Ericsson's services strategy is in great shape

Clare McCarthy/Ovum
12 Nov 2009
OvumThroughout 2009 we have commented on the growing importance of network services and managed network services in the telecoms vertical.
Ericsson Global Services is the market leader and currently sees over 30% of its 2008 group revenues generated by professional services and network rollout services. At a recent service briefing, Ericsson’s Business Unit Global Services clarified its ambitions and showcased its most comprehensive managed services contract to date.
Ericsson’s Business Unit Global Services, known as BUGS internally, is at the sharp end of Ericsson’s future business aspirations. The company claims to manage networks supporting a total of 350 million subscribers, and it is aiming to increase that to 1 billion. It currently has 300 managed services contracts covering field maintenance, operations (up to the BSS stack), operational readiness and shared solutions (hosted and managed backhaul). The most comprehensive contract is with the 3 UK-Orange network sharing JV, MBNL.
Established in December 2007, MBNL is a joint venture between 3 UK and T-Mobile UK, and is responsible for the combined 3G access networks of the parent companies. The 40-person company manages and maintains the contracts covering site sharing, backhaul and RAN sharing. NSN provides the equipment, while Ericsson is responsible for the network design, deployment, operation and maintenance.
According to MBNL MD Graham Payne, the net result is that the company is on course to make £2 billion ($3.2b) of cost savings over ten years through a mix of decommissioning sites, shared backhaul and leveraging the combined purchasing power of its parent companies.
Payne was equally pleased with the venture’s ability to handle the rapid growth in mobile broadband traffic – something that would have proved costly for its parent companies to address individually.
The contract is dimensioned to incorporate further network upgrades, such as LTE, to protect against swings in traffic volumes between the two service providers and to cover any change of ownership at the parent companies. Payne stressed the need to invest time in the contract negotiations to cover every conceivable operational scenario, but also to identify the risk-reward KPIs to incentivise the supplier.


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