Huawei Technologies

2005.10 8
Win-Win / JUN 2009
VOICE
FROM OPERATORS
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Vodafone leading market
change through innovation
The key drive for us is innovationat the Huawei 2009 Global Analyst SummitAndy MacLeod, Director
of Vodafone Technology Networks, shared with us what Vodafone is doing to innovate its way through
the current market and the current changes in the telecom space.
By Andy MacLeod, Director of Vodafone Technology Networks
The changing market
oday Id like to discuss Vodafones strategy in
the context of the changing market. Firstly, lets
talk about macroeconomic market trends. Not
surprisingly, the global economy, competition
and regulation are the three things that most concern
Vodafone and the telecom industry as a whole.
Competition is pressuring all industries, and this is
particularly true for the mobile sector as it approaches
commercial maturity. Te continual entry of new players
is driving down prices, and the industry trend is heading
towards bundled services and convergence. Competition
has extended to resale, which is now relatively ubiquitous
and spans all markets via Mobile Virtual Network
Operators. Tis has been encouraged by the current
regulations that have opened markets in a broad sense. Te
maturity of mobile markets has led to increased interest
from regulators, which in turn has created various price
pressures.
Customer divergence
Microeconomics concerns the behavior of customers.
In its infancy, the mobile industry adopted a generic
approach to customers, which persisted until relatively
recently. Now, the diverged interests of business and
T
individual consumers are increasingly dictating Vodafones
commercial strategy.
If we look back 5 or 6 years, consumers just wanted
a SIM card. Handset price, functionality, and data
connection speeds led the market. Te current situation
is more complex. Media now forms a very large part of
the consumer proposition while for business customers,
eective integration is of much more concern.
Next let us consider the qualities of portability and
mobility. Individual consumers are concerned about
portability and mobility prompting questions such as:
Will my phone t in my jeans back pocket? But for
businesses, mobility centers more around the question:
Do the applications I need work on my mobile?
So there is a subtle dierence about consumer interest
in battery and form factor versus, the way that the device
can be used, and integrated on the business side for
business customers.
Of course, quality underpins all aspects of the mobile
eld. When a mobile signal drops, individual users
simply move somewhere else to obtain a signal. However,
for business use, this is no longer acceptable as mobile
connectivity now forms an integral part of the oce
environment. So Quality of Service, and all of those
attributes customers associate with the xed network
enterprise environment are starting to impinge very
signicantly on customers expectations in the mobile
space. Divergence is central to our strategic approach and
Win-Win / JUN 2009
We are addressing challenges through innovating, not only from a
technical perspective, but particularly around our operating model, and the way
we interact both internally and externally with partners and customers.
were broadly focusing on total communication growth
areas: the business market, mobile data services, and
broadband services.
Operational innovation
Vodafone is embracing and driving innovation across
a wide range of areas rather than responding to a narrow
denition that centers on technology. In addition to
technology, our approach covers new operation models,
building intellectual property, new services and products,
business transformation, and industry collaborations. With
a holistic strategy in mind, were instilling in our sta an
understanding of the journey that were undertaking to
reach sustainable business development.
Te rst innovation here is to build a single converged
network. Vodafone enjoys a strong global presence and
this gives us an edge in terms of ensuring consistency,
economies of scale, and passing on operational innovations
to our enterprise customers. At present, one of our key
operational innovations is the construction of a converged
European IP backbone and IMS/NGIN service network
to deliver all our national and international core service
and transport requirements. Te best in breed IP/MPLS
router platforms help to deliver unrivalled scalability and
performance to our customers.
Meanwhile, the new converged network enables
centralization of the service delivery layer (GGSN, IMS,
Voice Interconnect etc.) through 3 hosting locations to
enable reduced costs and shorter time to market for new
services. Lastly it also provides a platform to simplify our
IP/Service network interface towards third party partners
and the outside world.
Te second innovation weve prioritized is network
sharing. Radio access networks incur the bulk of OPEX
and CAPEX, and so sharing access networks signicantly
curtails costs and allows us to focus investment on service
development and competitive strategies. Weve deployed a
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Andy MacLeod, Director of Vodafone Technology Networks
Win-Win / JUN 2009
HSPA+ 16Mbps 64QAM and HSPA+ 20Mbps MIMO
technology in January and February 2009, and this has
paved the way for future commercial deployment. Were
presently examining ways of conguring both equipment
and physical positioning to reduce OPEX and CAPEX
through key infrastructure solutions such as Remote Radio
Heads and SingleRAN.
At the same time, Vodafone is playing a key role
in the ongoing development of LTE, which Id like to
discuss in terms of dening its path and its commercial
structure. Crucial to Vodafones LTE approach is our close
partnership with China Mobile and Verizon, with whom
weve already produced RFIs and set up LTE eld trials.
Tis partnership has helped solidify our direction not
only in terms of the technical specications of devices and
chipsets, but also in terms of volume aggregation through
which we can meaningfully penetrate the global market.
To ensure consistency throughout our solutions, we
are driving a single LTE specication that will improve
global roaming. An important aspect of doing so involves
the standardized FDD+TDD chipset solutions that were
developing to converge LTE FDD and TDD so as to
deliver a truly global mobile broadband solution.
Centers of excellence
A key dierence in the way we previously operated
and our present approach is our deeper involvement
with third parties. We utilize our partners capabilities,
applications, and ideas to maximize service quality for our
customers. Over the past few years, weve partnered with
world leading vendors to establish numerous innovation
centers with the aim of generating ideas for new products
and services. Weve set up several of these with Huawei
covering mobile communications, applications, core
networks, and transport.
We work in a very methodical and structured way to
make sure that we are tightly focused on driving our technical
capabilities in the right strategic and commercial direction.
Tese joint innovation centres work in a very structured and
similar way. Tis forms an integral part of our mechanism for
leveraging innovation; particularly in how we turn ideas into
operational reality and commercial advantage.
To conclude, life is tough, but the ship is built well. We
are addressing challenges through innovating, not only
from a technical perspective, but particularly around our
operating model, and the way we interact both internally
and externally with partners and customers. By doing that,
Vodafone will continue to shape the industry around us
and become even stronger and more competitive.
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Editor: Gao Xianrui sally@huawei.com
wide range of passive and active sharing models spanning
all our markets, and doing so allows us to pass on resulting
cost savings to subscribers.
Our third innovation strategy covers outsourced
and managed services in the form of turnkey build-
operate-transfer and total cost of ownership models that
optimally respond to our customers core services demands.
Weve designed these models to manage costs and ensure
that we remain operationally focused on the activities that
directly deliver the best service experience and benets to
our customers. Our solid partnership approach has also
extended to managed services embracing areas such as
spare parts management for network infrastructure.
Technological innovation
Vodafone is aggressively pushing the development of
the current 3G technology to realize its full potential.
Were also driving the development of new technologies
such as femtocells and LTE through a strong collaborative
approach with leading vendors and third parties.
3G Femtocells
Te rst thing I want to talk about is femtocells. We
at Vodafone look at femtocells in two ways. Tere are a
number of opportunities that we see on the retail side.
We think its a very signicant opportunity to provide
better service to customers, both the enterprise and home
customers in areas which could benet from enhanced
coverage. Tere are also capacity management benets.
Network data trac is increasing quickly, and this presents
some management challenges, although data growth
tends to be concentrated both in terms of user numbers
and location. However, we view this as an opportunity
to which we can apply a cohesive capacity management
strategy, particularly in mature markets where broadband
access is widely available as a supplementary technology.
Femtocells respond to both consumer and capacity
demands and weve proactively led its development and
drive for standardization through our position on the
executive board at the Femto Forum. During 2008 we
completed internal and external user trials, and launched
a commercial pilot in Spain using Huaweis femtocell
products.
3G vs. LTE
While there is a wave of excitement surrounding LTE,
we believe that HSPA still has a wealth of potential and
are as such exploring ways to fully exploit our existing 3G
assets, especially in the data eld. We successfully trialed