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Point of View
October 2012, No. 2
Fixing the network traffic jam: Four imperatives for network operators
By Paul Bultema and Larry M. Socher
Paul Bultema is the US lead for Network Strategy within the Accenture Communications, Media & Technology industry group. firstname.lastname@example.org Larry M. Socher is the managing director of Accenture Network and of the Accenture & Cisco Business Group. email@example.com
One of the iconic images of today’s networked environment is the “waiting” symbol on a smartphone or other wireless device: waiting for connectivity, waiting for a file to download, waiting for a video to buffer. It shows up especially when using devices in dense urban environments—large sports stadiums or crowded downtown areas—as people using their connected devices compete for a decent connection. All signs point to the fact that network usage will continue to grow as people become more and more accustomed to being always on and always connected. This situation represents more than just consumer frustration. As the work of global enterprises is increasingly conducted by employees over wireless devices, the quality of network connectivity has significant business implications. This article discusses several of the actions operators can take to help optimize network performance, reduce costs and drive business growth: • Accelerate broadband deployment by improving processes and by leveraging analytics to better align investments. • Increase collaboration and sharing of network infrastructure and capacity. • Invest in new and creative network and technology capabilities such as small cells, fiber backhaul and Wi-Fi offloading. • Increase operational efficiencies and reduce costs to make additional network investments possible while maintaining profitability.
Implementations of 4G (also known as Long Term Evolution, or LTE) are an important piece of the overall puzzle. More than 100 operators launched 4G technologies in 2012, but the difficulties encountered by some operators during these implementations have underscored the serious challenges of network infrastructure deployment. Fiber or Ethernet backhaul upgrades are a prerequisite for effective 4G implementations, but such upgrades can be enormously expensive. They also require end-to-end, cross-functional deployment capabilities. To enable faster and more effective broadband deployments, operators should consider several complementary tactics and strategies. They should establish a “command center” organization responsible for tracking, coordinating and managing network build activities across different network organization silos. Using an analytics-driven approach, they need to identify key roadblocks impeding progress. Then they should reengineer processes and systems to alleviate bottlenecks and eliminate downtime between process steps. An integrated approach can pay off for carriers racing to upgrade their networks. At one provider, an end-to-end cell-site build, including deployment of wholesale fiber to the cell, increased throughput by 45 percent in two months and reduced delays in cell-site builds and turn-ups by 50 percent.
Accelerating broadband deployment
To keep pace with growing network demands, it is critical that service providers revisit their existing network planning, engineering and construction capabilities. They should also examine their processes and systems with the goal of improving capital efficiency and aligning capacity to customer demand more effectively.
Implementing network-sharing strategies
Rollout costs for high-speed networks can be very high, and those costs are not necessarily being matched by equivalent increases in revenue. To make such investments possible while maintaining profitability, operators need to reduce costs and achieve better operational efficiency.
One important trend in reducing costs is network sharing, a formal arrangement between two or more mobile operators to share various components of their networks. Based on Accenture’s experience, network sharing has the potential to reduce standalone cost run rates by 20 percent to 40 percent while accelerating deployment speed and filling gaps in network coverage. However, operators must overcome a series of challenges to effectively deploy a networksharing strategy. They need to work with competitors to plan and execute an integrated program covering network scope, site scope, technology, organization design, geographic coverage and functionality. There have been several examples of successful cooperation in the area of network infrastructure. An example in the United Kingdom involves a network-sharing agreement between two mobile network operators that jointly operate shared network infrastructure and associated field service operations. The companies continue to compete in the market with specific voice and data offerings and they retain control over their own customer data. A different form of network sharing has been taking place in North America. To support rapidly expanding 4G buildouts, mobile network providers often use wholesale fiber and Ethernet services from their wireline competitors to provide backhaul capacity.
world. In the United States alone, recent studies suggest that at least 25 percent of mobile voice and data traffic will need to be diverted from the macro network to meet demand. Integrated small cells with Wi-Fi and cellular technologies are an important component of an overall network strategy, but they present implementation challenges. Providing Wi-Fi service may not appear to be difficult, but implementing Wi-Fi in high-density areas such as stadiums during sporting events or university campuses is exceedingly complex and challenging to get right. Proven methodologies are needed to manage these highdensity Wi-Fi solutions to deliver a carriergrade quality experience. Several other small-cell technology options also can be leveraged as part of network builds, augmenting macro cell sites to improve network efficiency, capacity and range. Service providers are increasingly turning to picocells, microcells, femtocells and Distributed Antenna Systems (DAS) to achieve their performance targets. Some forecasts indicate that these heterogeneous solutions— pushing cells to microcells and also using Wi-Fi offload points—will eventually outnumber traditional cell sites 10 to 1.
• Finding opportunities to increase the selective use of outsourcing, a strategy that can both reduce costs and improve operations. By outsourcing a spectrum of network operations—planning, engineering, provisioning and management—one global provider achieved 40 percent cost savings and improved service in a number of areas, including the percentage of orders meeting the customer-desired due date. It will be essential for service providers to rethink and overhaul their operations over the next few years. They will need to figure out how to minimize the cost of legacy technologies and infrastructure—in part by retiring aging technologies—while handling the increased complexity of new network deployments such as microcells and Wi-Fi.
Broadband deployment initiatives on a massive scale will be required to meet the exponentially growing demand for wireless capacity and applications. These deployments will not be easy. For network operators, the return on broadband investments can appear uncertain: network infrastructure and operating costs are skyrocketing while mobile voice revenues are plummeting. It will take coordinated efforts leveraging new technologies, infrastructure sharing and cost-reduction strategies to achieve long-term success in the new network era.
Improving the cost effectiveness of operations
To address the challenges posed by eroding revenue streams and rising capital and operational costs, service providers need to streamline operations by redesigning their organizations and processes, by overhauling and consolidating systems and by more costeffectively sourcing network processes. These steps can significantly reduce the costs of planning, building and operating both legacy and new networks and services. Important steps in an overall cost reduction program include: • Streamlining the operating model by creating well-defined operational building blocks that standardize processes and minimize the impact of customization. By taking a modular approach to operational standardization, providers have the opportunity to shorten order cycle time while increasing volume and reducing costs. • Finding the best way to retire legacy platforms, a step often required to realize the full value of new platforms. Rather than simply eliminate their legacy systems, however, operators need to fund new network investments by extracting maximum value from their legacy businesses. To do so, companies need the diagnostic ability to identify the right areas for cost reduction—eliminating excesses and redundancies rather than areas essential to the business.
Expanding the use of innovative technologies
The quality of the networked experience that operators are able to deliver to users will continue to be a market differentiator. If carriers are to be capable of handling increased data traffic and providing acceptable bi-directional throughput and network quality, they will most likely need to engage in several multiphased investment programs. Such programs will focus on pushing fiber deeper into neighborhoods, including going beyond the current macro-area cell sites to microcells. Having pushed Ethernet and fiber backhaul to the microcell, providers can then consider leveraging carrier-grade Wi-Fi to take advantage of unlicensed frequencies to further expand network capacity by offloading some of the traffic to the Wi-Fi portion of the network footprint. This offload will be increasingly important as the industry experiences exponential growth in connected devices and bandwidth-hungry applications such as video. Offloading data traffic to Wi-Fi networks is now a priority for most carriers around the
Outlook Point of View October 2012, No. 2 Copyright © 2012 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. The Outlook Point of View series offers insights about leading trends and innovations across all industries. David Cudaback, Editor-in-Chief Craig Mindrum, Managing Editor Jacqueline H. Kessler, Senior Editor For more information on Point of View and other Outlook publications, please visit our website: http://www.accenture.com/Outlook This document makes reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks. The views and opinions in this article should not be viewed as professional advice with respect to your business.