Delivering on a promise in spite of hard times

Mobile operators are under increasing pressure to deliver services with sufficient quality and capacity to meet customer expectations, while simultaneously reducing CAPEX and OPEX in order to stay competitive in the face of the difficult economic outlook.  Andrea Casini, VP Sales and Marketing, EMEA, Andrew, explains how Russian wireless operators can best protect revenues in the midst of the financial crisis. 

The economic downturn has already posed unprecedented challenges to mobile operators in Russia and other CIS states, putting planned network expansions and upgrades at serious risk of delay or worse. It is now, more than ever, the responsibility of Original Equipment Manufacturers (OEMs) and other network infrastructure vendors to work with the mobile operators to enable cost-efficient solutions for addressing and overcoming these challenges before the Russian telecommunications market begins to fall behind in current 3G and Next-Generation Network (NGN) development plans.

There are, however, reasons to be optimistic.  According to Advanced Communications and Media, there are 190 million subscribers in Russia alone, with Russia's wireless penetration rate reaching 131%. With such high usage, the two leading operators, MTS and VimpelCom, have been actively seeking growth in new areas, especially among 3G mobile data services. While voice and SMS continue to drive revenues, other content such as ringtones and other music-based services with a focus on local music are also proving increasingly popular among Russian subscribers. The mobile Internet is also proving increasingly popular, with social networking sites Vkontakte and Odnoklassniki driving access to online content via the mobile device. 

In 2008 MTS and VimpelCom reported US$80 million and US$90 million revenues respectively from 3G services.  According to industry analysts, the 2009 revenues of the two companies could increase by as much as 22% and 19%  respectively, which would bring an increase in Average monthly Revenue Per Subscriber (ARPU) from the current US$14.2 to US$17. This is because the number of 3G users is still growing and the service is becoming more and more popular. By the end of 2010 the total number of 3G subscribers is set to reach 26 million, and this is likely to grow as more operators begin to facilitate faster data speeds through the rollout of 3G networks.

MTS, in particular, has made considerable investment in its 3G strategy. Having recognised consumer demand for mobile broadband services, the Russian operator launched its first 3G network in St Petersburg in May 2008.  Consequent networks were rolled out shortly afterwards in other Russian cities, including Kazan and Sochi, with MTS planning to enable 3G coverage to all areas in Russia by 2010. 3G network roll-outs have also commenced in areas of Uzbekistan, and Armenia recently received a 3G licence with network roll-out expected to commence in 2009. Other CIS countries where MTS operates are also following suit by applying for 3G licences. 

With fixed broadband penetration at only 10% in Russia, the first experience of the Internet for many consumers is likely to be through a mobile phone. There is significant market share to be captured by the mobile operators and, having enabled EDGE across their networks in 2007 and 2008, Russian operators have already proved significant growth in usage of value added services in the data arena - which can make big differences to overall revenues. Russian operators also have the advantage that they can look to Western operators for inspiration or warning when planning their 3G network strategies, which means they are more likely to get deployments right first time.

While some mobile operators still complain of the slower than expected take-up of 3G, this is, in many ways, a chicken-and-egg issue. Subscribers who buy 3G devices do so with the expectation of seamless high-speed services, yet they can be disappointed with the quality of service caused by technical shortcomings at the network level. Now more than ever, mobile operators need to look at optimising the network while simultaneously capping the costs of network improvements and maintenance in order to provide the best possible service at the most competitive price. This means identifying ways to reduce both the CAPEX and OPEX of 3G networks while ensuring that coverage and capacity levels are maintained to an acceptable standard.

Network hardware solutions that are scalable, future-proof and CAPEX-efficient will be a critical factor of success in meeting consumer demands for coverage and performance. Operators need to ensure that customers can connect to new services in order to increase their ARPU but they must also focus on how to cost-effectively add new customers to their networks, as well as expanding capacity in urban scenarios and coverage/reach in rural and remote areas. For example, Andrew's product portfolio includes intelligent repeaters that allow for maintaining the same Radio Interface performance as a Node-B repeater without requiring the backhaul connection and removing the typical technical drawbacks associated with conventional repeater technology. 

Emerging technologies such as WiMAX may also play a fundamental role in expanding coverage and capacity.  It is possible for operators to implement and deploy technologies that will enable better connection to the wireless services of tomorrow. As new networks are built, there must be consensus among operators that the network infrastructure is designed to optimise the use of each cell. By deploying the appropriate network optimisation software at a fraction of the cost of a new base station site, for example, mobile operators can avoid the issues of network overload and dropped calls for their subscribers. This will also help to significantly reduce OPEX costs which operators are now beginning to recognise as a contributing factor to increasing their bottom line. 

In addition, ensuring the efficiency of the network and providing additional access to subscribers will increase the adoption of new services, driving up ARPU. To illustrate the theory, products such as Andrew's ION series can carry radio signals loss-free over fibre optics at all power levels and at distances of up to 20 km.  ION is a complete line of distributed communications systems solutions for difficult coverage areas, tunnels, metros, and buildings.  Andrew has already deployed ION in numerous noteworthy locations in the Russian and CIS market. Projects range from the implementation of professional security systems in Moscow's Domodedovo International airport and the Moscow metro system to commercial coverage projects for densely populated areas surrounding dykes and mines. 

Access to network components that easily integrate with each other is very important. As network infrastructure complexity increases, operators need to be able to rely on the best cable, antennae and power amplifiers to make their network a success without investing time and money in extensive engineering costs. This is best accomplished by limiting the number of parties involved in the end-to-end project delivery processes. This can be done by establishing more strategic relationships with vendors who can provide unique and powerful solutions that can leverage existing site assets and lower the CAPEX for both new sites and new technology additions. 

There is still further opportunity for Russian mobile operators to boost revenues via coverage projects for the metro systems in Kharkov in the Ukraine and Baku in Azerbayzhan, as well as for upcoming events such as the 2012 Euro Cup in the Ukraine and the 2014 Olympic Games in Russia. Andrew has witnessed a sudden surge in demand among operators who wish to deploy coverage solutions in the run-up to large events in the past, and deployed their ION solutions in the 2006 World Cup stadiums in Germany and in the Sydney Olympics stadiums. It has also deployed the product in various transport systems around the world, including the Hong Kong metro, Turin metro and Germany's Inter-City Express high-speed rail. 

When planning large scale projects mobile operators need to design, build and commission processes that deliver services at the lowest cost to meet tight project timescales, especially now - when budgets are particularly tight. Recent announcements by Telefónica O2 and Vodafone point to base-station sharing as part of a cost-cutting strategy in Western Europe, although this seems a less attractive option in Russia and the CIS for the moment. However, Russian operators are already looking at sharing in other areas, such as the deployment of in-building solutions in wireless "hotspots". The deployment of femto cells, or UMTS/WCDMA access points, will be instrumental in the move to integral-play, wireless optimised indoor networks, which could prove to be a lucrative source of fresh revenues.

A large portion of mobile traffic is either generated or terminated indoors, simply because it is indoors that people spend most of their time. Standard network design does not consider in-building specifically, which obviously causes revenue-generating "hot spots" such as airports and shopping malls to fall short of traffic capacity, if not of coverage, until a suitable in-building system is deployed. Nevertheless, operators have historically been reluctant to install dedicated in-building systems as the required investment was difficult to justify on a business case where the traffic outcome was not clearly definable under standard design parameters.

Andrew's ION-M technology is designed to meet the most stringent requirements for multi-operator, multi-band systems, with virtually no interference or interaction between independent services. It therefore enables a "shared approach" to in-building systems, where several operators can agree on splitting the cost with complete peace of mind on technical performance and return in traffic. The required CAPEX is reduced up to four times compared with a typical single-operator platform, while preserving individual service flexibility and future expansion options.
To allow operators to maintain a competitive position, it is important to deliver on the time-to-market of new services, as well as ensuring low deployment costs for service delivery remain in place. Simple plug-and-play equipment, an area OEMs typically shy away from, coupled with test & measurement and asset management tools, will allow operators to create a future-proof network fit for the next generation of services. The only way to enhance the operating efficiency of a cellular network and ensure all users can connect to the next generation of services is by being able to accurately pin point and diagnose network performance issues and faults within increasingly complex networks. In addition, telecommunications providers must be able to monitor signal strength and capacity easily and have access to a complete toolset to make network construction and development straightforward.

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