Voice from Operators

Perspective

Tao of Business

Winners

06/2011

ISSUE 9

Competing in the mobile Internet era: A primer du: The next level Mobily: MBB creates new opportunities Bouygues Telecom puts the future in focus

STC growing
in scale and scope

It's all about success! We aim to help you hear what operators would like to share in person, see how industry peers succeed in the fierce market, delve into their secret to success, and learn from the winners in the industry. Sponsor Huawei Technologies Co., Ltd. Publisher Huawei COMMUNICATE Editorial Board Consultants Hu Houkun, Xu Zhijun, Xu Wenwei Yu Chengdong, Zhang Hongxi, Zhu Yonggang Editor-in-Chief Gao Xianrui (sally@huawei.com) Editors Xue Hua, Julia Yao, Long Ji, Michael Huang Joyce Fan, Zhu Wenli, Ranajit Sankar Dam, Xu Ping Xu Peng, Li Xuefeng, Chen Yuhong, Pan Tao Art Editor Zhou Shumin Contributors Xia Liang, Odile Dupont Peneau, Xie Luming Chen Yuyun, Zhu Lei, Lv Jun, Xiao Tao, Yao Yuan Yang Xin, Luo Yi, Sun Xiaofeng, Wang Jian E-mail: HWtech@huawei.com Tel: +86 755 28789348, 28789343 Fax: +86 755 28787923 Address: B1, Huawei Industrial Base, Bantian, Longgang, Shenzhen 518129, China Publication registration No.: Yue B No.10148
Copyright Huawei Technologies Co., Ltd. 2011. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means without prior written consent of Huawei Technologies Co., Ltd. Disclaimer The contents of this document are for information purpose only, and provided as is. Except as required by applicable laws, no warranties of any kind, either express or implied, including but not limited to, the implied warranties of merchantability and fitness for a particular purpose, are made in relation to contents of this document. To the maximum extent permitted by applicable law, in no case shall Huawei Technologies Co., Ltd be liable for any special, incidental, indirect, or consequential damages, or lost profits, business, revenue, data, goodwill or anticipated savings arising out of or in connection with any use of this document.

New era calls for new approaches

After developing rapidly over the last ten years, the Internet is entering another brand-new decade that promises even greater growth. Following the mainframe, mini-mainframe, PC and desktop stages, the Internet is going mobile with the huge popularity of 3G applications. Whilst its desktop counterpart saw one billion PCs interconnected, the mobile Internet will connect tens of billions of devices, and grow much faster on a scale beyond imagination. It is no wonder that an increasing number of operators are looking at the mobile Internet for business opportunities. Though taking different approaches, they have one belief in common: Those who adapt to this new trend will dominate the market, while those who do not will be marginalized or even eliminated altogether. As has been obvious in the history of the Internet, the focus of user experience and value demand has been evolving over time. Successful operators are usually those who really understand and care about their customers and meet their needs through new technologies and business models. However, operators have to make tough decisions on their mobile Internet journey, which, though promising, is full of challenges. STC of Saudi Arabia has wisely taken advantage of scale and scope for business expansion and global collaboration. In Indonesia, XL has sought the best mobile data service strategy. Safaricom defines the leadership of an operator not just by its market share and customer base, but more by the changes its services have brought to peoples lives. Realizing the importance of broadband and mobile data, du provides its subscribers with more, faster services while improving the QoS of its premium services. SMART is endeavoring to balance traditional and new mobile broadband services innovatively for sustainable growth. And the list goes on. To meet ever-growing service requirements, global operators have explored ways of network structure optimization for better network efficiency and higher ROI. Following the national information strategy, China Unicom has sped up its backbone network. Mobily has built a high-performance wireless and packet core network to expand the coverage of its HSPA services. The immense development of the mobile Internet requires the whole industry to make timely changes in thinking and marketing strategy. This echoes the observation of marketing guru Martin Lindstrom: We need to change not only our means but also our attitude to handle the ever-changing global markets and more and more sophisticated consumer behavior.

For electronic version and subscription, please visit www.huawei.com/winwin

Yu Chengdong Chief Strategy & Marketing Officer, Huawei

06/2011
Issue 9

WHATS

INSIDE

Voice from Operators

01 STC growing in scale and scope
Today our growth revenue derives from scale and scope. They are the main drivers of synergy. What we do across the group is synergized and coordinated, as that is the best way to capture value from scale, says Ghassan Hasbani, CEO of STC International Operations.

05 Safaricom: Redefining leadership

Safaricom may have been facing some business challenges of late, not the least of which is a price war initiated by smaller competitors. CEO Bob Collymore says that, true leadership is less about market share and profitability, and more about the impact Safaricom has on the community around it.

09 The SMART way,

beyond traditional business

In the Philippines, operators look ahead to mobile broadband with no little trepidation. Danilo J. Mojica, Head of Wireless Consumer Division at SMART, believes that the new trend can be embraced by adopting an out-of-thebox approach.

12 Bouygues Telecom puts the future in focus

Bouygues Telecom, a major alternative provider of mobile and fixed services in France, has found a way to stand out in the market. Cyrille Guetin, CTO of the operator, tells us how his company is using a dynamic approach and innovative solutions to gear up for future growth.

23 M2M: The making of a green,

intelligent city

Perspective
25 Competing in the mobile Internet

era: A primer
29 Building business success in the era

Tao of Business
15 du: The next level
du has more than thrived in the UAE, acquiring an almost 40% mobile market share within four years. CEO Osman Sultan says that the operator is now seeking out new sources of revenue, as it attempts to establish itself as a region-wide communications powerhouse.

of cloud

Winners
33 Cell C: Onwards and upwards 36 Mobily: MBB creates new

opportunities
39 SMEs benefit from cloud-based

19 XL: A different approach to mobile data

In Indonesias telecom industry, 11 mobile operators are currently vying for a market of 240 million people. Axiata XL CTO Dian Siswarini believes that to profit from the mobile data boom in a unique market like Indonesia, a unique approach is needed.

data bank
42 China Unicom Zhuhai: A hassle-free

network for communications assurance

47 China Unicom speeding up the

information superhighway

FROM OPERATORS

VOICE

Today our growth revenue derives from scale and scope. They are the main drivers of synergy. What we do across the group is synergized and coordinated, as that is the best way to capture value from scale.
Ghassan Hasbani, CEO of STC International Operations

Win-Win / JUN 2011

STC growing in scale and scope

As STC pursues its globalization journey, it realized it had to address a number of questions. What is the ideal way to evaluate an overseas investment opportunity? How can synergies be best maximized across borders? How can value be best added from expanded operations?
By Joyce Fan
he leading national provider of telecommunication services in the Kingdom of Saudi Arabia, Saudi Telecom Company (STC) began expanding overseas in 2007, and presently has 110 million customers in places like Southeast Asia, Turkey, South Africa and the Middle East. As STC pursues its globalization journey, it realized it had to address a number of questions. What is the ideal way to evaluate an overseas investment opportunity? How can synergies be best maximized across borders? How can value be best added from expanded operations? Ghassan Hasbani, CEO of STC International Operations, shares with WinWin his insights into scale, scope, and global synergy.

companys CEOs, CTOs, CMOs and purchasing managers. They hold regular decision-making and monitoring forums to enable specific business reviews that span the operating companies, suggest performance improvement measures, and convey our future direction group-wide. However, Hasbani does not see the three globalization stages as distinct from each other. Theyre evolutionary, he says. No phase actually stops; it continues to develop the capabilities that began in stage one, and these overlap in the long-term. Our objective is to position STC as a solid international operator that reaches stage three within two years.

Extract synergies across the group

Today our growth revenue derives from scale and scope, says Hasbani. They are the main drivers of synergy. My role as the STCs International Operations CEO is to ensure that what we do across the group is synergized and coordinated, as that is the best way to capture value from scale.

Three stages of globalization

According to Hasbani, every company globalizes in three stages. The first involves an initial investment strategy to widen its footprint and test new markets. The second involves developing internal capabilities, emphasizing synergies, and strengthening the companys position in certain markets. During the third stage, the company develops international career management processes, creates a single corporate culture that respects and preserves the local culture, and unifies brand positioning across markets. Having expanded its footprint into Kuwait, Bahrain, India, Malaysia, Indonesia, Turkey, South Africa, Jordan and Lebanon, STC is forging ahead with its global vision, Since Ive been in this post, weve laid the foundation for stage two, and have established synergy councils and a groupwide synergy program, he says. Currently, the synergy program comprises over 60 members drawn from STCs operating companies, including group CEOs, operating

Synergies from scale

Scale is about coordinating a roadmap; it is not about adopting the same technology in all markets at the same time. However, coordinating technology rollouts, service launches, and group-wide experience-sharing is greatly beneficial and, as Hasbani believes, the essence of scalederived synergy: By experience-sharing, we can coordinate service rollout and market segmentation, which ultimately results in the better coordinated rollout of technologies. In STCs synergy council, members discuss the future of the industry, local market needs, and ways of sharing

Win-Win / JUN 2011

FROM OPERATORS

VOICE

Todays investments are directed at putting the Internet into everyones pocket in the same way as mobile voice. Offering a wider and relevant range of applications and services helps attract customers and garner their loyalty.

knowledge and best practice. They also collectively decide on certain product rollouts for the entire group, which are designed to cater to group orders. Hasbani views inter-group synergy as a massive generator of value, and describes the Hajj pilgrimage period as a scenario that exemplifies service synergy. A trip to the holy city of Mecca in Saudi Arabia is an important pillar of the Islamic religion. With a presence in many countries with large Muslim populations, STC launched a seasonal service that operationally focuses on Hajj. All pilgrims receive a special service package that can be used in Saudi Arabia during the Hajj period, and on their return home. The package is hugely successful as it provides both emotional and practical value, says Hasbani. When people are traveling to Mecca from long distances, for example, from Indonesia, Malaysia, or Turkey, pilgrims need a cost-effective and convenient communication facility. He is keen to clarify that creating synergy does not mean centrally operating every commercial endeavor. We fully respect local values and culture, which is why we have different brand names that aim to match the local market segment as closely as possible. STC also plays different roles in different markets either challenger or incumbent so, we need different approaches. Based on this, we free up our marketing activities to operate as is appropriate in a given market, he adds.

group, which is seeking convergence and a complementary operational approach. Beyond FMC, STC is considering cross-industry convergence. He is convinced that the boundaries between technologies, services and industries are blurring: Today, were seeing media and telecom convergence; IT and telecom convergence; and cross-industry convergence, such as in the finance and health sectors. These trends are a treasure map for STC as were already moving in this direction. We need to serve our customers wherever they are; whatever the business, leisure, education, or other activity theyre involved in; and whatever their income level. We must find them a solution that is tailored by them, and for them.

The hidden synergy

In addition to scale and scope, Hasbani mentions hidden synergy knowledge and foresight. STC has a large number of industry experts constantly working together. Providing them tools and processes which enable a group-wide and international sharing platform will accelerate creativity and development, and spawn

Extend business scope

Extending business scope into new areas is not just an exercise in basic connectivity; it requires innovative services in the context of applications and content. These must be attractive to subscribers, generate revenue, and engender customer loyalty. Todays investments are directed at putting the Internet into everyones pocket in the same way as mobile voice. Offering a wider and relevant range of applications and services helps attract customers and garner their loyalty, which in turn supports scalability, he says. Hasbani perceives a DNA blueprint across the STC
Win-Win / JUN 2011

innovation from basic activities. Today, most operators invest less in R&D, as doing so has become the role of technology companies and equipment providers. Hasbani believes the best alternative to investing heavily in R&D is to share best practice across the group: This is a kind of hidden drill of knowledge, experience, and best practice-sharing across the large group of companies that form the DNA of STC Group.

Grasping opportunities in industry consolidation

Consolidation trends
Driven by value creation, economies of scale, synergy, and revenue pressures, the telecom sector is anticipating further consolidation in the near future. I believe consolidation is happening and continuing to happen in Europe, the Middle East, Asia, and all over the world, Hasbani says. The number of single market operators is poised to decrease significantly. Most operators are either already part of a big group, or creating a big group themselves. Its a kind of eat or be eaten scenario. He believes that other than cash deals, the consolidation methods will be numerous: Paper deals, share-swapping and mergers these havent been seen so far on a large scale, but are very likely to happen over the next two years as part of the consolidation process, as not all companies have the financial muscle to continue making major acquisitions.

Measuring an M&A opportunity

Hasbani says that the right M&A opportunities may not always present themselves at the right time. Sometimes you get the right opportunity at the wrong time, and

sometimes you get the wrong opportunity at the right time. So balance is very important, he says. What do we do? We stick to our objectives and strategies which are always focused on areas where we can derive synergies, complement our current operations, and create new values to us based on our current position. According to STCs globalization strategy, if a market does not create synergy and complementary opportunities for STCs current operational base, the company is not interested, even if it is an attractive market with huge growth potential. Synergy is simply measured by the cultural affinity of the country in which you want to operate with your current footprint. I dont specifically mean Saudi Arabia; it could be any operation that has our current footprint. Im talking about the cultural affinity, business transactions, tourism travel traffic into that country from the existing countries, the network and technological infrastructures of that country, and the potential for our existing operations to derive and add value. Basically it emphasizes our stage two and stage three global goals, Hasbani adds. Currently, STC has created two or three clusters. The major cluster is in the Middle East, which links to the cluster in Turkey and its surrounding countries; then there is the cluster in Asia: India which is a major one and Malaysia and Indonesia. These clusters are now we would want to complement, to build further and strengthen further, he says. Hasbani also envisages that STC might venture into new territories to create a new cluster of synergies: Over the next two or three years, I imagine a truer international platform. Potentially, more markets will be added to our portfolio. There will definitely be further coordination and cooperation across the groups companies, and more coherence and uniformity in the way we understand technology deployment, and service and product rollout. Editor: Gao Xianrui sally@huawei.com

Win-Win / JUN 2011

FROM OPERATORS

VOICE

Leadership up till now has been about greater market share and greater profitability. As we move forward leadership will be defined by the impact we have on the community around us.
Bob Collymore, CEO of Safaricom

Win-Win / JUN 2011

Safaricom

Redefining leadership
A market leader since it was formed in 1997, Kenyan operator Safaricom may have been facing some business challenges of late, not the least of which is a price war initiated by smaller competitors. But CEO Bob Collymore tells WinWin that to the deeply Kenya-focused operator, true leadership is less about market share and profitability, and more about the impact Safaricom has on the community around it.
By Ranajit Dam

he story of Safaricom has been a story of dominance. Formed in 1997 as a subsidiary of the state-run Telkom Kenya, the operator, which now counts Vodafone as a 40% stakeholder, is a giant in every sense of the term. With three-quarters of the Kenyan mobile market, Safaricom, which recorded revenues of KES83.96 billion (USD975 million) for the year ended March 2010, dwarfs its competitors. Its mobile money transfer platform, M-PESA, has been a tremendous success, with more than 12 million users and an average of 80 transactions taking place every second. Most importantly, Safaricom is a true Kenyan brand, a company that identifies itself with the community, and one that is instantly recognizable across the country. The thing that sets Safaricom apart is that its a Kenyan company, says CEO Bob Collymore. These simple words capture an awful lot. It is a company which is run by mostly Kenyans, who understand the Kenyan psyche deeply.

Davids take on Goliath

However, in recent times, the giant has seemed fallible. In particular, it is caught up in a price war that threatens to shake the very foundations of the Kenyan telecom market. It all began with Airtel throwing down the gauntlet and slashing voice call rates across all networks to KES3 a minute from KES6, aside from cutting SMS rates by 80%. Yu followed soon after with a tariff of KES3 a minute, and with Orange charging just KES2 for on-net calls, a fullblown price war was underway by August, 2010. Safaricom, at that time charging KES8 a minute for on-

net calls and KES12 a minute for off-net calls, was caught by surprise. We never expected it would happen, says Collymore. Otherwise we would have shifted to three shillings long before. The incumbent responded with a scheme called Masaa Tariff, which cut its on-net and offnet rates to KES2 and KES3 respectively. But the damage had been done. Safaricoms market share dropped from more than 80% to just above 75%, and as calls flooded the network, the operator struggled to cope with the load. There were two major consequences to the price war, says Collymore. One was the volume of traffic increased beyond what we were expecting, which meant we werent able to cope with the flood onto the network. The other thing was the impact on customer service. Customer service inevitably suffers in times like this. Airtel upped the ante in January 2011 by cutting call rates even further, to a scarcely believable KES1 per minute. Collymore believes that it has the potential to put the skids on Kenyas growth as investments are deemed as being

Win-Win / JUN 2011

FROM OPERATORS

VOICE

How do we contribute to the health agenda; how do we contribute to the education agenda? These are things that make a difference to Kenya, and what makes a difference to Kenya will inevitably make a difference to Safaricom.

riskier. If the environment becomes less profitable, then you have to think about how you want to invest, whether you want to invest, he says. In the short and medium term, it has the potential of slowing Kenya down a little bit, because we and some of our competitors have to seriously consider and rethink the investments we make. But when it comes to the long term, Collymore says that Safaricom remains well and truly committed to Kenya. We continue to look at our vision of what we want to do within a Kenyan context, he says. And this is not measured by how many customers we have, nor our profits, but how much we can uplift the Kenyan community. How do we contribute to the health agenda; how do we contribute to the education agenda? These are things that make a difference to Kenya, and what makes a difference to Kenya will inevitably make a difference to Safaricom.

More than market share

Collymore, a thoughtful, soft-spoken veteran of the telecom industry with experience literally spanning the globe, started as CEO of Safaricom in November 2010. He took over following the 10-year spell of Michael Joseph, a larger-than-life figure in Kenyan industry, and says he has long been impressed by how the operator has been in sync with the country and its needs. If you compare us to many competitors, not just in Kenya but other countries as well, what you find is that they tend to over-intellectualize things, he says. On the other hand, the Safaricom team is one that really understands what works for the ordinary Kenyan people. Another thing that sets us apart is how we have always built our propositions from the ground up. Take most operators around the world: they started by selling a mobile phone for several thousand dollars to really the very elite. When Safaricom started, it looked at what was required at the ground floor, and developed its propositions

from there. Thats because we always start at the bottom of the pyramid, not at the top. An extension of this approach has been looking beyond profit margins when measuring success, and taking calculated risks for the benefit of the broader community, even when many doubted the risks would pay off. We were the first to invest in 3G, says Collymore. We did that when many African countries, and certainly other operators in Kenya, were saying that we werent ready for 3G. We took that leap of faith, backed by a management team that truly believes in Kenya. Currently, about 30 percent of our network is 3G capable, and the result is that we have more than 90% market share when it comes to Internet users. Collymore says that the impact of Safaricom, however, goes beyond the immediate telecom industry, and into the broader Kenyan economy. Without the kind of investment we made, Kenya would still be quite a long way back in terms of having Internet, and indeed broadband access, he adds. The impact of telecommunications on a developing country I think is well known. The success of M-PESA has been well-documented in Kenya and around the world; in fact Collymores predecessor Joseph was recently appointed a Fellow of the World Bank and tasked with driving the adoption of mobile money transfers in developing countries. Collymore says that M-PESA has recently been upgraded to better serve Kenyan subscribers, the platform now being capable of handling 200 transactions per second. We can now open the gate to a lot more applications, he says. We believe that this will drive usage. Today the average subscriber uses M-PESA for 2.5 transactions per month. If we can take it up to 3.5 or four [per month], then you can see it will have a significant impact. Another thing that Safaricom has done is launch an M-PESA Visa debit card, which gives users access to 1.6 million Visa outlets and ATMs across the world. These are the applications we are now developing and driving within M-PESA, says Collymore. It remains a world leader, and

Win-Win / JUN 2011

we dont judge it against local competitors; we judge it on its performance worldwide. On a non-commercial level too, Safaricoms contribution to Kenyan society has been far from insignificant. Having a successful industry, having a successful player like Safaricom in the market is clearly contributing a great deal, says Collymore. The operator is currently the countrys largest tax payer, as well as the most compliant tax payer. So far this year it has invested KES250 million in the Kenyan community through its Safaricom Foundation, taking its total so far to about KES1.5 billion. Whether it is about sinking boreholes, whether it is about health, education or gender violence, Safaricom has always been ahead of the corporate pack in terms of how much we spend, and the impact that we have on the community, he says.

Leadership redefined
In order to stay competitive in the current environment, and stay committed to the Kenyan people, one of the adjustments Safaricom has had to make has been a trimming of costs. We really have to be a company whose cost base and structure reflects the current environment, and in some ways anticipates the environment which is to come, says Collymore. Twelve months ago, we were selling our minutes at eight shillings a minute. Today were selling our minutes at three shillings a minute and our competitors are selling it at one shilling a minute. We have to get ourselves ready for that. He adds that having Huawei as a partner at this time has been invaluable. Huaweis moved on from being a vendor to being a business partner, he adds, and through this partnership, we can address the challenges of the future. According to Collymore, the Kenyan mobile will see an increased focus on data, given that voice revenues are inevitably declining. Safaricom, currently the runaway

market leader in this area is doing all it can to ensure it stays that far in front. People simply want to be able to browse, he says. They want to go on Google, on Wikipedia, and social media is also a big up-and-coming thing in Kenya; it is something people have been taking far more seriously recently. One of the surprises in Safaricoms data strategy has been the success of Huaweis Ideos, a low-cost smartphone. It has been very well-received, Collymore says. We have countless young people who want to use the Android platform. Its being sold bundled with an attractive data package, and of course it is an attractive phone. He adds that Huawei is playing a huge role in Kenyas broadband future, with the companys modems and dongles playing a prominent role. Safaricom is currently busy rolling out a number of innovative services for the masses, including the ability to access Facebook and Twitter from just about any phone, and Collymore says that going ahead, the operator is looking to keep the Kenyan community at the front and center of its plans, particularly the rural population. Over the next few years, I see Safaricom playing an even greater role in the empowerment of rural communities, he says. I see us having a bigger role in finding technological solutions for some of the health problems that we have in Kenya, and some of the problems related to education and access to information. We are going to play a critical role, and this is why data, and investing in data, is so important for us going forward. He adds that in this way the operator will define leadership in its own terms. Leadership up till now has been about greater market share and greater profitability, says Collymore. As we move forward, we dont intend to define our leadership by market share I think we have a high market share today, and inevitably well lose some of that instead, leadership will be defined by the impact we have on the community around us. Editor: Gao Xianrui sally@huawei.com

Win-Win / JUN 2011

FROM OPERATORS

VOICE

The SMART way

Beyond traditional business

By Joyce Fan

Danilo J. Mojica

Win-Win / JUN 2011

It is very important that we work in the way that minimizes the negative impact on the revenue of the traditional business. We need to keep the balance.

n the Philippines the SMS business capital of the world, operators look ahead to mobile broadband with no little trepidation, as the traditional high margin business is expected to be affected by increased mobile broadband penetration. Danilo J. Mojica, Head of Wireless Consumer Division at SMART, the leading wireless operator in the Philippines tells WinWin that the new trend can be embraced by adopting an out-of-the-box approach.

mobile broadband, as this would adversely impact their traditional businesses. The profit margin in broadband is much lower than that in traditional businesses, and the transition cant take place overnight. So it is very important that we work in the way that minimizes the negative impact on the revenue of the traditional business. We need to keep the balance, he adds.

Winds of change in SMS capital

Because of its very high usage of text messaging, the Philippines is known as the SMS capital of the world. Even with the popularity of social networking sites, SMART is still seeing a rapid growth of SMS traffic on its network. It is not a simple matter of sending SMS is cheaper than making calls. We are also seeing voice traffic increasing. The appetite of mobile users in the Philippines is really huge. It is part of our nature: we like to communicate, we like to text, and we like to make friends, says Mojica. Compared with the newly emerging mobile broadband service, text messaging still remains a high-margin business. However, because of the prevalence of bucket pricing plans in the Philippines, SMS revenue has not increased in proportion to the traffic. According to Mojica, bucket plans account for 70% of SMARTs revenue. There are two kinds of bucket plans: one has a cap, while the other provides unlimited calls and text. Needless to say, the latter is more popular among users, but more unfavorable to SMART in terms of capacity expansion and revenue. Meanwhile, social networking sites have become a part of a Filipinos daily life. The Philippines now is the fifthbiggest Facebook market in the world. A result of this is that as mobile broadband penetration increases, at the end, the SMS will be affected, says Mojica. While the majority of operators worldwide are enthusiastically embracing mobile broadband, he believes that part of the challenge for operators is controlling its entry. Given their very big traditional business base, operators cant jump the gun when it comes to

Driving mobile Internet growth, Filipino-style

Bite-sized pricing model
According to some mobile broadband pioneers in Europe, the pricing model comprises two aspects: speed and capacity. Compared with those developed markets, the Philippines has different consumption habits and relatively limited spending power. There are some high ARPU users in the Philippines market, but for the majority of the consumers, SMART plans to replicate their successful SMS and voice strategy which involves giving consumers bite-sized offerings. We discovered that even if we offer an unlimited package, users dont really make the most of it. So we just provide the amount that they use, Mojica says, We are studying consumer habits and have found the exact amount that they use. By focusing on their needs we dont waste capacity by providing unlimited services. Internet habits in the Philippines originate from Internet cafs, where users pay for the time that they use computers. Mojica says that operators have drawn inspiration from this to offer time-based pricing for mobile Internet services in the Philippines. SMART, for example, now offers not just a one-day package, but also part-day packages, for usage from, say, 5 p.m. to 8 p.m. He says that it will take time and much effort to educate consumers about volume pricing, since few people know what KB really means. But, certainly, as mobile broadband becomes more popular and sophisticated, there will be a growing awareness about volume, he adds. Then the way to pricing may be a mixture of volume and time.

Three-layer handset strategy

Win-Win / JUN 2011

10

In the Philippines, most phones are feature phones and legacy phones, with smartphones making up only 2% of the market. SMART is adopting a three-layer handset strategy to promote the mobile Internet in the Philippines. On the high-end smartphone side, as this product is used by a more affluent, sophisticated segment that spends a lot of money on the mobile Internet, SMART is actively working with phone vendors to make sure the phones are aligned with needs of this segment. As for mid-range phones, as part of its partnership with Huawei, SMART has developed the Netphone which is built on a Service Delivery Platform. It is deployed on Android handsets. Through the Netphone, SMART gives a larger chunk of Filipino consumers an affordable handset with a cluster of built-in services like Facebook and mail. If you look at a normal smartphone on the Android platform, you have many icons there. Every time you have to choose. But on the Netphone, weve already provided a button to give you exactly what you need. It can take you anywhere: applications from Android market, applications that are very unique to SMART, and other very specific services. But the beauty of all this is that it is providing services at a price that is very, very similar to what consumers pay for calls and SMSs, Mojica says. At the lower end is another innovative product, a platform that SMART has introduced to let users send SMSs to mobile phones from computer. There are currently 10 million Filipinos working abroad. They have computers, but in some impoverished parts of the Philippines, computers are not so prevalent. Instead, locals have cheap phones that can receive SMS. The Chikka Text Messenger allows messages to be sent to these phones, and currently has 50 million subscribers, says Mojica.

application development contests, with the winners given a chance to attend the GSMA Asia Congress in Hong Kong. Finally, SMART is working with vendors to carry out research in best practices so that they will be able to leverage technology in the best possible way while moving forward.

SMART Money, a life changing innovation

Mojica says that SMART is proud of being a pioneer in the mobile money business, which has changed many lives in the Philippines. The majority of the Philippines is unbanked. If you ask the Filipinos in the countryside why they dont go to a bank, they will say that it is because they have no shoes, he adds. They only have slippers and feel embarrassed to go inside a bank. It sounds crazy, but it is true. Different from M-PESA created by Kenyan operator Safaricom, SMART Money is the worlds first bank-linked mobile money service. It features a rechargeable payment card that may either be accessed through a SMART mobile phone or a MasterCard powered card, similar to a debit/ cash card. It enables SMART subscribers to manage their money from their mobile phones no matter where they are. In the Philippines, we have 7.5 million users of this SMART Money card, and there is PHP13 billion (USD300 million) currently in the system, Mojica says. But the vision here is to help consumers make it a habit so that they dont always have to carry money, especially in unsafe areas. Recently, SMART has begun adding value to SMART Money, through two projects. First, SMART is running projects in the micro-finance area: micro-loans and microbusiness. In the Philippines, sometimes people need to borrow amounts as little as USD50, to purchase things or run businesses. SMART Money leverages technology to make the loan process possible and efficient using mobile phones. You send and receive money via the phone, Mojica says. It is not like you go to bank and fill out a lot of forms and take days and weeks to process. Second, SMART has created a global joint venture with Master Card called Mobile Payments Solution (MPS). From the Master Card and SMART perspective, it is a B2B type of relationship between an operator and a bank. This joint venture acts more as a hub than a product. Through this joint venture, any operator in any country can work with Master Card and establish mobile money services abroad similar to what SMART offers in the Philippines. To conclude, we want to be the leader in terms of user experience, says Mojica, who believes that the relationship between SMART and Huawei is meeting the needs of the consumer in both technology and otherwise. We must have the ability to provide to the consumer the last, integrated and best price. This is the shared vision of two parties. Editor: Gao Xianrui sally@huawei.com

An app developer-friendly environment

In the old days when operators only had value-added services, they were effectively content providers. But it didnt become a big business, and the operators didnt have much control. The creativity was lost a little bit. Mojica says. Now, as operators move forward into mobile broadband, developers are becoming a very important part of the ecosystem. Now, it is the world of applications, he says. We are seeing that Apple is talking about 350,000 apps, and Android has 200,000. It means that there is a lot of creativity going around in that area. Our role is to make sure that we encourage that creativity. So operators have to create an app developerfriendly environment. And we have three ways of doing it. First, SMART has built a developer center for creative developers who dont have adequate resources. They have no regular access to high-end phones. What they have are ordinary phones and PCs. But they need to test on many different phones, Mojica says. We give them the resources to develop, test, and then maybe even trial applications in the market. The second initiative is seeking out creative developers and providing them communication opportunities. For example, in the early days with the Google developers, SMART sponsors

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FROM OPERATORS

VOICE

Bouygues Telecom puts the future in focus

Compared with its bigger competitors, Bouygues Telecom, a major alternative provider of mobile and fixed services in France, may have fewer resources and had a later start in the mobile data race. Yet, it has found a way to stand out in the market. Cyrille Guetin, CTO of the operator, tells us how his company is using a dynamic approach and innovative solutions to prepare for future growth.
By Julia Yao
WinWin: Can you tell us about Bouygues Telecoms overall technology and network strategy? What are your current priorities, and what will you be looking at in the next two or three years? Guetin: We are a very customer-centric company. We want to provide service of the best quality to the customer. To achieve this, we currently have three priorities when it comes to technology and network deployment. First, we will expand our 3G network to full nationwide coverage (from 85% to 99%) by the end of 2013. Second, we need to increase network capacity to accommodate a significant increase in traffic. Third, we need to move to an All-IP architecture to implement IP for all the network layers, from backbone to access layers, for both mobile and fixed networks. During this transition, IPv6 is inevitable, as it will enable us to deliver IPv6 addresses to every customer and every machine. WinWin: To expand your 3G network to nationwide coverage must be challenging in a country as big as France. How are you going to do this in a cost-efficient manner? And how much longer does Bouygues Telecom plan to prioritize UMTS and HSPA? Guetin: You are right. The remaining 15% of coverage will be the most expensive to achieve, as we plan to cover more rural areas. To accelerate the expansion of 3G services in France, we have signed an agreement with Orange and SFR in 2010 to share 3G mobile network deployment. This move is key to ensuring the rapid roll-out of mobile broadband, and bringing fast Internet access to customers in isolated areas. As for the choice of technology, we believe HSPA+ can offer sufficient capacity over the next three years. So we dont need LTE for capacity purposes before 2014. When it comes to the decision to deploy LTE, it will depend on our competitors, handsets and other factors. WinWin: What are your priorities in the area of fixed network infrastructure development? Is there a plan for similar joint investment in the fixed infrastructure area? Guetin: Today, we offer fixed access through DSL and cable. In the coming years, we will put a lot of investment into FTTH. As FTTH deployment is very expensive, Bouygues Telecom and SFR have agreed to a joint initiative to share costs of FTTH passive infrastructure in major French cities. The joint investment will see us sharing investments and pooling the horizontal portion of the optical fiber

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FROM OPERATORS

VOICE

There are basically two means to accommodate the traffic increase. Either you increase investment constantly, or you take a different approach. We have introduced innovative solutions to lower the strain of the traffic without degrading customer experience.

network deployed between the central offices and each building. As for the technical aspect, we plan to employ GPON rather than P2P Active Ethernet fiber technology. However, the agreement only covers the passive elements of the network, leaving the carriers free to compete using differentiated service offerings. The French regulator ARCEP has endorsed the agreement and praised Bouygues for our dynamic approach to providing broadband. WinWin: Talking about the operators fixed-mobile convergence strategy, what are the current challenges you face from the network perspective, and how are you planning to tackle these? Guetin: As we acquired an external fixed network in 2008, we had to link both telecom sites between fixed and mobile networks. Since the POPs of both networks will be linked, we will be able to build a common backbone. That means IP MPLS plugged in on an optical loop, with WDM and P Router. The aggregation network, mainly the PE router and PTN network, is quite different due to different geographical and physical sites. WinWin: We know you started very early in fixed mobile converged services by launching the countrys first quad-play offer, and it is very popular. In your opinion, what has made the product so successful? Guetin: In May 2009, we introduced the all-in-one solution, with Ideo being the first quadruple play offer in the market. The service was launched with an offer comprising high-speed Internet access, TV with up to 90 channels, unlimited fixed telephony and a mobile phone service, for the relatively low price of EUR45 per month. One year later, we continued to lead the way in the

fixed mobile market innovation by launching Ideo 24/24, the first all-in-one offer to include unlimited calls to all operators, 24 hours a day virtually the first totally unlimited fixed-mobile plan on the French consumer market. Also, we have introduced a very-high-speed offer up to 100Mbps with access to 3.3 million connection points. I would say the unique feature of Ideo is value for money, as it offers significant savings for our consumers and enhances the companys brand image in the French telecom market. But if we want to absorb this low price, we need to have a competitive cost structure. To provide good coverage and capacity with a low price, we need to be innovative. WinWin: Can you give us a few examples on how you are keeping the costs low? Guetin: For example, on the mobile network, we are deploying 900MHz bands for 3G as far as we can. At the same time, we are actively transforming the network to IP and Ethernet. We are moving from SDH microwave to optical fiber at the aggregation layer, called long haul microwave. At the access layer, we are upgrading our microwave and our NodeBs to Ethernet. By moving from TDM to Ethernet, the costs can be reduced. WinWin: Talking about mobile services, how has your mobile data traffic growth been, and what innovative solutions have you employed to cope with the growth? Guetin: The handset market is evolving. The middle market is shrinking. Now we have smartphones at one end, and feature phones at the other end, each accounting

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We currently have three priorities. First, we will expand our 3G network to full nationwide coverage by the end of 2013. Second, we need to increase network capacity to accommodate a significant increase in traffic. Third, we need to move to an All-IP architecture.
Cyrille Guetin, CTO of Bouygues Telecom

for half of the total. The traffic from smartphones has multiplied by three times in 2010. This is a big challenge for us. There are basically two means to accommodate the traffic increase. Either you increase investment constantly, or you take a different approach. We have introduced innovative solutions to lower the strain of the traffic without degrading customer experience. Image compression is a good example. We compress images very carefully, so that the end user sees no difference at all in terms of quality of image. As the page is lighter, the download is more fluent; it reduces network traffic and is less expensive for us. So its a win-win for both us and our customers. We are going to do video

compression this year in the same manner. WinWin: It sounds like you place a lot of emphasis on end user experience. What are the main technical concerns and challenges you face in this regard? Guetin: When you talk about web browsing, the Quality of Experience is not so much depending on throughput, but more on latency of the network, on the quality of the handset, on the web browser you useWe pay attention to all these technical issues. For example, you can have a very good network, but if the CPU of the handset is too weak, the end user experience will be bad, and customers will blame the operators anyway. Editor: Gao Xianrui sally@huawei.com

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du: The next level

Despite being the only second telecom operator in the world to have ever entered a 100%-penetration market, du has more than thrived in the UAE, acquiring an almost 40% mobile market share within four years of its entry in 2007, and maintaining an annual growth rate of more than 32% in a saturated market. CEO Osman Sultan tells WinWin that the operator is now seeking out new sources of revenue, as it attempts to establish itself as a region-wide communications powerhouse.
By Ranajit Dam

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At a time when mobility was really becoming something for everyone, we asked How can we take it to the next level? Taking telecom services to the next level became an obsession for us.

hen du entered the UAE market in 2007 as the new telecom operator, it didnt look like it would be easy. It was a saturated market, with a penetration rate of 100%, and du was also the first telecom startup in the region not completely backed by an existing telecom operator. Unlike players like Mobily in Saudi Arabia (backed by Etisalat), Nawras in Oman (Qtel) and Viva in Kuwait (STC), du entered the market on its own, a challenging proposition for a new entrant. This was the only telecom startup in the region to have been launched with its own resources, says du CEO Osman Sultan. One of the big challenges in this case was acquiring human capital, which is the most important asset that an operator can have. Sultan, a telecom industry veteran who has been with du from the beginning after spending eight years at Egypts Mobinil, which he also started up and ran, says there was only one approach to tackle these challenges. We needed to be different, he says. And at a time when mobility was really becoming something for everyone, we asked How can we take telecom services to the next level? Taking telecom services to the next level was an obsession for us. This meant we had to innovate creatively, and do things in a uniquely efficient way. The approach yielded results: a 40% share of the twoplayer market (the other operator being Etisalat) in the short period of four years, along with one of the highest top-line growth rates in the entire industry today. We finished 2009 with a rate of 35% revenue growth, says Sultan. We ended 2010 with 32% growth, so we have kept recording high numbers even though the market is really, really over-saturated. The keys to this success have been innovation, and also bringing in the best available talent. Since we didnt have any legacy from a human capital point of view, he adds, our priority was to bring in the best people, and make sure they assimilated into

one homogenous culture.

Different products for different segments

According to Sultan, what makes the UAE market unique is the heterogeneity of the population. You dont have a lot of countries in the world where there is such a large percentage of expats, he says. It means we need to understand the segmentation better. Even among expats, there are many categories: there are Asians, there are Europeans, and there are people from different Arab countries. Within Asia you have China, and you have India and so on. And then you have different social and professional categories. You have high-end expatriates, you have engineers, you have blue-collar workers etc. So you need to have the full picture and really cater to them all. One of the key attributes behind dus success, says Sultan, has been trying to cater to each category in a creative way. For this, we have had to thoroughly develop our business analytics, he says. We have been a company driven by the right data to develop our product. It costs money to develop a product, a value proposition. So we needed to be very efficient in developing our products, and our development process. This is why creating a network where we could understand exactly who was using what services, was so important. We were focused on creating products to target particular market segment needs. As an example, Sultan refers to a mobile line named Alo, which du introduced for overseas blue-collar workers. Alo caters to their specific communication needs using tailor-made sales and billing methodologies that suit this segment. We have a number of value propositions, and we are always looking to give more to our customers, he says. du also has products tailored to specific communities,

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More and more people are using mobile devices to do different things, and thats a huge opportunity. Customers are expecting to get more for less, and that is something normal. So we need to be creative.

like the local Indian community, whose members make a large number of international calls on certain religious occasions. With our season-based offers, we are always engaging with the different segments, he adds. However, Sultan says that the operator is not satisfied at having 40% of the two-player market, and is looking for ways to increase its share. These include expanding in the fixed space, taking advantage of the way mobile usage habits have changed, and also venturing into other areas like the Internet space. Yes we will grow our market share, because we are capable, and we have evidence of this capability, he says.

New usage habits drive growth

One of the most promising new areas of growth for du, according to Sultan, is mobile broadband, stemming from the fact that people are now using mobile services differently than they used to. We see the importance of broadband; we see the importance of mobile data, and the way that people are using mobile services differently, as devices like smartphones emerge. More and more people are using mobile devices to do different things, he says. And thats a huge opportunity. Now, of course there is pressure on the margins, there is pressure on the pricing that way, but this is only normal. Customers are expecting to get more for less, and thats something that is very legitimate. So we need to be creative in our business models. Currently, data usage makes up for less than 10% of dus mobile revenues, but Sultan expects this to double to the 20% range by 2015. He says this can be achieved by providing users both speed and capacity in mobile broadband. We made the choice of going with Huawei on all the 3G strategy that we had, and we were very

proud at one point to claim that we had the fastest mobile broadband, with 42Mbps on the network that Huawei provided, he says. And it was real, people felt that. We were able to offer more for customers, and it contributed very nicely to the pick up of these high-end types of applications. Now, we plan to make it even faster. Many of the worlds developed markets are now making the move to LTE, but Sultan doesnt have an answer yet as to when du will follow suit. I know customers want both faster and larger when it comes to the pipe. And I agree that the appetite for bandwidth among customers is unlimited, he says. Its all about phasing. We will watch the market carefully. Actually we are just starting some LTE trials, so its not that were not doing anything in that area. But when a full rollout will happen, will depend on how ready the market is. What is valid in Europe and more advanced markets is probably not valid now in the UAE. So I think for the sake of making sure that we manage both our CAPEX and our cash flow in the best way, we need to be circumspect.

Fixed on the future

In the fixed space, du has room to grow as well. A provider of fixed voice, high-speed Internet broadband and IPTV, it offers mobility through Wi-Fi in some areas as well. However, dus area of coverage is currently restricted to the newer parts of Dubai in which it has its own fiber infrastructure, or about 15% of the UAE. Sultan, however, rules out a full FTTH rollout. It isnt justifiable from a financial perspective, and also from the fact that 60% of the cost of the network is in civil work, he says. In a country that has such a lot of construction going on, getting the permission to dig and put the

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ducts will be a real hassle. Besides, these ducts already exist. There is a very strong political willingness to have broadband everywhere in the country, to make the UAE a very strong connected country. The authorities have indicated to us and the other player [Etisalat] that they are looking to have us use the same ducts, and to optimize the investment that was made in the country. He says that du will be able to expand coverage in the near future after it thrashes out in agreement with Etisalat. Soon, with our agreement to share the fiber infrastructure, we will be able to get our value proposition to all seven emirates in the UAE, and that is a very significant track of growth for us and a great opportunity, says Sultan. The network sharing is both about sharing ducts and laying fiber. We can use dark fiber when available, we can pull out our own fiber if needed. Sultan stresses that at the end of the day, the arrangement is bound to benefit consumers the most. The idea is to encourage genuine competition, he says. Consumers, whether residential or businesses, will have the opportunity to choose any service from any telecom provider. There are two existing today, but there may be more in the future.

Branching out
Evidence of the creativity that Sultan says is one of the cornerstones of the operators strategy comes from the fact that du is looking beyond its fixed and mobile operations for additional avenues of growth. We have created an investment holding company, and we are starting to create companies where we spin out certain activities from our role as a telco, he says, and we partner in areas where we

believe we need to partner with people who will enrich the value proposition. As an example he cites Anayou, a region-wide Internet platform that the company hopes will become a major digital destination for the 21st century digital Arab generation. Its a website that combines social networking, entertainment, games, information and more, says Sultan. However, we dont want to compete with, or negate the appetite of people for Facebook, Twitter, Gmail and so on. The concept is like that of a digital mall, in which all these websites are like shops that people visit. Since its launch in October 2010, Anayou has attracted millions of page views. Sultan says that the plan is to make the portal a separate company from du: We are already talking to partners, including other operators. We want to work in a collaborative spirit with other operators, and also media players, who are welcome to invest in Anayou. Another plan is to create a hub company for the Internet in the country. I think the UAE is very well positioned to become the digital hub in this part of the world, he says. It is already the hub for merchandise, for people, for capital and for investment. It can be the hub for the digital space as well. Finally, the telecommunication operator is also looking into the possibility of setting up a data center. We will create a company in partnership with other players to establish a data center, says Sultan. This centre will have the required service layers to cater to the requirements of enterprise community and individuals to access the cloud. These are the spectrum of things that we are currently seeding growth in. Editor: Gao Xianrui sally@huawei.com

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Our philosophy is that technology should be driven by market needs. We dont want to launch new technology just like that. We need to see it from the business perspective; we need to see if the whole ecosystem is ready.
Dian Siswarini, CTO of Axiata XL

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A different approach to mobile data

To call Indonesias telecom industry competitive would be a bit of an understatement; 11 mobile operators are currently vying for a market of 240 million people. And if the three largest operators Telkomsel, Indosat and Axiata XL came out on top during the voice-and-SMS-growth era of 2007-2009, 2010 brought a more level playing field with the rise of mobile Internet. Axiata XL CTO Dian Siswarini tells WinWin that to profit from the mobile data boom in a unique market like Indonesia, a unique approach is needed.
By Ranajit Dam

ndia, a country of about 1.2 billion people, has 12 major mobile operators. In comparison, Indonesia, with a population of 240 million people, or one-fifth that of India, has nearly the same number of mobile network operators 11. Needless to say, competition is fierce among the five GSM and six CDMA operators, although it is three largest ones Telkomsel, Indosat and Axiata XL that currently hold the lions share of the market. The big three operators owed their dominance to the traditional revenue streams of voice and SMS, but with the emergence of mobile data, the rules of the game are changing. More than a third of the Indonesian population is aged below 20, and Internet usage is high, particularly in the field of social networking (the country ranks second in the world in terms of Facebook users), so its no surprise that Indonesias operators are chalking out their strategies for making the most of the coming mobile Internet boom. Among them is Axiata XL, Indonesias third-largest operator with a market share of 16%, which is looking to leverage its existing subscriber base to make headway in the mobile data field. XLs own data shows how the landscape is moving irrevocably towards data. In the one year between September 2009 and September 2010, the operator saw the number of subscriptions with GPRS rise from 5 million to 20 million, data traffic excluding that from Blackberry jump 400% from 96TB to 478TB, and data

revenues more than double, from IDR160 billion (USD 17.8 million) to IDR340 billion.

How, not what

According to XL CTO Dian Siswarini, what sets the operator apart from its competitors in the approach to mobile data is not what technology it uses, but how it utilizes the same. If you ask me about technology, I think its the same. We use Huawei, Telkomsel uses Huawei, other operators use Huawei. I dont see a big difference, she says. The difference will be how we use the technology. And this approach includes working closely with vendors to create a future-proof network, rethinking the pricing approach, and most importantly, implementing a sound business strategy backed up by existing technology. Our philosophy is that technology should be driven by market needs, says Siswarini, who has been with XL since 1996, or almost the very beginning. XLs strategy is to deploy available technology only when there is a visible market need for the same. We dont want to launch HSPA just like that. We need to see it from the business perspective; we need to see if the whole ecosystem is ready, Siswarini says. We need to see how the market is. Market demand, availability of terminals, and how capable the network is: these things determine

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Tao of Business

As long as they feel the Internet is fast, customers dont care if it is 380Kbps or 500Kbps With a time cap, we dont give them the highest speed, but we dont degrade them to bottom either. So were happy and theyre happy.

our strategy. For instance, even if 42Mbps broadband were available, it would not make sense to deploy it, because there are no terminals. So, in the case of mobile data services, deployment timing is very critical.

Future-proofing the network

One of the biggest challenges that operators like XL face is how quickly technology can go from being cuttingedge to obsolete. Earlier, equipment would become obsolete in eight years, and then it was five years, now it is not even three years, says Siswarini. XL, which has been providing data services since 2007, found midway that it had no choice but to upgrade its network after better, more efficient technology became available. I have said that the key is to building a future proof network, but in reality, it is very difficult, she adds. The solution to this problem is to work with the vendor in such a way as to share the pain, according to Siswarini. The key is having a special partnership with the network vendor, she says. Obviously, we have to modernize our network all the time. Our ability to predict what will happen in the future is very limited. We dont know what will happen one or two years down the road. But the one who does know is the vendor, as it owns the technology. The special partnership, she says involves not just acquiring the technology from the vendor, but also sharing costs, related to operation and maintenance, and resulting benefits from the network operation. We cannot do this alone, she adds. When it comes to future network planning, Siswarini believes some of the traditional approaches are outmoded in the MBB era. For example, ARPU is no longer the metric to be used when planning networks. The metric

we now use is return on invested capital, or ROIC, she says. This metric ties together the business KPIs and infrastructure KPIs, and so measures both sides. If we only measured revenue, or if we only measured costs, it would lead to a faulty analysis. For core network people, we used to have only congestion as the KPI. So anytime we encountered congestion, we would expand. We never tried to see if it was profitable, or if it would bring us value. ROIC ties in that network KPI with value, which means we will only expand the network when we know that it will bring value to us.

Rethinking pricing
Developed markets with heavy mobile Internet usage are currently witnessing a debate about what is the best way to price mobile data, with neither all-you-can-use packages, nor monthly data caps finding overwhelming support among both operators and users. Siswarini says that for a developing market like Indonesia, a third approach might be more suitable: charging users on the basis of the amount of time they spend on the Internet. I think the difference between consuming voice traffic and data traffic is that customers using voice traffic know how much theyre spending. For example, if a call costs a dollar a minute, then after three minutes they know they have spent three dollars. But in the case of data usage, they dont know how much they have used, she says. So instead of volume-based charging, what we are offering now is time-based Internet packages. So we have fivehour packages, one-day packages, five-day packages and so on. Siswarini adds the response among customers has been very favorable because users know exactly what they are paying for, and how much they are paying. And as an

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Now, 3G penetration in Indonesia is less than 15 percent, and the main reason for this is the price. I would ask handset makers for cheaper smartphones smartphones costing less than USD20.

operator, XL is also happy because the usage is kept to reasonable amounts, and that is good for the network. The operator didnt stumble on this solution by accident, though. Earlier, we used to give users a cap of 1GB a month, she says. But we found they were consuming their quota within five days. After that, we didnt stop the service, but cut the speed drastically. It made them really unhappy. Siswarini and her team realized that while users couldnt really tell the difference between two relatively fast speeds, they could tell the difference between fast and slow. As long as they feel the Internet is fast, customers dont care if it is 380Kbps, or 500Kbps or whatever, she adds. But when we used to enforce capping, and drop them to 64Kbps, they would really feel the pain. With this time cap, we dont give them the highest speed, but we dont degrade them to bottom either. Its a happy medium; were happy and theyre happy. The learning process continues, though. We still need a lot more analysis, she says. We really need to nail down usage patterns. For voice, every kind of traffic is the same. But for data, for example Facebook traffic is different from Twitter traffic. In the last two years, we have spent a great deal of investment doing analysis, and we expect it to continue in the near future.

A smarter take on smartphones

Siswarini admits that, compared to many other telecom markets, Indonesian operators have been lucky in the sense that BlackBerry, with its effective compression mechanism, is far and away the most popular brand of smartphone in the country. The good thing about BlackBerry is that its compression is really good, she says. If you compare an

iPhone with a BlackBerry, you will find that for the same application, the BlackBerry takes up only a quarter of the traffic of the iPhone. Nevertheless, as XL prepares its network capacity for the coming mobile broadband wave, it is, for the first time, paying close attention to handsets and also trying to align terminal deployment with network deployment. We are now looking at device management capability, and cooperating with people who know about it, she says. It has to be embedded within our strategy. Its not easy, because we never considered device management before, and now we need to think about devices. But I think thats what we have to do if we have to be good in handling smartphones. Siswarini also hopes handset vendors will help in popularization of mobile data usage with cheaper handsets, particularly for a developing economy like Indonesia. Now, 3G penetration in Indonesia is less than 15 percent, and the main reason for this is the price difference between a 3G handset and a 2G handset, she says. So I would ask handset makers for cheaper smartphones. In Indonesia, I have seen smartphones costing USD150, but I would like to see them lower than USD20. I dont know how they will manage it though. She adds that she would also like to see handset makers providing bundled applications like BlackBerry does. If they put nice applications in there, if they put social community features there, it will create stickiness, she says. I still cannot understand why anyone else has not done what Blackberry has. Look at the way that BlackBerry Messenger has been driving business and creating stickiness. And the stickiness will lead to further adoption. Editor: Gao Xianrui sally@huawei.com

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The making of a green, intelligent city

M2M is set to transform the utilities sector and the way of city life. Peng Haixing, Vice President of Huaweis Software Enterprise Business Unit, talks about M2M, and how its potential can be harnessed to build a green and intelligent city.
By Peng Haixing

M2M

Forces driving M2M

ne year earlier, at the MWC 2010, we announced our determination to go beyond connecting people to pursue M2M, and beyond the pipeline for cloud computing. These two are areas of strategic focus for us. Behind the M2M agenda, there are several fundamental driving forces. The future scale of M2M can be put into perspective by a forecast from UN, which predicts that the percentage of the global population living in urban areas will exceed 70% by 2050. There is no doubt that mobile subscriptions are riding this wave, with many people having two or more handsets. Yet the connectivity of things lags far behind that of people, with only 1% of the worlds 50 billion devices connected. This opens up the potential for a whole new connected world that involves future city living, including security, traffic, education and so on. It is expected that this market will be worth USD110 billion by 2012. With M2M applications expected to attract a flood of investment in the future, countries are currently developing their own national strategies in order to keep up. Currently, industries like healthcare and energy are using or planning to use M2M applications. Yet, the future of M2M lies not within the confines of a single industry, but within the interconnections between industries, and

these require a large-scale platform. The value chain and business models are key elements of M2M. Operators are well placed to achieve a dominant position in the value chain, as they act as an interface between end users, content providers and application providers.

Video surveillance: A case in point

The common focus points of M2M platform include the secure connection of machines and smart applications based on sensor networking. Based on our extensive experience in video surveillance which features high-speed wireless M2M applications, we think there are four key elements to its successful operation. Clear perception and measurement: We once had a case in which the recording system and alert system were triggered by the movement of mosquitoes drawn to the camera by its light. Adjustment of the system sensitivity brought things back to normal. Safe access and interconnection: Security is an essential factor. Without a security guarantee, hackers can easily get unauthorized access and even take control of the whole command center. Smart analysis and interaction: When the video data reach the data center, the center needs cloud computing equipment to generate results and provide feedback to the

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sensor within a second. Therefore combining the strengths of cloud computing and M2M is vital. Unified platform and collaboration: Currently, in some cities, we are building a connection between electronic identification (EID) and video surveillance. Standardization is the key for fast growth in this area.

Realizing the vision of a green, intelligent city

With the M2M platform holding the future, how can we realize a green and intelligent city? As we look at it, there are three important factors. Firstly, establish a clear development plan, take into account the information requirements of the government, enterprises and citizens by unifying data access, data processing, application framework and service interface, and tailor the urban planning according to the specific environment, positioning and development emphases of the city. Secondly, build a city that is visible, and process and utilize the information related to urban infrastructure and life-related facilities by making full use of the digital technologies. Thirdly, build a city with unified management and intelligent collaboration by constructing a unified platform, a city data center and three basic networks of Communication, Internet and Internet of Things in a hierarchical manner to achieve a growing and scalable platform capability and application and create a futureoriented intelligent city system framework. The four core technical elements of the intelligent city solution, are computing, video, communication and management. We have deployed thousands of people in

the past three years to build this platform in order to make it simple and open enough for the ecosystem to build applications on it. Each year, we hold a partner conference for the vertical application environment (VAE) platform. We are now working closely with ETSI M2M standardization team to build the M2M platform architecture and standard. M2M holds the future for each one of us. We are ready. Are you? Editor: Zhu Wenli zhuwenli@huawei.com

The value chain and business models are key elements of M2M. Operators are well placed to achieve a dominant position in the value chain, as they act as an interface between end users, content providers and application providers.

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Perspective

Competing in the mobile Internet era: A primer

The mobile Internet is an inevitable choice for the global telecom industry as it seeks to undergo a deep transformation. At the center of it are QoE and value innovation, coupled with device-pipe-cloud connection, hardware-software-wetware collaboration, and user information in three core aspects. Telecom operators will need to change to boost their core competitiveness and blaze a trail in the huge mobile Internet market.
By Li Changwei

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To succeed, operators must discern and follow core user experience and value demand and meet user requirements through new technologies and new business models.

i t h t h e m o b i l e In t e r n e t b e c o m i n g widespread, operators must shift toward it as quickly as possible while protecting and optimizing the value of pipes which is not an option but the only way. The development of the Internet has shown a constant evolution of QoE and value demand in their core parts. Therefore, to succeed, operators must discern and follow core user experience and value demand and meet user requirements through new technologies and new business models.

seamlessly connected. For example, Googles search traffic growth is hampered by bandwidth, and the iPhone supports Wi-Fi by preference due to insufficient 3G network capability. Worldwide, 3G networks did not see much uptake for more than five years due to high costs and a shortage of smart devices. In 2009, the success of the iPhone changed the ecosystem in the industry: Smart terminals were in greater supply, and operators mobile broadband traffic rose significantly around the world. However, with inadequate content and business capabilities, operators merely operate dumb pipes a trend that is intensifying.

Nine-dimensional model
The core competitiveness model of the mobile Internet is a nine-dimensional paradigm made up of the device, pipe, cloud, hardware, software, and wetware. In each dimension, the building of core capabilities depends on the insight into and understanding of user requirements, namely a mechanism for discerning user requirements and their trends. This model aims to maximize user value quickly and optimize QoE.

Hardware-software-wetware collaboration
How to discern and meet QoE requirements and value demand in an innovative manner remains a challenge. Based on user value and experience demand, Google designed two key indexes: the response time and the timeliness and accuracy of information. According to usage scenario research and competitiveness analysis, Googles response time for search is 20ms (an industry benchmark) worldwide. As for information timeliness and accuracy, Google needed to provide rich information closely related to key words within 24 hours, displaying the information in one screen in order of relevancy. To provide response within 20ms, it innovatively built a super-strong cloud computing search and cloud storage architecture. To meet timeliness requirements, it developed real-time information capture technology dubbed the Web Spider. To meet search accuracy requirements, it worked out a mining adaptation algorithm based on user information. The new architecture, technology and algorithm have become key to its success in Internet search. To meet the social needs of users, Facebook, Twitter, Foursquare, and Sina micro-blog rolled out new networking services based on social CRM. Since then, Facebook outpaced Google in traffic, and succeeded in its business strategy through the use of wetware in bypassing Googles hardware and software. Referenced in Here Comes Everybody by Clay Shirky, wetware refers to human

Device-pipe-cloud connection
Through the device-pipe-cloud connection, user experience is delivered end to end, as is user value. For example, a video service requires good smart devices, client software that is visual and easy to use with a neat design, and the traffic flow from cloud (application platform) through pipe (networks at all levels) to device to stay above the minimum threshold for the video service. As the QoS system needs to guarantee the absence of jitter, delay, or distortion, this requires that a business-based architecture be designed, standards set, and key technologies developed end-to-end from device through pipe to cloud. Also, middleware and systems should be designed, integrated, verified and implemented in the same way. On the Internet, the pipe, device and cloud are operated by different players, so it is difficult to get the three

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Perspective

The pyramid-shaped model of hardware-softwarewetware is the most stable organizational structure, and the foundation of business architecture.

knowledge that can only be sensed, such as intelligence, capability, competence, and faith, existing in the living body and in an active state, and shared and transferred mainly through SNS. Now, Google is seeking to make breakthroughs in SNS websites. While introducing Google+1, it is looking for opportunities to acquire Twitter and other SNS websites. Moreover, with the fast growth of traffic, SNS websites also face challenges brought about by mass services in computing power, storage capacity, and low-cost operation capability, and they call for support and optimization through powerful hardware and software platforms. This shows that hardware-software-wetware collaboration is an inevitable trend driven by QoE and demand development and market competition. If hardware is likened to a mans body and skeleton, and software to flesh and blood, then wetware is his brain and nervous system with active competency, thinking and intelligence attached to the body. In other words, Google has strong limbs, and needs to make up for its weakness in intelligence, while SNS websites such as Facebook and Twitter have highly developed brains, and need to get strong physically. Only people with good hardware-software-wetware collaboration are competitive and can achieve sustainable development. The pyramid-shaped model of hardware-softwarewetware is the most stable organizational structure, and the foundation of business architecture.

Therefore, it is necessary to develop and tap into user information in three core aspects: people (user profile), place (location and scenario information) and skies (various kinds of cloud applications and extended user profile). On the computing platform, QoE and user value requirements can be explored, specific to the time, place, scenario, and person through the CRM-based intelligent simulation system, and new applications and services designed in an innovative manner.

New thinking about mobile Internet

With the rise of the mobile Internet, telecom operators top priority now is to analyze their business model and develop new business ideas as quickly as possible. First of all, telecom operators need to understand and follow the mobile Internets business model, breaking away from the business thinking that every bit must be profitable. The business model for the mobile Internet is freemium, which is examined in Free: The Future of a Radical Price by Chris Anderson. Freemium is a business model that works by offering a basic product or service free of charge (such as software, web services or other) while charging a premium for advanced features, functionality, or related products and services. The word freemium is a portmanteau combining the two aspects of the business model: free and premium. The business model has gained popularity with Web 2.0 and open source companies. In an extreme case, 1% of value content and services are paid for, while 99% of content and services are free. 1% high-value users support 99% free users. Therefore, in the network architecture and operating cost structure, operators need to change the telecom operation model in a revolutionary manner. For example, under the traditional model, Google needs to spend USD64 billion annually. With the adoption of cloud architecture, it

User information in three core aspects

Business innovation based on QoE and user value is the competitive essence of a business. This requires an in-depth analysis and understanding of information about users historical behavior, consumption, and social relationships. In addition, it calls for an interactive mechanism to stimulate users potential needs, and an intelligent simulation of business and services that meet user value and experience requirements according to constraints then and there.

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With the rise of the mobile Internet, telecom operatorstop priority is to analyze their business model and develop new business ideas as quickly as possible.

needs to invest only 1.6 billion each year. Secondly, operators need to follow principles governing the development of the mobile Internet. When the S curve of the mobile Internet reaches the lower inflection point, the evolution cycle gets longer. Before the profit model takes shape, the number of users needs to cross the critical point, conforming to Metcalfes law that the value of a telecom network is proportional to the square of the number of users connected to the system. For example, when Facebook had 1 million users, the website was estimated to be worth USD5 million, namely each users estimated value was USD5. When the number of users rose to 500 million, its estimated value exceeded USD60 billion and each user was estimated to be worth USD120. Therefore, before reaching the break-even point, the operator needs to evaluate and manage the value of the mobile Internet from the perspective of VC/PE instead of the traditional approach based on operating revenue. Thirdly, operators need to learn from the industrys benchmark, gradually and steadily establishing profit models. At present, successful profit models for the Internet mainly include: the information ad model of portals such as Yahoo and Sina, search ad model of Google and Baidu, digital utilities-based model of Tencent and Shanda, e-commerce model of Alibaba/eBay, Apples App Store, and Netflixs content monopoly model. Finally, operators should be user-centric and build their core competitiveness on innovative service design and key technology architecture based on user value and experience. They should seize opportunity to shorten time to market by ensuring sufficient resources and, if necessary, undertaking mergers and acquisitions (M&A) or cooperation.

How operators can foray into mobile Internet

Given the preceding analysis of the core competitiveness model and business model for the mobile Internet, telecom

operators who consider a foray into the mobile Internet market should take the following strategies. Make use of internal and external advantages. Operators can fully exert their advantages in capital, channels, and customer groups. They can take the strategy of M&A and seek strategic cooperation with professionals and partners in service design and innovation, platform architecture, Internet marketing, and the business model. Also, they can step up cooperation with government, leveraging their advantages in credibility, security, reliability, and controllability to improve information services for society through mobile Internet. Select growing mainstream services that have not reached the sweet spot. A decision-making team of domestic and foreign experts can be set up to identify business opportunities with the greatest growth potential, seek cooperation closely with the capital market and industry experts, and build a development and investment alliance or partnership. Introduce management consulting to stimulate innovation and achieve transformation in organization and management. By innovating the mechanism and model for business/service management, essential competitiveness in business operation can be built, and an innovative, cooperative, and open culture/atmosphere created in the organization. Set up a user experience center. The center aims to further dig into potential user requirements, step up research into targeted marketing, and improve service/experience design capability and value innovation capability. Mobile Internet is all about innovation based on QoE and value. Seek a sound business strategy and cooperation. A business system and organizational support capability should be built upon the device-pipe-cloud connection, hardware-software-wetware collaboration, and user information in three core aspects to put in place a mechanism for sustainable growth. Editor: Xu Peng HWtech@huawei.com

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Building business success in the era of cloud

An increasing number of players are entering the cloud arena. The driving forces behind cloud services include governments, Internet service providers, telecom operators, and IT service providers. Telecom operators are in the best position to utilize cloud technology and build the IT architecture for a future information society. Che Haiping, CTO/VP of Huaweis Carrier Software Business Unit, unveils more on cloud services.
By Che Haiping

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It is time to systematically rebuild a horizontally unified service network layer. Otherwise, introducing the cloud service and technology to operators networks will only create new information silos, as they cannot be fully integrated with operators legacy product portfolios.

Transforming for the cloud

perators like China Mobile, SMART, Telefonica, and KPN etc. have been transforming themselves for the cloud with a series of innovative trials. When the cloud era finally arrives, they can further open their portals, expand their business landscape, and optimize their revenue structures. SMART for example, has not only telecom operations, but is also involved in energy, water, healthcare and more. By leveraging its service network and business processing systems, SMART can horizontally penetrate other fields. Also, to create a stronger innovation base, SMART is also looking into the possibility of returning larger portion of revenue gained from the community to developers. To help operators better prepare for transformation and make the most of the cloud business, we have been partnering with a number of operators, including China Mobile, Deutsche Telekom, Etisalat, SMART and Vodafone, to establish joint innovation centers, and helping them offer digital media content and launch cross-industry operations. With marketdriven and agile innovation, operators can be better prepared to compete with Internet service providers. For example, Telefonica can add new service features or launch new services with reduced time to market thanks to their service delivery platform (SDP). These joint innovations have greatly helped operators identify the new revenue streams, as well as the trends and direction for the future cloud services.

Now, it is the time to systematically rebuild a horizontally unified service network layer. This layer will enable operators to explore the future business landscape in the cloud era. Otherwise, introducing the cloud service and technology to operators networks will only create new information silos, as they cannot be fully integrated with operators legacy product portfolios and the network can not deliver convergent technologies to end users. To help establish such a network layer, we have been closely working with operators and have launched the solutions like SDP, next generation intelligent network (NGIN), rich communication suite (RCS), open service gateway, digital shopping mall, and more. These will contribute to form a unified and enhanced service network layer that integrates network resources, applications, business processes and more, helping operators to gain new revenue from individual users, enterprises and cross-industry offerings.

One IT (SDP/BSS/OSS) transformation

Besides the transformations within the service network, operators should also consider the business support system (BSS) and operation support system (OSS). How can customers be acquired? How can tariff package be created and sold? How can the bonus be delivered? There are lots of marketing actions that are not fully supported by traditional BSS/OSS. In this context, a very light, flexible BSS/OSS is required to go with the service network transformation, in order to enable operators to explore the new business potential. Today, telecom networks still have many fragmented IT modules, and to carry out simplification and system integration, we should consider the Portal freedom in the new cloud era, like the digital content, unified communication mobile open access, and the cloud service offering. In this context, SDP, BSS and OSS should be

New service layer required

One of the major factors impeding operators from being more successful in the cloud area is not related to technology, but is due to their strategy carried over from the years of communications-centric operations, during which their organization chart and business process were communicationproduct oriented, forming lots of silos in their network.

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Perspective
Location-based services, advertising platform and NGIN can be the business enablers, especially if we combine them with the IP-based network, cloud computing, cloud storage and layer infrastructure.

integrated together using a business integration bus. We are working with Vodafone on a similar project, which will support business transformation and reduce costs related to the IT system. Traditionally, operators have only been involved in telecom service retail, but they are increasingly consider wholesale services that span content, applications and service aggregation/distribution. To simplify the wholesale business and speed up the cash flow turnover, we have rolled out the digital shopping mall and NGIN solutions. Speaking of future B2B services like advertisements, e-commerce and healthcare, how can we build B2B interfaces and integrate the cross-industry business processes? If we are aiming for the future information societys IT architecture, todays telecom IT architecture should be further opened to various businesses. By gradually moving to the cloud-based technology and service capability, we can build up the whole societys IT architecture and let the business process be more easily and flexibly integrated for enterprises and across industries. To transform and meet the future B2B business needs, we should define unified data models and business creation logic, as well as lifecycle management for customers, service portfolios, and revenue. In this context, service providers can tap into the huge business potential based on the large subscriber base, user behavior pattern, as well as their preferences and social relationships. Future development can be achieved by properly sharing the information to third parties and other across-industry partners. Location-based services, advertising platform and NGIN can be the business enablers, especially if we combine them with the IP-based network, cloud computing, cloud storage and layer infrastructure. We should also consider the real-time and unified resource management for e-data centers, Internet and the public network resources; this can help operators build a horizontal platform to accommodate and integrate third party, enterprise and other industry efforts.

Case study: China Mobile

To help operators start their transformation, Huawei has rolled out the one BSS, one OSS and one SDP solutions. For example, China Mobile and Huawei jointly built the mobile Internet operation, service networks and other innovative applications. China Mobile has set up nine application bases in China, including a music base. Covering the entire operation of the national music industry, the music base has granted the operator a dominant position in the value chain, contributing more than RMB20 billion (USD3 billion) in revenue by the end of 2009. By building its SDP and a light BSS, China Mobile can deliver nationwide operation and let their content partners create different kinds of applications to make money through the music. Besides offering services like ring back tone, ring tone and full music download, the operator has also launched a music community, through which members can interact with each other and share their love for music. Huawei is also working with China Mobile to build localized applications. Example includes the Internet application 139.com. Users can use MSISDN as their major ID to access various applications like mailbox, news, blog and so on, thus enjoying a convergent experience. Less than two years since its launch, 139.com has attracted over 50 million users, contributing about RMB20 million (USD3 million) in revenue per month. China Mobile has also launched its Mobile Reading service. Of its more than 110 million subscribers, most are medium and low-end customers, but they really enjoy the Mobile Reading service instead of using a Kindlelike or iPad-like device, they just use their mobile handsets to do the reading. In China, there are many writers on the Internet, and if their writing is very attractive, subscribers would like to pay money to China Mobile to read them. In this context, China Mobile shares the revenue with the writers and editors, building up a profitable ecosystem.

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Of its more than 110 million subscribers, most are medium and low-end customers, but they really enjoy the Mobile Reading service instead of using a Kindle-like or iPad-like device, they just use their mobile handsets to do the reading.

With Huaweis SDP and NGBSS as the major enabling systems, applications like mobile video, reading, music, Internet, cartoons, games and location-based services can be given full play. We are also working with China Mobile to build a nationwide BSS, analyze user behavior, and improve cross-selling efforts. We are also researching the possibility of applying cloud technology, but some operations will still be distributed across China. We can contribute more because we not only provide the platform, but also the major in-house design and the third party partners applications and contents. With the right experts globally and the best suite of SDP and BSS solutions, we are ready to be a partner in operators transformation, helping them reshape the cost structure of the IT architecture and enhance investment efficiency for better innovation.

Three-cloud solution
In 2011, we are expected to offer the Life in Cloud solution. Besides delivering SDP to operators like SMART and Telefonica, we also rolled out our digital shopping mall solution to help operators expand their home and individual user base. Work in Cloud is an ICT solution for enterprises, which will integrate our mobile office and mobile OA offering to provide one-stop cloud-based solution to enterprises. For Business in Cloud, we will provide solutions to support mobile virtual network operators (MVNOs) and mobile virtual network enablers (MVNEs). With one BSS, one OSS, and business intelligent solutions, we can help operators explore more potential in services like cloud-based mobile payment and contact center. To foster the ecosystem and explore increased revenue during the cloud era, Huawei is ready to be a partner in operators transformation and innovation, helping them expand their business landscapes in the future. Editor: Michael huangzhuojian@huawei.com

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Winners

Cell C
By Xiao Tao Editor: Zhu Wenli zhuwenli@huawei.com

Onwards and upwards

The first operator to utilize a 900MHz and 2100MHz HSPA+ dual band network and the first to offer cost-effective call options like billing per second on all of the packages, South Africas Cell C strives to be the possibilities provider. In September 2010, Cell C launched the countrys first HSPA+ network in the 900MHz frequency band. Having been in the market for more than nine years, the operator is currently serving more than seven million subscribers.

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Call for change

o maintain fast market growth, Cell C focused on attracting customers by offering rich services at competitive prices. This plan had been successful in accelerating subscriber growth, but also placed greater demands on the Cell C network. The burgeoning subscriber base complicated network management and increased network maintenance costs to such an extent that the profits from those low-priced services failed to offset the maintenance costs.

market share. However, the existing HLR platform limited capacity expansion, and could provide only temporary relief from the pressure on HLR storage capacity. Frequent expansion of the HLRs not only required high costs and lengthy projects, but also complicated the existing network structure, thereby hindering network evolution.

Low reliability
Due to a lack of redundant HLRs, if an active HLR broke down, the services would be disrupted and the image of Cell C adversely affected. To ensure service continuity and improve customer satisfaction, Cell C decided to deploy the ngHLR, the next generation of HLR with higher capacity and reliability and to enhance network resistance against natural disasters and system failure.

Capacity bottleneck
Considering this situation, Cell C cooperated with Huawei in 2007 to complete its technological migration to a new sophisticated core switching network that can cope with unprecedented traffic demand. This transformational success resulted in Cell C being named the Best Quality Network at the South Africa Telecommunication Congress of 2007. However, the home location registers (HLRs), core of the core network, were not upgraded at that time. The Cell C core network contained ten traditional HLRs, which were deployed in different cities. Due to remarkable subscriber growth, the HLRs were fully loaded and demanded urgent expansion of storage capacity. This had become the biggest barrier for Cell Cs goal of seizing additional

Fast growth needs

Cell C set up a long-term strategy aimed at developing a highly reliable subscriber data management system to replace the existing HLRs with insufficient storage capacity and low reliability. This new system was expected to meet the demand for rapid subscriber growth, provide centralization of data storage, data management, and service provisioning, which in turn would reduce OPEX and capital expenditure (CAPEX), strengthen the new service deployment capability, and sharpen the market competitiveness of Cell C.

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Compared with the centralized server platform, the deployment of the ATCA-based SingleSDB required no additional investment in central office and supporting facilities, such as transformers, power backup and cooling systems.

SingleSDB is the way out

Higher capacity
I n 2 0 0 5 , Hu a w e i s t a r t e d r e s e a r c h a n d development of SingleSDB, a distributed data management solution with a high storage capacity targeting subscriber data consolidation. In 2007, Huawei released the ngHLR solution based on Advanced Telecommunications Computing Architecture (ATCA), which completely satisfied Cell Cs desire for huge storage capacity, high reliability, and data consolidation. Cell C replaced its entire network HLRs with three Huawei SingleSDB-HLRs that supported a total of 30 million subscribers. This action helped Cell C in expanding its network storage capacity and meeting future demand for subscriber growth.

portability (MNP), home subscriber ser ver (HSS), and customer relationship management (CRM) databases to realize additional centralized subscriber data management. At that time, unified provisioning interface will be deployed, and the network maintenance will become easy and efficient, saving large amounts in maintenance costs.

Ready for the future

With the completion of the network renovation before 2010 FIFA World Cup, Cell Cs network remained highly stable during the event even when facing a traffic attack several times heavier than usual. Its outstanding performance during this event helped Cell C to enhance its image in the industry and thereby improve its brand value. Cell C has now shifted its focus from network expansion and device stabilization to service innovation and business model research. Compared with the centralized server platform, the deployment of the ATCA-based SingleSDB required no additional investment in central office and supporting facilities, such as transformers, power backup and cooling systems. The dramatic decrease in spare part investment and unified database has also reduced maintenance cost. The big savings in OPEX enabled Cell C to invest more in network research and business innovation, and to provide end users with simple, innovative, value-for-money products, along with exceptional customer service. Cell C has focused its attention on the development of the entire network. The HLR renovation was only the beginning.

Improved reliability
Cell C deployed its SingleSDB-HLRs in active/ standby mode in three large cities. Therefore, if the HLR failed in one of the cities because of natural disasters (earthquakes or floods) or manmade accidents (fires or power outages), the HLR in another city would take over services from the faulty HLR to ensure service continuity, which substantially improved network quality and customer satisfaction.

Enhanced convergence
The deployment of the SingleSDB consolidated the functions of the HLR and equipment identity register (EIR). In the future, Cell C will converge the functions of the mobile number

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Mobily
By Wang Man & Wu Wei Editor: Joyce Fan joyce_fan@huawei.com

MBB creates new opportunities

The first licensed 3G provider in Saudi Arabia, and the owner of one of the busiest 3G networks in the world, Mobily had come up with a strategy to utilize its 3G and HSPA+ data bandwidth in such a way that would not only set it apart from other operators, but also bring it into direct competition with fixed broadband DSL.

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When we looked at 3G and more importantly 3.5G, we knew that we could shift the goal posts. We wanted to shift the mobile data consumption conversation in the minds of consumers away from kilobytes to gigabytes.
Etihad Etisalat consortium, known by its trade name Mobily, was founded on May 25, 2005. As the second mobile operator in Saudi Arabia and first licensed 3G mobile provider in the kingdom, Mobily achieved its first one million subscribers in less than 90 days of beginning operations and ended its first year with around 2.35 million customers. In 2007, GSMAs statistics showed that Mobily had the busiest 3G network in the world. services as soon as possible to stay ahead in the mobile race, as HSPA offered a better alternative to both ADSL and WiMAX. When we looked at 3G and more importantly 3.5G, we knew that we could shift the goal posts, says Khalid Al-Kaf, CEO and Managing Director of Mobily, We wanted to shift the mobile data consumption conversation in the minds of consumers away from kilobytes to gigabytes, he adds.

Competitive market calls for strategy shift

In April 2007, Saudi Arabias Communication and Information Technology Commission (CITC) made two official announcements that were of great significance for the kingdoms telecommunication industry. The first was the issuance of a third mobile license. With the addition of a new mobile competitor and having been denied the opportunity to add fixed-line offerings to its portfolio, Mobily needed to rethink its strategy.

Enhance the network capacity

To implement its strategic direction and meet forecast demand, Mobily decided to build an HSPA network for high-speed mobile broadband and upgrade its core packet network system to handle large amounts of data traffic. Early experiences showed that the large-scale deployment of HSPA resulted in increasing data throughput in a short time, so Mobily knew it had to prepare for this data traffic. A large capacity and high throughput packet core is required to lay the foundation of various mobile broadband services.

A future featuring MBB and new services

The Kingdom of Saudi Arabia has one of the largest volumes of demand for broadband Internet services among the Gulf Cooperation Council (GCC) countries. With a rapidly growing population of young consumers and increasing wealth, mobile broadband and multimedia services have become popular entertainment avenues. After thoroughly analyzing the situation, Mobily realized that it needed to launch large-scale HSPA

A solution for today, keeping tomorrow in mind

Mobily and Huawei first began working together in 2005, on the construction of a high performance radio and packet core network. To meet the new strategic objectives, and also to address the looming tactical challenges, an architecture working group was established in 2007 between Mobily and Huawei. This group evaluated a series of solutions to resolve possible bottlenecks caused by the high

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traffic of data services and unique traffic scenarios. The result of this was a decision to deploy Huaweis huge capacity and high performance packet core SingleEPC, which has five to ten times more capacity and throughput than traditional equipment. This core network was built to provide strong support for a large-scale HSPA rollout and ensure safe operation. The solution can also implement ser vice awareness and control, a flexible charging policy and bandwidth management, maximization of network resource utilization and increased revenue. Because the packet core can handle both 2G and 3G, it could optimize the network investment of Mobily, mining the potential of the 2G market and evolving the network to 3G smoothly and costeffectively.

Step by step, towards MBB success

On May 19, 2007, Mobilys launched its unlimited bundle at an affordable monthly charge of SAR350 (USD93), along with another two high-usage bundles, the 5GB and 1GB bundles for SAR200 and SAR100 respectively. As an indication of the popularity of the service and pent-up demand in the kingdom, Mobily signed up 50,000 users in the first few months. In November 2007, Mobily again selected Huawei to construct its next generation packet core, including constructing and upgrading a 3G/3.5G (HSPA) PS core network to support 100,000 HSPA subscribers with an average throughput of 55Kbps per subscriber during peak

hours (the actual usage by a single user can reach tens of Mbps). At the end of 2009, Mobily became the first operator to use HSPA+ in the region on its 3.75G network. The operator closed the year with one million customers subscribed to its high-usage bundles, and an overall customer base of 18.2 million. Mobilys HSPA network now covers 92% of all populated areas in the kingdom. In July 2010, Mobily saw a 40% growth in H1 net profit. The growth of Q2 revenues was attributed to the increase in broadband revenues and postpaid customers. According to the annual report of CITC, the number of Saudi Arabias mobile broadband subscribers rose 488% to 1.41 million during that time. Of these, 51% were MBB users, while 47% used ADSL. Till end of 2010, Mobily carried a daily average of 80 terabytes of data transfer, up by more than 200% over the past 12 months, and 9Gbps of peak-time throughput with 90% growth rate yearby-year. By leveraging Huawei HSPA offerings and unified packet core SingleEPC, the Saudi Arabian operator was able to reinforce its leading position in the MBB market, with a share of more than 70%, comprising of more than two million MBB subscribers, by the end of 2010. Mobily is currently the biggest 3G mobile operator in the Middle East. Over a period of three years since 2007, Mobily has built up a flourishing mobile broadband business through HSPA. In the coming three years, Mobily aims to strengthen its leadership in broadband services and applications, as a pioneer in this technology in the Middle East, in line with global trends in mobile communications.
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SMEs
By Hu Yuhai Editor: Xue Hua xuehua@huawei.com

benefit from cloud-based data bank

On April 27, 2010, Zhengzhou Hi-tech Zone, which is located in central Chinas Henan Province, celebrated the completion of its first-phase data bank project, marking the successful launch of Chinas very first cloud-based distributed data center.

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nformation technology is playing an increasingly important role in the daily operations of small and medium enterprises (SMEs). Yet building and maintaining an independent IT system can be costly, as SMEs need to purchase equipment, hire specialized engineers to engage in daily O&M, and continually upgrade the system to keep up with business development. All these may affect the cash flow of an SME and its business development as a whole. Thus, the IT system should be a major focus when governments and service providers help promote the development of SMEs.

Difficult data management

Zhengzhou Hi-tech Zone has more than 3,000 companies, more than 90% of which are SMEs specializing in the sectors like electronic information, animation, new materials, and new energy. With their rapid development, SMEs generate large amounts of data every minute and it would incur high costs to build and maintain their own data centers and disaster recovery systems. Take an advertising agency producing outdoor LED billboards for example. The growing business has brought the agency an increased number of billboard orders, yet distributing and updating the advertisements has become a challenge. The agency has several employees to manually update the billboards with USB dongles every day, yet it still fails to keep up with booming customer demand.

In case of bad weather, the update speed is slowed and more customer complaints are generated. Similar cases like this abound among SMEs. The prevailing IT technology asks SMEs to increasingly focus on office automation and security of their critical data, yet their underdeveloped IT system has become a hindrance to support fast service growth. SMEs have some universal requirements from IT systems, including feasible access, security, reliability and management of their data. Since early 2003, the Hi-tech Zone has been striving to become a digital industrial park. Based on the user demand and technology trends, the Zone commissioned preliminary research in 2007 on automatic resource deployment, and started building flexible and scalable IT infrastructure. This was expected to help SMEs in the Hi-tech Zone solve their IT issues for smooth business growth. Called data bank, the project would also provide online data storage and backup for the enterprises and individual users in the Zone.

Cloud storage debuts

The emerging cloud technology has enabled users to enjoy data resources like water or electricity. With the maturing of key technology and standards, cloud service has moved from theory to practice. After research into the technology, the Hi-tech Zone decided to use a distributed cloud platform to build the data bank, which can facilitate smooth upgrades, flexible resource

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The cloud-based data bank has provided SMEs a user-friendly and secure data platform to share and store their data. Since being launched, the platform has attracted over 100 SMEs and thousands of individual users.

allocation and management, while providing massive data storage and supporting large-scale service development. Through a simple service platform, the cloudbased data bank can provide rental storage space to enterprise users, together with services like information sharing and data backup. SMEs can use various services and resources with reduced costs, as they dont need to invest in hardware or employ specialized IT engineers. The data bank is highly reliable and secure, providing an edge for enterprises in fields like disaster recovery and antivirus functions. The Hi-tech Zone has implemented the data bank project in phases and adopted Huaweis cloud storage solution. The first phase has been completed with a cloud-based storage system and service platform. The second phase will develop value-added services based on the cloud platform, while expanding the system capacity to accommodate more users, upgrading the basic cloud infrastructure, and establishing a training lab. The data bank system, which realizes distributed data storage through cloud technology, is the very first known one of its kind in China. The system architecture consists of a distributed storage system and specialized terminals, providing an end-to-end data sharing and backup solution for enterprises and individuals. The system can be expanded smoothly to support SaaS-based data storage, helping enterprises in the Zone secure a competitive edge in the Web 2.0 age. The data bank can provide data management service to meet office and production needs. Without carrying any extra devices like USB sticks, users can check their files and information through

the Internet via a special account, then edit and save files online. In this context, users wont lose critical data even when their computers break down. Thanks to comprehensive information rights management, users can also share specific files with their colleagues using secure URLs. The data bank provides a secure platform to store and manage online data for enterprises in the Hi-tech Zone, and can deliver different data backup policies through a tailored terminal. With multi-level data protection measures for both the service and storage platforms, the data bank can deliver satisfied services by ensuring the data integrity, business continuity, user authorization, and data transmission security.

Successful applications
With rich IT services and sound infrastructure, the Hi-tech Zone has met the IT requirements of various SMEs in different development stages. The cloud-based data bank has provided SMEs a user-friendly and secure data platform to share and store their data. Since being launched, the platform has attracted over 100 SMEs and thousands of individual users. The data bank is also of strategic importance, as it helps the Hi-tech Zone promote its technology and service development, while benefiting more SMEs with core innovation capability and technology advantages. The Hi-tech Zone is expected to adopt more cloud-based technology such as cloud storage, cloud security, cloud computing, and cloud application. These expanding cloud services are set to further promote the development of the Hi-tech Zone.

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China Unicom Zhuhai

A hassle-free network for communications assurance

China Unicom Zhuhai has successfully cut over to the optimized MSC Pool solution, helping it achieve one-time service recovery and centralized management through softswitch networking without wireless network upgrade. Also, this success has prepared China Unicom Group for a large-scale commercial deployment of the MSC Pool.
By Yang Xin Editor: Xu Ping x.ping@huawei.com

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Through unified coordination, the operator could reduce management difficulty and complexity and cut the overall management costs while effectively alleviating the constraints of main maintenance resources.

Unique communications needs

nown as the City of Islands, Zhuhai is one of Chinas five special economic zones. Though a city with relatively small population, it is one of Chinas 40 best tourist destinations thanks to its pleasant climate, picturesque scenery, and unique location. Each year, the city receives a large number of tourists, and hosts various major international conventions, exhibitions and fairs, and sports events. Underlying public security systems, communications systems must run reliably to ensure that these important activities and events proceed smoothly. In particular, emergency communications assurance is needed to cope with emergencies. In Zhuhai, tourists largely visit scenic spots during the daytime; in the evening they often gather at restaurants, hotels, and entertainment venues. When it comes to the communications network, this movement of people gives rise to a typical tidal effect, which is characterized by significant changes in network traffic patterns in different areas and periods of time. Coupled with roaming and handover, the effect exacerbates the impact on the network, and in extreme cases, causes switches to break down. In master/ backup mode, the MSC servers on China Unicom Zhuhais core network could not recover services immediately after a breakdown, and it even took hours to activate the servers, which adversely affected user experience. As one of the leading local telecom operators

committed to providing its subscribers with the best services, China Unicom Zhuhai has kept on improving its network capabilities to meet their unique needs. Before 2009, however, the operator had two MSC servers the master server was based in Zhuhai and the backup one in Guangzhou. Two network management systems and two maintenance teams were thus required to take care of these two MSC servers, which ran counter to the philosophy of global planning and maintenance.

MSC Pool to solve the issue

After extensive research, China Unicom Zhuhai realized that transforming the master/backup MSCs into one MSC Pool would be a solution with notable advantages. The MSC Pool solution, based on 3GPP, is now an industry-leading distributed disaster recovery solution that is generally accepted. Its disaster recovery function is co-delivered by switches in the pool while the network capacity is equivalent to the total capacity of the switches. By fully utilizing the redundant capacity, the solution can improve the networks capability to handle burst traffic. In the case of China Unicom Zhuhai, it could make the best of network capacity resources and avoid the waste of the idle backup server. For real-time service switching in the event of downtime, the MSC Pool solution makes sure that, once a certain MSC in the pool is damaged or overloaded, other switches can immediately take over the affected users and achieve zero service interruptions. If deployed by China

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Unicom Zhuhai, an MSC Pool-based emergency communications system would not only reduce losses from service interruptions, but also effectively improve customer loyalty, its social influence and brand image. T h e M S C Po o l s o l u t i o n c o u l d c o m b i n e two network management systems into one to address the coordination between the two maintenance teams. It could fully adapt to current network statistics and appropriately expand to meet operator requirements for network-level statistics management. With the solution, the two maintenance teams of China Unicom Zhuhai could be reduced to one. Through unified coordination, the operator could reduce management difficulty and complexity and cut the overall management costs while effectively alleviating the constraints of main maintenance resources (human, financial, and material) to its rapid development and delivering high quality O&M at lower cost.

Deployment: No easy task

At the end of 2009, China Unicom Zhuhai embarked on the project of upgrading to the MSC Pool on its core network, which aimed to transform the master/backup MSC server mode into the MSC Pool. It was China Unicoms first trial MSC Pool project. The MSC Pool deployment did not go without a hitch, though; the operator needed to address the issues of synchronization planning, cost management, and O&M. Synchronization planning would need to address the synchronization of network planning

and configuration data. In network planning, the deployment of a traditional MSC Pool solution required upgrading the wireless access network in the first place. Yet access network equipment from different vendors varied in the schedule and capability of support, which affected the whole networks overall planning and implementation progress. In data configuration, the MSC Pool required unified operation and collaboration between the access network and the core network. If pool-level management was conducted in the same way as was the distributed management of traditional network elements, it would entail a lot of collaboration between China Unicom Zhuhais departments, plus a large amount of data that would easily lead to errors and considerable network security hazards. Investment and operating costs were a top concern to China Unicom Zhuhai. As the deployment of a traditional MSC Pool on a TDM network necessitated wireless base station controllers (BSC) interconnecting with all switches in the pool, enormous TDM transmission resources would be consumed. In general, costs for network building and maintenance would be prohibitive to the operator. Upgrading wireless equipment on the network would also be costly. Compared with traditional networking, the MSC Pool required more complex network management. To implement maintenance management activities such as network configuration, statistics, and monitoring, China Unicom Zhuhai would need to operate massive data through cumbersome procedures. If there were no effective operation management tools, operating costs would soar and

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The optimized MSC Pool solution enabled the MGW to achieve service distribution and circuit management for China Unicom Zhuhai, eliminating the need to upgrade the wireless access network.
pose a formidable challenge. O&M issues China Unicom Zhuhai had with the traditional MSC Pool solution mainly included the following: One was that the incoming call recovery scheme was defective so that the first call could not be put through. Another was that the resulting change in the O&M approach had an impact on the operators O&M and billing mechanism.

IP softswitch networking reduces transmission investment

China Unicom Zhuhai adopted Huaweis IP softswitch with an architecture featuring bearer/ control separation so that the media gateway (MGW) and MSC in the MSC Pool could be fully interconnected on the IP bearer network. When the MGW was in distributed mode on the core network, the BSC only needed to connect to the original softswitch MGW without any alteration. This could avoid the drawback of traditional media gateway distribution technology that required full interconnection between the BSC and all the MGWs in the pool, thus saving on TDM resources and reducing actual deployment costs. The flat IP network structure has allowed China Unicom Zhuhai to share resources with all MSS servers in the MSC Pool. Meanwhile, Huaweis MSC Pool solution supported the MiniA-flex solution to provide disaster recovery for media gateways and further enhance network security.

Optimized MSC Pool eliminates barriers

Finally, China Unicom Zhuhai detailed its network transformation requirements. First, the impact on the current network needed to be minimized to ensure normal services. Second, implementation difficulty needed to be reduced to achieve smooth transformation and evolution toward the MSC Pool. Finally, change to the current O&M and billing model needed to be avoided as much as possible to maintain network reliability. Based on the requirements, Huawei helped Zhuhai Unicom develop a network optimization solution involving three phases. Upgrade to VoIP would be completed first for core network softswitches; then a standalone TDM/IP interoperability office would be established; finally a new MSC would be built in Zhuhai. Upon completing the network transformation, China Unicom Zhuhai summed up its experience as one-time service recovery and centralized management through softswitch networking without upgrading the wireless access network.

Expediting deployment without BSC upgrade

The optimized MSC Pool solution enabled the MGW to achieve service distribution and circuit management for China Unicom Zhuhai, eliminating the need to upgrade the wireless access network. While saving the investment cost for the BSC upgrade, it facilitated actual planning and deployment of the networking scheme. With open network interfaces, the operator could keep its MSC Pool network open to equipment from multiple vendors so as to benefit from more

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competitive equipment prices.

Uninterrupted services improve customer satisfaction

When China Unicom Zhuhai had completed its transition to the MSC Pool, it took less than three minutes for a BSC Pool area to access interrupted services while both services and charging were accurate. By utilizing the one-time incoming call recovery function of Huaweis MSC Pool solution, the operator solved the industry issue of incoming call recovery. In other words, a user data backup server was deployed. When an MSS failed, another MSS quickly recovered lost data through the data backup server, and took over users of the failed MSS, thereby performing one-time incoming call recovery. With service uninterrupted, the network failure was not perceptible to users of the failed MSC. User satisfaction improved as a result.

Centralized network management system improves O&M efficiency

China Unicom Zhuhai adopted the M2000, a centralized MSC Pool network management system, to manage all MSCs and MGWs in the pool and meet the MSC Pool networks requirements for unified configuration, monitoring, assessment, and adjustment. Maintaining configuration parameters across network elements (NEs), the system ensured the correct configuration of Pool parameters on all MSSs and MGWs, which was strengthened by a function of manual/automatic data consistency verification. The system could gather and analyze performance statistics from the MSSs to obtain global reference data. It also conducted performance monitoring based on daily indicators. By viewing the curves of these KPIs, China Unicom Zhuhais network management people could promptly find out the operational status of its MSC Pool network.

Hassle-free network makes Zhuhai more attractive

After a period of relentless effort, China Unicom Zhuhai officially launched its MSC Pool for commercial use on April 28, 2010; it rode out the May Day holidays that immediately followed. The new MSC Pool network had no impact on the current 2G/3G services. KPIs such as the call setup success rate and paging success rate were up by 1 to 2 percent; indicators such as the location update success rate, assignment success rate, and handover success rate remained stable; network reliability was 99.9999%. By eliminating the need to upgrade the wireless network and sharing TDM transmission resources at the A interface, Huaweis MSC Pool allowed China Unicom Zhuhai to dramatically save on network deployment costs and speed up the network deployment cycle. Meanwhile, implementing the sharing of 2G/3G network resources as well as the sharing of network loads between MSCs, it improved resource efficiency for the whole core network of the operator and provided MSC-level disaster recovery. Also, it resulted in a sharp decrease in interoffice switching and better call quality. The new MSC Pool network topology, together with its evolution path, would surely serve as a basis and reference for China Unicom Group in its future upgrade to VoIP and the MSC Pool. Li Haihua, O&M Manager of China Unicom Zhuhai, noted, Were happy to have built a highreliability, high-performance and high-efficiency mobile core network with Huaweis innovative MSC Pool solution that also facilitates operation and maintenance. The effective deployment of this solution at China Unicom Zhuhai will get China Unicom Group ready for the large-scale commercial launch of the MSC Pool in terms of technology and O&M. Selecting a mature, optimal solution always has benefits. With Huaweis optimized MSC Pool, China Unicom Zhuhai has dramatically reduced risks in all phases of its MSC Pool deployment from network planning to O&M. Now, capitalizing on a hassle-free core network, it can easily provide communications assurance for all the tourists and attendees of major international events in the City of Islands.

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China Unicom
By Yao Yuan Editor: Xue Hua xuehua@huawei.com

Speeding up the information superhighway

In October 2010, NE5000E routers were deployed at four core nodes of China Unicoms China169 backbone network, providing faster speed to China Unicoms information superhighway.

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he China169 backbone network carries the majority of China Unicoms broadband services, information, and Internet traffic. After a seven-phase capacity expansion, the network currently boasts more than 100 network elements (NEs), connecting over 300 cities across the country. With traffic hitting 2200G, it is one of the worlds largest backbone networks, playing an important role in fulfilling China Unicoms strategic goals and promoting the nations informatization development.

Backbone expansion is required

China Unicom has seen fast growth of both broadband users and access bandwidth. In the past few years, the number of China169s broadband users has been growing by more than 20% annually, and it is expected to hit 56 million by the end of 2011. Meanwhile, the average access bandwidth of users is rising sharply, with the average annual growth rate topping 30%. The rapid development of heavy-traffic services such as P2P has made the operators annual traffic growth rate reach 90%. In this context, China Unicom has been investing heavily in the backbone network, ensuring the healthy, fast development of services and users. In recent years, China Unicom has stepped up the development of the China169 backbone network. By upgrading network equipment,

expanding relay circuit bandwidth and optimizing network organization structure, the operator has significantly improved network quality. Nonetheless, with the fast growth of broadband users and a hefty rise in access bandwidth, the China169 backbone network was lagging behind in terms of capacity, and there was a pressing need to expand network relay bandwidth. Secondly, the number of China Unicoms broadband users had kept growing, but the growth was slowing down due to increased competition. China Unicom needed to give full play to its network resources and enhance its competitiveness. Broadband acceleration would help China Unicom gain a competitive edge, and the China169 backbone network was the key. Thirdly, Chinas general broadband access rate was less than 4Mbps, and implementing the national broadband strategy had become a hot topic. Operators are the major force behind the promotion of the development of backbone networks and fiber access, as well as the application innovation. As a company with a strong sense of social responsibility, China Unicom was expected to enhance the China169 backbone network and contribute more to ICT development. In 2009, China Unicom carried out its seventhphase capacity expansion project for the China169 backbone network, replacing and building equipment at four key nodes at Chengdu, Xian, Chongqing, and Wuhan. As sink nodes in the southwestern and northwestern regions, Chengdu and Xian were the focus of the project.

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NE5000E: An optimal choice

When replacing equipment at the four key nodes of the China169 backbone network, China Unicom had explicit requirements related to service processing capabilities, reliability, scalability, energy conservation/emission reduction, and equipment cost. The China169 backbone network had long been monopolized by one vendor, which made it difficult to introduce healthy competition. Experience has shown that accommodating multiple vendors in a network brings about no technical risks, and it can help to enhance network security and reduce TCO by more than 40%. China Unicom also wanted to introduce new vendors to ensure healthy network growth, reduce costs and enhance service quality. Meeting those requirements, the Huawei NE5000E router became the optimal choice for China Unicom. A 10T 2+8 cluster system, the router can be extended from a single-frame cluster to multiple-frame, and its compatible hardware can help protect the operators long-term investment. With 40G interfaces that feature high performance and low power consumption, the NE5000E router supports high-bandwidth services and can be smoothly upgraded to T level. In addition, a 40G single board, at only 285W, has the lowest known power consumption in the industry. Moreover, the unique load sharing between 40G and 10G links greatly helps protect China Unicoms heavy investment in 10G links. To promote energy conservation and emission reduction, NE5000E features innovative energy conservation design, including highly integrated chips, divisional power supply, high power efficiency, and circulating air cooling unit. Compared with the legacy device, NE5000E cuts cost by more than 40% and uses 50% less power, minimizing OPEX and TCO. Another key reason for the NE5000E being selected for the China169 backbone network is that, said Tang Xiaoming, Vice President of Huawei China Region, More than 1,000 sets of NE5000E have been deployed on the backbone networks around the world. As one of the three vendors grasping the core technologies of cluster router and 40G, Huawei has also helped China

Telecom deploy the NE5000E routers, and their stable running eliminates China Unicoms concerns over equipment performance.

Speeding up the information highway

Deployed by the operator since 2006, NE5000E has been widely applied in China Unicoms IP bearer networks, provincial IP backbone networks, and IP MAN. In the past few years, NE5000E has ranked first in high-end router procurement made by China Unicom. In cluster router tests by China Unicom, NE5000E routers demonstrated outstanding performance, especially in terms of load forwarding in heavy-traffic national trunk networks. On October 12, 2010, the NE5000E 2+2 cluster routers were successfully cut over at the Chengdu node of the China169 backbone network. In this context, all of the seven routers had been cut over at four core nodes of Chengdu, Xian, Wuhan and Chongqing. Running stably, the NE5000E cluster routers are comprehensively serving the China169 backbone network. When reviewing the capacity expansion project of the China169 backbone network, China Unicoms technical expert summarized: Based on the growth of services and users, we expanded the relay-circuit capacity to meet bandwidth demand by the end of 2010. According to our roadmap, we moderately revamped the network structure and accordingly adapted our routing policies. In addition, we replaced the node equipment with insufficient capacity. We have also flattened the China169 network at the provincial level. Moreover, dual-stack capabilities are made available to some convergence equipment, making it ready for an end-to-end IPv6 pilot. A key NE for the operators information superhighway, NE5000E is helping China Unicom implement the nations informatization strategy, while accelerating the broadband speed. The router also helps China Unicom optimize its network, enhancing its efficiency and brand image. Meeting the expanded bandwidth demand, NE5000E provides sufficient support to develop 3G and other broadband value-added services.

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