We’re seeing a significant and growing level of outsourcing across the telecoms industry. Operators are thinking the unthinkable. Will they consider outsourcing their femtocell operation, what would the scope include and what are the issues and risks?
What is outsourcing?
Many businesses do things that they aren’t the most efficient or best qualified to do. By sub-contracting that to another business, it can be done by a company which specialises in that function which then develops expertise and optimises its costs through large scale and continuous improvement.
It’s been done for centuries. You can include anything from posting letters via the post office, office cleaning, press relations, marketing through to physical production of products. Occasionally, businesses still can do things better themselves – I’ve heard of one mobile phone company which employs staff to hand deliver bills to business customers because the local postal service is so unreliable.
More recently, we’ve seen the trend become global, with outsourcing of call centres, software development, book-keeping etc.
Mobile Network Outsourcing
There are two very common scenarios today:
- Ericsson, NSN, ALU, Huawei etc. are all able to offer complete projects to build out, install, commission and run entire radio networks.
- Some operators just outsource the field work, i.e. staff visiting site to install, upgrade, maintain equipment. They continue to plan, design and manage the network themselves.
Site and Network Sharing
Recently, we have seen a growing trend in RAN (radio access network) sharing. Sometimes this is just limited to site sharing (i.e. where operators install their own separate equipment at the same physical site, even installing their own antenna on the mast tower). Other agreements involve more direct sharing, ranging from equipment sharing (power, transmission links) through to base stations.
Telus and Bell Canada have made a simpler arrangement to build out a brand new 3G network in Canada . They each build over coverage for half the country, but allow all customers to use it everywhere. This paves the way for a joint 4G LTE network in the future.
3 UK and T-Mobile UK have gone a step further. They’ve created a new company, Mobile Broadband Network Limited , which owns and operators all 3G cellsites for both companies. They can then consolidate sites, equipment and transmission into a common shared resource which is measured by the Service Level Agreements (SLAs) that their two parent customers specify. This gives MBNL flexibility in choosing the best way to achieve their coverage and capacity goals, and allows them to outsource services themselves as appropriate. A four year contract was announced in late 2008 where Ericsson manage the network on behalf of MBNL.
Customer care/call centers
It's not uncommon for operators to outsource their call center operations, especially for lower revenue customers such as prepaid (in developed countries). This can be limited to first line issues, with more complex and/or severe problems resolved by inhouse staff.
An example relates to the early days of mobile data, where the technical intricacies of configuring and getting your mobile data modem to work were complex to say the least. It only affected a relatively small number of customers at that time. It was quite common for network operators to outsource the technical support to small specialist companies. As this service has grown, 2nd or 3rd line support may still rely on external specialists.
Is it worthwhile for an operator to outsource their femtocell operations to a 3rd party? Some issues to consider include:
- It’s not the same as the outdoor radio network. Initial feedback from operators suggests that they wouldn’t automatically outsource domestic femtocell operation to the same 3rd party contractor. However, Enterprise femtocells, which are effectively the same as picocells in many applications, or metro-femtocells used for capacity/coverage hotspots in the network, may be deployed using the same processes and arrangements as today.
- Domestic femtocells involve many back office functions. Rather than being a separate business function or process which can be easily disentangled, the process of buying, installing and operating a femtocell touches many parts of the backoffice operation of an operator. Customer care, ordering, provisioning, billing, diagnostic maintenance, network operations etc. are all impacted.
Whilst there's no hard and fast rule - it will depend on which back office functions have already been outsourced - it would be difficult to outsource only the femtocell aspect of the business processes involved. Where specific functions have been outsourced already, they may need to be extended to cater for any new aspects when femtocells are introduced.
So I don’t see domestic femtocells being outsourced as a one-off operation by many operators. It involves integrating with too many touchpoints within the operators current business processes.
It may be feasible to outsource the installation of femtocells for enterprise or outdoor purposes – this is more of an extension of the picocell and microcell installation that is already done by contractors today.
But for the vast majority of femtocells, operators will just have to adapt and manage it themselves.