />
began with a very innovative way of buying networks since<br />
we started in 2003. At that time, we were buying about<br />
2,000 black boxes. We didn’t understand many of those<br />
black boxes as we are not technologists. But we understood<br />
customers, people, and <strong>the</strong> market. So we started buying<br />
lines and capacity from our partners. We paid <strong>the</strong> partners<br />
by every user capacity in terms of lines. We also had<br />
3<br />
Win-Win / FEB 2009
managed services managed by vendors. Today, I can say<br />
that those vendors have given us <strong>the</strong> power to rollout up to<br />
3,000 towers per month. I think this innovative business<br />
model has been very successful.<br />
IT outsourcing is more innovative than network. IT<br />
is <strong>the</strong> backbone for any telecom company in <strong>the</strong> world,<br />
whe<strong>the</strong>r it is <strong>the</strong> billing system, IN system, or CRM<br />
system. So we went to IBM in 2003 and let <strong>the</strong>m run our<br />
IT systems end to end. Now, all hardware, software, and<br />
services are handled by <strong>the</strong> IBM employees who work for<br />
Bharti Airtel.<br />
IBM tailored 65 platforms for us and we pay IBM<br />
a percentage of our top line and revenue. There is no<br />
linkage with how many new services, new software, or new<br />
hardware has come online in a month. It is just simply<br />
linked to <strong>the</strong> top line and we pay this amount to IBM.<br />
There is a short case project for IBM globally. Based on <strong>the</strong><br />
project, IBM is getting many new contracts in <strong>the</strong> telecom<br />
sector across <strong>the</strong> globe.<br />
For customer service and call centers, we have five to six<br />
partners who are high quality global partners. We know<br />
that if every customer calls us each month, we will have<br />
80 million calls a month. So we need very large capacity<br />
call centers. 70% of our present call centers are outsourced<br />
to our partners who are very high-quality global partners.<br />
30% of <strong>the</strong> present call centers are being outsourced now<br />
and will be completed within <strong>the</strong> next six months or so.<br />
These partners focus on <strong>the</strong> output factor of <strong>the</strong> customers.<br />
If <strong>the</strong> customer satisfaction goes up, <strong>the</strong>se partners get<br />
more fees from us. If it goes down, <strong>the</strong>se partners have to<br />
suffer.<br />
By completely outsourcing <strong>the</strong> entire distribution of<br />
<strong>the</strong> company, we have built up <strong>the</strong> strongest distribution<br />
force in India. We have thousands of distributors and<br />
more than one million retail points in India. Our target is<br />
that by 2010, <strong>the</strong> number of retail points will reach close<br />
to 2 million. There is a match box distribution strategy in<br />
India–wherever a match is sold, Bharti Airtel’s services will<br />
also be sold. This will make our distribution <strong>the</strong> deepest<br />
in <strong>the</strong> world. We see that local retailer and local outlets<br />
are <strong>the</strong> best way to promote Bharti Airtel. Hence, we do<br />
not own <strong>the</strong> distribution of <strong>the</strong> company, including large<br />
showrooms with our exclusive Airtel Relationship Centres<br />
and o<strong>the</strong>r small showrooms that are not exclusively Airtel.<br />
Last but not least, <strong>the</strong> passive infrastructure is all<br />
open for sharing with o<strong>the</strong>r operators. I think it is very<br />
important that we collaborate when <strong>the</strong> competitive<br />
intensity is at a cut-throat level in India. With more<br />
operators sharing <strong>the</strong> infrastructure, <strong>the</strong> cost of our<br />
network operation actually is coming down steadily.<br />
A clear example is Indus Towers, where Bharti Airtel,<br />
Vodafone and Idea Cellular are <strong>the</strong> joint venture partners.<br />
I think in <strong>the</strong> coming few years, <strong>the</strong> average tendency will<br />
be that one tower is shared by 2-3 operators.<br />
In conclusion, under this unique business model,<br />
Bharti Airtel has assumed <strong>the</strong> roles of supervisor, planner,<br />
About Bharti Airtel Limited<br />
Bharti Airtel Limited, a group company of Bharti Enterprises, is Asia’s leading integrated telecom services provider with<br />
operations in India and Sri Lanka and has an aggregate of over 88 million customers as at <strong>the</strong> end of December 2008. Bharti<br />
Airtel Limited has been voted as India’s most innovative company, in a survey conducted by The Wall Street Journal.<br />
FEB 2009 / Win-Win<br />
4
VOICE<br />
FROM OPERATORS<br />
Bharti Airtel continues to lead <strong>the</strong> market, and our leadership is<br />
due to our commitment to affordability for Indian customers. Offering worldclass,<br />
innovative and world’s most affordable tariffs at 1.5 cents/minute, we have<br />
achieved more than 33% of <strong>the</strong> regular GSM market share in India.<br />
governor and quality control inspector. By partnering with<br />
strong global partners, Bharti Airtel is able to successfully<br />
develop and focus on <strong>the</strong> core competence.<br />
Product innovation<br />
Production innovation is a delightful journey which<br />
has allowed Bharti Airtel to win <strong>the</strong> hearts of millions<br />
of Indian customers. Bharti Airtel comes out with new<br />
ideas and new products every month. Although some new<br />
customers don’t use <strong>the</strong>m, customers like to feel that <strong>the</strong><br />
brand image of Bharti Airtel is innovative and really brings<br />
new ideas every day.<br />
Examples include <strong>the</strong> Micro Prepaid. We started it<br />
in 2004, and now all our million plus retailers offer this<br />
service. Through e-charging, low-educated or even illiterate<br />
retailers can use e-charging instead of a paper recharge<br />
card. This is a very good innovation that customers are<br />
delighted with because <strong>the</strong>y can buy talk-time near <strong>the</strong>ir<br />
offices or at home. Retailers are happy because <strong>the</strong>y don’t<br />
have to keep a large inventory on hand. Money is all kept<br />
on <strong>the</strong> phone, which is fantastic. More than USD5 billion<br />
in transactions happen on this system every year.<br />
Ano<strong>the</strong>r example is Lifetime Prepaid which we<br />
launched about two-and-half years ago. With <strong>the</strong> Easy<br />
Lifetime, a customer can stay <strong>mobile</strong> for his entire life by<br />
paying just about USD2 per month. Easy Lifetime is an<br />
unprecedented move in <strong>the</strong> Indian telecom sector. If you<br />
ask an Indian customer today which product he/she will<br />
buy, <strong>the</strong>y will invariably say, “I will buy Lifetime Prepaid<br />
from Bharti Airtel.” Lifetime has lots of benefits for <strong>the</strong><br />
millions of customers who are using it every month.<br />
On <strong>the</strong> content side, Indian people are really passionate<br />
about music, Bollywood, games and a lot of o<strong>the</strong>r content.<br />
We have been very innovative in this field and we believe<br />
that if we give more such exciting content to our customers<br />
that <strong>the</strong>y use, it will keep <strong>the</strong>m loyal to <strong>the</strong> brand.<br />
With all <strong>the</strong>se products launched, including Hello<br />
Tunes, Music on Demand, Easy Music, and Song Catcher<br />
where you can get somebody else’s ring back tones, Bharti<br />
Airtel has become <strong>the</strong> largest music company in India.<br />
We are not a music company, but by being a telecom<br />
company, we are <strong>the</strong> largest music company, because <strong>the</strong><br />
volume of downloaded music is <strong>the</strong> highest in India and<br />
more than any o<strong>the</strong>r music company.<br />
Innovation for <strong>the</strong> future<br />
We see <strong>the</strong> future very differently. We feel that in <strong>the</strong><br />
future, technology will give us speed. The service providers<br />
have to aggregate. Customers do not want to go to many<br />
brands, customers want to have one brand which <strong>the</strong>y<br />
like, and hence service providers have to aggregate and<br />
make it simple. Customers clearly want affordability and<br />
<strong>the</strong> differences between customers will vanish. If you<br />
move ahead, some customers want to use more music or<br />
data. The rural market is opening up, while <strong>the</strong> industry is<br />
seeing lots of convergence, including media, telecom, and<br />
<strong>the</strong> Internet.<br />
Exploiting rural and youth opportunities<br />
On <strong>the</strong> rural side, we are doing a lot of work at 400<br />
thousand villages in India. We are helping <strong>the</strong> farmers in<br />
India to get commodity prices, agricultural information<br />
and agricultural help lines for buying fertilizer and<br />
pesticide. We also help <strong>the</strong>m to learn English. We are<br />
helping <strong>the</strong> fertilizer co-operative reach <strong>the</strong> farmers. About<br />
55 million farmers are going digital, including doctors<br />
5<br />
Win-Win / FEB 2009
We also focus on new business opportunities to gain higher share.<br />
Now we are focusing on <strong>the</strong> telecom wallet share. We are an integrated<br />
company, so we will pick up <strong>the</strong> entire wallet of our customers, whe<strong>the</strong>r it is for<br />
<strong>the</strong> Internet, media, satellite TV or IPTV.<br />
on call, health care givers, animal husbandry workers,<br />
veterinarians, etc. We really are impacting rural India in a<br />
very big way.<br />
Moving ahead, we also focus a lot on youth in India.<br />
They like chatting, dating, gaming, voice SMS. As an<br />
example, voice MSM simplifies <strong>the</strong> communication. We<br />
want to make our products and services a simple service<br />
like voice MSM that is close to <strong>the</strong> heart of our customers.<br />
Mobile commerce is also a big potential area. In India,<br />
we have domestic money transfers amounting to about<br />
USD40 billion and international remittances around<br />
USD42 billion, so we have more than USD80 billion in<br />
money transfers that we can do in India. Recently, Bill<br />
Gates was in India and helped us to get <strong>the</strong> automation<br />
done for money transfers. I think <strong>the</strong> bank is helping<br />
us, and GSMA is helping us as well. Mobile commerce<br />
actually will be a big part.<br />
Half <strong>the</strong> economy in India is a cash economy and we<br />
would like to help <strong>the</strong> consumers to transfer <strong>the</strong>ir money<br />
from one place to ano<strong>the</strong>r, maybe from cities to villages,<br />
in a very secure fashion, so that people will have no worry<br />
of losing money at any time. We are helping customers go<br />
<strong>mobile</strong> with <strong>the</strong>ir transactions. For paying bills, money<br />
transfers, recharging and everything else, <strong>the</strong> <strong>mobile</strong><br />
should be <strong>the</strong> only instrument needed instead of so many<br />
cards.<br />
Innovation is core<br />
Innovation is <strong>the</strong> core of success of Bharti Airtel. We<br />
will leverage <strong>the</strong> existing core capabilities to exploit rural<br />
and youth opportunities. We also focus on new business<br />
opportunities to gain higher share. Now we are focusing on<br />
<strong>the</strong> telecom wallet share. We are an integrated company,<br />
so we will pick up <strong>the</strong> entire wallet of our customers,<br />
whe<strong>the</strong>r it is for <strong>the</strong> Internet, media, satellite TV or IPTV.<br />
We are continuously redefining our business model so<br />
that we can become more and more viable, and our cost<br />
structure should come down more and more in <strong>the</strong> years<br />
to come. Of course, we are doing mass customization of<br />
<strong>the</strong> backend systems. The backend system is a big strength<br />
of our company.<br />
Innovation has to be based on “<strong>the</strong> smell of customers”.<br />
If you do not smell <strong>the</strong> customers, it is very difficult to<br />
innovate, because <strong>the</strong> innovation has to start from outside,<br />
and <strong>the</strong>n into <strong>the</strong> company. You should know what <strong>the</strong><br />
customers’ aspirations are for <strong>the</strong> next few years. We need<br />
to listen to customers and look beyond Airtel customers<br />
and even listen to non-Airtel customers too. We also<br />
have institutionalized <strong>the</strong> innovation framework within<br />
<strong>the</strong> company as <strong>the</strong> culture. Innovation can not be a<br />
department’s job, a function’s job, or a CEO’s job. It has<br />
to be carried out through <strong>the</strong> company. We have set up<br />
customer labs and we have rewards and recognitions for<br />
<strong>the</strong> people who really help us strongly in innovation.<br />
Our vision is simple and clear. By 2010 Bharti Airtel<br />
will be <strong>the</strong> most admired brand in India across all product<br />
and service lines, loved by <strong>the</strong> most customers, targeted<br />
by top talents, and benchmarked by more businesses. Our<br />
passion to innovate actually continues. We are confident<br />
that this vision and its excellent execution will be able to<br />
achieve sustainable performance for many years to come.<br />
Bharti Airtel is on a journey of excellence through<br />
innovation and through <strong>the</strong> employees’ passion. This<br />
journey definitely has no destination. O<strong>the</strong>r than that<br />
Bharti Airtel will continue to be a catalyst to India’s<br />
economy and an engine for <strong>the</strong> economic growth.<br />
Editor: Gao Xianrui sally@huawei.com<br />
FEB 2009 / Win-Win<br />
6
VOICE<br />
FROM OPERATORS<br />
We are confident<br />
in providing a pipe.<br />
It is a pipe, but it<br />
is a GREAT pipe.<br />
High speed, flat-rate<br />
<strong>mobile</strong> <strong>broadband</strong><br />
data is in itself a<br />
differentiated service.<br />
—Dr. Sachio Semmoto,<br />
<strong>EMOBILE</strong> Chairman and CEO<br />
Left: Dr. Sachio Semmoto, <strong>EMOBILE</strong> Chairman and CEO<br />
Right: Eric Gan, <strong>EMOBILE</strong> President and COO<br />
(Photo courtesy of <strong>EMOBILE</strong>)<br />
7<br />
Win-Win / FEB 2009
<strong>EMOBILE</strong><br />
<strong>the</strong> <strong>mobile</strong> <strong>broadband</strong><br />
<strong>revolutionist</strong><br />
<strong>EMOBILE</strong>, Japan’s newest and fastest growing <strong>mobile</strong> operator entered <strong>the</strong> market in March 2007.<br />
Skeptics thought <strong>the</strong>y could not compete with <strong>the</strong> well-established and powerful big three operators<br />
–NTT DoCoMo, KDDI and SOFTBANK MOBILE. Yet, in less than two years, it has already carved out<br />
a strong niche in <strong>mobile</strong> <strong>broadband</strong>, and at <strong>the</strong> same, dramatically changed <strong>the</strong> existing <strong>mobile</strong><br />
landscape. In January 2009, <strong>EMOBILE</strong> attracted <strong>the</strong> second largest number of newly added <strong>mobile</strong><br />
subscribers, bringing its total to 1.19 million customers. <strong>EMOBILE</strong> founder, Chairman & CEO, Dr. Sachio<br />
Semmoto and President & COO, Eric Gan unveiled <strong>the</strong>ir unique business model and future ambitions in<br />
an exclusive interview with Win-Win.<br />
By Julia Yao<br />
Dr. Semmoto can be proud of his record as an<br />
entrepreneur. He is one of <strong>the</strong> co-founders of<br />
DDI (today part of KDDI), and founded <strong>the</strong><br />
ADSL provider eAccess in Japan. In 2005, when<br />
he founded <strong>EMOBILE</strong>–<strong>the</strong> first new <strong>mobile</strong> operator<br />
in 13 years, Dr. Semmoto imbued <strong>the</strong> company with<br />
his entrepreneurial spirit and said, “<strong>EMOBILE</strong> is totally<br />
different from <strong>the</strong> incumbents. We are entrepreneurs. We<br />
are a start-up. We are a venture. We are a totally different<br />
species. You have to change your mindset. O<strong>the</strong>rwise, you<br />
can not understand our company.”<br />
A born <strong>revolutionist</strong><br />
<strong>EMOBILE</strong> was a different species at birth. Unlike<br />
traditional operators in <strong>the</strong> market, <strong>EMOBILE</strong> started as<br />
a pure <strong>mobile</strong> data operator. With a strong belief that <strong>the</strong><br />
whole <strong>broadband</strong> market in Japan would be <strong>the</strong> <strong>mobile</strong><br />
<strong>broadband</strong> market in <strong>the</strong> future, <strong>EMOBILE</strong> focused solely<br />
on <strong>the</strong> 100 million user strong Japanese <strong>mobile</strong> <strong>broadband</strong><br />
market.<br />
Eric Gan explained, “We started off with data<br />
customers and slowly moved into <strong>the</strong> voice market. That’s<br />
very different from traditional carriers for whom voice is<br />
<strong>the</strong> main business, and if <strong>the</strong>y have some time, <strong>the</strong>y do<br />
some data. The <strong>mobile</strong> data market is a very new area. We<br />
were very fortunate to have <strong>the</strong> new spectrum and to have<br />
built a new network with HSPA from scratch in record<br />
time.”<br />
<strong>EMOBILE</strong> began offering voice services starting from<br />
March 2008, but it is not a pure voice strategy.<br />
He continued, “We are focusing our voice service on<br />
<strong>the</strong> data product, like SmartPhone and PDA types, which<br />
FEB 2009 / Win-Win<br />
8
VOICE<br />
FROM OPERATORS<br />
We started off with data customers and slowly moved into<br />
<strong>the</strong> voice market. It’s not a pure voice technology. That’s very different from<br />
traditional carriers for whom voice is <strong>the</strong> main business.<br />
people are willing to carry as a second handset. Voice will<br />
be included in <strong>the</strong> data service. Like our new data modem,<br />
it’s a data card, but we put a voice function inside <strong>the</strong><br />
data card. So, when people use it for data, if <strong>the</strong>y lose <strong>the</strong><br />
battery in <strong>the</strong> main handset, <strong>the</strong>y can use <strong>the</strong> data card as<br />
<strong>the</strong> voice handset.”<br />
When speaking of <strong>mobile</strong> <strong>broadband</strong>, content is often<br />
said to be king, and traditional wisdom warns operators<br />
not to become a dumb data pipe. Yet, <strong>EMOBILE</strong><br />
deliberately adopts <strong>the</strong> open platform strategy for both<br />
devices and application. Customers can choose from<br />
a great variety of terminals that can serve all kinds of<br />
PC functions, at <strong>the</strong> same time, <strong>the</strong>y are free to enjoy<br />
streaming content, financials, interactive game and security<br />
services etc.<br />
Regarding <strong>the</strong> open platform strategy, Dr. Semmoto<br />
said, “We are confident in providing a pipe. It is a pipe,<br />
but it is a GREAT pipe. High speed, flat-rate <strong>mobile</strong><br />
<strong>broadband</strong> data is in itself a differentiated service.”<br />
Market leader in <strong>mobile</strong><br />
speed and price<br />
The “great” pipe delivers <strong>the</strong> fastest speeds coupled with<br />
<strong>the</strong> lowest flat-rate plans in Japan.<br />
According to Eric Gan, “<strong>EMOBILE</strong>’s customers are<br />
very speed sensitive as <strong>the</strong>y basically use <strong>the</strong> <strong>mobile</strong> for<br />
a PC connection. So <strong>EMOBILE</strong> positions speed as its<br />
biggest differentiator. We are ahead of our competition<br />
in 7.2Mbps HSDPA product. On Nov. 20, 2008, we<br />
launched our HSUPA product with speeds up to 1.4Mbps,<br />
which was <strong>the</strong> first time in Japan. We just have to be <strong>the</strong><br />
first one in Japan to do all <strong>the</strong>se new services, compared to<br />
<strong>the</strong> existing operators.”<br />
<strong>EMOBILE</strong> offers not only <strong>the</strong> fastest speeds, but also<br />
<strong>the</strong> lowest price. “We are also <strong>the</strong> first in Japan to launch<br />
flat-rate in 2007.” The flat-rate plan Eric Gan mentioned<br />
is as cheap as USD10 a month, considerably less than its<br />
rivals’ wireless-<strong>broadband</strong> offerings which normally range<br />
from USD40 to USD80 for equivalent speeds.<br />
In addition to <strong>the</strong> lowest flat-rate, <strong>EMOBILE</strong> launched<br />
a revolutionary new data card bundling service with <strong>the</strong><br />
UMPCs (Ultra Mobile PC) in July 2008. With a twoyear<br />
<strong>EMOBILE</strong> contract, <strong>the</strong> PC is priced at USD1 to<br />
USD200, compared with USD2000 to USD3000 for some<br />
big name brand PCs and customers can pay in installments<br />
for 24 months. “This changes drastically <strong>the</strong> business model<br />
for selling PCs for first time in Japan. The market actually<br />
exploded.” commented Dr. Semmoto, “This is extremely<br />
good considering <strong>the</strong> financial crisis. Consumers spend less,<br />
our network has <strong>the</strong> cheapest flat-rate, and you can get PC<br />
for USD1, or USD100. This is perfect.”<br />
To ensure <strong>EMOBILE</strong>’s ability to always lead in <strong>mobile</strong><br />
speed and price in <strong>the</strong> future, Dr. Semmoto maintains<br />
that it is important to go for <strong>the</strong> mainstream technologies.<br />
“I doubt <strong>the</strong> future of CDMA2000, PHS and WiMAX,<br />
because major worldwide operators are moving to GSM/<br />
WCDMA/LTE as <strong>the</strong> mainstream technology. We are now<br />
using HSDPA, and we just started with HSUPA. MIMO<br />
EHSPA (HSPA+) might join <strong>the</strong> stream, and LTE is<br />
coming, but <strong>the</strong> issue is when and how.”<br />
Competitive price structure<br />
To provide <strong>the</strong> lowest price without sacrificing <strong>the</strong><br />
9<br />
Win-Win / FEB 2009
Now aided by very small, briefcase-sized radio units, you can even<br />
hang <strong>the</strong> equipment on <strong>the</strong> wall. So <strong>the</strong> price to build is just one tenth of <strong>the</strong><br />
traditional base station, and we can build <strong>the</strong>m very quickly.<br />
fastest speed, Dr. Semmoto explained, “We are very costconscious<br />
compared with <strong>the</strong> incumbent companies. We<br />
have a lot of wisdom in regard to cutting costs. That’s why<br />
we have much lower costs and prices.”<br />
One of <strong>the</strong> pearls of cost-saving wisdom is to keep <strong>the</strong><br />
headcount as small as possible. “You don’t want to be a big<br />
company. Smaller is better. It’s <strong>the</strong> leader’s management<br />
philosophy. If you run <strong>the</strong> company like <strong>the</strong> incumbents,<br />
it’s a group of bureaucrats like government or big telecom<br />
companies.”<br />
<strong>EMOBILE</strong> has a surprisingly small headcount with<br />
only 560 employees, and new graduates comprise more<br />
than half of <strong>the</strong> total number.<br />
Eric Gan also highlighted <strong>the</strong> cost benefits by using<br />
small-sized Node B, “I think capital spending is <strong>the</strong><br />
function of how to build <strong>the</strong> network. The radio station is<br />
<strong>the</strong> major cost for a <strong>mobile</strong> carrier. When deploying base<br />
station, operators normally put a huge cabinet in a big<br />
room with air conditioning. Also, it incurs more running<br />
costs, uses more electric power, consumes more rent and<br />
requires a higher backbone as well.”<br />
“Now with <strong>the</strong> latest technology, aided by very<br />
small, briefcase-sized radio units, you can even hang <strong>the</strong><br />
equipment on <strong>the</strong> wall. So <strong>the</strong> price to build is just one<br />
tenth of <strong>the</strong> traditional base station, and we can build<br />
<strong>the</strong>m very quickly. In Japan, we have earthquakes. A<br />
lighter base station to put on <strong>the</strong> rooftop is always easier to<br />
negotiate than <strong>the</strong> traditional one. Running costs are much<br />
cheaper, because we pay less rent and use less electricity.”<br />
Eric Gan added.<br />
The base station mentioned above is <strong>the</strong> distributed<br />
Node B designed and produced for <strong>EMOBILE</strong> by<br />
<strong>Huawei</strong>.<br />
A robust future<br />
Dr. Semmoto is quite positive about future market<br />
potential and said, “Although more than 80% of <strong>the</strong><br />
Japanese population owns a <strong>mobile</strong> phone, <strong>the</strong>re is<br />
evidence of an increasing demand for second handsets. We<br />
estimate combined demand in Japan is about 30 million<br />
additional subscribers. <strong>EMOBILE</strong> is focusing on this<br />
growth opportunity.”<br />
While <strong>the</strong> current financial crisis brings a lot of fear to<br />
<strong>the</strong> industry, <strong>EMOBILE</strong> actually sees great opportunity.<br />
“We are very fortunate that we completed full funding<br />
of USD1.4 billion in 2006 for <strong>the</strong> following 5 years until<br />
2011, before <strong>the</strong> current worldwide financial crisis.” More<br />
importantly is that, because of <strong>the</strong> financial crisis, people<br />
tend to be more careful with <strong>the</strong>ir spending, which brings<br />
great opportunity for <strong>EMOBILE</strong>. Eric Gan added, “People<br />
may not want to pay for an expensive fixed line. Instead,<br />
<strong>the</strong>y may opt to use a <strong>mobile</strong> phone with a modem inside<br />
just to cut cost. This fits perfectly with our strategy to<br />
target at <strong>the</strong> price sensitive users.”<br />
Operators can not succeed all by <strong>the</strong>mselves. To form<br />
strong partnerships with capable and devoted partners<br />
is imperative for sustainable growth. Dr. Semmoto has<br />
appreciated <strong>the</strong> collaboration and cooperation with<br />
<strong>Huawei</strong>. “<strong>Huawei</strong> from day one has been an excellent<br />
partner to us. In <strong>the</strong> past, <strong>Huawei</strong> was totally a stranger<br />
in <strong>the</strong> Japanese market. You have grown enormously in<br />
<strong>the</strong> last 20 years. You have now become one of <strong>the</strong> leaders<br />
in <strong>the</strong> telecom arena. I think that jointly <strong>EMOBILE</strong> and<br />
<strong>Huawei</strong> can be prosperous if we stay very entrepreneurial,<br />
very challenging and take risks.”<br />
Editor: Gao Xianrui sally@huawei.com<br />
FEB 2009 / Win-Win<br />
10
11<br />
Win-Win / FEB 2009
Perspective<br />
<strong>Huawei</strong> Views on<br />
Future Industry Trends<br />
Over <strong>the</strong> last ten years, <strong>the</strong> telecom industry has<br />
grown and begun changing from <strong>the</strong> familiar<br />
patterns of <strong>the</strong> past. These changes have been<br />
driven by customer needs, technology changes<br />
and <strong>the</strong> emergence of new business models.<br />
As <strong>the</strong> industry enters 2009, <strong>the</strong> global financial<br />
turmoil adds a new dimension to an already complicated<br />
picture and deepens <strong>the</strong> existing challenges. The ability<br />
of <strong>the</strong> operators and <strong>the</strong>ir partners to rapidly seize new<br />
opportunities, anticipate customer demands and be able<br />
to quickly modify strategies will determine <strong>the</strong> ongoing<br />
success of <strong>the</strong> telecom industry.<br />
<strong>Huawei</strong> is in a unique position to have insights into <strong>the</strong><br />
divergent global telecom markets and this paper shares our<br />
vision of where <strong>the</strong> industry is going and our views of <strong>the</strong><br />
key trends that will impact success.<br />
Vision – networked world<br />
The concept of a Networked World has been discussed<br />
for some time, but we are now seeing <strong>the</strong> results in<br />
everyday life. Driven by <strong>the</strong> rapid deployment of new<br />
technologies and emerging user requirements, <strong>the</strong> boundary<br />
between software, IT and communications has become<br />
blurred. Added to <strong>the</strong> traditional telecom operators are<br />
service and content providers from <strong>the</strong> Internet, media<br />
and entertainment industries and <strong>the</strong>se players will have<br />
a major impact on <strong>the</strong> industry. <strong>Huawei</strong> believes that <strong>the</strong><br />
future Networked World will be profoundly influenced by:<br />
Mobile penetration saturation<br />
At <strong>the</strong> end of 2008, <strong>the</strong> number of <strong>mobile</strong> subscribers<br />
topped 3.5 billion and projections show that it will reach<br />
5 billion in just a few years, equaling <strong>the</strong> total number of<br />
potential users. Over 1 billion of those new users will come<br />
from emerging markets and this will result in a world which<br />
is fully interconnected and able to bridge <strong>the</strong> digital divide.<br />
Ubiquitous <strong>broadband</strong><br />
The next few years will see <strong>the</strong> rapid deployment of<br />
high-speed <strong>mobile</strong> <strong>broadband</strong> and a major shift to higher<br />
speeds for fixed <strong>broadband</strong>. By 2013, 300 million new<br />
fixed <strong>broadband</strong> users will be added, doubling today’s total<br />
and, through <strong>the</strong> deployment of FTTx, <strong>the</strong>y will have<br />
access to massive amounts of data. On <strong>the</strong> <strong>mobile</strong> side,<br />
1.2 billion new users will be added to <strong>the</strong> 200 million<br />
current users as <strong>the</strong> result of <strong>the</strong> HSPA technologies.<br />
The availability of this <strong>broadband</strong> will allow “3 Screen”<br />
(TV, PC and <strong>mobile</strong> handset) convergence with exciting<br />
opportunities for always-on networking.<br />
Cloud computing<br />
As high-speed data connections become common for<br />
both fixed and <strong>mobile</strong> users, <strong>the</strong> opportunity exists to<br />
provide previously unavailable services from “The Cloud”.<br />
The opportunities from what is becoming known as Cloud<br />
Computing will be enormous. The ability to offer end-users<br />
access to sophisticated information services without <strong>the</strong> need<br />
to buy expensive software and hardware, similar to <strong>the</strong> way<br />
we use electricity today without <strong>the</strong> need to buy our own<br />
generators and diesel oil, will abolish <strong>the</strong> boundaries between<br />
have and have-not information societies. In <strong>the</strong> next few<br />
years, cloud computing will go beyond <strong>the</strong> discussion of<br />
concepts and technologies and become widely available.<br />
A digital flood<br />
In <strong>the</strong> 5,000 years of recorded history, mankind<br />
generated <strong>the</strong> equivalent of 5 exabytes (10 18 bytes)<br />
of written information, but during 2006, over 280<br />
exabytes of digital content were generated. Driven by<br />
high-definition, three-dimensional and user-generated<br />
content, <strong>the</strong> annual volume By of Wang digital Kening information & Ling will Yun<br />
FEB 2009 / Win-Win<br />
12
Perspective<br />
soon reach 1,000 exabytes, a veritable Digital Flood.<br />
The ramifications to <strong>the</strong> information infrastructure and<br />
backbone networks will be immense, with annual traffic<br />
growing by 10 or even 100 times.<br />
Ten future industry trends<br />
As we move to this Networked World, <strong>the</strong> factors<br />
discussed above will have real, practical impacts on <strong>the</strong><br />
telecom industry. Emerging markets will become a major<br />
factor in industry expansion, but decreasing ARPU will<br />
act as stimulation for creative solutions. Uncovering <strong>the</strong>se<br />
opportunities, providing products, services and support<br />
to operators as <strong>the</strong>y deal with <strong>the</strong> emerging trends and<br />
successfully managing <strong>the</strong> impacts will be <strong>the</strong> key to future<br />
success. <strong>Huawei</strong> views <strong>the</strong> top 10 trends as being:<br />
All-IP transformation<br />
Operators are spending billions of dollars each year for<br />
network expansion, but are still not able to keep ahead<br />
of demand. We believe that <strong>the</strong> only way to build costeffective,<br />
flexible and expandable networks is to move<br />
quickly to All-IP for <strong>broadband</strong>. This applies to both fixedline<br />
networks, where high-capacity fiber-copper integration<br />
will become common, and to wireless networks, where<br />
single IP backbones will handle voice, data, media and<br />
signaling. In both cases, moving to All-IP control layers is<br />
also required to flatten <strong>the</strong> network and achieve CAPEX<br />
and OPEX goals.<br />
Carrier-grade IP<br />
As networks move to All-IP, it is becoming apparent that<br />
common Internet-oriented IP technology does not meet <strong>the</strong><br />
needs of real-time delivery demanded by voice networks. In<br />
order to meet <strong>the</strong>se requirements, a new class of solutions<br />
will be required. These solutions will ensure end-to-end<br />
high-quality voice-grade communications with carrier-grade<br />
reliability and maintainability. Without <strong>the</strong>se advances, it will<br />
not be possible for operators to create <strong>the</strong> All-IP networks<br />
needed to meet <strong>the</strong> challenges of a Networked World.<br />
ARPU deterioration<br />
With most of <strong>the</strong> future growth coming from emerging<br />
markets, <strong>the</strong> low ARPU requirements of <strong>the</strong>se markets will<br />
force operators to adopt creative solutions to capture <strong>the</strong><br />
market while still maintaining profitability. As an example,<br />
72% of <strong>the</strong> Indian population is in rural areas, where <strong>the</strong><br />
current telecom penetration is only 13%. This is a wonderful<br />
opportunity, but <strong>the</strong> ARPU is USD3-5 per month! Clearly,<br />
low cost networks and low cost terminals will be key factors<br />
for operators to develop services and make profits.<br />
Mobile <strong>broadband</strong> delivery<br />
Exploding use of <strong>mobile</strong> devices for high-speed data<br />
connections is one of <strong>the</strong> most exciting frontiers in telecom.<br />
Functionality which was previously only available from<br />
wired <strong>broadband</strong> connections can now be used from <strong>mobile</strong><br />
devices, opening up new applications that are based on<br />
location, status or even <strong>the</strong> proximity of friends. Delivering<br />
this high-speed data experience to <strong>mobile</strong> users has a<br />
number of challenges which must be overcome. When<br />
<strong>the</strong> network bandwidth reaches 100M, <strong>the</strong> density of base<br />
stations will increase by 50 times. Our consultations with<br />
operators has underscored that <strong>the</strong> increased complexity of<br />
site selection, backhaul transmission, signaling schemes and<br />
operation & maintenance is becoming a serious burden.<br />
Optimizing <strong>the</strong> coverage of a Metrozone, base station<br />
minimization, packet transmission and level transmission, as<br />
well as organization of networks, etc. have <strong>the</strong> potential to<br />
restrict <strong>the</strong> development of <strong>mobile</strong> <strong>broadband</strong>. Since 2006,<br />
<strong>Huawei</strong> had been focused on base station minimization,<br />
support for packet-based backhaul transmission and plugand-play<br />
of self-organizing networks. These capabilities<br />
have been successful in solving <strong>the</strong> coverage problems of<br />
Metrozones.<br />
SingleRAN advances<br />
Continued rapid growth in users, along with <strong>the</strong> growth in<br />
<strong>mobile</strong> <strong>broadband</strong> requirements and advances in <strong>broadband</strong><br />
technology will result in a very complex radio network<br />
environment. While operators will support market demand by<br />
quickly deploying new radio technologies, such as LTE, <strong>the</strong>y<br />
must continue to support <strong>the</strong> existing GSM, EDGE, UMTS<br />
and HSPA networks for many years. Ra<strong>the</strong>r than building<br />
a complex “vertical” network of separate radios, <strong>the</strong> need is<br />
for a “horizontal” integrated radio network that supports<br />
voice, narrowband data and <strong>mobile</strong> <strong>broadband</strong>. <strong>Huawei</strong> has<br />
championed <strong>the</strong> “SingleRAN” concept to meet this need.<br />
With around 10,000 of <strong>the</strong>se 4th-generation base stations<br />
deployed by O2 in Germany, <strong>the</strong> TCO savings of up to 30%<br />
and <strong>the</strong> smooth evolution capabilities are quickly proving to<br />
be a winning combination.<br />
Tera-scale networks<br />
Surging growth in data traffic continues to exceed <strong>the</strong><br />
capacity capabilities of traditional telecom networks. Network<br />
modeling for developed countries in Western Europe suggests<br />
that data growth and network transformation to flat, All-<br />
IP architecture will soon require end-to-end Tera-bit bearer<br />
networks. The appetite for capacity will be even greater for<br />
countries like China and US that have large populations and<br />
13<br />
Win-Win / FEB 2009
equire broad geographic coverage. We believe that building<br />
a Tera-Scale bearer network will become a competitive<br />
requirement for leading global operators.<br />
With extremely high extendibility, <strong>Huawei</strong> IPTime<br />
Solution has <strong>the</strong> capability of 80T as Router Cluster System,<br />
which will reach even higher with <strong>the</strong> development of 100G<br />
interface technologies. Its adoption of unified control plane<br />
enables seamless interactions between <strong>the</strong> IP layer and <strong>the</strong><br />
optical layer. Such architecture can offer higher transport<br />
efficiency, increasing return on investment and enhancing<br />
operators’ core competitiveness in <strong>the</strong> era of <strong>broadband</strong>.<br />
New voice business models<br />
Current <strong>mobile</strong> network operators receive 70% of <strong>the</strong>ir<br />
revenue from voice services, a market category that is<br />
being pressured by a continual decrease in ARPU. There is<br />
a natural shift in focus towards <strong>the</strong> more attractive revenue<br />
from data services, but this overlooks a critical element of<br />
user preference. Voice represents <strong>the</strong> most natural, efficient<br />
and convenient way of acquiring information that suits all<br />
scenarios and surroundings. How to capitalize on this and<br />
how to leverage voice as a new channel for communication<br />
and information acquisition, such as with <strong>the</strong> web, has<br />
turned into one of <strong>the</strong> most-debated and most difficult<br />
technical propositions. It is our belief that <strong>the</strong>re is huge<br />
market potential to tap in voice.<br />
New business models are <strong>the</strong> answers to this need. A<br />
good illustration would be <strong>the</strong> “Best Tone” service offered<br />
by China Telecom. An industry-leading innovation and<br />
a fast growing service, Best Tone has become a significant<br />
driver for <strong>the</strong> operator’s voice revenue growth.<br />
Value creation in <strong>broadband</strong><br />
While Moore’s Law will help decrease <strong>the</strong> cost, size and<br />
power of <strong>the</strong> equipment required to handle <strong>the</strong> massive<br />
increases in <strong>broadband</strong> data traffic, it can not keep up<br />
with <strong>the</strong> projected growth. The growth of <strong>the</strong> required<br />
equipment will result in significant increases in both capital<br />
and operational expenses, which can not be recovered<br />
from <strong>the</strong> revenue of passing basic data traffic. To tackle this<br />
challenge, operators will need intelligent traffic management<br />
to enhance bandwidth utilization, coupled with traffic-based<br />
user behavior analysis to generate additional revenue streams<br />
through targeted advertising or o<strong>the</strong>r new models.<br />
Content and media services<br />
To d a y t h e n e t w o r k i s t r a n s i t i o n i n g f r o m a<br />
communications vehicle into an infrastructure that sustains<br />
all elements of society. This will lead to a new trillion-<br />
USD market for businesses who provide <strong>the</strong>ir services<br />
over <strong>the</strong> Internet. As <strong>the</strong> new potential is unfolding,<br />
leading operators are all looking to transforming to add<br />
content and media services, on top of <strong>the</strong>ir traditional<br />
pipe offerings. The content and media arenas require new<br />
capabilities, skills and levels of user interaction that will<br />
challenge traditional operators. The service experience,<br />
development methodology and business model are<br />
dramatically different and community-based interactions<br />
are emerging as <strong>the</strong> fundamental trait of future services.<br />
User-driven and user generated content will be <strong>the</strong><br />
prevailing <strong>the</strong>me and a large number of personalized<br />
offerings will enter <strong>the</strong> market based on <strong>the</strong> long tail<br />
<strong>the</strong>ory. These offerings will be nurtured by <strong>the</strong> changing<br />
character of <strong>the</strong> network, where sharp declines in <strong>the</strong> cost<br />
of services will make it possible for “niche offerings” to<br />
win. Take publishing for example: traditionally <strong>the</strong> cost<br />
of a book could be recovered only if multiple thousands<br />
of copies were sold. With new network capabilities,<br />
<strong>the</strong> digital world increases competition, resulting in<br />
an ecosystem characterized by radical cost reductions,<br />
sometimes to zero, making on-line books profitable even<br />
with a small volume.<br />
Virtual computing<br />
The ability to deliver high-speed data connections<br />
anywhere allows <strong>the</strong> world of computing to shift from<br />
“buying products” (computers, storage and software) to<br />
“buying services” (IaaS, PaaS, and SaaS). This obviously is<br />
disruptive to conventional software and hardware vendors,<br />
but it also is disruptive to telecom operators because it<br />
provides an opportunity to re-think <strong>the</strong> boundaries of<br />
<strong>the</strong>ir networks. The network “cloud” can now include not<br />
only physical data centers, but also <strong>the</strong> virtualization of<br />
service capabilities that can be delivered along with dial<br />
tone to improve users’ lives. If we compare network traffic<br />
to rivers in <strong>the</strong> digital world, <strong>the</strong>n data centers will be <strong>the</strong><br />
future “reservoirs”. These new-generation data centers will<br />
require revolutionary shifts technologically, providing <strong>the</strong><br />
capacity for massive data processing at a low cost.<br />
Even in areas where economies are experiencing a slump,<br />
<strong>the</strong> telecom industry is still able to maintain and even<br />
accelerate its growth. Successful societies are going to require<br />
greater connectivity, placing <strong>the</strong> social responsibility of<br />
bridging <strong>the</strong> digital gap on <strong>the</strong> telecom industry. During <strong>the</strong><br />
last ten years, an information world has taken shape. Over<br />
<strong>the</strong> next few years, <strong>the</strong> universal spread of high-speed, lowcost,<br />
anywhere connectivity will be <strong>the</strong> driving force for <strong>the</strong><br />
telecom industry’s development.<br />
In this process, innovation and transformation is an<br />
everlasting topic. Working toge<strong>the</strong>r, we will create a truly<br />
connected world where people can have equal access to<br />
communications.<br />
Editor: Joy Zhou zhouhj@huawei.com<br />
FEB 2009 / Win-Win<br />
14
Tao of Business<br />
Internet puzzle<br />
How can operators solve it?<br />
Operators are in quite a predicament with value-added Internet services. By and large, <strong>the</strong>y are too big and<br />
slow on <strong>the</strong> uptake, not able to move as quickly as <strong>the</strong> small and lean development companies. Cooperation<br />
is <strong>the</strong>ir only option if <strong>the</strong>y want to thrive in this ever changing and progressive environment.<br />
By Kevin Lee from In-Stat<br />
After <strong>the</strong> rousing success of<br />
<strong>the</strong> iTunes model of “Device<br />
+ Connected Service”, Apple<br />
keeps playing to a full house<br />
around <strong>the</strong> world. One month<br />
after <strong>the</strong> service was launched,<br />
users of <strong>the</strong> Apple Store, <strong>the</strong><br />
a p p l i c a t i o n a n d s o f t w a re<br />
platform of iPhone, downloaded<br />
more than 60 million programs,<br />
generating a total of about<br />
USD30 million in sales (1 million dollars a day average).<br />
By <strong>the</strong> third quarter 2008, Apple sold 6.9 million<br />
iPhones, with sales of USD4.6 billion and became <strong>the</strong><br />
third largest handset maker in <strong>the</strong> world after Nokia and<br />
Samsung. A remarkable achievement considering <strong>the</strong>y did<br />
it by offering only two handset models.<br />
Also, 77% of iPhone users say that <strong>the</strong>y use more<br />
<strong>mobile</strong> Internet services than before due to having an<br />
iPhone; and among <strong>the</strong> top 10 services frequently used,<br />
six are <strong>mobile</strong> Internet applications. It is safe to say that<br />
iPhone is <strong>the</strong> frontrunner in <strong>the</strong> <strong>mobile</strong> Internet race with<br />
operators trailing behind.<br />
Evolution of Internet consumption<br />
When talking about <strong>mobile</strong> Internet services, it is<br />
important to understand <strong>the</strong> eco-system and <strong>the</strong> evolution<br />
of consumption patterns.<br />
Fragmentation of time: Most people have limited<br />
time and increasingly more content is trying to attract<br />
attention. The number of media types has grown from<br />
four in <strong>the</strong> 1980s to eighteen now. That is a lot of different<br />
media trying to capture <strong>the</strong> web surfer.<br />
Voluntary evolution: If you carefully study <strong>the</strong><br />
differences between telecom networks and Internet<br />
networks, you will find that <strong>the</strong> two types of networks<br />
are like “voluntary evolution” vs. “intelligent design”.<br />
The nature of <strong>the</strong> Internet resembles Darwin’s Theory of<br />
Evolution, which emphasizes <strong>the</strong> “survival of <strong>the</strong> fittest”,<br />
while <strong>the</strong> telecom environment is suitable for intelligent<br />
design.<br />
The Internet generally uses some basic tools like IP,<br />
HTML, XML, etc. for diversified terminal applications.<br />
Only a few applications will evolve on a large scale and <strong>the</strong><br />
speed of extinction is just as rapid as expansion. Voluntary<br />
evolution can be controlled by no one. It is characterized<br />
by progressive evolution, local evolution, a prosperity<br />
period and an outbreak period. O<strong>the</strong>r characteristics<br />
include: genetic drift, such as VoIP coming from IM;<br />
evolution under environmental pressures, for example,<br />
rich Internet content leads to <strong>the</strong> prevalence of search and<br />
community networks.<br />
Google clearly sees <strong>the</strong> life cycle of “born and die” on<br />
<strong>the</strong> Internet and encourages small engineering teams to<br />
develop new applications and test <strong>the</strong>m in <strong>the</strong> Google<br />
Labs. An application will graduate if it has sufficient users,<br />
or it will be left to die; survival of <strong>the</strong> fittest in action.<br />
Internet survival: The Internet has indisputably<br />
become <strong>the</strong> first media. This is particularly true along with<br />
<strong>the</strong> emergence of video sites, and users can find a lot of<br />
15<br />
Win-Win / FEB 2009
interesting video content on <strong>the</strong> Internet. Currently, more<br />
users are on <strong>the</strong> Internet than watching TV during prime<br />
time every day. It is no wonder that many professionals<br />
have an email complex. The first thing <strong>the</strong>y do at a place<br />
with a network connection is to check <strong>the</strong>ir emails.<br />
Grassroots: In <strong>the</strong> <strong>mobile</strong> Internet field, operators have<br />
limited strength. It is not viable for operators to depend<br />
on <strong>the</strong>ir own resources for innovation. True innovation<br />
comes from <strong>the</strong> grassroots and a large number of small<br />
companies. Currently, users are not satisfied with only<br />
getting content from <strong>the</strong> Internet. They produce content<br />
of <strong>the</strong>ir own; examples include <strong>the</strong> content, editing,<br />
ranking and reviews on some most popular video websites.<br />
Grassroots involvement pools <strong>the</strong> wisdom of ordinary<br />
Internet users. One example is Goldcorp, a mining<br />
company based in Toronto that was having trouble<br />
locating exploitable gold and launched <strong>the</strong> “Goldcorp<br />
Challenge”. Contestants found 110 possible mining<br />
claims, 50 percent of which had not been previously<br />
identified by <strong>the</strong> company. Over 80 percent of <strong>the</strong> new<br />
claims yielded substantial quantities of gold. In fact, since<br />
<strong>the</strong> challenge was initiated, an astounding eight million<br />
ounces of gold have been found.<br />
Social networking: Since Internet content is so rich,<br />
users ga<strong>the</strong>r as communities and conduct and interact on<br />
specific topics. This is <strong>the</strong> basis of <strong>the</strong> wildly-popular social<br />
networking. For instance, an active user of Facebook on<br />
average, stays in <strong>the</strong> community for over 3 hours, far more<br />
than <strong>the</strong> time he or she spends on traditional portals.<br />
Internet predicament<br />
The changes in Internet consumption modes have<br />
brought new challenges to operators. Operators have<br />
endeavored to take <strong>the</strong> lead in <strong>mobile</strong> Internet services, for<br />
example, proactive promotion of handset customization<br />
(from hardware, operating system to chipsets). However,<br />
operators have little control over terminals. Innovation<br />
and operation related to handsets are controlled by<br />
handset makers. The appearance of <strong>the</strong> iPhone remarkably<br />
improved <strong>the</strong> use of <strong>the</strong> <strong>mobile</strong> Internet for users, but<br />
operators do not have <strong>the</strong> ability to realize <strong>the</strong>ir ambitions.<br />
Most operators lack comprehensive knowledge of<br />
<strong>the</strong> Internet industry and <strong>the</strong> operation of <strong>the</strong> Internet<br />
industrial chain. Moreover, operators lack <strong>the</strong> ability to<br />
innovate and cannot offer standardized products to meet<br />
<strong>the</strong> needs of <strong>the</strong> majority of <strong>the</strong>ir subscribers. Customers<br />
place more importance on participation and information<br />
selection. Operators have to cope with <strong>the</strong> “Long Tail” of<br />
<strong>the</strong> Internet.<br />
In fact, <strong>the</strong> Internet usage habits are established and<br />
<strong>the</strong> emerging <strong>mobile</strong> Internet merely uses ano<strong>the</strong>r display<br />
and transmission pipe. Therefore, operators have to<br />
depend on cooperating with terminal manufacturers. For<br />
instance, China Mobile works with Samsung making<br />
custom terminals and even wants to launch its own<br />
handset operating system called <strong>the</strong> “Ophone”. In this<br />
environment, handset makers are given more power when<br />
negotiating with operators. Once handsets are in <strong>the</strong><br />
hands of consumers, <strong>the</strong> manufacturers can use <strong>the</strong>m to<br />
promote <strong>the</strong>ir own services, without paying attention to<br />
<strong>the</strong> operators, like <strong>the</strong> Apple Store does.<br />
On <strong>the</strong> o<strong>the</strong>r hand, operators have to take advantage of<br />
being <strong>the</strong> transmission pipe. Mobile operators dislike being<br />
called data pipes. While <strong>the</strong>y suspect that certain risks on<br />
<strong>the</strong> Internet will cause <strong>the</strong>m to only be data pipes, just<br />
providing <strong>the</strong> connection for handset users to access data<br />
and doing nothing related to <strong>the</strong> Internet. If this is <strong>the</strong><br />
wave of <strong>the</strong> future, <strong>the</strong>n <strong>mobile</strong> operators are re-treading<br />
<strong>the</strong> path of fixed operators in an uneconomical manner.<br />
From <strong>the</strong> commercial efficiency per bit (revenue per<br />
bit for operator), <strong>broadband</strong> access has much lower<br />
commercial efficiency per bit than SMS text messaging.<br />
In 2007, <strong>the</strong> revenue of China Mobile from SMS was<br />
approximately USD6.1 billion, while <strong>the</strong> revenue of<br />
China Telecom for Internet service was over USD4.5<br />
billion. Compared with SMS, <strong>broadband</strong> generates an<br />
astronomical amount of traffic. Mobile operators do not<br />
want to tread this path when <strong>the</strong> bandwidth of <strong>mobile</strong><br />
data is realized on <strong>the</strong> wireless spectrum that is already a<br />
scarce resource.<br />
Faced with <strong>the</strong>se conditions, operators first think of<br />
building a portal and only allow handset users to access <strong>the</strong><br />
Internet through <strong>the</strong> portal. The portal of China Mobile is<br />
called Monternet. However, this mode was soon sloughed<br />
off and increasingly more third party <strong>mobile</strong> Internet<br />
websites have emerged. The “surf” key of iPhone allows<br />
users to easily access third party websites. Portals like <strong>the</strong><br />
walled gardens of telecom networks will most likely not<br />
succeed and possibly could even become extinct.<br />
If this mode is not successful, operators have to<br />
improve <strong>the</strong> value of data traffic by enhancing <strong>the</strong> value<br />
of information through <strong>the</strong> telecom channels, becoming<br />
“information experts” instead of just “communication<br />
pipes”.<br />
BizNavigator, Best Tone of China Telecom, and 12580<br />
of China Mobile are all geared for precisely this type of<br />
transformation. However, such services cannot be said to<br />
be totally successful, because it is difficult for <strong>the</strong>se value<br />
added services to be standardized like a telephone. Users<br />
have changing and diversified needs and operators cannot<br />
respond swiftly to meet <strong>the</strong>ir mercurial needs. Operators<br />
are in quite a predicament with value added Internet<br />
FEB 2009 / Win-Win<br />
16
services. By and large, <strong>the</strong>y are too big and slow on <strong>the</strong><br />
uptake, not able to move as quickly as <strong>the</strong> small and lean<br />
development companies. Cooperation is <strong>the</strong>ir only option<br />
if <strong>the</strong>y want to thrive in this ever changing and progressive<br />
environment.<br />
How can an elephant dance?<br />
Based on <strong>the</strong> advantages and disadvantages of operators<br />
and <strong>the</strong> characteristics of Internet services, <strong>mobile</strong><br />
Internet services can be divided into two segments:<br />
Internet extension and <strong>mobile</strong> centric. Internet extension<br />
is influenced by <strong>the</strong> traditional Internet. Mobile centric<br />
refers to applications closely aligned with <strong>mobile</strong> services<br />
or applications with more <strong>mobile</strong> characteristics due to<br />
terminal factors.<br />
“Borrow a hen that lays golden eggs”<br />
For <strong>mobile</strong> operators, Internet extension services, such<br />
as search engines, do not offer much room to grow for<br />
operators as major players like Google, Yahoo, Baidu, etc.<br />
have <strong>the</strong> lion’s share of traffic. Cooperation is probably <strong>the</strong><br />
best option. Google, Yahoo, MySpace and YouTube first<br />
generated <strong>the</strong>ir immense following with fixed Internet, and<br />
have now entered <strong>the</strong> <strong>mobile</strong> arena in cooperation with<br />
operators.<br />
In 2007, Vodafone worked with Yahoo to launch<br />
<strong>mobile</strong> advertising, and worked with MySpace to launch<br />
MySpace <strong>mobile</strong> social networking. In 2008, Verizon<br />
worked with YouTube to provide <strong>mobile</strong> YouTube. In<br />
similar cooperative cases, operators have increased network<br />
traffic and <strong>the</strong> resulting revenues with help from <strong>the</strong><br />
big names of <strong>the</strong> Internet. Once wireless bandwidth is<br />
broadened with OFDM, MIMO and o<strong>the</strong>r technologies,<br />
both <strong>mobile</strong> and fixed Internet will share <strong>the</strong> same destiny.<br />
Bandwidth is used up by Internet applications, and<br />
operators turn to being data pipes.<br />
For <strong>mobile</strong> centric services, such as location based<br />
service (LBS), games and video, operators have relative<br />
advantages and can combine <strong>the</strong>ir understanding of<br />
user locations and applications. Operators can easily<br />
identify <strong>the</strong> location of a user through GPS and base<br />
station positioning, while subscriber privacy is ensured<br />
and operators can reach subscribers with SMS, voice or<br />
o<strong>the</strong>r approaches at any time. Currently, location is a<br />
key advantage for operators, and will be one of <strong>the</strong> core<br />
components of competitiveness in <strong>the</strong> <strong>mobile</strong> Internet<br />
era. This is why among <strong>the</strong> 10 top software applications of<br />
Google’s Android, nearly half are related to location.<br />
Dancing with <strong>the</strong> Internet<br />
If operators are not able to compete with <strong>the</strong> Internet<br />
giants, <strong>the</strong>y can help <strong>the</strong>m to offer better services. Take<br />
<strong>the</strong> content delivery network (CDN) for instance. Because<br />
more and more video websites desire to improve user<br />
access experiences, <strong>the</strong>y need to have servers and mirrors<br />
at various network nodes, to allow visitors from different<br />
regions to have smoothly streaming videos. ChinaCache is<br />
such a company and to whom Tudou.com pays over 50%<br />
of its costs.<br />
On <strong>the</strong> <strong>mobile</strong> Internet, <strong>the</strong>re are still remarkable<br />
overlaps between telecom networks and <strong>the</strong> Internet. To<br />
remedy <strong>the</strong> situation, <strong>mobile</strong> operators can take following<br />
measures:<br />
Terminal adaptation: Compared with <strong>the</strong> standard<br />
structure of PCs, handset terminals differ significantly<br />
from each o<strong>the</strong>r in hardware, operating system, etc.<br />
Operators may provide adaptation at <strong>the</strong> network side to<br />
reduce <strong>the</strong> immense costs of application developers for<br />
terminal adaptation.<br />
Data mining/differentiated operations: Operators<br />
have a large base of subscribers. For example, China<br />
Mobile has over 400 million subscribers. Through data<br />
mining, <strong>the</strong> operators can know subscriber information,<br />
such as age, voice bills, occupation, income, etc., to better<br />
understand users and identify smaller market segments.<br />
In <strong>the</strong> future, operators may become intermediary service<br />
companies operating with subscriber data, which lays <strong>the</strong><br />
foundation for targeted advertising.<br />
Opening telecom capabilities: This is also known as<br />
mashup. A mashup is a web application done by access to<br />
open application programming interfaces (APIs) through<br />
HTTP. Mashups are for developers and presented as<br />
Widgets to users. A mashup is an interesting new type<br />
of application, similar to <strong>the</strong> API of computer operating<br />
systems.<br />
EVDB for example, provides a database of events<br />
calendar. It opens <strong>the</strong> database, and a developer can develop<br />
new applications based on <strong>the</strong> web API, such as an agenda<br />
for reminders or where you should go at a given time.<br />
Google releases map data on <strong>the</strong> web, and craigslist.org,<br />
<strong>the</strong> classified ads site gives <strong>the</strong> link to Google Maps so real<br />
estate for sale can be easily located. Housingmaps.com was<br />
born in this same manner.<br />
Some operators have indeed noticed and opened up to<br />
application developers for serving as <strong>the</strong> API of <strong>the</strong> telecom<br />
network. For instance, British Telecom (BT) offers <strong>the</strong><br />
“I’m Hungry” service. BT gives <strong>the</strong> location information<br />
of subscribers to <strong>the</strong> application developers and <strong>the</strong>ir<br />
applications help subscribers to find <strong>the</strong> nearest restaurants<br />
and book seats by ei<strong>the</strong>r voice calls or SMS.<br />
Editor: Chen Yuhong chyhong@huawei.com<br />
17<br />
Win-Win / FEB 2009
Tao of Business<br />
Inspiration from<br />
Internet business models<br />
Internet reinforces its leading position with a growing penetration rate and fast-increasing<br />
user base. Can telecom operators transplant <strong>the</strong> Internet-related technologies and successful business<br />
models, so as to find a new profit stream?<br />
By Chen Fudong<br />
Land of opportunity<br />
or a black hole?<br />
As is known to all, <strong>the</strong> predecessor<br />
of <strong>the</strong> global Internet was <strong>the</strong><br />
Advanced Research Projects<br />
Agency Network (ARPANET)<br />
developed by <strong>the</strong> United States<br />
Department of Defense in<br />
1969. In1990, <strong>the</strong> hyper text<br />
protocols of Tim Berners-Lee and Robert Cailliau allowed<br />
<strong>the</strong> technology and application to swiftly morph into<br />
<strong>the</strong> world wide web of today. In less than 40 years, <strong>the</strong><br />
Internet has grown from <strong>the</strong> original four nodes to around<br />
400 million nodes, with over a billion users. This can be<br />
attributed to <strong>the</strong> web breaking out of <strong>the</strong> circle of science<br />
and research and being easily accessible to ordinary users<br />
and geeks alike.<br />
Along with constant expansion, network performance<br />
has also consistently improved through software hardening<br />
(which uses hardware devices to replace software modules<br />
for packet forwarding). A number of new stars have been<br />
born.<br />
We can see <strong>the</strong> shining stars as well as <strong>the</strong> dark side<br />
in <strong>the</strong> course of Internet innovation. In reality, <strong>the</strong>re<br />
are far more losers than winners. Microsoft is a vivid<br />
example. They have invested heavily in Internet services<br />
including: Internet Explorer, MSN, Hotmail, MSNM,<br />
Live, Space, and Facebook among o<strong>the</strong>rs. Their assets<br />
span <strong>the</strong> industrial chain upstream and downstream,<br />
from television (MSNBC) to consumer electronics (Xbox<br />
360). Never<strong>the</strong>less, <strong>the</strong> return on <strong>the</strong> Internet investment<br />
is nothing to crow about. It is obvious that, even for<br />
Microsoft it is difficult to succeed in <strong>the</strong> Internet.<br />
Transitions of Internet business<br />
models<br />
The earliest mass commercialization was <strong>the</strong> ISP era<br />
represented by AOL, and <strong>the</strong> business model was to bill<br />
dialup subscribers by usage or by <strong>the</strong> hour. Later, <strong>the</strong><br />
Internet entered <strong>the</strong> portal era as represented by Yahoo!,<br />
and it gained revenues from display ads based on <strong>the</strong><br />
number of clicks and views by users. The value of an ad<br />
depended on <strong>the</strong> popularity or amount of traffic on <strong>the</strong><br />
site.<br />
Then Google exploded onto <strong>the</strong> scene and led <strong>the</strong><br />
search engine era and <strong>the</strong> successful model became<br />
targeted advertising. The value of this type of advertising<br />
lies in accurately steering <strong>the</strong> user to commercial sites he/<br />
she might have interest in making purchase forms.<br />
The current era is represented by social networking<br />
sites such as Facebook and <strong>the</strong> business model shifts to<br />
recommended advertising. The value lies in word of mouth<br />
marketing, also known as viral marketing.<br />
The commercialization process progresses with how well<br />
<strong>the</strong> Internet understands people. In <strong>the</strong> era of <strong>the</strong> portals<br />
around 2000, subscribers were just contributors of traffic.<br />
A popular saying was, “On <strong>the</strong> Internet, nobody knows<br />
you’re a dog”. The era of search, however, was focused on<br />
FEB 2009 / Win-Win<br />
18
Tao of Business<br />
your intention and needs, and search engines gave you<br />
what you wanted. In <strong>the</strong> era of social networking, your<br />
needs are nurtured from recommendations by your friends.<br />
Even if you have no needs, a larger space is given for<br />
imaginative ad-driven business models. That is a primary<br />
reason why social networking websites have become so<br />
popular in recent years.<br />
The ultimate objective of Internet is to perceive <strong>the</strong><br />
desires of users. Therefore, every website endeavors to<br />
provide as many applications as possible. For instance,<br />
Google provides a wide range of seemingly unprofitable<br />
and even money-burning applications including YouTube<br />
and Maps, and numerous Facebook applications on its<br />
open platform. Their hope is to make users leave more<br />
historical data when using applications on <strong>the</strong> Internet,<br />
to manifest user behaviors from more dimensions, to<br />
identify values of <strong>the</strong> users via fur<strong>the</strong>r data mining (artificial<br />
intelligence), to establish user profiles, and finally to<br />
provide high-value, precise ads to affect consumer behavior<br />
and drive profits.<br />
This is one of <strong>the</strong> reasons why Google is interested in<br />
entering <strong>the</strong> <strong>mobile</strong> communications field. GPhones are<br />
carried anytime by <strong>the</strong> users who access various <strong>mobile</strong><br />
Internet applications, indicating that increasingly more<br />
personal information is being digitalized. Fed with this<br />
massive amount of digitalized information, <strong>the</strong> Internet<br />
is constantly enhancing its IQ and EQ, for a better and<br />
more accurate understanding of <strong>the</strong> users and <strong>the</strong> ability to<br />
provide services for <strong>the</strong>m.<br />
Cloud computing on <strong>the</strong> horizon<br />
Cloud computing is Internet (“cloud”) based<br />
development and use of computer technology<br />
(“computing”); its infrastructure is intended to better<br />
support <strong>the</strong> ultimate objective of <strong>the</strong> Internet. Realization<br />
is still far off, but <strong>the</strong> goal is in sight and being driven by<br />
diversified Internet applications. It promises to bring about<br />
remarkable changes in <strong>the</strong> experience of Internet users.<br />
Currently we need to install software applications<br />
before using various Internet applications. For instance,<br />
we use Outlook to discuss which film is worth watching,<br />
download <strong>the</strong> film with BitTorrent, open <strong>the</strong> film with<br />
Media Player, and enter forums or blogs to post our<br />
reviews regarding <strong>the</strong> film. Information on behavioral<br />
patterns is scattered in different applications and cannot<br />
be integrated systematically, plus <strong>the</strong> user has to reinstall<br />
<strong>the</strong> applications to use ano<strong>the</strong>r machine to run <strong>the</strong><br />
applications.<br />
With cloud computing, desktop and <strong>mobile</strong> terminal<br />
systems only need to have a browser. The user can use<br />
<strong>the</strong> same account to open <strong>the</strong> applications in different<br />
environments without worrying about whe<strong>the</strong>r <strong>the</strong> local<br />
machine has <strong>the</strong> appropriate software or operating system.<br />
For instance, you just need to register one iGoogle<br />
account to use any combination of services (Gmail/<br />
YouTube/Blogger/etc). Your browser acts as a window that<br />
gives you a similar user experience with ei<strong>the</strong>r a desktop<br />
device or a smart phone using ei<strong>the</strong>r Windows or Android.<br />
Recently, Google released Chrome, a new generation<br />
browser, to promote <strong>the</strong> penetration of cloud computing,<br />
with enhanced browser performance, reliability, safety and<br />
o<strong>the</strong>r key features and improved SaaS usability.<br />
As to <strong>the</strong> external business value of cloud computing,<br />
we can summarize it as: “to organize <strong>the</strong> personal<br />
information and make <strong>the</strong> Internet push targeted ads with<br />
more accuracy and value”, by following Google’s vision, “to<br />
organize <strong>the</strong> world’s information and make it universally<br />
accessible and useful”.<br />
“Plumbers” have a newfound status<br />
With <strong>the</strong> centralized intelligence of cloud computing,<br />
it is not difficult to see that among <strong>the</strong> technical divisions,<br />
<strong>the</strong> backstage of <strong>the</strong> Internet is intensive computing for<br />
19<br />
Win-Win / FEB 2009
The entire network solution is not just focused on traditional<br />
networking abilities, such as bandwidth allocation and packet forwarding.<br />
Through integration of computing and storage, network capabilities will be<br />
stronger and more practical.<br />
services; <strong>the</strong> terminals are for presentation of services;<br />
and <strong>the</strong> networks between <strong>the</strong> two components are <strong>the</strong><br />
plumbing or pipeline for information transmission.<br />
Many people are indifferent to <strong>the</strong> role of a network<br />
plumber, thinking that <strong>the</strong> ability to provide enhanced<br />
value-added network services should be <strong>the</strong> keynote for<br />
telecom operators to forge <strong>the</strong>ir core competitiveness. But,<br />
<strong>the</strong> Internet is a highly risky, highly profitable industry<br />
where only a fortunate few can mine <strong>the</strong> gold; while <strong>the</strong><br />
requirements for traffic bearing infrastructure keeps on<br />
growing regardless of concepts, making it lucrative for <strong>the</strong><br />
plumbers.<br />
For fixed <strong>broadband</strong> networks, <strong>the</strong> number of end users<br />
is calculated by households; however, in <strong>mobile</strong> Internet,<br />
<strong>the</strong> customer base is calculated by individuals, who may<br />
have multiple Internet terminals. Therefore <strong>the</strong> number<br />
of terminals to access <strong>the</strong> Internet will be larger by order<br />
of magnitude. The data package of <strong>the</strong> T-Mobile G1<br />
phone, which supports HSDPA, is priced at USD25 per<br />
month, equivalent to <strong>the</strong> monthly bill from AT&T for<br />
1.5M DSL <strong>broadband</strong>. This just might be <strong>the</strong> reason why<br />
both T-Mobile and AT&T are quite enthusiastic about<br />
merely being plumbing contractors and introducing <strong>the</strong><br />
G1 phone and <strong>the</strong> iPhone respectively and exclusively in<br />
North America.<br />
Operators can introduce Internet experiences and<br />
related technologies to <strong>the</strong>ir services, particularly HD video<br />
services, to take full advantage of local resources, including<br />
infrastructure and user information and to improve <strong>the</strong><br />
service ability of All-IP networks and increase profitability.<br />
Content distribution network (CDN) technology and<br />
location-based precise advertising technology can <strong>the</strong>n<br />
be introduced into Multi-Play bearer network solutions.<br />
This reduces <strong>the</strong> pressure on bandwidth for large scale<br />
video transmission and improves <strong>the</strong> experience of end<br />
users, while improving <strong>the</strong> ability of revenue generation of<br />
services and opening up more revenue streams for telecom<br />
operators.<br />
The entire network solution is not just focused on<br />
traditional networking abilities, such as bandwidth<br />
allocation and packet forwarding. Through integration<br />
of computing and storage, network capabilities will<br />
be stronger and more practical. With <strong>the</strong> standard<br />
optimization for digitalized information (XML/Flash/<br />
H.264/etc), <strong>the</strong> new network of “networking + computing<br />
+ storage” is able to perceive services and contents; an<br />
understanding of both bit and byte information. Only in<br />
this manner can a telecom operator do a superb job as a<br />
plumber, while trying to create new services and business<br />
models using <strong>the</strong> network as an information circulation<br />
platform and improving its IQ and EQ.<br />
There are two sides of Internet commercialization: It<br />
not only brings about both opportunities for start-up<br />
business and improved experiences for consumers, but<br />
also opens <strong>the</strong> door to those who profit from invading<br />
customers’ privacy or maliciously misguiding <strong>the</strong><br />
customers via spam, viruses, spyware, malware, and misuse<br />
of personal information. More and more websites are<br />
trying to influence consumers by page layouts and various<br />
information rating and ranking technologies, such as paid<br />
placement, search engine optimization (SEO) etc. These<br />
are all aimed to direct traffic to a select group of sites,<br />
limiting <strong>the</strong> choices for casual users.<br />
Apparently, <strong>the</strong>se negative aspects damage <strong>the</strong><br />
creditability of <strong>the</strong> Internet and loosen <strong>the</strong> cornerstone of<br />
Internet advertising. Google took “Don’t Be Evil” as its<br />
motto after it became popular, to alleviate any concerns,<br />
especially since Google has <strong>the</strong> best resources to be evil<br />
only if it wanted to.<br />
The overwhelming success of Google is a testament to<br />
<strong>the</strong> adage that, Internet commercialization is a double-edged<br />
sword, and playing business integrity is <strong>the</strong> only way to ensure<br />
<strong>the</strong> sound development of <strong>the</strong> Internet industry.<br />
Editor: Li Xuefeng xuefengli@huawei.com<br />
FEB 2009 / Win-Win<br />
20
Winners<br />
OPTUS<br />
Australia has an unevenly distributed population with relatively few people living inland in <strong>the</strong> outback. To<br />
achieve full <strong>mobile</strong> network coverage, an operator needs to invest heavily and in relation to technology,<br />
capital, and cost, make wise equipment and partner choices.<br />
opening up <strong>the</strong> outback<br />
By Li Xiaojuan<br />
Editor: Julia Yao julia.yao@huawei.com<br />
21<br />
Win-Win / FEB 2009
In recent years, governments around <strong>the</strong> world<br />
have ramped up development of moblie<br />
<strong>broadband</strong>. The underlying initiative is to<br />
bridge <strong>the</strong> digital divide with technology that<br />
allows people in more remote and less-developed<br />
areas to experience <strong>the</strong> benefits of wireless<br />
<strong>broadband</strong>. Australia, with extensive hinterland<br />
and <strong>the</strong> very low population densities throughout<br />
its vast interior, provides a sterling example of need<br />
and fulfillment.<br />
The wide coverage to bridge<br />
<strong>the</strong> digital gulf<br />
According to Australian Bureau of Statistics,<br />
<strong>the</strong> number of <strong>broadband</strong> users in Australia<br />
now exceeds 3.5 million, or 17% of <strong>the</strong> total<br />
population. Canberra, <strong>the</strong> nation’s capital, has <strong>the</strong><br />
most with 58% of households using <strong>broadband</strong><br />
technology.<br />
In Sou<strong>the</strong>rn Australia, <strong>the</strong> <strong>broadband</strong><br />
penetration rate is only 32%. Back in October of<br />
2006, Telstra, <strong>the</strong> top <strong>mobile</strong> operator in Australia<br />
had deployed a nationwide HSDPA network,<br />
named Next G, operating on 850MHz frequency.<br />
The biggest competitive edge of Next G lies in its<br />
wide coverage–up to 98% of <strong>the</strong> population. The<br />
service penetration of <strong>the</strong> network is also worth<br />
mentioning.<br />
In May 2007, <strong>the</strong> Australian government<br />
announced funding for building a national<br />
<strong>broadband</strong> superhighway to extend access to underdeveloped<br />
areas. The goal of <strong>the</strong> project was to<br />
provide <strong>broadband</strong> services for 4 million individual<br />
and commercial users with particular focus on<br />
sparsely populated remote areas.<br />
Telstra’s early advantage placed considerable<br />
pressure on Optus, <strong>the</strong> No.2 operator in Australia.<br />
Not wanting to lag behind, Optus quickly<br />
responded to <strong>the</strong> government afforded opportunity<br />
and commenced an in-depth search for a vendor<br />
who could offer <strong>the</strong> necessary combination of<br />
capability, value and coverage that would allow <strong>the</strong><br />
operator to participate in this vital national project.<br />
To achieve full <strong>mobile</strong> network coverage that<br />
reaches an unevenly distributed population across<br />
many thousands of square kilometers, an operator<br />
in Australia faces heavy up-front investment costs,<br />
all of which makes prudent selection of a reliable<br />
equipment vendor an essential priority.<br />
After careful consideration, in December 2007,<br />
Paul O’Sullivan, CEO of Optus, announced a plan<br />
to expand <strong>the</strong> capacity of <strong>the</strong> company’s existing<br />
3G network. According to <strong>the</strong> plan, by <strong>the</strong> end<br />
of 2008, Optus would improve network coverage<br />
from 60% to 96% (based on population), and<br />
expand <strong>the</strong> covered area to 650 thousand square<br />
kilometers. In addition, Optus would upgrade <strong>the</strong>ir<br />
existing network to HSPA with a download rate<br />
of 3.6Mbps. Meanwhile, Optus specified UMTS<br />
900MHz as a core part of future <strong>mobile</strong> strategy<br />
and chose <strong>Huawei</strong> as <strong>the</strong>ir exclusive vendor for<br />
deploying <strong>the</strong> UMTS 900MHz network in rural<br />
areas.<br />
FEB 2009 / Win-Win<br />
22
Winners<br />
This moment is a defining one in Optus’ and <strong>the</strong> Australian<br />
telecom history–it’s leading edge, an Australian first and a<br />
first for <strong>the</strong> sou<strong>the</strong>rn hemisphere!<br />
The expanded horizons of<br />
UMTS900<br />
Optus had already deployed a 2.1GHz UMTS<br />
network. Even in areas with sufficient 2.1GHz<br />
frequency resources, Optus still decided to deploy<br />
a UMTS 900MHz network to achieve wider<br />
coverage at lower cost.<br />
Compared to <strong>the</strong> 2.1GHz frequency band, <strong>the</strong><br />
900MHz frequency operates on a lower frequency<br />
with a higher penetration capability and a single<br />
<strong>Huawei</strong> base station covers much wider areas.<br />
Tests proved that with a <strong>Huawei</strong> UMTS 900MHz<br />
system, 60% fewer base stations would be required<br />
for rural areas. With such a vast region to be<br />
covered, <strong>Huawei</strong>’s UMTS 900MHz was clearly <strong>the</strong><br />
perfect choice for Optus.<br />
In <strong>the</strong> past, Optus had invested AUD2.5 billion<br />
in <strong>the</strong>ir GSM network. Their top priority had<br />
always been to minimize network construction cost<br />
while introducing new technologies. By deploying<br />
a UMTS network on top of <strong>the</strong> mature GSM900<br />
network, <strong>the</strong>y would be able to take full advantage<br />
of sites and antennas in <strong>the</strong> existing network. This<br />
decision would not only help <strong>the</strong>m introduce 3G<br />
services quickly in markets where network coverage<br />
already existed, but would also lower construction<br />
operational costs when expanding to cover new<br />
areas of <strong>the</strong> country. All of which could be passed<br />
on to <strong>the</strong> end user, building competitiveness and<br />
customer loyalty, in <strong>the</strong> form of lowered access<br />
costs and added, cost-effective services.<br />
The remote area rewards of<br />
Re-farming<br />
Despite its many advantages, UMTS 900MHz<br />
is not entirely free of challenges. This technology<br />
is still in <strong>the</strong> process of being fully exploited by<br />
supporting industries and <strong>the</strong> variety of terminals<br />
is limited. Currently, only one operator, Elisa, in<br />
Finland has deployed a commercial UMTS900<br />
network, implemented on November 11, 2007.<br />
When <strong>the</strong> UMTS 900MHz was introduced,<br />
<strong>the</strong> biggest concern for operators was interference<br />
between GSM and UMTS networks. A UMTS<br />
network capitalizes on <strong>the</strong> GSM frequency band.<br />
Inappropriate planning may not only jeopardize<br />
<strong>the</strong> performance of <strong>the</strong> UMTS network, it can also<br />
degrade <strong>the</strong> quality of an existing GSM network.<br />
After extensive calculations, Optus found<br />
that <strong>the</strong>y could only assign a 4.2MHz frequency<br />
bandwidth to <strong>the</strong> UMTS network. The greatest<br />
challenge for Optus and <strong>Huawei</strong> is to make a<br />
network with only a 4.2MHz effective frequency<br />
bandwidth perform as well as one with a 5MHz<br />
frequency. In response, <strong>Huawei</strong> made creative<br />
use of Re-farming, a network transformation<br />
process, to reorganize <strong>the</strong> frequency, cutover, and<br />
optimization of <strong>the</strong> GSM900 network.<br />
The planning stages stimulated positive reactions<br />
from technical personnel on <strong>the</strong> combined Optus<br />
and <strong>Huawei</strong> team. “Although testing had been<br />
conducted in Europe, nothing is more exciting<br />
than witnessing <strong>the</strong> whole process in your own<br />
23<br />
Win-Win / FEB 2009
ackyard,” one engineer said. Just <strong>the</strong> idea of<br />
implementing transformation over a large-scale trial<br />
network within only three months was something<br />
that stimulated everyone’s minds.<br />
Test results showed that Re-farming could<br />
minimize <strong>the</strong> bandwidth required in construction<br />
of <strong>the</strong> UMTS 900MHz and <strong>the</strong> carrier spacing<br />
between GSM and UMTS networks. Addressing<br />
<strong>the</strong> limited bandwidth constraints, <strong>Huawei</strong> used<br />
wave-trap technology to ensure <strong>the</strong> performance<br />
of <strong>the</strong> UMTS network with 4.2MHz frequency<br />
bandwidth.<br />
In April 2007, a maiden call was made between<br />
<strong>the</strong> UMTS 900MHz network and <strong>the</strong> existing<br />
GSM network in <strong>the</strong> South Pacific. Moments<br />
after completing his first UMTS900 exchange<br />
over <strong>the</strong> trial network, Darren Rogers, Optus’<br />
Network Strategy Manager, announced, “This<br />
moment is a defining one in Optus’ and <strong>the</strong><br />
Australian telecommucations history–it’s leading<br />
edge, an Australian first and a first for <strong>the</strong> sou<strong>the</strong>rn<br />
hemisphere!”<br />
The rapid deployment of<br />
UMTS900<br />
With <strong>the</strong> biggest challenge of UMTS 900MHz<br />
behind <strong>the</strong>m, Optus began to maximize <strong>the</strong><br />
fast and efficient deployment features of UMTS<br />
900MHz. The small size, light weight, site<br />
flexibility, and easy installation of <strong>Huawei</strong>’s<br />
compact distributed base stations allowed for fast<br />
side-by-side installation with existing GSM sites.<br />
Even if a site was already crowded, Optus quickly<br />
discovered that <strong>Huawei</strong>’s BBU could easily be<br />
installed in a standard cabinet with 19-inch width<br />
and 2U height and <strong>the</strong> RRU could be pole based or<br />
installed in <strong>the</strong> same cabinet. in this fashion Optus<br />
was able to reuse <strong>the</strong> site resources of <strong>the</strong> existing<br />
GSM network in <strong>the</strong> UMTS 900MHz network,<br />
including equipment room, air conditioners, power<br />
supply, and transmission equipment.<br />
<strong>Huawei</strong>’s Same-band Antenna Sharing Unit<br />
(SASU) scheme enabled <strong>the</strong> sharing of antennas<br />
between two systems with <strong>the</strong> same frequency<br />
band. Sharing reduces investment, frees <strong>the</strong> trouble<br />
of network re-planning, accelerates <strong>the</strong> 3G network<br />
construction, reduces man hours and speeds up<br />
commercial usage.<br />
Thanks to <strong>Huawei</strong>’s innovative solutions, Optus<br />
saved AUD300 million and achieved its interim<br />
goal of covering 80% of <strong>the</strong> population by June<br />
2008.<br />
Recently, with <strong>the</strong> goal of increasing <strong>the</strong><br />
percentage of <strong>broadband</strong> users in <strong>the</strong> total<br />
population from 96% to 98%, Optus CEO<br />
Paul O’Sullivan announced an AUD315 million<br />
investment plan to be exclusively applied <strong>the</strong><br />
extended deployment of UMTS 900MHz. Optus<br />
also announced <strong>the</strong> intention of establishing a<br />
Mobile Innovation Center with <strong>Huawei</strong> to deepen<br />
cooperation and support <strong>the</strong> company’s overall<br />
expansion strategy. Optus and UMTS900 continue<br />
to open up Australia’s outback everyday.<br />
FEB 2009 / Win-Win<br />
24
Winners<br />
AIS<br />
keeps Thailand smiling<br />
AIS can set <strong>the</strong> BTSs to GSM mode, ensuring communication quality. When <strong>the</strong> demand for <strong>mobile</strong> <strong>broadband</strong><br />
services increases, AIS can add UMTS carriers to offer GSM and HSPA services simultaneously.<br />
By Xu Yan Editor: Xue Hua xuehua@huawei.com<br />
25<br />
Win-Win / FEB 2009
As <strong>the</strong> largest and leading <strong>mobile</strong><br />
operator of Thailand–<strong>the</strong> “Land of<br />
Smiles”, Advanced Info Service (AIS)<br />
has realized a ubiquitous and rich<br />
information network through its brands such as<br />
GSM ADVANCE, ONE-2-CALL!, GSM1800,<br />
and MPAY STATION, which cater for <strong>the</strong> 26<br />
million local subscribers and tourists.<br />
The dominant influence of AIS has ensured<br />
critical involvement in <strong>the</strong> development of<br />
Thailand’s domestic telecom industry which, in<br />
turn, has profoundly and positively impacted <strong>the</strong><br />
Thai economy and its 64 million inhabitants.<br />
Elevating 2G services<br />
Thailand has been noted for its outstanding<br />
scenery and remarkably friendly locals. As one<br />
of <strong>the</strong> world’s most popular tourist destinations,<br />
Thailand boasts an internationally famous cuisine<br />
and a wealth of attractions. In <strong>the</strong> first half of 2008,<br />
Thailand hosted around 5.62 million tourists;<br />
approximately 70% of <strong>the</strong> country’s industries are<br />
related to tourism, and over 7% of its GDP directly<br />
results from its visitors.<br />
Fulfilling <strong>the</strong> communication requirements of<br />
this significant tourist economy is vital for AIS to<br />
realize full value potential. However, prior to 2008,<br />
this objective was hampered by networks in tourist<br />
heavy-traffic areas such as Bangkok. At that time,<br />
<strong>the</strong> AIS network for Thailand’s capital city was based<br />
on European-sourced equipment. Each cabinet<br />
occupied around 1m 2 , weighed up to 600kg, and<br />
only supported <strong>the</strong> S4/4/4 configuration.<br />
Toward <strong>the</strong> end of 2007, AIS was confronted<br />
with untenable circumstances and apparently<br />
impossible problems. Service capacity expansion<br />
would require heavy investment in additional<br />
equipment rooms and related engineering. The<br />
resulting CAPEX coupled with a slow market<br />
response would have been disastrous for <strong>the</strong><br />
company’s development and revenue streams. This<br />
situation was exacerbated by <strong>the</strong> network’s low<br />
power output and reception sensitivity, both of<br />
which restricted uplink and downlink coverage and<br />
greatly degraded service quality. Additional BTSs<br />
were clearly indicated to remedy this situation, but<br />
again this would increase <strong>the</strong> company’s CAPEX<br />
and OPEX beyond acceptable limits.<br />
Back in 2007, <strong>the</strong> lag problems in Bangkok were<br />
not <strong>the</strong> only ones confronting AIS. The original<br />
GSM equipment covering <strong>the</strong> nor<strong>the</strong>ast and south<br />
of Thailand had been in use for over five years; <strong>the</strong><br />
original manufacturer was unable to provide fur<strong>the</strong>r<br />
technical support; <strong>the</strong> network framework could not<br />
support EDGE services, and future evolution based<br />
on <strong>the</strong> old equipment was out of <strong>the</strong> question. AIS<br />
could not accommodate <strong>the</strong> apparent upgrade costs<br />
but, in <strong>the</strong> midst of a boom in Thailand’s tourism, if<br />
<strong>the</strong>y did not upgrade <strong>the</strong>y would lose vital end user<br />
revenue to <strong>the</strong> advantages offered by <strong>the</strong> improved<br />
quality of competing vendors networks. AIS had no<br />
choice but to refine its original network, particularly<br />
in peak traffic areas, and extend coverage to boost<br />
user QoE. The question was, how to do this costeffectively<br />
and time-efficiently while hopefully<br />
gaining long-term advantages at <strong>the</strong> same time?<br />
As 2007 drew to a close, AIS embarked on a<br />
cooperative venture with <strong>Huawei</strong>. The two companies<br />
carefully analyzed Thailand’s key GSM markets<br />
with <strong>the</strong> goal of invigorating <strong>the</strong> AIS network and<br />
accommodating immediate and future expansion.<br />
In early 2008, AIS embarked on <strong>Huawei</strong>’s solution<br />
for GSM equipment replacement in Bangkok, and<br />
across <strong>the</strong> major tourist areas of north, nor<strong>the</strong>ast,<br />
and south Thailand. In three short months, and in<br />
good time to realize benefit from <strong>the</strong> heavy local<br />
traffic increase and tourist surge occurring around<br />
April’s Thai Water Festival, a remarkable total of over<br />
10,000 carriers were replaced.<br />
In key areas such as Bangkok, AIS opted for<br />
<strong>Huawei</strong>’s highly integrated indoor and outdoor<br />
macro base transceiver stations (BTSs). Occupying<br />
less than 0.5m 2 , <strong>the</strong> <strong>Huawei</strong> BTS supports up to 18<br />
or 36 carriers, and simplifies constructing S8/8/8<br />
sites and those of a higher configuration. During<br />
seasonal traffic peaks, using software to upgrade RF<br />
modules in phases from one carrier to six carriers,<br />
AIS can now configure <strong>the</strong> <strong>Huawei</strong> BTSs to meet<br />
demand. The <strong>Huawei</strong> solution eliminates <strong>the</strong> need<br />
for on-site engineering and antenna adjustments,<br />
significantly reducing AIS’s O&M costs and<br />
accelerating <strong>the</strong>ir ability to more quickly respond<br />
to market requirements.<br />
In remote scenic spots and along <strong>the</strong> highways<br />
linking Thailand’s tourist cities, AIS adopted<br />
<strong>Huawei</strong>’s small, six-carrier GSM BTSs. These BTSs<br />
meet requirements for capacity and coverage without<br />
<strong>the</strong> need for deploying additional equipment and<br />
equipment rooms, but can still be located outside<br />
and withstand <strong>the</strong> humid and rainy local climate.<br />
Along <strong>the</strong> highway to Chiang Mai, for example, AIS<br />
was able to discretely mount <strong>the</strong> compact <strong>Huawei</strong><br />
FEB 2009 / Win-Win<br />
26
Winners<br />
GSM BTSs in an environmentally friendly ways that<br />
occupied no ground space, yet still allowed for easy,<br />
low-cost maintenance. Once again, AIS was able to<br />
expand coverage and quality while avoiding much of<br />
<strong>the</strong> previously anticipated high costs.<br />
AIS realized optimal industry standards of<br />
GSM carrier output power and receive sensitivity.<br />
Subsequent road test statistics revealed that voice<br />
service KPI had been dramatically improved,<br />
benefiting both local and tourist economies<br />
through appreciation of <strong>the</strong> elevated QoS.<br />
Solving Thailand’s 3G puzzle<br />
Both voice services and <strong>mobile</strong> <strong>broadband</strong><br />
services now thrive in Thailand. “Laying new fixed<br />
line connections is expensive and inefficient so<br />
high-speed <strong>mobile</strong> networks are Thailand’s best bet<br />
to realize <strong>the</strong> many social and economic benefits<br />
that arise from widespread access to <strong>broadband</strong><br />
services,” said Ricardo Tavares, Senior Vice<br />
President for Public Policy of <strong>the</strong> GSMA.<br />
Constructing a UMTS network over <strong>the</strong><br />
operator’s mature GSM900 network would make it<br />
possible for AIS to quickly introduce 3G services to<br />
<strong>the</strong>ir existing market. AIS also required <strong>the</strong> solution<br />
to minimize network construction costs and OPEX<br />
in new coverage areas. With a 3G license, AIS<br />
regarded this solution as essential for successful<br />
launch of its 3G marketing strategy.<br />
Prior to AIS selecting <strong>the</strong> 900MHz band for its<br />
UMTS solution, <strong>Huawei</strong> had already assisted Optus<br />
construct a 900MHz HSPA network in Australia with<br />
4.2MHz valid bandwidth. This achievement realized<br />
<strong>the</strong> world’s first large-scale commercial UMTS900<br />
network. This notable accomplishment reinforced<br />
AIS’ final decision to partner with <strong>Huawei</strong> to develop<br />
<strong>the</strong> operator’s 900MHz-based HSPA network.<br />
In May 2008, as a prelude to expanding<br />
service throughout Bangkok, AIS commenced<br />
operation of a 900MHz 3G network in Chiang<br />
Mai. By applying <strong>Huawei</strong>’s portable UMTS900<br />
distributed BTSs, AIS was able to quickly<br />
construct a commercial network without <strong>the</strong><br />
costs of cumbersome hoisting equipment and<br />
complicated engineering. The resulting AIS<br />
network provides end users with HSDPA services<br />
at rates of up to 7.2Mbps. These accelerated speeds<br />
are complemented by <strong>Huawei</strong>’s stylish USB HSPA<br />
modems, which have emerged as a popular tool for<br />
many of Thailand’s laptop users.<br />
In <strong>the</strong> near future, AIS believes <strong>the</strong> demand for<br />
<strong>mobile</strong> <strong>broadband</strong> services will increase and <strong>the</strong>ir<br />
UMTS900 network will be extended. In order<br />
to construct a UMTS network over <strong>the</strong> existing<br />
GSM network and realize unified access while<br />
maximizing site and antennae sharing, AIS is<br />
employing <strong>Huawei</strong>’s 4th generation BTS solution<br />
to replace earlier vendors’ BTSs and support both<br />
GSM and UMTS requirements.<br />
With <strong>Huawei</strong>’s new equipment, AIS can set <strong>the</strong><br />
BTSs to GSM mode, ensuring communication<br />
quality and wide coverage at a 60% lower power<br />
consumption rate than conventionally encountered.<br />
When <strong>the</strong> demand for <strong>mobile</strong> <strong>broadband</strong> services<br />
increases, AIS will be able to reduce <strong>the</strong> number<br />
of GSM carriers. Meanwhile, AIS can add UMTS<br />
carriers to simultaneously offer GSM and HSPA<br />
services, until all functional modules are set to <strong>the</strong><br />
UMTS mode.<br />
<strong>Huawei</strong>’s solution neatly sidesteps <strong>the</strong> difficulties<br />
AIS previously faced in terms of strategizing its<br />
3G network and optimizing its 2G network. As a<br />
result, AIS will be firmly ahead of <strong>the</strong> game as <strong>the</strong><br />
undisputed leader of <strong>the</strong> country’s 3G market.<br />
The solution neatly sidesteps AIS’s difficulties in strategizing<br />
its 3G network and optimizing its 2G network. As a result,<br />
AIS will be firmly ahead of <strong>the</strong> game as <strong>the</strong> undisputed<br />
leader of <strong>the</strong> country’s 3G market.<br />
27<br />
Win-Win / FEB 2009
PCCW<br />
builds a CDMA <strong>broadband</strong> bridge<br />
By adopting <strong>Huawei</strong>’s 4th generation BTSs on its CDMA2000 network, PCCW is now able to provide<br />
advanced <strong>broadband</strong> data and global data roaming services for both local and overseas’ CDMA<br />
subscribers in Hong Kong.<br />
By Zhao Yahui Editor: Li Xuefeng xuefengli@huawei.com<br />
FEB 2009 / Win-Win<br />
28
Winners<br />
Operating a CDMA2000 network in <strong>the</strong> 850MHz band<br />
will give PCCW <strong>the</strong> performance, cost-effectiveness<br />
and network adaptability to own a decisive stake of<br />
Hong Kong’s <strong>mobile</strong> telecom market.<br />
With its strategic location and a<br />
history as an international finance<br />
center, Hong Kong accommodates<br />
visitors and business people from<br />
all over <strong>the</strong> world, including CDMA subscribers<br />
from North America and <strong>the</strong> Asia-Pacific<br />
region. However, Hong Kong’s lagging CDMA<br />
infrastructure has for some time challenged <strong>the</strong><br />
city’s ability to cope with subscribers’ <strong>broadband</strong><br />
communication requirements.<br />
In a decisive move, Hong Kong’s largest<br />
integrated telecom operator PCCW decided<br />
to eliminate this problem. In November 2007,<br />
PCCW acquired a 15-year CDMA2000 operating<br />
license, and began construction preparations for its<br />
CDMA2000 1xEV-DO Rev. A network.<br />
Quality first<br />
P C C W i s n o t o n l y o n e o f A s i a’s m o s t<br />
powerful communications service providers, but<br />
also a leading ICT enterprise. For PCCW, <strong>the</strong><br />
opportunity to rapidly construct and operate a<br />
high-quality CDMA2000 network provided a<br />
means for <strong>the</strong> company to fur<strong>the</strong>r enhance its<br />
brand equity in <strong>the</strong> Asian-Pacific region. Richard<br />
Midgett, <strong>the</strong> Managing Director of Mobility at<br />
PCCW, stated that, “CDMA2000 will enhance our<br />
capability in offering advanced <strong>broadband</strong> wireless<br />
services to subscribers. The technology will provide<br />
a valuable roaming footprint and help to fur<strong>the</strong>r<br />
boost our brand.”<br />
The increasing intensity of competition in Hong<br />
Kong has meant that network coverage and service<br />
quality have overtaken price as <strong>the</strong> preconditions<br />
for market success. To realize a sustainable<br />
business model, PCCW sought a solution capable<br />
of delivering differentiated services quickly and<br />
economically. As a result, PCCW collaborated with<br />
<strong>Huawei</strong> in June 2008 to launch Hong Kong’s first<br />
CDMA2000 network.<br />
Speeding <strong>the</strong> dream<br />
Rapid deployment<br />
Hong Kong is characterized by an unusually<br />
complex terrain that encompasses islands, hills and<br />
bays. The myriad fingers of towering buildings<br />
punctuate <strong>the</strong> city’s skyline. People crowd every<br />
square kilometer of Hong Kong and its bustling<br />
central business districts. All in all, more than 7<br />
million residents, and nearly 3 million visitors every<br />
month, pack <strong>the</strong>mselves into <strong>the</strong> densely developed<br />
areas of this incredibly dynamic city.<br />
Not only is Hong Kong’s wireless network<br />
construction environment probably <strong>the</strong> world’s<br />
most complex, it is also extremely hard to obtain<br />
wireless sites, which is exacerbated by some of<br />
<strong>the</strong> world’s highest rental terms. Leveraging an<br />
existing investment, PCCW decided to co-locate<br />
its new CDMA network with its existing UMTS<br />
network to fully utilize resources and cut CAPEX.<br />
One problem was <strong>the</strong> prohibitively large size and<br />
voracious power demands of traditional CDMA<br />
BTSs. These negative attributes would dramatically<br />
increase OPEX and off-set any CAPEX savings,<br />
while adversely impacting <strong>the</strong> local environment.<br />
With <strong>the</strong>se challenges and factors in mind,<br />
PCCW found a solution with <strong>Huawei</strong>’s 4th<br />
29<br />
Win-Win / FEB 2009
generation BTS. Based on advanced power<br />
amplification and multi-carrier technologies, <strong>the</strong><br />
compact 4th generation BTS is highly integrated<br />
and efficient. Not only does it occupy smaller<br />
space, but it also reduces power consumption by<br />
as much as 60%, which in turn lowers <strong>the</strong> power<br />
needed to cool equipment rooms. Moreover,<br />
BSC requires only one tenth of <strong>the</strong> power used<br />
in traditional solutions, substantially minimizing<br />
<strong>the</strong> network’s total eco-footprint and significantly<br />
curtailing OPEX.<br />
<strong>Huawei</strong>’s 4th generation BTS adopts a modular<br />
and distributed design with a 2U BBU. In turn,<br />
<strong>the</strong> normal complexity of excessive cabling is<br />
dramatically reduced, allowing <strong>the</strong> unit to be<br />
housed with o<strong>the</strong>r equipment without requiring<br />
any special facilities. Small and light, <strong>the</strong> RRU can<br />
be installed near <strong>the</strong> antenna and connected to <strong>the</strong><br />
BBU with fibers to reduce feeder loss. The coverage<br />
of <strong>the</strong> BTS is expanded, and installation is much<br />
quicker and less costly.<br />
Enhanced performance<br />
In addition to minimal TCO and rapid network<br />
deployment, PCCW imposed strict requirements<br />
on network performance and evolution capabilities.<br />
Compared with <strong>the</strong> traditional solution, <strong>the</strong><br />
<strong>Huawei</strong> BTS enhances transmit power and receive<br />
sensitivity by at least 3dB, which is equivalent to a<br />
40% increase in coverage.<br />
This in turn greatly reduces <strong>the</strong> number of<br />
BTSs required in <strong>the</strong> solution, while network<br />
performance and subscriber experience are also<br />
considerably enhanced.<br />
Based on <strong>the</strong> complex environment for wireless<br />
network construction in Hong Kong, <strong>Huawei</strong><br />
provided <strong>the</strong> innovative PerformA solution, which<br />
features a network health check function to improve<br />
overall performance. By employing comprehensive<br />
QoS and QoE testing technologies, hidden network<br />
problems can be quickly located and rectified to<br />
maximize overall KPI. Advanced performance<br />
translates directly into improved subscriber<br />
experiences, increased traffic and revenues.<br />
Featuring high capacity BSCs, BTSs, and an<br />
intelligent QoS control algorithm for PerformAbased<br />
voice and data services, PCCW’s data service<br />
and control flexibility capabilities were significantly<br />
enhanced, all of which paved <strong>the</strong> way for highspeed<br />
data provision across <strong>the</strong> CDMA network.<br />
Evolving <strong>the</strong> network by using <strong>Huawei</strong>’s 4th<br />
generation BTSs based on IP and <strong>broadband</strong><br />
technologies has increased PCCW’s RF channel<br />
bandwidth and transmission interface bandwidth<br />
to more than 20Mbps and 100Mbps respectively.<br />
Moreover, data configuration protects PCCW’s<br />
investment by enabling <strong>the</strong> BTSs to be used in<br />
multiple systems.<br />
The communications bridge<br />
In December 2008, after successfully completing<br />
its CDMA network in <strong>the</strong> Kowloon peninsula and<br />
<strong>the</strong> nor<strong>the</strong>rn area of Hong Kong, PCCW launched<br />
its CDMA2000 services. Network deployment has<br />
been planned over three phases, <strong>the</strong> culmination of<br />
which will extend coverage to central Hong Kong,<br />
airports, railway stations, tunnels, and border<br />
control stations.<br />
In <strong>the</strong> meantime, PCCW has signed roaming<br />
agreements with numerous operators including<br />
China Telecom, <strong>the</strong> Asia Pacific Telecom Group,<br />
KDDI, SK Telecom, LG Telecom, Sprint and<br />
o<strong>the</strong>rs. Overseas CDMA subscribers arriving in<br />
Hong Kong are automatically switched to PCCW’s<br />
CDMA network and can surf <strong>the</strong> Internet through<br />
CDMA <strong>mobile</strong> phones or computers with a<br />
CDMA adapter.<br />
With <strong>Huawei</strong>’s solution, PCCW is well<br />
positioned to handle <strong>the</strong> intricate ramifications of<br />
this formidable city’s <strong>mobile</strong> <strong>broadband</strong> needs for<br />
many years to come. As Perry LaForge, CDMA<br />
Development Group’s Executive Director, points<br />
out, “Operating a CDMA2000 network in <strong>the</strong><br />
850MHz band will give PCCW <strong>the</strong> performance,<br />
cost-effectiveness and network adaptability to own<br />
a decisive stake of Hong Kong’s <strong>mobile</strong> telecom<br />
market.”<br />
FEB 2009 / Win-Win<br />
30
Winners<br />
RELIANCE<br />
growth has no limit<br />
Reliance Communications reduces its <strong>mobile</strong> network TCO through integration. Meanwhile, it adopts <strong>Huawei</strong>’s<br />
4th generation BTS for network construction, laying a firm, cost-effective foundation for future growth and<br />
maintaining a substantial market share.<br />
By Xu Yan<br />
Editor: Liu Zhonglin liuzhonglin@huawei.com<br />
31<br />
Win-Win / FEB 2009
Managing <strong>the</strong> largest network<br />
expansion in <strong>the</strong> world<br />
India is experiencing <strong>the</strong> fastest CDMA<br />
subscriber and market growth rate of any<br />
country in <strong>the</strong> world today. Reliance, <strong>the</strong><br />
second largest telecom operator in India,<br />
was established in 1999, is an integrated telecom<br />
operator that initiated its original network<br />
almost 10 years ago. In recent years, faced with<br />
extraordinary competition from India’ several<br />
rival telecoms, Reliance felt an urgent need to<br />
accelerate CDMA network optimization and<br />
expand to address GSM network needs, while<br />
reducing CAPEX and maintenance costs through a<br />
nationwide integration program.<br />
Reliance’s original TDM based CDMA network<br />
generated significant problems. Network coverage<br />
expansion entailed extremely high costs if TDM<br />
construction was to be involved, and network<br />
structure complexity and OPEX would both<br />
subsequently increase. There would also be some<br />
inherent impediments to <strong>the</strong> speedy launch of new<br />
services and <strong>the</strong> ability to conform to IP network<br />
development trends would be severely inhibited.<br />
After an exhaustive assessment evaluation of <strong>the</strong><br />
world’s leading vendors, Reliance embarked on a<br />
network commercialization contract with <strong>Huawei</strong><br />
in late 2006. Just six months later, Reliance<br />
awarded <strong>Huawei</strong> 60% of <strong>the</strong>ir massive network<br />
transformation project. On July 12, 2007, Reliance<br />
and <strong>Huawei</strong> officially signed a long-term strategic<br />
cooperation agreement detailing a next generation<br />
integrated digital network construction; integrating<br />
<strong>mobile</strong> and fixed lines; supporting voice, data,<br />
and video, and covering over 600,000 villages and<br />
20,000 towns. The ultimate goal is to create India’s<br />
largest telecom network.<br />
New and improved<br />
competitiveness<br />
Reliance’s strategy is to quickly enter <strong>the</strong> GSM<br />
market and grab market share after shifting its<br />
CDMA network operation to GSM and CDMA<br />
dual-network operations. Simultaneously, <strong>the</strong>y<br />
optimized <strong>the</strong> original CDMA network, improving<br />
competitiveness and keeping subscribers, while<br />
entering <strong>the</strong> GSM market quickly to maximize<br />
expansion.<br />
Enhancing spectrum usage<br />
The GSM spectrum allotment of Reliance<br />
is rare. It is not quite enough for large-scale<br />
networking in metropolises such as Delhi, Bombay,<br />
and Chennai. How to deploy larger sites with<br />
limited spectrum resources that could handle <strong>the</strong><br />
demands of <strong>the</strong>se densely populated urban areas?<br />
<strong>Huawei</strong> offered fast and efficient frequency reuse<br />
solutions to help <strong>the</strong>m tackle <strong>the</strong> problem.<br />
Reliance succeeded in deploying <strong>the</strong> S4/4/4<br />
sites to aggressively reuse 4.4MHz bandwidth<br />
frequency sources. Limited spectrum bandwidth<br />
is a thing of <strong>the</strong> past and now <strong>the</strong>y have enough<br />
to provide enhanced subscriber services in <strong>the</strong><br />
FEB 2009 / Win-Win<br />
32
Winners<br />
As of September 2008, Reliance had 55 million <strong>mobile</strong><br />
subscribers in India or 18% of <strong>the</strong> market. They provide<br />
coverage for 20,000 towns and 450,000 villages, with<br />
dramatic growth that shows no signs of slackening.<br />
dense urban environs of <strong>the</strong>se megalopolises. The<br />
U Interface Soft Synchronization (UISS) and<br />
interference elimination technologies are used to<br />
reduce interference between networks, allowing<br />
subscribers to enjoy better quality and experiences.<br />
Saving equipment room space<br />
With CDMA sites already being deployed, <strong>the</strong><br />
extra space should be utilized for placing <strong>the</strong> GSM<br />
equipment to reduce TCO.<br />
Reliance uses <strong>Huawei</strong>’s highly integrated GSM<br />
base station which supports up to 18 GSM carries<br />
by using one cabinet in an area of less than 0.5<br />
square meters. What’s more, extra space is reserved<br />
in <strong>the</strong> base station for expansion. The footprint is<br />
small and <strong>the</strong> sound adaptability is so superb that<br />
Reliance is considering sharing its site resources<br />
with o<strong>the</strong>r operators to convert its costs into added<br />
revenue.<br />
In big cities like Bombay and Delhi, co-location<br />
of GSM and CDMA sites is largely used by<br />
Reliance to share auxiliary devices like antennas,<br />
feeders, and power supplies. The construction cost<br />
is <strong>the</strong>n far lower than that for conventional separate<br />
network construction.<br />
Decreasing power costs<br />
India has been dealing with a power shortage<br />
for years. As <strong>the</strong> prices of gas and coal rise, so does<br />
electricity costs and leads to soaring electricity<br />
prices. What’s more, due to equipment aging and<br />
electrical loss during transmission, <strong>the</strong> transmission<br />
loss rate is up to 50% in New Delhi. Power costs<br />
make up over 60% of <strong>the</strong> Reliance’s operational<br />
expenditure (OPEX).<br />
It was imperative to lower electricity costs in<br />
thousands of base stations while still providing<br />
excellent service. Reliance searched for <strong>the</strong> most<br />
efficacious way and found <strong>Huawei</strong>’s high-efficiency<br />
power amplification (PA) technology. The PA<br />
efficiency keeps ahead in <strong>the</strong> industry, cutting <strong>the</strong><br />
power consumption of <strong>the</strong> base station by over<br />
60% while providing <strong>the</strong> same coverage. This is<br />
important in India where electricity is expensive<br />
and <strong>the</strong> electrical transmission loss is high.<br />
Moreover, Reliance adopted <strong>Huawei</strong>’s intelligent<br />
power control technology. When traffic is low, a<br />
single or even several carrier modules are used for<br />
subscriber services and o<strong>the</strong>r idle resources are shut<br />
down. Alternately, different parts of time slots on<br />
one carrier are shut down to lower transmission<br />
energy consumption. This way <strong>the</strong> idle energy<br />
usage of base stations is minimized and a high level<br />
of quality of service (QoS) is ensured.<br />
Reducing transmission costs<br />
In India, traffic is much more concentrated<br />
and heavier in some areas with a great number of<br />
calls in one base station or one BSC. In traditional<br />
GSM solutions, this kind of traffic is transmitted<br />
to <strong>the</strong> core network equipment and <strong>the</strong>n sent<br />
back to <strong>the</strong> initial base station after switching. In<br />
o<strong>the</strong>r words, <strong>the</strong> traffic data stream starts out local,<br />
travels a long distance and finally returns back. The<br />
process wastes transmission resources on <strong>the</strong> uplink<br />
33<br />
Win-Win / FEB 2009
and downlink.<br />
To remedy <strong>the</strong> situation, Reliance adopted<br />
<strong>Huawei</strong>’s local switching solution: In a base station,<br />
<strong>the</strong> traffic data stream is directly sent to ano<strong>the</strong>r<br />
subscriber without traveling through <strong>the</strong> core<br />
network equipment, dramatically reducing <strong>the</strong><br />
requirements for transmission bandwidth. If this<br />
solution is used in 40,000 base stations, a great deal<br />
of transmission and maintenance expenses can be<br />
saved.<br />
Winning <strong>the</strong> future via an<br />
advanced platform<br />
3G is a significant strategy for Reliance. One of<br />
<strong>the</strong> main reasons why Reliance chooses <strong>Huawei</strong> for<br />
GSM network construction is to pave <strong>the</strong> way for<br />
3G.<br />
By applying <strong>Huawei</strong>’s future-oriented GSM<br />
solutions, Reliance’s network can be easily upgraded<br />
to 3G. In <strong>Huawei</strong>’s highly integrated GSM base<br />
station, part of <strong>the</strong> cabinet space is sufficient for<br />
<strong>the</strong> need of capacity, and <strong>the</strong> remaining space<br />
can be used for placing <strong>Huawei</strong>’s 4th generation<br />
UMTS RF module and baseband processing unit.<br />
UMTS sites are supported by simply upgrading<br />
<strong>the</strong> base station, without changing its structure and<br />
avoiding large-scale reconstruction. In one cabinet,<br />
2G and 3G networks operate at <strong>the</strong> same time,<br />
fully extending <strong>the</strong> life cycle of equipment.<br />
Reliance can even use <strong>Huawei</strong>’s 4th generation<br />
BTS to provide multiple access services. According<br />
to market development, <strong>the</strong>y can smoothly adjust<br />
<strong>the</strong> system capacity to match network operation<br />
strategy. With <strong>the</strong> unified platform of <strong>Huawei</strong>’s 4th<br />
generation BTS, Reliance can combine multiple<br />
networks into one network, readily catering to <strong>the</strong><br />
complex, capriccioso demands of <strong>the</strong> market.<br />
The dual-mode operation of <strong>the</strong> UMTS/LTE<br />
and CDMA/LTE as demonstrated by <strong>Huawei</strong><br />
has given Reliance complete confidence in future<br />
LTE evolution. Based on <strong>Huawei</strong>’s experience in<br />
smooth multi-path evolution, <strong>the</strong>y are deploying<br />
<strong>the</strong> 4th generation multi-mode base stations to<br />
ensure smooth evolution from <strong>the</strong> UMTS to <strong>the</strong><br />
LTE and from <strong>the</strong> CDMA to <strong>the</strong> LTE, creating a<br />
rock-solid, yet flexible foundation for <strong>the</strong> future.<br />
Network reliability, QoS, service innovation, and<br />
launch speeds have been rapidly improved so as<br />
to guarantee a fast increase in subscriber numbers,<br />
enhance customer loyalty and increase market<br />
share.<br />
As of September 2008, Reliance had 55<br />
million <strong>mobile</strong> subscribers in India or 18% of <strong>the</strong><br />
market. They provide coverage for 20,000 towns<br />
and 450,000 villages, with dramatic growth that<br />
shows no signs of slackening. Reliance is known<br />
for its network reliability and is reliably expanding<br />
because it understands <strong>the</strong> reality of telecom<br />
service in India and is committed to providing its<br />
customers with <strong>the</strong> best service at <strong>the</strong> best price.<br />
<strong>Huawei</strong> is more than pleased to be a reliable<br />
partner in <strong>the</strong>ir continued success.<br />
FEB 2009 / Win-Win<br />
34
Winners<br />
ORANGE<br />
dreams come true<br />
After many years in business, and a massive operational effort, Orange now ranks fourth in <strong>the</strong> world<br />
and number two in Europe as a full-service operator. Meanwhile, <strong>the</strong> cooperation between <strong>Huawei</strong> and<br />
Orange has moved into <strong>the</strong> fast lane.<br />
By Zhao Yuan Editor: Li Xuefeng xuefengli@huawei.com<br />
35<br />
Win-Win / FEB 2009
In Paris, London, Belgium, and even Egypt,<br />
you will find <strong>the</strong> uniform service brand of<br />
France Telecom–Orange, which has built its<br />
brand loyal customer base on outstanding<br />
and responsive services. After many years in<br />
business, and a massive operational effort, Orange<br />
now ranks fourth in <strong>the</strong> world and number two<br />
in Europe as a full service operator. Orange has<br />
distributed its <strong>mobile</strong> networks in 23 countries,<br />
covering 110 million subscribers and operating <strong>the</strong><br />
biggest 3G network in <strong>the</strong> world.<br />
Story behind <strong>the</strong> glory<br />
France Telecom has consistently been regarded<br />
as highly innovative among <strong>the</strong> world’s leading<br />
telecom operators and launched its three-year<br />
transformation strategy named “NExT” in June<br />
2005. They have made great strides ever since. In<br />
2007, France Telecom’s annual sales revenue was<br />
EUR52.9 billion, which was an unprecedented<br />
amount of income.<br />
NExT is focused on <strong>mobile</strong> <strong>broadband</strong> service<br />
and subscriber numbers continuously rise. In 2006,<br />
<strong>the</strong>re were 5.8 million Orange <strong>mobile</strong> <strong>broadband</strong><br />
users, compared with 1.6 million users in 2005.<br />
The number of <strong>broadband</strong> users kept streaming<br />
upward in 2007 and net profits increased by 52%<br />
compared to 2006.<br />
It is Orange’s diligence that has brought those<br />
remarkable numbers. As one of <strong>the</strong> most powerful<br />
operators in terms of research and development<br />
in Europe, Orange knows quite well that network<br />
transformation is <strong>the</strong> most direct and most effective<br />
support to service transformation.<br />
Success in transformation depends heavily<br />
on deployment of advanced networks that can<br />
smoothly evolve in <strong>the</strong> future. Success of <strong>mobile</strong><br />
<strong>broadband</strong> service is also inseparable from advanced<br />
networks, especially for <strong>the</strong> high-speed data<br />
service. To smoothly develop <strong>mobile</strong> <strong>broadband</strong><br />
service, strong co-operative links in <strong>the</strong> chain are<br />
indispensable.<br />
Orange has stringent standards when it comes to<br />
choosing strategic equipment suppliers. Its partners<br />
must be leaders in <strong>the</strong> technological fields, stable<br />
and resourceful enough to cooperate on a longterm<br />
basis.<br />
In early 2006, Orange launched <strong>the</strong> re-bidding<br />
for <strong>the</strong> 3G RAN project, which was to be held<br />
every three years. Based on strict testing procedures<br />
and whole-process auditing, <strong>the</strong> capacity test results<br />
showed that <strong>Huawei</strong>’s HSDPA, high-speed railway<br />
FEB 2009 / Win-Win<br />
36
Winners<br />
The Orange dream of providing a whole lot more<br />
advanced communications services to more people all<br />
over <strong>the</strong> world is coming true. The popularity of <strong>the</strong><br />
brand shows <strong>the</strong> positive response from users.<br />
coverage, and power amplification efficiency were<br />
all beyond <strong>the</strong> expectations of Orange’s R&D<br />
department. Due to excellent product performance<br />
and distinctive HSPA solution, <strong>Huawei</strong> beat <strong>the</strong><br />
competition and a successful co-operation between<br />
Orange and <strong>Huawei</strong> began.<br />
Initial success in <strong>mobile</strong><br />
<strong>broadband</strong><br />
The previously used 3G network could not meet<br />
<strong>the</strong> requirements for <strong>mobile</strong> <strong>broadband</strong> service<br />
development, so in December 2006, Orange<br />
Romania decided to swap its 3G network. As <strong>the</strong><br />
sole supplier, <strong>Huawei</strong> changed and constructed<br />
thousands of 3G base stations in more than 30<br />
cities for Orange Romania.<br />
Upon completion of <strong>the</strong> whole network,<br />
multiple KPI values of <strong>the</strong> Orange Romania<br />
network surpassed those of <strong>the</strong> former network<br />
(e.g., <strong>the</strong> success rate of 2G/3G handover in<br />
<strong>the</strong> new network was up by 5%). The customer<br />
satisfaction rate was also markedly higher. The new<br />
3G network elevated <strong>the</strong> subscription base up to<br />
10 million in March 2008 for Orange Romania,<br />
which reinforced <strong>the</strong> Group’s trust in <strong>Huawei</strong>.<br />
Similarly, <strong>the</strong> second largest operator Mobistar<br />
(Orange-owned) in Belgium also faced <strong>the</strong> problem<br />
of having to relocate <strong>the</strong> former 3G base stations.<br />
The focus was especially on Brussels, capital of<br />
Belgium, home to <strong>the</strong> European Union, and HQs<br />
of multiple international organizations. Many<br />
high level international meetings of all sorts are<br />
held in Brussels each year, so ensuring high-quality<br />
<strong>mobile</strong> communications service is a top priority for<br />
Mobistar.<br />
Based on a detailed survey and a careful plan,<br />
<strong>Huawei</strong> implemented <strong>the</strong> new radio network<br />
conforming to <strong>the</strong> local environmental conditions.<br />
Older network equipment was replaced with <strong>the</strong><br />
new distributed base stations, lowering <strong>the</strong> call<br />
drop rate, enhancing <strong>the</strong> network stability, and<br />
improving <strong>the</strong> throughput capacity of <strong>the</strong> system<br />
bandwidth.<br />
For <strong>the</strong> first time, Orange Belgium realized<br />
end-to-end All-IP after <strong>the</strong> new 3G network was<br />
set up. The end-to-end All-IP provided users with<br />
abundant services, such as <strong>mobile</strong> <strong>broadband</strong>, VoIP,<br />
and CMMB, and met <strong>the</strong> requirements for highspeed<br />
<strong>mobile</strong> data service during <strong>the</strong> F1 Belgian<br />
Grand Prix.<br />
The NExT strategy has been successful from<br />
<strong>the</strong> beginning and Orange has officially started <strong>the</strong><br />
strategic partnership with <strong>Huawei</strong>.<br />
Pursuing green<br />
Environmental protection, energy conservation<br />
and emission reduction lower operational costs<br />
while showing social responsibility. Besides new<br />
services for <strong>the</strong> high-quality network users, Orange<br />
is also actively responding to <strong>the</strong> EU’s Green<br />
Action Plan and diligently taking green actions.<br />
Because of its large number of users and sizeable<br />
income, <strong>the</strong> sub-network in Poland ranks among<br />
<strong>the</strong> top four in <strong>the</strong> Orange Group (<strong>the</strong> o<strong>the</strong>rs:<br />
37<br />
Win-Win / FEB 2009
England, France, and Spain).<br />
The old <strong>mobile</strong> network created a lot of pressure<br />
for Orange Poland due to <strong>the</strong> large sizes of base<br />
stations, high power consumption, and high total<br />
cost of ownership (TCO). The CEO of Orange<br />
Poland attached great importance to technical<br />
innovation and wanted development of <strong>the</strong> 3G<br />
network and HSPA. Never<strong>the</strong>less, <strong>the</strong> former<br />
equipment simply could not satisfy <strong>the</strong>ir needs in<br />
terms of HSPA performance and network evolution.<br />
Orange started to test <strong>the</strong> RAN10.0 with<br />
<strong>Huawei</strong> in 2007. Comparing <strong>the</strong> former base<br />
stations with <strong>Huawei</strong>’s with <strong>the</strong> same configuration,<br />
Orange found that <strong>the</strong> power consumption of<br />
<strong>Huawei</strong>’s base stations was 30% lower than <strong>the</strong><br />
base stations <strong>the</strong>y were previously using. Then <strong>the</strong><br />
news came that <strong>Huawei</strong> had successfully swapped<br />
this kind of base station for Vodafone Spain and<br />
<strong>the</strong> KPI substantially rose. Orange chose <strong>Huawei</strong><br />
to adjust and expand its 3G network in Poland.<br />
During construction, advantages of <strong>the</strong><br />
distributed base station were obvious. The largesized<br />
micro base stations of <strong>the</strong> old network must<br />
be installed by using a crane which costs EUR1800<br />
each time. The distributed base station features a<br />
small size (1/3 of <strong>the</strong> former base station) and is<br />
lightweight, making it portable, easy to install by<br />
hand.<br />
Meanwhile, prices started soaring after Poland<br />
joined <strong>the</strong> EU. Leasing costs for <strong>the</strong> equipment<br />
room and electricity also rose. It was a timely<br />
implementation as <strong>the</strong> small size and low power<br />
consumption of <strong>the</strong> distributed bases station<br />
effectively lowered <strong>the</strong> construction and O&M<br />
costs.<br />
All base stations adopt <strong>the</strong> same type,<br />
configuration, and software. The BBU of <strong>the</strong><br />
distributed base station can be integrated to <strong>the</strong><br />
cabinet of <strong>the</strong> 2G base station, which integrates<br />
<strong>the</strong> resources, eases <strong>the</strong> O&M, and lowers <strong>the</strong><br />
operational expenditure (OPEX).<br />
The newly constructed 3G network is also<br />
outstanding in <strong>the</strong> HSPA capacity. Orange is <strong>the</strong><br />
first operator to provide commercial HSUPA<br />
services. In a few months, Orange quickly took <strong>the</strong><br />
leading position for 3G data service providers in<br />
Poland. User numbers increased by 20%, ranking<br />
first in Poland and <strong>the</strong> ARPU for data downloading<br />
doubled, streng<strong>the</strong>ning <strong>the</strong>ir competitiveness.<br />
Thereby, Orange Poland’s CTO specially sent a<br />
thank-you letter to <strong>Huawei</strong>’s project team. And Ms.<br />
Grazyna Piotrowska Oliwa, Chairman & CEO of<br />
Orange Poland highly lauded <strong>Huawei</strong>. “We believe<br />
that <strong>Huawei</strong> can enable us to implement <strong>the</strong> most<br />
modern telecommunications technologies and<br />
provide high quality networks and services, while<br />
significantly reducing <strong>the</strong> total cost of ownership,”<br />
said Ms. Grazyna Piotrowska Oliwa. “This contract<br />
recognises <strong>Huawei</strong>’s commitment to helping PTK<br />
Centertel to achieve its strategic objectives.”<br />
Orange is pretty confident about <strong>the</strong> network’s<br />
smooth evolution in <strong>the</strong> future. With <strong>the</strong> open<br />
modular structure, <strong>the</strong> distributed base station of<br />
<strong>Huawei</strong> features rich functions, easy upgrades and<br />
respective evolution between <strong>the</strong> baseband and <strong>the</strong><br />
RF. Meeting <strong>the</strong> LTE development requirements of<br />
<strong>the</strong> 3G network and ensuring advancement of <strong>the</strong><br />
network in Poland should not be a problem in <strong>the</strong><br />
future.<br />
The Orange dream of providing a whole lot<br />
more advanced communications services to more<br />
people all over <strong>the</strong> world is coming true. The<br />
color orange is bright, warm, and optimistic; <strong>the</strong><br />
popularity of <strong>the</strong> brand shows <strong>the</strong> positive response<br />
from users. <strong>Huawei</strong> is an important partner and<br />
has co-operated with Orange in constructing 17<br />
sub-networks. With development of <strong>the</strong> Orange<br />
brand all over <strong>the</strong> world, <strong>the</strong> successful partnership<br />
between Orange and <strong>Huawei</strong> will surely grow as<br />
fast as orange blossoms on a sunny day.<br />
FEB 2009 / Win-Win<br />
38
Winners<br />
CHINA MOBILE<br />
powered by All-IP<br />
Market competition is cut-throat, and competitors are aggressively courting new subscribers with<br />
attractive subsidies and tariff packages. How does China Mobile adjust its development strategy to<br />
ensure <strong>the</strong> leading position?<br />
By Wu Yanning Editor: Michael Huang huangzhuojian@huawei.com<br />
39<br />
Win-Win / FEB 2009
Few people are familiar with China Mobile’s<br />
difficult past. Without implementing<br />
an All-IP strategy earlier than its rivals,<br />
<strong>the</strong> Chinese giant might be away from<br />
its rightful position as one of <strong>the</strong> globe’s leading<br />
operators.<br />
As China’s leading telecom services provider,<br />
China Mobile boasts <strong>the</strong> world’s largest <strong>mobile</strong><br />
subscriber base. Serviced by a unified, all-digital<br />
<strong>mobile</strong> network, its subscribers topped 450 million<br />
on November 30, 2008, while <strong>the</strong> number of new<br />
monthly subscribers to its services has reached a<br />
staggering 4 million. China Mobile’s GSM and<br />
GPRS global roaming services cover 219 and 138<br />
regions and countries respectively. The creative<br />
addition of value-added services has culminated in<br />
27% of its revenue deriving from non-traditional<br />
services such as CRBT, music downloads, and a<br />
range of Internet-based services.<br />
Time for a bold move<br />
2003, however, marked a year replete with<br />
difficulties for China Mobile. Market competition<br />
was cut-throat, and competitors were aggressively<br />
courting new subscribers with attractive subsidies<br />
and tariff packages. Internally, <strong>the</strong> company was<br />
saddled with a TDM-based network that was at<br />
80% capacity and betraying signs that customer<br />
demand would soon outpace its capabilities.<br />
While new domestic subscribers had grown from<br />
60 million in 2001 to 62 million in 2003, China<br />
Mobile actually lost its new subscribers during <strong>the</strong><br />
same period, suffering a sharp decline from 32<br />
million to 24 million. This was nothing short of a<br />
crisis in a market with a <strong>mobile</strong> penetration rate of<br />
only 21%.<br />
To reverse <strong>the</strong> situation, China Mobile decided<br />
to adjust its development strategy in a number of<br />
ways. Firstly, <strong>the</strong> company decided to reconstruct<br />
its network with future-oriented nascent<br />
technologies to enhance service capabilities and<br />
reduce TCO. Secondly, it sought to transform its<br />
role from a “<strong>mobile</strong> communications expert” to a<br />
“<strong>mobile</strong> information expert”.<br />
The legacy TDM network of China Mobile<br />
had been <strong>the</strong> largest <strong>mobile</strong> network in <strong>the</strong> world,<br />
providing services for 150 million subscribers a<br />
decade after its inception. Network expansion,<br />
however, would increase topology complexity,<br />
resulting in declined quality but increased ancillary<br />
costs, including <strong>the</strong> costs related to transmission,<br />
equipment rooms, power consumption, and<br />
human resources. In a bold move fraught with risk,<br />
China Mobile acted decisively and positioned All-<br />
FEB 2009 / Win-Win<br />
40
Winners<br />
IP transformation as <strong>the</strong> core of its strategy, opting<br />
for a 3G-ready network that was optimized for <strong>the</strong><br />
currently prevalent 2G environment.<br />
China Mobile selected <strong>Huawei</strong> as its strategic<br />
partner to realize All-IP transformation due to <strong>the</strong><br />
latter’s impressive aggregate experience in numerous<br />
related fields. The <strong>Huawei</strong> solution incorporated<br />
2G/3G IP-based core networks coupled with<br />
a voice quality enhancement (VQE) solution<br />
capable of delivering carrier-class QoS for voice<br />
services. With a resulting 50% efficiency increase<br />
over TDM, <strong>the</strong> entire network was restructured to<br />
preempt <strong>the</strong> hidden problems that can infect a new<br />
Reaping major benefits<br />
Project progress was mirrored by <strong>the</strong> cumulative<br />
benefits visited upon China Mobile. From 2004 to<br />
2007, subscriber numbers doubled, during which<br />
time traffic skyrocketed to 1.8 trillion minutes with a<br />
completion rate of 99%. OPEX was greatly reduced,<br />
with average MSC power consumption dropping<br />
by 63%, and 20% OPEX savings were gained by<br />
optimizing systems and centralizing O&M.<br />
These reductions allowed China Mobile to<br />
penetrate <strong>the</strong> vast rural market, which propelled<br />
IP transformation of <strong>the</strong> whole network is a grand project,<br />
it requires a partner who understands both IP and <strong>mobile</strong><br />
communications technologies. We are pleased to have<br />
<strong>Huawei</strong> as our partner.<br />
—Ms. He Bin, Vice President of China Mobile Shaanxi<br />
IP infrastructure.<br />
To meet <strong>the</strong> requirements that <strong>the</strong> new<br />
network dealt, China Mobile adopted a multilevel<br />
management system with centralized realtime<br />
monitoring, dual-homing, N+1 backup, and<br />
<strong>mobile</strong> switch center (MSC) pool. These measures<br />
optimized security for <strong>the</strong> variety of All-IP NEs.<br />
The risk minimization strategy established three<br />
major strategic phases. The first phase constructed a<br />
tandem IP backup network parallel to <strong>the</strong> existing<br />
tandem TDM network in order to seamlessly<br />
migrate traffic to <strong>the</strong> IP network. The second phase<br />
expanded <strong>the</strong> IP bearer layer to <strong>the</strong> local network,<br />
under which <strong>the</strong> control and transmission bearers<br />
were based on All-IP. The final stage transformed<br />
<strong>the</strong> wireless access layer to All-IP.<br />
<strong>the</strong> company’s growth rates with considerable force.<br />
By utilizing a dual 2G/3G IP based core network,<br />
China Mobile completed a crucial network control<br />
and service transmission phase in terms of 3G<br />
infrastructure without activating any of <strong>the</strong> risks<br />
that accompanied <strong>the</strong> scheme.<br />
China Mobile acted swiftly and confidently in<br />
<strong>the</strong> face of a plethora of challenges from its rivals<br />
coupled with <strong>the</strong> lagging legacy network. The<br />
bold move to All-IP and <strong>the</strong> choice of <strong>Huawei</strong><br />
as its partner spearheaded a flexible, reliable, and<br />
expandable network that drove China Mobile’s<br />
efforts to widen <strong>the</strong>ir market lead. As <strong>the</strong> network<br />
begins to accommodate more 3G traffic, <strong>the</strong> results<br />
of this far-sighted strategy are becoming more<br />
evident.<br />
41<br />
Win-Win / FEB 2009
MegaFon<br />
transforms and prepares for 3G<br />
MegaFon was quickly expanding throughout <strong>the</strong> Russian Federation but <strong>the</strong>ir MGC-based network could not<br />
keep up. As <strong>the</strong> expenses mounted, with <strong>the</strong> looming award of 3G licenses, MegaFon decided to transform <strong>the</strong>ir<br />
network to All-IP.<br />
By Lu Chao Editor: Joy Zhou zhouhj@huawei.com<br />
FEB 2009 / Win-Win<br />
42
Winners<br />
After <strong>the</strong> transformation, MegaFon could easily meet <strong>the</strong><br />
user capacity expansion requirements for <strong>the</strong> solution’s<br />
large capacity of up to 3.2 million users in a single MSS.<br />
MegaFon was quickly expanding<br />
throughout <strong>the</strong> Russian Federation<br />
but <strong>the</strong>ir MGC-based network<br />
could not keep up. As <strong>the</strong> expenses<br />
mounted, with <strong>the</strong> looming award of 3G licenses,<br />
<strong>the</strong>y decided that <strong>the</strong>y needed to transform <strong>the</strong>ir<br />
network to All-IP. After partnering with <strong>Huawei</strong>,<br />
MegaFon implemented an All-IP converged<br />
2G/3G core network that reduces <strong>the</strong>ir costs and<br />
positions <strong>the</strong>m to continue growing.<br />
Covering <strong>the</strong> Russian<br />
Federation<br />
MegaFon was <strong>the</strong> first all-Russian GSM <strong>mobile</strong><br />
operator. It was founded in 2002 through <strong>the</strong><br />
combination of a number of regional operators<br />
and provides end users with comprehensive<br />
<strong>mobile</strong> communications services across <strong>the</strong><br />
Russian Federation. After telecom reform in<br />
1992, Russia and <strong>the</strong> CIS telecom industry grew<br />
rapidly, especially <strong>the</strong> <strong>mobile</strong> market. By <strong>the</strong> end<br />
of Q3 2008, MegaFon has more than 41 million<br />
subscribers and its consolidated revenue grew<br />
24.9% for <strong>the</strong> nine months past. MegaFon is<br />
committed to its goal to become <strong>the</strong> revenue leader<br />
in Russian <strong>mobile</strong> communications.<br />
Out of capacity with surging<br />
subscriptions<br />
Two factors were influencing <strong>the</strong> direction of<br />
MegaFon’s planning. The first was dramatic growth in<br />
users. The second was caused by <strong>the</strong> fact that Russia<br />
planned to release 3G licenses for operators to deploy<br />
high speed <strong>mobile</strong> data service at <strong>the</strong> end of 2007.<br />
As a result of surging subscriptions, MegaFon’s<br />
existing core network was rapidly reaching its<br />
limit. Because <strong>the</strong> network was composed of oldstyle<br />
MSCs, which have a low individual capacity,<br />
<strong>the</strong> only way to increase capacity was to add<br />
more MSCs, but this would dramatically increase<br />
<strong>the</strong> network interconnections, raising costs.<br />
The existing network was also not well suited to<br />
handling <strong>mobile</strong> <strong>broadband</strong> connections, even for<br />
<strong>the</strong> relatively slow-speed EDGE connections.<br />
Based on <strong>the</strong> deep understanding of IP<br />
network, MegaFon had rolled out a 3-step All-<br />
IP transformation strategy, covering fiber to BTS/<br />
Node B, IP-based core network, and IP RAN.<br />
One of <strong>the</strong> goals for MegaFon was to have a core<br />
network that could not only handle <strong>the</strong> growth<br />
of subscribers and low-speed data, but also be<br />
able to easily expand to support 3G in a way<br />
that optimized <strong>the</strong>ir investment. This new core<br />
network should simplify maintenance and reduce<br />
operational costs as well.<br />
Converged 2G/3G All-IP<br />
softswitches solve <strong>the</strong> problem<br />
MagaFon realized that <strong>the</strong> utilization of existing<br />
43<br />
Win-Win / FEB 2009
network resources must be maximized to host a 2G<br />
and 3G integrated network. Only in this way could<br />
MagaFon safeguard investment, lower TCO, and<br />
facilitate smooth future evolution to All-IP FMC<br />
networks. By partnering with <strong>Huawei</strong>, MegaFon<br />
implemented an All-IP converged 2G/3G core<br />
network that reduces <strong>the</strong>ir costs and positions <strong>the</strong>m<br />
to continue growing.<br />
The successful deployment of a <strong>Huawei</strong> IP<br />
<strong>mobile</strong> softswitch (MSS) solution that replaced<br />
<strong>the</strong> traditional exchange network solved <strong>the</strong><br />
problems MegaFon was encountering. After <strong>the</strong><br />
transformation, MegaFon could easily meet <strong>the</strong><br />
user capacity expansion requirements because of <strong>the</strong><br />
solution’s large capacity of up to 3.2 million users<br />
in a single MSS. With 2G/3G dual access support,<br />
MegaFon can share <strong>the</strong> 2G core network resources<br />
with upcoming 3G users which will substantially<br />
save CAPEX for future 3G network construction.<br />
In addition, <strong>the</strong> IP MSS solution also supported<br />
increasing <strong>the</strong> capacity of <strong>the</strong> existing bearer network.<br />
Increased capacity, but<br />
reduced costs<br />
Even though <strong>the</strong> network capacity was greatly<br />
increased, <strong>the</strong> reduction in managed control<br />
points reduced routine operational expenses. The<br />
use of VoIP on <strong>the</strong> bearer network, with <strong>Huawei</strong><br />
enhancements to IP capacity and quality, cut<br />
transmission cost by 25%, power consumption by<br />
60% and footprint by 74%. <strong>Huawei</strong>’s specialized<br />
network design, high-quality products, timely<br />
delivery, and professional services helped MegaFon<br />
Ural capture emerging market opportunities,<br />
building a strong competitive position.<br />
According to Mr. Roman, a network manager of<br />
MegaFon Ural, “<strong>Huawei</strong> <strong>mobile</strong> softswitches with<br />
high capacity have simplified <strong>the</strong> network and <strong>the</strong>y<br />
are quite stable, especially on overload condition.”<br />
Keeping a leading position<br />
When faced with a severe capacity problem<br />
and <strong>the</strong> future opportunities related to <strong>mobile</strong><br />
<strong>broadband</strong>, MegaFon chose to make a major<br />
change to <strong>the</strong>ir network to embark on an IP<br />
transformation.<br />
To meet its strategic goals, MegaFon has been<br />
unrelentingly stringent in its choice of partner.<br />
TDM-to-IP transformation involves lengthy<br />
research, end-to-end solutions, and rapid network<br />
deployment. Not only does suppliers have to<br />
demonstrate relevant technological expertise, but<br />
<strong>the</strong>ir brand equity, service response, and delivery<br />
capacity are also under scrutiny.<br />
Since 2005, <strong>Huawei</strong> has been MegaFon’s major<br />
partner, and <strong>the</strong> two have cooperated in a wide<br />
range of fields spanning <strong>mobile</strong> BTSs, softswitch,<br />
wavelength division transmission, IP bearer, and<br />
service. As a young, ambitious company, MegaFon<br />
remains committed to maintain its leading All-IP<br />
position through customization, innovation and<br />
evolution.<br />
FEB 2009 / Win-Win<br />
44
Winners<br />
VODAFONE RO<br />
growth from one 2G/3G network<br />
In April 2008, Vodafone Romania heaved a sigh of relief: They no longer had to deal with <strong>the</strong> maintenance of<br />
independent and complicated 2G and 3G networks.<br />
By Zou Chun Editor: Joy Zhou zhouhj@huawei.com<br />
45<br />
Win-Win / FEB 2009
MANIA<br />
In April 2008, Vodafone Romania heaved<br />
a sigh of relief: They no longer had to deal<br />
with <strong>the</strong> maintenance of independent and<br />
complicated 2G and 3G networks. The<br />
original 20 switch nodes had been replaced with<br />
six unified core network (CN) nodes. The network<br />
architecture was greatly simplified and capacity rose<br />
from 460,000 lines to 1.2 million lines. Because of<br />
its advanced network architecture, <strong>the</strong> network can<br />
seamlessly evolve to IMS in <strong>the</strong> future.<br />
Leader in 2G and 3G<br />
Vodafone Romania is <strong>the</strong> largest <strong>mobile</strong> operator<br />
in Romania, with 48% of <strong>the</strong> market. It has a<br />
GSM <strong>mobile</strong> network and has recently introduced<br />
3G services. Vodafone Romania provides <strong>mobile</strong><br />
services to 8 million users, accounting for 35% of<br />
<strong>the</strong> country’s total population.<br />
Two networks, twice <strong>the</strong><br />
headaches<br />
When Vodafone Romania began to offer 3G<br />
services, <strong>the</strong>y did so by implementing a separate<br />
network, exclusively for 3G. The 2G network used<br />
TDM-based MSC core network switches and <strong>the</strong><br />
3G network was based on ATM. As both <strong>the</strong> 2G<br />
and 3G networks grew, <strong>the</strong> network soon had<br />
numerous network elements (NEs), which had<br />
to be individually managed. This required a large<br />
amount of work for O&M and <strong>the</strong>refore exerted<br />
great pressure on human resources.<br />
In addition, <strong>the</strong> individual network elements<br />
had a relatively small capacity and could not meet<br />
<strong>the</strong> rapid growth of users, requiring continual<br />
expansion. This network architecture necessitated<br />
establishing a large number of small CN offices,<br />
each of which required expenditure on site rental,<br />
power, and local personnel. The overall result was a<br />
high level of CAPEX and OPEX.<br />
One network for growth and<br />
low costs<br />
To provide for future growth and to meet <strong>the</strong><br />
demands for new services, while reducing operating<br />
expenses, Vodafone Romania decided to move<br />
to an All-IP core network architecture. This also<br />
would provide a platform to allow <strong>the</strong>m to offer<br />
fixed-<strong>mobile</strong> convergence (FMC) services.<br />
From January to April 2007, Vodafone Romania<br />
tested <strong>the</strong> CN solution provided by <strong>Huawei</strong>.<br />
The solution passed <strong>the</strong> strict testing on 643<br />
items. In September 2007, Vodafone signed <strong>the</strong><br />
project contract with <strong>Huawei</strong> to supply a 2G/3G<br />
integrated All-IP <strong>mobile</strong> softswitch network to<br />
support both <strong>the</strong> visited <strong>mobile</strong> services switching<br />
centers (VMSC) and <strong>the</strong> tandem <strong>mobile</strong>-services<br />
switching centers (TMSC).<br />
The completed network was characterized by a<br />
more flexible networking model. The sixteen 2G<br />
MSC servers, two 3G MSC servers, and two transit<br />
layer gateway <strong>mobile</strong>-services switching centers<br />
(GMSCs) of <strong>the</strong> former network were integrated<br />
into six 2G/3G MSC servers and two standby<br />
MSC servers. This integration of <strong>the</strong> original<br />
independent 2G and 3G networks into a unified<br />
CN, greatly simplified <strong>the</strong> network architecture<br />
FEB 2009 / Win-Win<br />
46
Winners<br />
We were very pleased with <strong>the</strong> responsiveness and<br />
professionalism of <strong>the</strong> <strong>Huawei</strong> team. The outstanding result<br />
for this project is why we awarded <strong>the</strong>m <strong>the</strong> Excellence<br />
Diploma. —Vodafone Romania<br />
and enhanced <strong>the</strong> network performance.<br />
The All-IP <strong>mobile</strong> softswitches of <strong>Huawei</strong> are<br />
based on <strong>the</strong> 3GPP R4 architecture, conforming<br />
to <strong>the</strong> GSM/EDGE and 3GPP R99 WCDMA<br />
standards, which helped Vodafone Romania<br />
transform <strong>the</strong> traditional TDM network into an<br />
IP network, which can interconnect with an IMS<br />
network in <strong>the</strong> future.<br />
To create a secure and reliable network, <strong>Huawei</strong><br />
also provided a dual-homed solution. When<br />
a server fails, <strong>the</strong> standby server takes over <strong>the</strong><br />
services promptly, ensuring uninterrupted network<br />
operation.<br />
Simplification brings service<br />
and cost benefits<br />
During <strong>the</strong> deployment, Vodafone Romania did<br />
not need to upgrade <strong>the</strong> RNC/BSC, which helped<br />
reduce investment. Extensive planning and detailed<br />
procedures ensured that <strong>the</strong> cutovers did not affect<br />
<strong>the</strong> services of <strong>the</strong> existing network.<br />
The completed network is characterized by a<br />
more flexible networking model. The centralized<br />
management and unified O&M of <strong>the</strong> network<br />
help reduce OPEX. Moreover, <strong>the</strong> unified CN<br />
minimizes <strong>the</strong> overlapping duties of <strong>the</strong> 2G MSCs<br />
and 3G MSCs and thus enhances <strong>the</strong> efficiency<br />
and quality of <strong>the</strong> network transmission.<br />
With All-IP based <strong>mobile</strong> softswitches,<br />
Vodafone Romania succeeded in transforming its<br />
traditional TDM network into an All-IP network.<br />
As a result, <strong>the</strong> transmission efficiency increased<br />
and <strong>the</strong> network met <strong>the</strong> requirement of being able<br />
to support FMC services. Recently, based on this<br />
set of CN systems, <strong>Huawei</strong> has provided Vodafone<br />
with <strong>the</strong> innovative MediaX system, a multi-party<br />
multimedia conference system for <strong>the</strong> fixed-<strong>mobile</strong><br />
converged network that can provide new services to<br />
enterprise users.<br />
The network transformation not only helped<br />
Vodafone Romania complete <strong>the</strong> evolution to<br />
an All-IP network but also paved <strong>the</strong> way for <strong>the</strong><br />
operator’s migration to IMS in <strong>the</strong> future. By virtue<br />
of <strong>the</strong> advanced network architecture and clear<br />
evolution plans, <strong>the</strong> <strong>mobile</strong> softswitches of <strong>Huawei</strong><br />
can support <strong>the</strong> 3rd Generation Partnership Project<br />
(3GPP) R5/R6 and interconnect with an IMS<br />
network, which protects <strong>the</strong> operator’s investment.<br />
Focus on new services, not<br />
operations<br />
In April 2008, <strong>Huawei</strong> helped Vodafone<br />
Romania complete all cutovers for <strong>the</strong> project.<br />
Thanks to <strong>Huawei</strong>’s advanced technologies and<br />
extensive engineering experience, Vodafone<br />
Romania presented an “Excellence Diploma” to<br />
<strong>Huawei</strong> for its performance during <strong>the</strong> project<br />
“Evolve CS Core Network to IP based R4”. A<br />
senior manager of Vodafone Romania noted that:<br />
“We are very pleased with <strong>the</strong> responsiveness<br />
and professionalism of <strong>the</strong> <strong>Huawei</strong> team. The<br />
outstanding result for this project is why we<br />
awarded <strong>the</strong>m <strong>the</strong> Excellence Diploma.”<br />
The new <strong>Huawei</strong> solution has helped Vodafone<br />
Romania achieve a significant transformation to an<br />
All-IP network, and greatly reduced OPEX while<br />
allowing it to add new services and protect its longterm<br />
investment.<br />
47<br />
Win-Win / FEB 2009
Reach for <strong>the</strong> sky and<br />
transform your vision into reality.<br />
Realize Your Potential<br />
48