Hollow Operators: Know any?

While working on a FP7 Call 5 project proposal last year, I came across a new term that I hadn't heard of before - the Hollow Operator. I was instantly intrigued. What could that be I asked myself? I quickly realised that it refers to Network Operators who have decided to outsource the running of their network to a third party, referred to as a Managed Service Providers. The telecoms equivalent of a landlord handing over the running of his property portfolio to a management company.

As Network Operators seek to continuously reduce Operations Expenditure (OpEx) in order to remain competitive, outsourcing network operations to a managed service provider is a certainly a viable option on the table for negotiation. In fact, the last few years have seen tremondous growth in this new sector, so much so that all the major network equipment vendors have added a professional services arm to their portfolios. While the global economic crises hit bottom lines, it inevitably led to a slow down in Capital Expenditure (CapEx) by the operators, it was the managed services business that often propped up the ailing network infrastructures sales for the vendors allowing them to report a somewhat healthy balance sheet in some cases.

Why do operators want to do this in the first place? As I mentioned before its because running a network is complex and in telecoms - high complexity equals high cost while reducing complexity through innovation is not easy and won't happen anytime soon. Managed Service Providers are betting that they can run the network more cost effectively than the operators themselves and so the operators hand the running of their network to a third party and are henceforth known as 'Hollow Operators'.

Who are the Hollow Operators? To date as far as I'm aware they are new entrants to the markets, and not the traditional incumbent operators that have a long history in investing in their bespoke management systems. However that may be about to change. (See MWC2010: Will KPN Go All the Way)

So how big is this business? Last year Nokia-Siemens Networks predicted that it would grow to a €200B per annum business. (See NSN Sees Managed Services as $277B Market). Of course, its no coincidence that NSN do happen to have a very healthy professional service division so there is a vested interest here. The elephant in the room in this case is that the network infrastructure built by the vendors are simply too complex and too costly to run and that cost is ultimately passed on to the consumers in one form or another.

Outsourcing to a managed service provider only moves the problem to someone else - the function of managing the network remains the same. Only through innovation can this be really solved. The challenge therefore to the industry and research communities alike is to find news ways to deliver innovative communications infrastructures solutions that can be run cost-effectively, a major driver for the Next Generation Management Network's Self-Organised Networks initiative.

For more on Hollow Operators (See Network Operators: Hollow Be Thy Name and The Substance of 'Hollow Operators')

System Engineering: Research vs Industry - What's the difference?

A couple of weeks ago I was writing some use cases for EFIPSANS in order to specify functional requirements for implementation of the autonomic monitoring architectural component. It was the first time that I wrote use cases since I was in Motorola where writing very detailed use cases was the way we specified functional requirements. So as I was writing I was asking myself should I approach this specific task the same way as when I was in a product development environment.

As I pondered over this question, it reminded me of a time earlier in my life when during my years in college, I was watching a golf tournament that was on television with my grandfather. He asked me "What's the difference between a professional and amateur?".

I turned and smuggly replied "A professional plays golf for a living, an amateur does not".

I was a bit surprised when he replied "Wrong! An amateur practices until he gets it right, a professional practices until he can't get it wrong". Even though this was meant to be a joke, I couldn't help thinking that this simple statement was laced in truth.

Moving forward a few years, after spending over 6 years doing research with Broadcom Eireann, I was thrown into my first project as a system engineer with Motorola on a project with Alcatel for UMTS. My job was to work with Motorola and Alcatel system engineers to define the O&M interfaces for the Motorola and Alcatel Node B and RNC respectively. At one point one of the Alcatel engineers was asked to estimate the % completeness of the job in hand. In my own head, I would have said around 80%. When he answered 10%-15%, I had to bite my lip and stop chuckling to myself. However, by the time the job was done I'm afraid to say that in terms of effort and time his estimate was much more accurate than mine. It was an important lesson for me to learn and something that has stayed with me ever since.

Over the years, I realised that System Engineering in industry was less about architecting systems that can work, but more about architecting systems that must not fail.

Research, however, should not be so constrained. It should be about taking risks, pushing out the boundaries, exploring new ideas, new ways of doing things. It should not matter if every potential exceptional cases is catered for and unless its specifically in the scope of the research it should not matter whether or not in can perform, scale, is robust or secure.

In my own opinion there is often too much emphasis on the grand all encompassing integrated demo in research projects. Valuable time can be lost trying integrate and test everything. Researchers usually tend to have to play the role of system architects, software developers, integrators, testers and even project managers. Consequently expectations need to be realistic. Researchers are unlikely to be able to write high quality software that is capable of performing compared to what can be produced by seasoned software developers. Trying to make a product out of prototype is doomed to failure. If ideas and concepts developed in research show potential, then its back to the drawing board so that it can be designed to perform, designed to scale, designed to be secure and designed not to fail...by professional system engineers and software developers.

Now anyone for golf?

Webinars
IP Goes Mobile: Redefining LTE Wireless Broadband from Alcatel-Lucent. This wasn't your normal webinar but more of a one-on-one interview describing some of the challenges facing network operators and the potential ways of dealing with these in LTE.

Testing & Optimizing LTE Networks from Anritsu. Provided an overview of the LTE air interface - note though that a reasonable understanding of 2G or 3G air interfaces would be a pre-requestite. Covered OFDMA and MIMO. The focus was on the air interface physical layer and the eNodeB and LTE User Equipment test products available from Anritsu.

More on SON

As Mobile World Congress gets underway this week, I expect a lot of noise will be made about Self-Organised Networks along with grand claims and promises how operators can utilise SON to substantially reduce their OpEx. So why has it taken so long? Last time I finished by asking how hard can it be? Let me try and summarise this here.

Ideally to fully realise SON, the networks elements would be 'plug and play'. Apart from the physical act of installing the equipment once it is turned on the network element figures the rest out itself. Additionally, it would be able adapt to changes in the network due to faults or configuration changes to ensure that it continued to function optimally. Networks capable of this would substantially reduce the cost of planning, provisioning, operations, optimisation and upgrade.

Why is this so hard to achieve? If you take a radio access network for example. The air interface is a hostile a environment, interference and physical obstructions are just two hurdles that have to be overcome. SON capable network equipment would need to be able to determine what frequencies are available for them, determine the optimal power levels that can maximise coverage yet minimise interference will adjacent cells and automatically determine its neighbours for handover in order to allow end user mobility. That's just for starters.

Any configuration changes is likely to be subject to a potentially complex set of configuration rules that are dependent on the specific software version running on the network elements. Its unrealistic to expect all network element software upgrades to occur at the same time - never mind the associated risk. Therefore the network will be required to work with multiple software versions running simultaneously, and any proposed configuration change would be to be valid for that specific version and the current configuation of the live network. Given that a complex NE like a UMTS Radio Network Controller (RNC) could have 1,000s of configuration rules, it can all get very complicated very quickly.

The real killer is the network operators expectation for 5NINES (99.999%) availability - approximately 5 minutes downtime annually. Network outages = zero revenue for the duration of the outage and therefore can quickly become very expensive for the operator. If it was easy to automate, it would have been done already.

Therefore the need for meticulously planning and controlled deployment of network changes by skilled personnel which is why the operators are trying to find ways to reduce the cost of Operations Expenditure. So high in fact, that some operators have outsourced the running of their network to managed service providers instead of running it themselves. Despite falling network infrastructure sales, equipment vendors such as Nokia-Siemens Networks, Ericsson and Alcatel-Lucent have all seen growth in their managed service business. In fact NSN have predicted this market globally to grow to €200Billion (See NSN Sees Managed Services as $277B Market) and this only represents the cost where operators have decided to outsource the business to a 3rd party. This gives an insight into the staggering cost of running networks for the operators. Hence, the need for Self-Organised Networks!

Webinars
Attended two webinars last week. The first was Subscriber Data Management: Next Steps sponsered by Blue Slice Networks. Next Generation SDM solution for managing subscriber data. It highlighted the migration away from vertical subscriber data such as in the network (e.g. HLR) or in the back-office (e.g. CRM) towards an evolved SDM. The 3GPP are defining User Data Convergence through specification of standardised interfaces.

The second was Assuring The User Experience for IP-based Mobile Networks from Netscout. Described how a unified approach to service delivery management can be achieved or put another way how an end-to-end IP network can be managed. This will be critical for the operators who are trying to find new revenue streams through the provisioning of premium services. Netsocut solutions use deep packet analysis that can analyse every packet to identify sources of problems. This is very relevant to my current research in EFIPSANS and I think would be worth looking into the capabilities of these solutions more.

In the news this week...
Alcatel-Lucent finally reported its fourth quarter earnings and it was no surprise to see that it also saw a decline in revenues, a trend seen by most but not all of its main equipment vendor rivals. (See AlcaLu Revenues Shrink 11% in 2009)

Self-Organised Networks

One new story last week in particular caught me eye, not because it was exceptionally newsworthy, but more so because I felt it was the right time to express some of my own views on the challenges facing Self-Organised Networks and was reminded as such by NEC's intentions regarding SON for LTE. Last week, I attended just my second plenary meeting for the EFIPSANS project in Berlin, Germany. This focus of this research project is on the autonomic management of IPv6 networks and is due to complete by the end of 2010.
So what's the connection? Well Self-Organised Networks of course! Management of telecommunications networks typically consists of:

• Network Planning - planning the network including the topology and location of network elements, and defining the network element configuration such as frequency and power parameters for radio access network elements.
  
• Network Provisioning - deploy the network plan.
  
• Network Operations - just a fancy a name for the day-to-day job of monitoring the network for faults and performance.
• Network Optimisation - analysing the network performance metrics in order to create a more optimal and efficient network configuration or put another way refining the initial plan
• Network Upgrade - expanding the network, adding more hardware and capacity which is effectively a new iteration of all the above steps.

So what's the problem? Complexity which equates to higher Cost or Operations Expenditure (OpEx). All the above steps are labour intensive performed by skilled personnel in the Operations Centre of a Network Provider. This is especially so for Radio Access Networks (e.g. GSM, CDMA and UMTS). As a consequence of convergence these same Network Providers are under intense competition from cable MSOs, satellite providers, new entrants and of course each other. The Next Generation Management Networks (NGMN), an alliance of Network Operators, outline the requirements for Self-Organised Networks (SON) with the ultimate goal of increased automation and there reduced OpEx. The challenge is on the Network Equipment Vendors (e.g. Ericsson, Motorola, Nokia-Siemens Networks etc.) to bring to market next generation networks that are capable of SON so that Network Equipment can be plug and play where following installation and power-up the Network Elements can determine their optimal configuration based on their location and that of their peer network elements. What could be so hard about that? Maybe I'll try and answer that next week.

In the news this week...
NEC Corp has will provide a centralised LTE SON System from Actix Ltd. (See NEC Adopts SON for it LTE)

Motorola and Ericsson reports for Q4

As the 2009 Q4 quarterly reports continue to hit the news and another year ends, it will be worthwhile to take an overview of the state the market for the major network equipment vendors once all the earnings reports are in. As two of my previous employers, Motorola and Ericsson reported last week lets just take a look at how they fared in the last quarter and over 2009 as a whole.
As can be seen in the table, Ericsson and Motorola, both saw a decline in revenues for Q4 and 2009 as a whole but it will be interesting to see if this trend is seen by their competitors. On the operating profits side, while Ericsson profits declined almost in line with revenues, we can see that despite declining revenues, Motorola still managed to be profitable over the quarter compared to a €2.6Billion loss over the same period 12 months previous. Is this a sign that Motorola have managed turn this round for the forseeable future? Lets look at this again at the end of Q1 to see if the progress continues.

This week I attended the following a Light Reading Managed Security Services Webinar by Crossbeam Systems. It covered new security challenges including security for cloud-based services. Crossbeam offers Service Providers a managed security solution that they can offer their own customers. Described Snort which is an open source network intrusion prevention and detection system (IDS/IPS) developed by Sourcefire.

Last week in the news...
Ericsson as noted above reported 4th quarter results announcing a drop in profits but narrowly avoiding a decline in revenues over the full year despite the ailing economy. Revenues were SEK58.3B (€5.7B) and SEK206.5B (€20.1B) for the quarter and full year respectively. Notably, while revenues from sales from network infrastructure have been declining, revenues from managed services continue to grow. Full details available from here.

Motorola Q4 results are also available here. Other big news in tech this week was Apple's annoucement regarding their new tablet computer, the iPad. For the time being though, I'm going to focus on network infrastructure news as this is of more interest to me and leave consumer electronics news to other fora.