ASIA MAJOR - Total Telecom

leAder contentS 

ASIA MAJOR 

Asia is a booming market with its own unique challenges, but 

it continues to set the pace for fibre rollout and mobile users 

nick Wood 

Assistant Editor 

Total Telecom 

BuSIneSS AnAlySIS for telecomS profeSSIonAlS JULY/AUGUST 2011 

Asia is a continent that tests 

to its limit the telecoms 

industry’s ability to span 

borders and shrink geographic 

distances, as players grapple with a 

broad range of challenges and 

needs. There is no doubt that it is a 

booming continent. in the fixed 

broadband market alone, Asia is the 

fastest-growing region by connections 

in the world, according to the 

broadband forum, increasing by 

16.2% during the first quarter of 

2011. Asia’s 226.4 million broadband 

connections already represent 42% 

of the global total. 

This is in a continent where vast 

numbers of consumers in countries 

like india and china will experi- 

Asia is too big, 

too different and 

too diverse 

ence the internet for the first time 

via a mobile device. “it is a very 

challenging position to be in,” said 

bill barney, ceo of network operator 

pacnet, during communicAsia 

in singapore in June. “Asia is too 

big, too different and too diverse,” 

he continued. “There are firstworld 

and third-world countries 

within 20 miles of each other.” 

in fact, within a convention hall’s 

distance of one another Japan’s nTT 

docoMo was outlining its plans to 

extend nfc services to south korea 

to cater to the demands of international 

travellers, while india’s Vnl 

was explaining how its solarpowered 

base stations deliver basic 

wifi and gsM services to rural 

communities (see p.18 for our article 

on sustainability in telecoms). 

connecting all these seemingly 

disparate Asian markets to the 

world at large is a huge web of 

subsea cable systems that are 

vulnerable to the high levels of 

seismic activity in the region, and 

the rising volume of shipping as 

intra-Asian trade is driven by local 

economic growth. 

fibre networks will play a major 

part in that growth. european 

countries would do well to follow 

the fibre lead of countries like Japan 

and korea; but as our stories on p.7 

and p.10 show, many western 

nations have a long way to go to 

catch up as operators grapple with 

the economics of business models. 

Asia’s mobile operators face many 

network challenges as subscribers 

soar, and self-organising networks 

could play a part in managing their 

infrastructure in future (p.14). but 

Asia-focused telcos face other 

unique challenges. According to 

pacnet’s barney, if March’s earthquake 

off the coast of Japan had 

struck 35 miles further south, Asia 

would have lost 80% of its connectivity 

to the us. “The successful 

[business] model for Asia is going 

to be very different from the rest of 

the world,” concluded barney. n 

news in brief 

3 Timeline 

A round-up of some of the 

major stories reported in 

our daily news service 

www.totaltele.com 

business And finAnce 

7 Fibre economics 

The long-term returns 

for incumbents from 

rolling out fibre don’t 

look good, but telcos must 

still forge ahead with 

their plans. 

neTwork sTrATegies 

10 Operator FTTH 

business models 

Most operators still are 

not committing to large- 

scale fibre-to-the-home 

deployments, but there 

have been some key recent 

announcements. 

Technology Trends 

14 Self organising 

networks (SON) 

self-organising networks 

promise to help mobile 

operators manage their 

infrastructure and to 

control spiralling costs. 

operATor sTrATegies 

18 Sustainability 

operators need to 

communicate their 

sustainability strategies 

more clearly or they could 

lose out commercially. 

sTATisTics 

20 Prime numbers 

global Voip subscribers, 

enterprise networking 

equipment and wireless 

data revenue growth. 

clIcK Here 

to reAd on 

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challenge, 

the greater the 

need to 

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Business 

Mobile payments ventures 

Mobile payment developments 

moved on apace as the uk’s 

three largest mobile operators— 

everything everywhere, o2 and 

Vodafone—said they will form a 

mobile payments joint venture; in 

denmark operators Telia, Tdc, 

Telenor and 3 joined forces to 

develop a single system for nfc 

m-payments; ericsson launched 

an m-payments service across 

seven european countries; and 

Visa acquired south Africa-based 

mobile payments company 

fundamo for us$110 million. 

Vodafone gets control of Essar 

Vodafone bought partner essar’s 

33% stake in their mobile joint 

venture in india for us$5.46, 

taking its interest to 74%. 

Vodafone entered the indian 

market when it bought a 67% 

stake in hutchison essar for $11.2 

billion in 2007. 

Polkomtel sale agreed 

polish businessman Zygmunt 

solorz-Zak won the bidding 

to buy polish mobile operator 

polkomtel for 15.1 billion 

zlotys (roughly E4.5 billion), 

beating off Telenor and Apax 

partners. Vodafone will receive 

approximately E920 million for its 

24.4% stake in polkomtel. 

EC sets new roaming caps 

The european commission is 

imposing new price caps for voice 

and data roaming within the eu. 

retail price caps for making voice 

calls will be reduced from E0.35 a 

minute now to E0.32 from 1 July 

2012, E0.28 in 2013 and E0.24 in 

A roundup of the major stories 

in telecoms in the past month, 

as reported in our daily news 

service www.totaltele.com 

2014. data charges will decrease 

from E0.90 per megabyte next 

July to E0.70/Mb in 2013 and to 

E0.50/Mb in 2014. Text messages 

and incoming calls will be capped 

at E0.10 from next July. operators 

will also have to open up their 

networks so customers can take 

a separate contract to use other 

providers for overseas roaming. 

Nortel patents sold off 

A consortium of companies won 

the auction to buy the patent 

portfolio of nortel networks 

for us$4.5 billion, beating off 

google which had bid $900 

million. Apple, eMc, ericsson, 

Microsoft, research in Motion 

and sony will now receive more 

than 6,000 patents. 

News Corp gives up on BSkyB 

news corp shelved plans to 

buy the remainder of pay-TV 

company bskyb, after bowing to 

political pressure in the wake of a 

phone-hacking scandal involving 

news international newspaper 

the news of the world. 

Ericsson buys Telcordia 

ericsson bought us oss/bss 

company Telcordia for us$1.15 

billion. The deal means around 

2,600 Telcordia staff will move to 

ericsson including president and 

ceo Mark greenquist. 

Netherlands net neutrality first 

The netherlands became the first 

country in the eu to mandate 

net neutrality when it passed a 

law to ensure that isps cannot 

differentiate between different 

types of online traffic. 

News Corp sells Myspace 

news corp agreed to sell the 

Myspace social network to 

specific Media, a digital media 

and marketing company, for $35 

million. news corp bought the 

site in 2005 for $580 million. 

Telepresence deals 

orange business services 

and Telefonica struck a deal 

to provide telepresence 

interoperability across their 

networks; a similar partnership 

MPLS VPN / Ethernet VPLS providers in selected cities 

Number of service providers 

35 

30 

25 

20 

15 

10 

5 

0 

n VPN 

n VPLS 

Tokyo New York London Moscow Mumbai São Paulo 

Source: TeleGeography 

TeleGeography research shows Ethernet deployments lag far behind MPLS VPN 

deployments, both by service provider and by geographic market. The availability 

of IP VPN and Ethernet VPN services also differs by region. TeleGeography 

identified 39 IP VPN providers in Europe, 34 in Asia, 31 in the US & Canada, and 

19 in Africa and Latin America. Ethernet VPN services are less widely available in 

all of these regions, but the difference is particularly great in emerging markets. 

tImelIne 

was agreed between Verizon 

and Tata communications. And 

Telmex signed a deal with cisco 

to provide telepresence services 

in Mexico. 

Amdocs buys Bridgewater 

Amdocs agreed to buy 

bridgewater systems in a deal 

valuing the company at about 

us$214.2 million. 

ICANN to extend Net domains 

icAnn approved a plan to 

increase the number of internet 

address endings, or generic toplevel 

domains (gTlds), from the 

current 22. 

M2M joint venture expands 

Teliasonera joined the 

machine-to-machine (M2M) 

communications alliance set up 

by orange and deutsche Telekom 

earlier this year. The agreement 

will extend operations to 

scandinavian and baltic countries. 

UK spectrum trading begins 

ofcom gave clearance for uk 

mobile operators to start trading 

spectrum in the 900-Mhz, 1800- 

Mhz and 2100-Mhz bands. 

Facebook integrates Skype 

facebook signed an agreement 

to integrate skype calling into 

its social network, a week after 

google announced video calling 

in its google plus service. 

Tata increases Neotel share 

indian operator Tata 

communications increased its 

stake in south African fixed line 

operator neotel from 49% to 

61.5% by acquiring Telecom 

namibia’s share. 

July/August 2011 www.totaltele.com 3

tImelIne 

neTWORKs 

LTE networks 

pccw’s uk broadband 

subsidiary confirmed plans to roll 

out an lTe network in the second 

half of this year; in singapore 

M1 launched commercial 

services while singTel plans to 

follow by year end; canadian 

operator rogers communications 

launched commercial lTe 

services in ottawa; deutsche 

Telekom launched services in its 

first major city, cologne; and in 

south korea, sk Telekom and 

lg uplus both launched services 

while kT corp said it will launch 

in seoul in november. 

Telecom NZ separation 

The new Zealand government 

passed a bill to enable the 

separation of Telecom corp 

into separate retail and network 

businesses. foreign investors will 

be able to take a majority stake in 

the retail part of the operator. 

Network sharing in Denmark 

Teliasonera and Telenor 

announced a network-sharing 

agreement in denmark. The 

companies will build a joint 

mobile network and establish 

a common infrastructure 

company to operate 2g, 3g 

and lTe networks. The deal 

covers radio access networks, 

including antennas, towers and 

transmission equipment. 

Telstra NBN agreement 

Telstra signed agreements to sell 

its fixed copper lines into the 

country’s A$36 billion national 

high-speed broadband network. 

Sprint-LightSquared deal 

sprint nextel and lightsquared 

reportedly signed a 15-year deal 

to jointly deploy and operate the 

latter’s wholesale lTe network. 

The deal, said to be worth 

$20 billion, would see sprint 

becoming a wholesale customer. 

MVNO launches 

uk-based lycamobile launched 

an MVno in france; swiss telco 

cablecom will enter the mobile 

market via an MVno agreement 

with orange; and china Telecom 

plans to launch an MVno in the 

uk next year. 

Belgium awards 3G licence 

belgium’s fourth 3g licence 

was issued to the sole bidder, a 

consortium made up of cable 

operators Telenet and Tecteo, for 

E71.5 million. 

Vodafone outsourcing 

ericsson signed a five-year deal 

to manage Vodafone italy’s fixed 

and mobile networks. it already 

provides managed services for 

Vodafone in germany, the uk 

and the netherlands. 

Spain/France auctions 

spain began auctions of spectrum 

in the 800-Mhz, 900-Mhz and 

2.6-ghz bands, aiming to raise 

up to E2 billion. And france set 

deadlines of 15 september and 

15 december respectively for 

bids for 2.6-ghz and 800-Mhz 

spectrum, aiming to raise at least 

E2.5 billion from the auctions. 

Fastweb IP backbone deal 

fastweb selected nokia siemens 

networks and Juniper networks 

to increase the capacity of its ip 

backbone network in italy. 

China Telecom moving to IP 

china Telecom selected Alcatellucent 

to provide equipment 

for an iMs deployment due to 

be rolled out to six provinces 

covering 120 million people. 

Australian spectrum auction 

nbn co was the biggest winner 

in Australia’s auction of spectrum 

in the 2300-Mhz band. 

PEOPLE 

New Inmarsat CEO 

rupert pearce will take over 

as chief executive of satellite 

company inmarsat from 1 

January 2012. current ceo 

Andrew sukawaty will become 

executive chairman. 

AT&T Labs appoints new head 

krish prabhu was appointed head 

of AT&T labs, replacing ceo 

keith cambron, who is retiring. 

prabhu started his career at 

AT&T bell labs in 1980 and was 

ceo of Alcatel usA and Tellabs. 

RIM streamlining 

blackberry maker research in 

Motion said it will cut jobs and 

restructure the company after 

delays in launching its latest line 

of smartphones. 

Telekom’s new European head 

germany’s deutsche Telekom 

appointed claudia nemat from 

consulting firm Mckinsey to 

head up its european operations 

from october. 

Bharti restructuring 

india’s bharti Airtel will split 

its organisation into separate 

consumer and business 

operations. reports suggest that 

could lead to up to 2,000 job cuts. 

Telefonica cuts agreed 

Telefonica reached an agreement 

with labour unions to cut up to 

6,500 jobs over three years. 

Cisco readies job cuts 

reports suggest cisco systems 

could cut up to 10,000 jobs, or 

about 14% of its workforce. 

CORRECTION 

in the June issue we wrongly said 

that AT&T launched smartcloud 

enterprise. we should have said 

that it is an ibM product. 

c&W’S World WoeS 

The third profit warning in 12 

months at Cable & Wireless 

Worldwide led to the resignation 

of chief executive Jim 

Marsh and called into question 

the company’s demerger 

from C&W Communications, 

completed in March 2010. 

Chairman John Pluthero, who 

presided over the demerger, 

will take over as CEO from 

Marsh (pictured) in order to 

assume a more hands-on role 

in the business. C&W Worldwide 

now expects Ebitda in 

the year to March 2012 to 

be 5%–10% below market 

expectations with a similar 

impact on cash-flow; and 

it has halved its fiscal 2012 

dividend to 2.25 pence as a 

consequence of reduced cash 

flow forecast. The company 

said sales orders in the first 

10 weeks of the year have 

been slower than expected, 

and as a result gross margin 

will be below current market 

expectations. C&W Worldwide 

in March announced 

a £10 million investment in 

cloud computing in a bid to 

offset the decline in demand 

for fixed-line services. “I’ll be 

looking to take a more radical 

approach to building on our 

hosting, cloud and data services 

business,” said Pluthero. 

“It has been easy to lose sight 

of what this business could 

be; it is my intention to reassert 

and realise that future.” 

The company says it will 

“accelerate the investments 

necessary to deliver growth” in 

those areas. C&W Worldwide 

shares have fallen 65% since 

the group demerged from 

its international arm. Senior 

independent director John 

Barton will become chairman 

of the company and Penny 

Hughes will be the new senior 

independent director. 

4 www.totaltele.com July/August 2011

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2011

FIBRE BUSINESS MODELS 

pAIn AND GAIN 

european incumbent operators and 

altnets face a considerable challenge 

to make returns on their 

investment in fibre networks over the 

next ten years, but they cannot afford to 

slow down deployments in the face of 

stiff competition from cable operators. 

That is one of the key conclusions in a 

recent report from Arthur d. little and 

exane bnp paribas on superfast broadband 

in europe that shows cable operators 

still are in the driving seat with telcos 

needing to catch up. 

“cable operators have the lowest cost 

to upgrade their access network to superfast 

broadband,” say the analysts in the 

report Superfast Broadband: Catch up if you 

can. “The move not only creates value for 

them but also is likely to increase their 

overall profitability.” 

Across the nine european countries 

analysed telcos have connected only 1.5% 

of households with superfast broadband, 

defined as offering at least 50-megabitsper-second 

download speeds. The analyst 

companies say 4% of households in those 

countries have been passed with fibre-tothe 

home networks (fTTh), 16% with 

Vdsl and 34% with docsis 3.0 cable 

technology. 

but they say services are set to expand: 

cable operators are upgrading more than 

90% of their footprint to docsis 3.0, and 

incumbent telecoms operators already 

have announced E18 billion in capex by 

2015 to roll out fTTh to 16% of households 

and fibre-to-the-cabinet (fTTc)/ 

Vdsl to another 28%. if those plans are 

followed through, that would represent 

44% household coverage compared to 

just 20% today. what’s more, they estimate 

E18-E40 billion of additional capex 

that has yet to be announced by incumbents 

in the nine countries studied in the 

report (Austria, belgium, france, 

germany, italy, the netherlands, 

portugal, spain and the uk). 

but it is clear that operators are taking 

a considerable risk when it comes to 

July/August 2011 www.totaltele.com 

return on that investment. while the 

report outlines the very different situations 

in each country assessed, in general 

incumbents should expect deployment of 

fibre to be “just about neutral in terms of 

return on capital employed [roce] in 

the long term”. 

in fact, the analysts say roce for 

incumbents typically could fall from 14% 

on average for a european fixed-line 

operator in 2010 to just 12% in 2021 

following fibre rollout, using a set of base 

case assumptions: rollout in very highdensity 

areas (predominantly cities); 

retail broadband share of 50%; superfast 

broadband Arpu of E53-E55 per month; 

significant re-use of existing infrastructure 

such as ducts; and excluding 

wholesale revenues (see table on p.8 for 

full roce and capex/opex estimates). 

The picture is even bleaker for altnets: 

“Alternative carriers will not be able to 

make a positive return from their fibre 

investment on a standalone basis, even in 

the long term,” say the analysts. They 

estimate roce for altnets of -13% on 

BuSIneSS & fInAnce 

The long-term returns for incumbents from rolling out fi bre don’t look good according to 

a new report, but telcos must nevertheless forge ahead with their plans. By Ian Kemp 

fTTh in 2021 and -14% on fibre-to-thebuilding 

(fTTb) networks. 

in order to address the situation altnets 

will need to reduce capex and opex significantly 

through network sharing, securing 

access to existing ducts and focusing on 

rollout in very specific locations— 

selected cities or even streets—where 

they can guarantee high penetration. 

Alternatively, they could make use of 

wholesale fibre services where available, 

but that would lead to loss of differentiation; 

compounding matters, the analysts 

expect european regulators to be less 

accommodating to altnets on fibre 

networks than on copper infrastructure. 

cable operators remain the best placed 

to profit, using docsis 3.0 technology. 

They face the lowest cost to upgrade their 

networks and already enjoy roce of 

25%–40%—likely to rise or be maintained 

at an average level of 38% in 2021 

given the incremental investments 

modelled in the report. 

but in spite of the economic challenge, 

it seems that operators remain sanguine. 

‘Altnets will not be able to make a return from 

their fi bre investment on a standalone basis’ 

Model summary in base case FTTH rollout for a typical incumbent operator 

units 2011e 2012e 2013e 2014e 2015e 2016e >2021e 

Homes passed 000 20 74 156 288 451 603 800 

Penetration % % 8% 36% 38% 35% 33% 30% 30% 

customers (end of year) 000 2 27 58 101 147 181 240 

New 000 0 5 12 20 29 36 48 

Upsold 000 1 15 33 56 82 101 134 

Retained 000 0 6 14 24 35 43 58 

Arpu, partly incremental €/month 30.6 32.0 33.4 34.8 36.1 37.4 43.7 

New (full ARPU) €/month 53.0 53.5 54.1 54.6 55.2 55.7 58.5 

Upsold (incremental ARPU) €/month 13.0 15.1 17.2 19.2 21.2 23.1 32.0 

Retained (full ARPU) €/month 53.0 53.5 54.1 54.6 55.2 55.7 58.5 

revenues €m 0 5 17 33 54 74 126 

New €m 0 2 6 10 16 22 34 

Upsold €m 0 1 5 10 18 25 51 

Retained €m 0 2 7 13 20 26 40 

Source: Arthur D. Little, Exane BNP Paribas estimates 

7

BuSIneSS & fInAnce 

Model summary in base case FTTH rollout for a typical incumbent operator 

units 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 

revenues €m 0 5 17 33 54 74 92 106 116 121 126 

OPEX €m 1 5 13 23 35 47 56 62 66 67 68 

Network Opex 

Incremental 

€m 1 4 10 18 26 34 41 44 46 47 47 

service Opex €m 0 1 3 6 9 13 16 18 20 20 21 

eBItdA €m (1) 0 5 10 19 27 35 44 50 54 57 

EBITDA margin % ns 3% 27% 30% 35% 36% 38% 41% 43% 45% 46% 

EBITDA/customer €/month (75.6) 0.8 9.0 10.4 12.6 13.6 14.9 16.5 17.8 18.9 19.9 

cApeX €m 11 40 58 91 111 102 76 41 17 5 2 

Capex/sales % ns ns ns ns 207% 138% 83% 39% 15% 4% 1% 

Network deployment €m 11 29 44 74 93 88 63 35 14 4 1 

Customer activation €m 1 11 13 17 18 14 12 7 3 1 0 

eBItdA-capex €m (12) (40) (53) (81) (92) (75) (41) 3 33 49 56 

Cumulative capex €m 11 51 109 200 311 413 489 530 547 552 554 

per home connected € 

Cumulative 

7,450 1,907 1,868 1,986 2,123 2,282 2,294 2,301 2,305 2,306 2,307 

network capex €m 11 40 84 158 250 338 402 436 451 455 457 

per home passed € 525 533 540 548 555 561 566 569 570 571 571 

D&A €m (1) (3) (5) (10) (16) (21) (24) (26) (27) (28) (28) 

D&A/sales % ns (47%) (32%) (30%) (29%) (28%) (27%) (25%) (24%) (23%) (22%) 

Net PPE €m 11 38 63 119 158 200 210 214 199 192 173 

Post-tax EBIT €m (1) (2) (1) 0 2 4 8 12 16 19 21 

Post-tax ROCE % (8%) (5%) (1%) 0% 1% 2% 4% 6% 8% 10% 12% 

The report authors say of the 94 telecoms, 

media and technology companies, 

as well as local authorities and utilities, 

interviewed for the report “the vast 

majority…expect incumbents to benefit 

from the move to superfast broadband”. 

They say “the financial risk is worth 

taking given the potential positive strategic 

benefits [of] market share protection 

or recovery”. 

indeed, the base case scenario for operators 

can be improved considerably if 

they are able to increase market share 

and/or Arpu. An incumbent operator 

with 50% market share and E65 Arpu 

could expect to generate a 23% roce— 

compared to 12% roce for the base case 

of 50% market share and E55 Arpu—but 

a telco with only 40% market share and 

E45 Arpu would generate a negative 

roce of -4%. The base model assumes 

50% retail broadband market share for a 

typical incumbent, 20% for a cable operator 

and 20% for a typical altnet. 

Source: Arthur D. Little, Exane BNP Paribas estimates 

‘The fi nancial risk is worth taking given 

the potential positive strategic benefi ts’ 

factor in wholesale revenues and 

incumbents can expect to improve their 

returns further. for example, capturing 

50% wholesale market share could 

increase Arpu by E15—based on a E6 

increment and adding the substituted 

average unbundling price in europe of 

E9—and take the long-term roce of an 

incumbent’s fibre project to 15% 

compared to the base case 12%; 75% 

wholesale market share could raise it 

further to 17%. 

The wholesale opportunity is highest 

in countries where alternative operators 

already have high broadband market 

share: france, the uk, italy and germany. 

however, that opportunity might not 

materialise at all if alternative carriers 

invest in their own fibre infrastructure as 

they plan to do in france and italy, for 

example (see story on p.10). 

in terms of capital expenditure, the 

analysts estimate network upgrade alone— 

constituting 75% of total cumulative 

capex—to be E150 per home passed for 

cable operators moving to docsis 3.0, 

compared to E188 for fTTc/Vdsl for an 

incumbent and E525-E750 for fTTh. but 

while fTTc/Vdsl requires much lower 

capex it is only a short-term fix in terms of 

profitability, say the analysts. operators 

taking that route will need to upgrade to 

fTTh eventually in order to compete 

with the higher-speed services offered by 

cable operators—100-300 Mbps for docsis 

3.0 compared to 30-50 Mbps for fTTc/ 

Vdsl—and the strategy will to some 

extent lead to a duplication of capex in the 

long run. 

yet even where operators do invest in 

fTTh, the consensus is that Arpu uplift 

will be limited or non-existent unless 

they are able to sign up significant 

numbers of customers to new services: 

“we are not convinced that customers 

are ready to pay for faster speeds, so 

Arpu upside will mainly depend on 

operators’ ability to offer new, additional 

services.” in many cases that means 

triple-play services with differentiated 

bundles and richer TV offerings including 

video-on-demand and high-definition 

or 3dTV. in turn, those TV and video 

revenues could be threatened by overthe-top 

service providers. 

The table on p.7 shows estimates for 

Arpu and revenues for a typical incumbent 

operator to 2021, taking into account: 

new customers gained from competitors 

as a result of superfast broadband rollout; 

customers upsold from the operator’s 

basic broadband offering; and retained 

customers who would otherwise have 

churned to competitors. The analysts 

conclude that an incumbent investing in 

superfast broadband could expect to keep 

its circa 50% retail market share of broadband 

customers, but those which do not 

could see share falling to 33%. 

but it is clear that there is still a long 

way to go, with operators starting from 

current penetration of superfast broadband 

technologies at very low levels in 

europe. The analyst companies estimate 

just 4.7 million customers in the nine 

countries by the end of last year, representing 

penetration of 3%: 2.3 million for 

docsis 3.0, 1.2 million for fTTc/Vdsl 

and 1.1 million for fTTh. n 


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Speed LIMITS 

Most operators still are not committing to large-scale fibre-to-the-home deployments, 

but there have been some key recent announcements. By Joanne taaffe 

fujitsu grabbed headlines in April 

when it announced plans to invest 

up to £2 billion to lay fibre to five 

million homes in rural areas of the uk. 

Across europe, however, operators 

continue to question the current need to 

invest in extensive networks, leaving 

largescale fibre-to-the-home (fTTh) 

deployments few and far between. 

“in general operators are relatively 

reluctant at this moment [to deploy] 

fTTh. we see opportunistic deployment 

driven by government or 

competition, but a lot of what is called 

fTTh is fibre to the kerb,” says Jürgen 

grabenhofer, head of transport and core 

marketing at nokia siemens networks. 

Alcatel-lucent, too, says it is not seeing 

extensive fibre infrastructure plans. 

“rollouts [in europe] have been disappointing,” 

says richard loveland, the 

company’s director of marketing for 

wireline access. 

According to the oecd, fibre represented 

just 1% of all broadband 

connections in france at the end of last 

year and 0.5% in spain and germany (see 

chart p.11 top). eastern europe and 

scandinavia lead the way, with fibre 

representing 29% of all broadband 

connections in the slovak republic, 26% 

in sweden and 16% in norway. but even 

those countries are considerably behind 

deployments in Japan—where 58% of all 

broadband connections are fibre—and 

south korea (55%). 

The fibre To The home council— 

which is due to release new figures at 

broadband world forum in september— 

says there were 8.1 million fTTh 

subscribers in europe at the end of last 

year and 33 million homes passed; excluding 

russia there were just 3.9 million 

fTTh subscribers. but some operators 

have made key fibre project announcements 

and spending commitments in 

recent months (see box on p.12). 

several factors have undermined the 

business case for private investment in 

fTTh in much of europe today, including 

a lack of clear consumer demand, 

argue analysts. “There is a real demandside 

[problem]; when [fTTh] has been 

deployed [demand] has not been particularly 

strong and that [has] made operators 

sit up,” says rupert wood, principal 

‘There is not a lot of evidence that operators can 

charge a premium for high-speed fibre services’ 

Superfast broadband penetration, end 2010 

Percentage of households 

40% 

35% 

30% 

25% 

20% 

15% 

10% 

5% 

0% 

n Homes passed 

n Homes connected 

4% 

16% 

34% 

0.7% 0.8% 1.5% 

FTTH/B FTTC/VDSL DOCSIS 3.0 

Source: Arthur D. Little / Exane BNP Paribas 

analyst at Analysys Mason. “Take-up 

levels in france have been pretty poor,” 

for example, he says. 

french regulator Arcep reported 

516,000 fTTh and fTTb subscribers at 

the end of the first quarter of this year, 

out of a total of 21.774 million total broadband 

subscribers. 

That lack of demand is not just evident 

in europe. new Zealand’s second largest 

operator Telstraclear last month withdrew 

its 100-Mbps broadband service in 

christchurch and abandoned plans to 

launch in wellington, blaming a lack of 

demand. According to Telegeography, 

the government’s wholesale fibre-to-thepremises 

(fTTp) ultra fast broadband 

initiative will enable isps to deliver 

100-Mbps fibre services at much lower 

costs than retail operators from 2015. 

Analysys Mason’s recent studies suggest 

that trends in consumer broadband usage 

are shifting away from the consumption 

of ever higher quantities of fixed broadband 

capacity and towards mobile usage. 

“[The trend] is not moving to ultra highspeed 

media-intensive [usage]. it’s moving 

to lighter [data consumption] and value 

in portability,” says wood. 

The development of a new ecosystem 

around higher-speed mobile networks 

and smartphones isn’t the only change. 

Homes passed by technology, 2010/2015 

10 www.totaltele.com July/August 2011 

Homes passed (% of households) 

60% 

50% 

40% 

30% 

20% 

10% 

0% 

34% 

46% 

20% 

49% 

n 2010 

n 2015e 

4% 

21% 

Cable FTTx FTTH 

Source: Arthur D. Little / Exane BNP Paribas

Advances in the performance of xdsl 

mean operators can deliver content such 

as high-definition (hd) film and multiple-player 

gaming services over existing 

copper networks, say analysts. 

As things stand, many operators 

consider their networks are able to meet 

end-users’ current demands. “i don’t need 

100-Mbps [services] at home [today],” says 

grabenhofer at nokia siemens networks. 

in addition, there are signs that operators 

may struggle to charge a premium 

for retail fTTh access. “There is not a lot 

of evidence that [operators can charge]…a 

premium,” says wood at Analysys Mason. 

“The studies we’ve done show almost no 

difference whatsoever. it’s very difficult 

to compare it at a retail level, but if you 

compare it at a wholesale level there is a 

bit of a premium for Vdsl and fTTc 

[fibre-to-the-cabinet services].” 

Arthur d. little and exane bnp paribas 

in their report Superfast broadband: catch 

up if you can say operators face a challenge 

raising demand for fibre services and in 

increasing broadband Arpu. “There is no 

clear demand for faster internet access 

and superfast broadband does not come 

with a specific killer app,” say the analysts. 

but the report says fibre will become a key 

facilitator of the digital home, and says 

the operators it interviewed for the report 

overwhelmingly say the main application 

that can drive uptake is hdTV, followed 

by multiscreen entertainment, connecting 

devices such as tablets and smartphones 

to home broadband, video-on-demand 

and gaming. 

The report says while there are considerable 

differences in pricing and 

competitive conditions for superfast 

broadband—fTTh and next-generation 

cable—operators moving from Adsl to 

fibre networks could expect to see an 

uplift in blended median Arpu typically 

in the region of E13 per month compared 

to current levels (see story p.7). 

indeed, in many cases operators will 

have to wait a long time to see a return on 

investment (roi): up to 20 years, depending 

on the region covered. bT openreach, 

for example, estimates it will have a 

12-year return on investment in fTTc 

and fTTp infrastructure in the uk, 


Percentage of fibre connections in total broadband subscriptions (Dec 2010) 

Japan 

Korea 

Slovak Republic 

Sweden 

Norway 

Denmark 

Hungary 

Czech Republic 

Iceland 

Portugal 

Netherlands 

Turkey 

Italy 

Poland 

Finland 

Switzerland 

France 

Ireland 

Spain 

Luxembourg 

Austria 

Australia 

Germany 

Canada 

New Zealand 

Greece 

Belgium 

Leading fibre-to-the-home/building penetration, Europe, end 2010 

Lithuania 

Sweden 

Norway 

Slovenia 

Slovakia 

Russia 

Denmark 

Latvia 

Estonia 

Bulgaria 

Portugal 

Finland 

Netherlands 

France 

Romania 

Czech Repulbic 

Italy 

Turkey 

3% 

2% 

2% 

2% 

1% 

1% 

1% 

1% 

0.49% 

0.48% 

0.47% 

0.45% 

0.44% 

0.41% 

0.24% 

0.20% 

0.05% 

0% 10% 20% 30% 40% 50% 60% 

n FTTH subscribers 

n FTTB and LAN subscribers 

0% 5% 10% 15% 20% 

Household penetration (economies with greater than 1% household penetration) 

Source: OECD 

Source: FTTH Council Europe 

July/August 2011 www.totaltele.com 11 

6% 

12% 

12% 

12% 

11% 

16% 

26% 

29% 

55% 

58%


which is relatively densely populated, 

according to a spokesman. Analysts say 

bT has estimated the cost of a national 

fibre rollout as equating approximately to 

£1,000 per household passed. 

“The roi for fTTh is 12 to 17 years, 

which makes it extremely challenging for 

traditional operators,” says stuart orr, 

head of european communications at 

Operator plans: some recent fibre project commitments 

Accenture. “who pays? end users? [And 

is it funded by] government bonds? or 

[by sales of] content?” 

nevertheless, there is hope that additional 

capacity will spur the usage of new 

services such as 3d TV, high-speed 

gaming, or the delivery of health, education 

and other social services over very 

high-speed broadband connections. if 

The European Union’s ambitious goals for member states to provide very high-speed 

broadband access networks mean governments will be under pressure to do more to 

encourage FTTH build-out. The European Union’s Digital Agenda 2020 has set a target of 

providing all EU citizens with broadband access above 30 Megabits per second (Mbps), 

with 50% or more households accessing speeds of over 100 Mbps, at an estimated cost 

of between E250-E300 billion. 

In the UK, BT’s announcements have spurred other companies to plan competitive 

strategies. Fujitsu plans to spend £1.5–£2 billion to roll out fibre over the next 3–5 years, of 

which around £500 million is expected to come from the UK government. It says in order to 

develop a sustainable wholesale economic model and attract national retailers—it is already 

talking with Virgin Media and TalkTalk as possible customers—at least 5 million homes need 

to be passed. And Telefonica’s 02 in June announced it will conduct commercial FTTH trials 

in the UK towards the end of this year; 02 has carried out significant local loop unbundling 

in the UK. 

Several other key FTTH projects in Europe have been announced in recent months. In 

March, Deutsche Telekom set out its strategy to connect 160,000 households in selected 

districts of 10 German cities to FTTH this year, enabling downstream speeds of 1 Gigabit 

per second (Gbps) and upstream speeds of 500 Mbps. The incumbent has previously said 

it will cover 36% of households with superfast broadband by the end of 2012, of which 10% 

will be FTTH. Analysts at AD Little / Exane BNP Paribas estimate Deutsche Telekom has 

earmarked capex of E5 billion for FTTx rollout. 

In June, TeliaSonera said it will invest more than 8 billion Swedish kronor (about E900 

million) in fibre networks across its territories by the end of 2014, with some SEK5 billion 

of that earmarked for Sweden and the remainder for Finland, Denmark, Norway, Estonia, 

Lithuania and Latvia. It has set a target of covering 1 million homes in Sweden with direct 

fibre broadband connections and a further 1.3 million households in the Nordic and Baltic 

countries during the period. 

France Telecom earlier this year set out plans to reach 60% of households, or some 15 

million homes, with FTTH by 2020, with an interim target of 10 million households by 2015. 

The operator said it will spend €2 billion to the end of 2015 to build out the network. Iliad 

is targeting 4 million households; and Bouygues Telecom and SFR at the end of last year 

signed an agreement to co-invest in fibre networks in high population density areas targeting 

3 million homes, while the companies also have plans to build their own fibre networks. 

In Italy, 2.5 million homes had been passed and there were 348,000 fibre subscribers by 

the end of last year, according to the FTTH Council Europe. Telecom Italia has said it plans 

to cover 10% of households with fibre by 2016 and has committed up to E3.4 billion in 

capex; and a E2.5 billion joint project between Fastweb, Vodafone and Wind aims to bring 

FTTH within reach of 10 million people in Italy’s fifteen largest cities by 2015. 

In Spain, Telefonica has said it will extend its fibre footprint from around 300,000 homes at 

the end of February to 1 million by the end of this year. It has committed around E1 billion 

in capex so far. 

According to the The FTTH Council, Eastern European countries lead the way when it 

comes to FTTH subscriber penetration in the continent currently, with Lithuania in the top 

spot at the end of last year followed by Sweden, Norway, Slovenia and Slovakia. In May, 

Lithuanian operator TEO said its FTTH network covered 570,000 households, roughly half 

the country’s population. 

Globally, China is set to dominate the FTTx market. In a new report Ovum predicts that 

China’s FTTx subscribers will reach 100 million in 2016, representing more than 50% of 

the world’s subscribers. In July, China Telecom selected Alcatel-Lucent as a vendor for its 

Broadband China Fibre Cities project, which this year aims to connect 26 million people to 

high-speed Internet services. The operator says by 2015 it will cover 100 million households 

with FTTH and aims to have some 30 million FTTH subscribers. 

people are presented “with a genuinely 

two-way pipe…all kinds of cloud and 

upload become much more viable” and 

the use of broadband may change, says 

wood at Analysys Mason. 

in addition, operators could encourage 

very high-speed broadband take-up by 

offering premium services exclusively 

over fTTh. “if the operator tries to price 

the service based on available bandwidth 

it doesn’t resonate,” says Ana pesovic, 

wireline marketing manager at Alcatellucent. 

“[instead], operators can consider 

offering services, such as premium sport, 

uniquely over fibre in order to encourage 

the transition.” 

operators could also use fTTh to 

explore new business models, such as 

providing huge pipes of bandwidth that 

make “the expensive clobber of quality of 

service in streaming…an expensive irrelevance”, 

says wood. in turn that could 

circumvent some net neutrality concerns 

currently playing out in europe. 

but for other operators the success of 

over-the-top content services raises 

doubts about their ability to charge for 

their own differentiated content. 

Much could also depend on regulation 

in individual countries in future, should 

european regulators support servicebased 

competition and make it hard to 

develop new wholesale or charging 

models that place a premium on overthe-top 

content providers’ services. karl 

wermig, head of ngA customer solutions, 

eMeA, at Alcatel-lucent, says 

europe’s operators are currently wondering: 

“do i have to let everyone use my 

network? There are a lot of politics and 

economics involved.” 

in June, for example, the dutch parliament 

banned mobile network providers 

from charging customers extra for using 

over-the-top internet calling and messaging 

services such as skype and whatApp. 

currently, Vodafone in the netherlands 

charges customers an additional fee to 

use skype on smartphones and T-Mobile 

prohibits subscribers from using it altogether. 

The dutch parliament’s move 

raises questions about how much leeway 

operators have to develop new wholesale 

or consumer charging models whether 


on fixed or mobile networks. 

in some countries operators, utilities 

and technology companies could consider 

wholesale strategies to be the best 

economic option. some governments also 

are taking that route, with the model 

already in place in singapore and set to 

be adopted in Australia and new Zealand 

through their national next-generation 

network initiatives. 

Ad little / exane bnp paribas in their 

report say the wholesale opportunity for 

operators in the countries it has studied 

in europe is highest where alternative 

carriers have high broadband market 

share—france, the uk, italy and 

germany—and lowest where cable operators 

are the incumbent’s main 

competitors—belgium, Austria, the 

netherlands and portugal. but they say 

the wholesale opportunity for incumbents 

may not materialise if altnets invest 

in fibre: it cites projects announced by 

with 

iliad, sfr and bouygues Telecom in 

france; and a possible joint venture by 

fastweb, Vodafone and wind in italy. 

in some countries there is still hope 

that broadband competition will be sufficient 

to drive investment. The level of 

competition in the uk helped spur the 

decision by bT openreach to invest £2.5 

Breakfast briefings in 2011 

mHealth Update - 14 September 

mHealth is revolutionising healthcare on every level - social, environmental, 

and economic. What are the opportunities for operators? 

Global 100 Operators - 18 October 

In 2010 we predicted a shake up in the global operator rankings due to 

M&A activity. As the 2011 report comes to market, we examine whether 

these changes have materialised and look at the current drivers behind 

the new rankings. 

with 

Breakfast 

Breakfast 

For more information or to book your place, 

please contact breakfast@totaltele.com 


billion in its fibre network, which it plans 

to extend to two-thirds of uk homes and 

businesses by the end of 2015 (25% 

fTTh). The project includes spend of 

around £132 million to roll out fibre in 

the county of cornwall—with some £53.5 

million of that coming from the european 

regional development fund—one of the 

rural regions that could otherwise have 

missed out on fibre infrastructure. 

yet the sums of investment needed to 

provide widespread fibre may have been 

easier for private companies to swallow a 

few years ago, when the business case for 

fTTh was less muddied by questions 

over how consumer usage is changing 

and whether operators can charge for 

content or develop new wholesale models. 

“lots of european [stakeholders] question 

whether they have missed an 

opportunity,” says Accenture’s orr. “it 

probably would have been more effective 

[to invest in networks] earlier.” n 

July/August Breakfast 

Breakfast 

2011 www.totaltele.com 13 

with 

(% of households) 

FTTH and FTTC/VDSL, end 2010 

100% 

75% 

50% 

25% 

Talk to us, and get involved today! 

0% 

n Passed 

n Connected 

SE NL BE AT DE PT UK IT SP FR 

Source: Arthur D. Little / Exane BNP Paribas 

www.totaltele.com/breakfast 

Breakfast 

with 

with

tecHnoloGy trendS 

SELF-ORGANISING NETWORKS 

Self SERVING 

Self-organising networks promise to help mobile operators simplify the management of 

their infrastructure and to control costs, but challenges remain. By roy rubenstein 

Mobile networks are becoming 

so complicated that operators 

are turning to self-organising 

network (son) technology to help with 

their management. proponents say that 

only by using son technology will operators 

be able to manage and optimise 

their networks without operational costs 

spiralling out of control; in addition, the 

ability to optimise the network in real 

time could considerably benefit operators’ 

revenues. 

one operator which has implemented 

son across part of its network has already 

added 29,000 new subscribers and reduced 

churn by 7,000 users in a year, according 

to consultancy solution Matrix. That 

could lead to considerable revenues and a 

payback period of less than one year (see 

table below). 

but there is a mismatch between what 

wireless operators want in terms of son 

and what vendors are offering. son technology 

is part of the Third generation 

partnership project’s (3gpp) long Term 

evolution (lTe) standard, and vendors 

are focusing on son for lTe. yet 

operators want son to span all their 

networks including 2g and 3g. 

Telekom Austria has assessed the son 

offerings of five vendors. “what we have 

learnt is [that] son is a fabulous experience 

in 4g [lTe],” says Armin 

sumesgutner, head of network planning 

at Telekom Austria. “what we haven’t 

seen so far is the full integration across a 

single radio access network.” currently, 

Telekom Austria is adopting a single radio 

access network (rAn) architecture where 

only one vendor’s equipment is used at a 

site. This allows for optimisation across 

the wireless standards, both for son and 

in terms of such issues as antenna design 

and site power consumption. 

Vendors have invested their r&d 

dollars preparing for lTe and view additional 

investment in son for 3g as 

wasteful , says Johannes ritter, a partner 

at solution Matrix, which has worked on 

son with operators including kpn, 

T-Mobile and Vodafone. “operators 

[only] want to buy what nobody offers: 

son end-to-end for voice and data on 

2g, 3g and lTe,” he says. 

Potential savings through self-optimising network deployment 

Year 1 fi gures only Self Optimising Network (SON) 

Increase in gross adds (subscribers) 29,000 

Reduced churn (subscribers) 7,000 

Revenue per subscriber €220.00 

Revenue increase due to new gross adds €1,540,000 

Revenue increase due to churn decrease €6,380,000 

totAl IncreASe In reVenueS €7,920,000 

Gross margin percentage 40% 

Gross margin €3,168,000 

Total number of node Bs 8,000 

Percentage of node Bs saved 5% 

Number of node Bs saved 400 

Capex and Opex saved per Node B €48,000 

capex and opex saved €19,200,000 

SON hardware Investment €12,000,000 

SON software Investment €5,000,000 

eBItdA €5,368,000 

return on Investment (roI) 32% 

payback period in years 0.9 

Source: Solution Matrix 

Moreover, son has limited value to 

operators currently: lTe is only now 

being deployed, and optimisation 

requirements are limited because those 

networks are lightly loaded. “All the 

issues around coverage, bandwidth, utilisation, 

optimising between neighbouring 

cells to avoid interference—all the things 

son can do—are currently not a pressing 

problem in lTe,” says ritter. 

son enables the fine-tuning of parameters 

to enable optimisation of a network’s 

capacity and coverage, says kamakshi 

sridhar, director of the wireless cTo 

organisation at Alcatel-lucent. The adaptation 

is performed by algorithms within 

the base station that use measurements 

from end terminals. 

“one aspect of lTe that makes it suited 

to son-like algorithms is that more 

intelligence is pushed into the base 

station,” says sridhar. “There are now 

more opportunities to automate what was 

previously done manually.” There is also 

a specified interface between base stations 

that aids information sharing. 

The operations, administration and 

management (oA&M) systems of an 

operator are used to configure the 

network’s initial policy and parameters to 

ensure it starts up in a defined state. The 

son algorithms, distributed across the 

base stations, then provide key performance 

indicators to the oA&M systems. 

using the indicators, the oA&M system 

decides whether to expand or contract the 

boundary conditions within which son 

operates. “There is an inner fast [son 

control] loop between the terminals and 

the base stations, and a slower outer loop 

set by the oA&M,” says sridhar. 

operators already have two decades of 

experience in optimising their networks 

manually. “The main difference [with 

son] is that these [network planning] 

algorithms have been done outside the 

network on standalone hardware,” says 

yves bellégo, manager for network technical 

strategy at orange. “The algorithms 


do not work in real time and do not use 

feedback from the network—from the 

device and the base station.” 

Many operators view son as a key 

development that puts real-time expertise 

into on-site equipment. They say this 

will help them to contend with growing 

network complexity while also benefiting 

service quality. 

“This [son] is a big area and there is a 

lot to be gained from it,” says Tommy 

ljunggren, vice president, system development, 

technology solutions, business 

area mobility at Teliasonera. 

“Mobile systems are becoming so 

complex that we can’t have an engineer 

looking at every site, every day,” says 

bellégo. “if we do not have son we have 

to rely on our optimisation engineers, and 

since the systems are becoming so complex 

solving any on-site issue will take time.” 

Moreover, son also benefits operators’ 

revenues if they are able to convince users 

to upgrade to lTe and more advanced 

data services. “such optimisation improves 

user experience,” says bellégo. That is a 

vital consideration for orange which 

wants to ensure that users’ experience of 

lTe is superior to the services they have 

been used to. “when we launched 3g, 

there were difficulties; the performance 

was not good enough,” says bellego. 

An example benefit of son is the automatic 

neighbour relation (Anr) between 

base stations. when a terminal discovers 

a new base station’s signal, it forwards the 

information to its existing base station 

and that initiates the setting up of neighbour 

relationships. 

ericsson first demonstrated Anr using 

a chipset from Qualcomm and 

Teliasonera’s live network in november 

2010. “After only a 20-minute drive test 

the network had established the vast 

majority of the Anr that had been manually 

planned prior to that,” says Thomas 

norén, head of lTe at ericsson. “we did 

not drop one single call. had there not 

been any neighbour relations prior to 

that, no user would have noticed.” 

without Anr an operator must first 

plan the network to establish the desired 

relationships. This is then verified using 

a drive test that identifies any spots in the 

SON standards: 3GPP defi ned use cases 

Abbr. Scheme description 


CCO Coverage and Capacity Optimisation Optimises cell coverage and capacity for idle and active 

ESO Energy Saving Optimisation 

users in downlink and uplink per evolved UTRAN Node-B 

(eNB) in terms of Quality Class (QCI) 

Switches off part or all of an eNB to save power usage 

(cost); reactivates when needed for capacity 

IR Interference Reduction Identifi es sources of interference and manages power 

reductions e.g. switch of home eNB when user not home 

PCI Automatic Physical Cell Identity Automatically allocates Physical Cell Identity (PCI) — 

collision free (PCI unique in an area) and confusion free 

(neighbouring eNB PCI are unique) 

MRO Mobility Robustness Optimisation Reduces handover (HO) related radio link failures, through 

optimal confi guration of HO parameters to avoid too early, 

too late and wrong cell handovers 

MLB Mobility Load Balancing Optimisation of cell reselection and HO parameters to 

balance load between LTE cells and between different 

radio access technologies 

RO RACH Optimisation Minimises Random Access Channel (RACH) power and 

delay through optimisation of RACH parameters 

ANR Automatic Neighbour Relations Optimises neighbour list as plug and play feature for 

optimised HO. Also provides self healing for self or 

adjacent cell/site failure 

ICIC Inter-Cell Interference Coordination Co-ordination of radio resource management functions 

between cells to control inter-cell interference 

network where calls are dropped due to 

an absence of a relationship between base 

stations. A second network planning iteration 

is required, as is a further drive test. 

“we consider the Anr feature quite 

important as a missing neighbour relationship 

is a typical source of non-quality,” 

says bellégo at orange. 

son will also benefit the ability to 

introduce heterogeneous cells in lTe 

(Total Telecom+, July 2011). “one thing 

making things more complicated is that 

as we go to small cells there are a lot of 

different interference scenarios that are 

not typical of macro cells and that are 

going to need to be understood,” says 

James seymour, senior director of the 

wireless cTo organisation at Alcatellucent. 

“with optimisation techniques 

we can let the system manage itself.” 

for heterogeneous cells to work 

requires well-defined son standards to 

ensure interoperability between different 

vendors’ equipment. “one of the more 

advanced son algorithms is inter-cell 

interference coordination,” says steve 

bowker, cTo of Aircom international. 

Source: Aircom International 

“if people are rolling out heterogeneous 

networks, [the cells] have to operate 

across that boundary and co-ordinate 

interference; interoperability is key if the 

son is to work.” 

despite such benefits, operators are 

concerned that son does not cover their 

2g and 3g networks, which are still their 

main assets. “The operators have a 

problem to solve and in the next few years 

the networks will reach their peak of 

complexity,” says neil coleman, director 

of marketing at network analytics and 

optimisation company Actix. “They are 

managing multiple networks and their 

need for reducing services effort in the 

networks is here, and it is really not being 

serviced by vendors and by the standards 

committees.” This, he argues, opens the 

door for independent software vendors. 

large vendors also acknowledge operators’ 

needs. “son needs to cover 

multi-technology networks; it can’t be 

limited to lTe only,” says outi keskioja, 

product line manager, network 

optimisation, at nokia siemens networks. 

“This is one area where the vendors’ 



Self-organising networks: the development stages 

There are three main elements that make up SON: self-configuration, self-healing and selfoptimisation. 

Self-configuration adds functionality to simplify network deployments while 

self-healing enables a base station to undertake fault detection and fault recovery. “In 2G 

and 3G networks over the years, a hardware fault in a base station has required a manual 

restart,” says Keski-Oja at Nokia Siemens Networks. “Now as part of the self-healing, this 

reactivation is done in an automated way after certain alarms are raised.” Meanwhile selfoptimisation, 

the largest of the three categories, incorporates features that set the optimal 

values for the network elements as part of the trade-off between coverage and capacity. 

The main SON efforts in 3GPP Release 8 focused on simplifying network configuration. 

These include automatic neighbour relation (ANR) where a newly deployed base station is 

made aware of its neighbours based on terminal input. Other features include auto cell ID 

planning and ‘plug and play’. “Each base station needs a separate cell ID to not interfere with 

each other,” says Alcatel-Lucent’s Seymour. “Plug and play figures out what IP address the 

base station should have.” These are tasks that previously have been performed manually. 

The SON focus in Release 9 is network optimisation. For example, base stations can 

communicate their respective loads to enable traffic balancing between 3G and LTE 

networks. There are also mechanisms to improve user cell handover performance. Network 

optimisation is extended further in Release 10 to improve coverage and capacity. Alcatel- 

Lucent is pushing for features to be added to Release 10 to extend SON into the core of the 

network to benefit the user experience. For example, SON could decide which network— 

WiFi, 3G or LTE—to place a user based on factors such as their profile and applications they 

are using rather than solely air interface considerations. “If I [an operator] have a Gold User, 

I may never want to put them on 3G,” says Seymour. 

stories vary a lot; we provide son functionality 

for all these technologies.” 

providing son across a vendor’s wireless 

standards equipment helps, but 

Telekom Austria stresses that its networks 

use technology from multiple vendors. 

“what we don’t see is an approach of interworking,” 

says sumesgutner. “This is a big 

issue, because what it takes is full optimisation 

and this can’t be achieved with the 

existing tools we have from the vendors.” 

one way to manage multi-vendor 

equipment is by adding an extra vendorindependent 

layer. “The vendors have no 

interest in that [extra layer] as it would be 

the kiss of death [for them],” says ritter at 

solution Matrix. 

Actix provides son functionality to 

nec, but it also provides a layer above 

son. “we provide an abstraction layer 

which allows operators to focus on the 

overall network quality as experienced by 

subscribers rather than focus on vendorspecific 

technology issues,” says dirk 

stachorra, son product manager at 

Actix. here son elements are monitored 

and used as input for a broader network 

optimisation, such as maintaining quality 

while minimising manual effort, and 

where decisions are made over a longer 

timescale than son. 

Third-party network optimisation 

players such as Actix and Aircom have a 

role here, says ritter, but the deepest 

understanding is what happens within 

the hardware and that is the equipment 

vendors’ domain; only so much can be 

done with standards-defined interfaces 

coming from the hardware. 

yet if operators are denied the full 

picture, there are additional techniques 

they can use, says ritter. one is to insert 

probes and use active testing in their 

networks. both provide extra information 

and reduce operators’ need for drive 

tests, also a key goal of son. 

“drive testing is expensive: up to 

€400,000 per test,” says ritter. Moreover, 

a drive test only covers a specific area and 

is by definition retrospective. “you may 

do it only every nine months because of 

cost and that is too late,” says ritter. 

Active testing places a hardware device 

in the network to simulate customer 

behaviour, but this too is expensive. 

several devices are needed in base stations 

across a country if dropped calls, coverage, 

bandwidth and latency issues are to 

be monitored across the network. 

in a 3g network probes are used with 

the radio network controller (rnc) to 

measure traffic in real time. Typically, 40 

rncs are needed per operator, per 

country. using probes and active testing, 

operators can eliminate most drive testing 

while optimising their 2g, 3g and lTe 

networks. “[by doing that] they could get 

a son—maybe not fully automated but 

much less manual than now,” says ritter. 

indeed, that would be vastly superior to 

many operators’ current setups. solution 

Matrix says one small european operator 

has been identifying bandwidth and 

dropped call problems only when 

complaints at its call centre rise above a 

certain threshold. “They then send out a 

guy to measure,” says ritter. even the 

largest european operators only have 

probes in 40% or 50% of a country, covering 

80% of the traffic. 

ritter advises operators to adopt son 

in stages. “They can optimise an area and 

end up deploying a lot less equipment 

using son,” he says. in his company’s 

operator example for a typical lTe 

network, based on 8,000 enodeb base 

stations, son can reduce the total needed 

by 400 (5%). Assuming each base station 

costs €40,000 and the same amount again 

is spent in operational expenses over five 

years, the son-related savings equate to 

€32 million (see table p.14). “son does 

this; humans can’t. Tuning each cell and 

countering interference [manually] is like 

playing 3d chess,” says ritter. 

Another son challenge is that only 

self-configuration is active so far; selfoptimisation 

is still to be proven in a 

large, live network. “self-optimisation 

routines within the equipment itself are 

not live yet,” says bowker at Aircom. 

“Vendors are trialling things but none of 

the commercial deployments are using 

self-optimisation.” 

operators must also ensure that handsets 

incorporate support for son. “The 

situation now is that the network is a little 

bit ahead of the devices on many things,” 

says ericsson’s norén. 

These practical son issues will preoccupy 

operators for some time. but longer 

term, they expect son to broaden its 

scope and optimise users’ service experience. 

“we are in the starting phase: a lot 

of technology and network planning 

issues,” says sumesgutner at Telekom 

Austria. “but we also see the necessity for 

a broader set of parameters to be recognised 

and optimised by the [son] system 

[to enhance user experience].” n 


Asia Communication Awards 

The Winners... 

Operator of the Year 

Smart Communications 

Vendor of the Year 

Huawei 

Wholesale Operator of the Year 

Pacnet 

Emerging Market Initiative 

Pacific Bangladesh Telecom 

Best Content Service 

SK Telecom 

Best Cloud Service 

SingTel 

Best Business Solution 

Comviva Technologies Ltd 

Innovation Award 

Syniverse 

Green Technology Award 

Smart Communications 

Customer Service Initiative 

SK Telecom 

Outsourcing Company of the Year 

Comviva Technologies 

Best Mobile Strategy 

Comviva Technologies 

Social Media Initiative 

Qtel’s Virgin Mobile Service (QVMS) 

CEO of the Year 

Li Yue, China Mobile 

Asia Communication Awards 

Celebrating the success of Asian telecoms, globally 

For more information about 2012 Asia Communication Awards 

email: aca@totaltele.com or call: +44 (0) 207 608 7065 

www.asiacommsawards.com 

Organised by: Founding Partner: Asia ICT Partner: Sponsors: Event Partners:

operAtor StrAteGIeS 

SUSTAINABILITy 

reSponSIBle TALK 

Operators need to communicate their sustainability strategies more clearly or they could 

soon be at a significant disadvantage and lose out on key contracts. By Ian Kemp 

Aggressive marketing by some 

operators of their sustainability 

credentials could be paying off 

as pan-european enterprises look to 

bolster their environmental strategies. 

but other big-name telcos are in danger 

of missing out on enterprise and public 

sector contracts by not getting their 

corporate social responsibility (csr) 

messages across. 

A new survey by Verdantix, on the 

perceptions of sustainability strategy 

decision-makers at pan-european companies, 

ranks AT&T, bT, orange, swisscom 

and Telefonica as the operators leading 

the way in the provisioning of sustainable 

telecoms services. Their concerted moves 

to apply sustainability across their products 

and services, coupled with in-depth 

organisational commitment to sustainability, 

are proving key to their ability to 

Report findings: how some operators fared 

impress purchasing executives, says the 

research company. 

“Telecoms operators [that] can’t 

communicate their own energy, environment 

and sustainability performance are 

now at a competitive disadvantage,” says 

Verdantix director david Metcalfe. “This 

is particularly true when bidding for 

public sector telecoms contracts.” 

The third annual study compared the 

sustainable telecoms solutions—encompassing 

energy, environment and social 

metrics—of 18 of the largest operators 

providing services in europe, based on 

interviews with 15 decision-makers in 

pan-european enterprises. “from 2012, 

poor performance on sustainability will 

become a significant competitive disadvantage,” 

conclude the report analysts. 

As Total Telecom+ has shown, some 

operators are actively talking up their 

‘From 2012 poor performance on sustainability 

will be a significant competitive disadvantage’ 

The enterprise companies taking part in the Verdantix survey—entitled Green Quadrant 

Sustainable Telecoms Europe 2011—had combined revenues of more than €175 billion, 

and the executives questioned were all in senior positions with oversight for European 

operations. The companies represented a cross-section of industries including banks, hightech 

manufacturing, transport and business services. 

In order to rank the 18 operators, Verdantix collected data across 50 criteria analysing 

telecoms solutions that support sustainable business goals. Ten sustainable technology 

and business categories were analysed: video/Web collaboration; sustainable hosting; 

cloud computing; sustainability consulting; smart meters and other remote monitoring 

(m2m) solutions; intelligent building solutions; fleet telematics; telecommuting; sustainable 

equipment and handsets; and sustainable vertical market solutions. The operators were 

also measured according to strategy and execution, energy and carbon management, and 

environmental and social performance. 

Among the conclusions from the research company, Orange leads the European market 

on fleet telematics; BT has the leading video collaboration services; and Telefonica leads 

the way in intelligent building solutions. Vodafone achieves best-in-class scores for its 

smart meters and other m2m solutions, while SFR has strong conferencing, hosting and 

cloud services. Telenor is strong in smart metering services and has strong video/Web 

conferencing capabilities; Telekom Austria also has strong video/Web conferencing and 

hosting services. Cable & Wireless achieves strong scores in video and Web collaboration 

and sustainable hosting, while Colt scores highly for its hosting solutions. Telecom Italia has 

class-leading services for smart meters, intelligent buildings and fleet telematics; as does 

Verizon for both its hosting and cloud services. Deutsche Telekom achieves top scores for 

both its conferencing services and cloud computing. 

environmental credentials—one of the 

key elements of sustainability—by 

providing statistics on how they are tackling 

emissions in their own organisations 

and through technologies such as video 

conferencing and telepresence, solar base 

stations, machine-to-machine (M2M) 

communications, and server and storage 

virtualisation (Total Telecom+ March). 

france Telecom/orange and deutsche 

Telekom both have set a target of reducing 

co2 emissions by 20% by 2020 

compared to 2006 levels; and bT aims to 

reduce its carbon emission intensity by 

80% by the end of 2020 from 1997 levels, 

having already reduced them by 53% 

since that base year. 

bT, which says it is “one of the top 10 

consumers of electricity in the uk”, this 

year won planning approval for its first 

wind farm; it aims to generate around 1% of 

its uk electricity demand from the farm by 

2012 and 25% of its uk energy needs from 

renewable sources by 2016. The operator 

this year also set up a new climate change 

procurement standard requiring all its 

suppliers to measure carbon emissions and 

set reduction targets. 

bT was the telecoms sector leader in 

the dow Jones sustainability index—seen 

by many as the key measure of companies’ 

sustainability initiatives—in europe 

from 2002 to 2009, but has been overhauled 

by Telefonica for the past two 

years. Telefonica in its latest corporate 

responsibility report says in 2010 it 

achieved “over half of [its] target 30% 

reduction in electricity consumption in 

networks established in 2007”. 

in 2010 Telefonica’s worldwide group 

co2 equivalent (co2e) emissions stood at 

1,990,772 tonnes, up from 1,851,247 tonnes 

in 2009 (but it points out that brazilian 

operator Vivo and its wholesale services 

division were added to the group during 

that period). bT says its gross worldwide 

co2e emissions have risen from 1,627,000 

tonnes in 1997 to 1,723,000 tonnes to the 

end of March this year, but claims net 


emissions have fallen to 759,000 (see table 

bottom right). 

but operators still have a long way to go 

when it comes to engaging with large enterprises 

on sustainability. only five of the 15 

interviewees in the Verdantix study regard 

telecoms service providers as important or 

very important for their sustainability initiatives 

(see chart), and the research company 

says in general the executives had a low 

awareness of the sustainability services 

offered by operators. 

while the numbers might not be seen 

as statistically significant, the interviewees 

were all buyers of sustainable telecoms 

and iT services at companies with 

combined revenues of E175 billion. This 

year’s customer panel rated telcos as less 

important to sustainability than the 

participants in the 2010 survey, suggesting 

that “telco marketing departments 

need to up their game”, says Verdantix. 

“we are not that aware of what telecoms 

providers have to offer,” said one 

executive at a technology company. 

“Telecoms providers need to have a facility 

where they can provide an overview of 

the services that they are providing. This 

should clearly explain their footprint.” 

in fact some operators already are taking 

greater measures to bolster their csr 

messages. bT, orange, Telefonica and 

swisscom submit their sustainability reporting 

to external verification by a third party; 

and swisscom, for example, integrates its 

csr statistics into its financial report. 

“Telcos such as orange and swisscom have 

started to apply an integrated commercial 

approach to sustainability across all their 

products and services,” says Verdantix. “by 

2012 we expect many of their competitors 

will follow this approach.” 

Verdantix says the global e-sustainability 

initiative (gesi), backed by many leading 

operators, has published a standardised 

calculation methodology for carbon savings 

and predicts that telcos will adopt this 

approach from 2012. it says swisscom 

currently leads the way in this respect by 

including all its sustainable services in the 

scope of its web-based co2 calculation 

tool, and also highlights orange as having 

extended the scope of its calculation tools to 

cover cloud services and telecommuting. n 

operAtor StrAteGIeS 

How important are these suppliers to your sustainability programme? 

n Very important n Important n Neutral n UnImportant n Totally unimportant n Not applicable 

Telecoms hardware suppliers 

IT hardware suppliers 

IT consultants 

Telecoms service providers 

Environmental consultants 

Software providers 

Verifi cation providers 

Not for profi ts 

Energy consultants 

Financial auditors 

Management consultants 

40% 20% 13% 13% 13% 

27% 20% 20% 7% 20% 7% 

20% 7% 13% 7% 33% 20% 

13% 20% 40% 7% 13% 7% 

7% 20% 40% 13% 13% 7% 

7% 13% 40% 7% 27% 7% 

7% 13% 20% 13% 33% 13% 

7% 20% 47% 27% 13% 

13% 53% 13% 7% 13% 

33% 33% 33% 

33% 7% 27% 33% 

How important are these functions to your sustainability programme? 

n Very important n Important n Neutral n UnImportant n Totally unimportant n Not applicable 

Facilities management and energy 

Corporate social responsibility 

Procurement/supply chain 

IT/telecoms 

Finance 

Health, safety and environment 

Manufacturing 

Sales 

Marketing 

Strategy 

Human resources 

Legal and regulatory affairs 

Logistics/distribution 

BT carbon emissions, summary year ending 31 March 2011 

Source: Verdantix 

53% 40% 7% 

53% 13% 27% 7% 

40% 33% 13% 7% 7% 

40% 20% 27% 13% 

33% 13% 40% 7% 7% 

20% 20% 27% 13% 20% 

20% 7% 40% 13% 20% 

13% 13% 40% 13% 13% 7% 

7% 20% 40% 13% 20% 

33% 47% 13% 7% 

20% 67% 7% 7% 

13% 60% 20% 7% 

13% 53% 20% 13% 

Source: Verdantix 

co 2 e (kilotonnes) 2011 2010 2009 Base year Change 2010 Change 1997 

1997 to 2011 to 2011 

Scope 1 204 212 249 414 -3.5% -51% 

Scope 2 1,470 1,490 1,487 1,156 -1.3% 27% 

Sub total (scope 1&2) 1,675 1,702 1,736 1,570 -1.6% 7% 

Scope 3 49 49 73 58 _ -15% 

Total emissions (gross) 1,723 1,751 1,809 1,627 -1.6% 6% 

less purchases of: 

renewable electricity 571 574 590 – -0.5% – 

cHp low carbon electricity 

3rd party electricity 

301 312 318 – -3.4% – 

consumption (uK only) 92 77 67 – 18.9% – 

total emissions (net) 759 787 835 1,627 -3.6% -53% 

Source: BT 


prIme numBerS contActS 

WIreleSS dAtA reVenueS to SoAr 

IHS iSuppli forecasts global wireless data service revenues 

will rise at a 9.1% compound annual growth rate from 2010 

through 2015, more than twice the 4.5% growth of overall 

wireless operator business. In 2015, data revenues will rise 

to US$337.9 billion, it estimates, representing more than 

30% of the total wireless service market, compared to 

US$218.1 billion and 24.4% in 2010. 

GloBAl WIreleSS cArrIer reVenueS (uS$ mIllIonS) 

$1,200,000 

$1,000,000 

$800,000 

$600,000 

$400,000 

$200,000 

$0 

fAll In netWorK 

eQuIpment SAleS 

worldwide enterprise 

networking equipment sales 

fell in the first quarter of the 

year, according to infonetics 

research, in large part due to 

slowdowns in the public 

sector. After record growth in 

2010, enterprise ethernet 

switching market revenues fell 

12% to us$4.2 billion in the 

first quarter compared to the 

fourth quarter of last year and 

9% compared to the first 

quarter of 2010. worldwide 

wireless lAn equipment 

revenues decreased 8% to $698 

million compared to the final 

quarter of 2010, but were up 

17% year-on-year. enterprise 

router sales totalled $797 

million in the first quarter, 

down 14% sequentially and 

down 3% from the quarter a 

year ago, marked by declining 

mid-range router sales and 

strong low-end sales. All 

major regions saw sequential 

declines in enterprise router 

sales in the first quarter of 

2011, and only Asia-pacific and 

central and latin America 

posted increases year-on-year, 

boosted by the financial 

sector and–counter to the 

worldwide trend–the public 

sector. 

n Total service revenues n Data revenues 

2010 2011 2012 2013 2014 2015 

Source: IHS iSuppli 

HSpA SetS recordS 

wcdMA hspA connections 

reached 500 million worldwide 

by the end of June, making it 

the fastest growing wireless 

technology ever says wireless 

intelligence. The research 

company says 19 million hspA 

connections are being added 

each month and forecasts one 

billion connections by the end 

of 2012. There are now 350 live 

hspA networks across 132 

countries worldwide, and 88 

hspA networks across 50 

countries have been upgraded 

to hspA+ with a further 52 

upgrades planned. lTe 

networks are also showing 

rapid growth, reaching one 

million connections just 18 

months after the first 

commercial network launches 

and expected to grow to 300 

million by 2015. 

$50 billion 

value of NFC mobile contactless payments 

worldwide by 2014 (Juniper Research) 

WeStern europe leAdS In VoIp SuBS 

Voice over IP subscribers reached 120 million worldwide by 

the end of last year, an increase of 12.6% during 2010 and 

2.9% during the fourth quarter, according to new statistics 

from Point Topic. The analyst company defines VoIP as a 

subscription service that does not require a PC, so includes 

PSTN-type services but excludes Skype. Western Europe 

leads the way by region with subscribers growing by 8.6% 

last year to reach 39.2 million. In terms of countries, the US, 

Japan and France account for nearly 70 million of the 120 

million total. The US is the leading VoIP nation with over 26 

million subscribers, most of which take services from cable 

companies; in Japan there are 24 million VoIP subscribers; 

while France has 18.6 million. Point Topic estimates 93% of 

broadband subscribers in France also have a VoIP service, 

compared to 72% in Japan and 30% in the US. 

VoIp SuBScrIBerS By reGIon 

Region 2009Q4 2010Q4 YOY % 

increase 

Asia-Pacifi c 29,102,717.00 33,890,259.00 16.45 

eastern europe 1,182,440.00 1,412,987.00 19.50 

latin America 3,769,670.00 4,371,200.00 15.96 

north America 27,867,110.00 30,795,894.00 10.51 

South and east Asia 5,805,000.00 7,338,000.00 26.41 

Western europe 39,248,238.00 42,656,731.00 8.68 

Global total 106,975,175 120,465,071 12.61 

Source: Point Topic 

$20 billion 

Value of the global optical networking 

market by 2016. (Ovum) 

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16th Annual Event 

Sponsored by: 

Organised by: 

Co-located with: 

Sponsored by: 

Organised by: 

Content Provider Partner: 

27 – 29 September 2011, Guoman Tower Hotel, London, UK 

www.terrapinn.com/carriers 

Opportunity and strategy for wholesale carriers 

and telcos 

Navigate the challenges of eroding voice margins and search for new 

revenue growth 

Hear Voice debated by key carriers including BT Wholesale, iBasis, Deutsche 

Telekom ICSS and Orange and learn where to generate revenue for the future. 

Examine the VAS on the market and discover how to differentiate your offering. 

Maximise the opportunities presented by content delivery 

Gain insights from carriers already boosting revenue through delivering quality 

content, including Level 3, Telefonica, Du, Virgin Media and Eircom. 

Optimise your services through building strategic markets 

Explore the impact of consolidation in the industry and learn from Telecom Italia 

Sparkle, Telefonica and Deutsche Telekom ICSS about the importance of 

partnerships in the new telecom era. Build your own partnerships with over 10 hours 

joint networking with our co-located event ‘Carriers Ethernet World’. 

27 – 29 September 2011, Guoman Tower Hotel, London, UK 

Opportunity in technology innovation for Carriers 

Maximise the opportunities Ethernet presents for Cloud Services 

Gain definitive insights on how Ethernet can enable Cloud Computing through 

C-level addresses from BT Innovate & Design, Level 3 and XO Communications. 

Navigate and debate the possibilities posed by Ethernet Exchanges 

Hear the future of Ethernet Exchanges debated by key carriers including Interoute, 

Deutsche Telekom AG, Hutchinson Global Communications and Tata 

Communications. 

Optimise your network to attract new business and accelerate 

revenue growth 

Explore the solutions to monetize your Ethernet offering and learn from Colt 

Communications, NTT America and GTS CE about the future technologies that 

will ensure Ethernet continues to lead the Carrier market. Meet and exchange ideas 

with other leading Carriers during the 10+ hours of joint networking with our colocated 

event ‘Carriers World’. 

Sally Davis 

CEO 

BT Wholesale 

Mike Millegan 

President of Global 

Carriers 

Verizon 

James Crowe 

CEO 

Level 3 

Rakesh Bahsin 

CEO 

Colt 

For more information please contact Samantha Graves 

BOOK NOW! online www.terrapinn.com/ethernet | email sarah.pegden@terrapinn.com | phone +44 (0)207 242 2324 | fax +44 (0)207 242 1508 

tel +44 (0)20 7092 1241 | fax +44 (0)20 7242 1508 | email samantha.graves@terrapinn.com | web www.terrapinn.com/carriers | booking code InterComms 

www.terrapinn.com/ethernet 

Key speakers include: 

Key speakers include: 

Clive Selley 

CEO 

BT Innovate & Design 

CIO 

BT Group 

Jack Waters 

CTO & President of Global 

Network Services 

Level 3 

Tim Wu 

Author 

“The Master Switch” 

Rajiv Datta 

COO 

AboveNet 

For more information please contact Samantha Graves 

BOOK NOW! tel +44 online (0)20 www.terrapinn.com/ethernet 7092 1241 | fax +44 (0)20 7242 | 1508 email | sarah.pegden@terrapinn.com email samantha.graves@terrapinn.com | phone +44 | web (0)207 www.terrapinn.com/ethernet 242 2324 | fax +44 (0)207 | 242 booking 1508code 

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