The long and seamless road to integration

European operators are on the cutting-edge of business and technology transformation, but do they have what it takes to sustain this new way of doing working‾ Keith Willetts, chairman and CEO of the TeleManagement Forum (TMF), talks to TelecomsEurope editor Ian Channing about how European providers compare to the rest of the world and what future challenges they will have to overcome

TelecomsEurope: How do European operators stack up against those in other regions when it comes to transforming their business operations to reflect the new realities of the marketplace‾
Keith Willetts: As a general trend, I think we're seeing Asian operators the most willing to look at transformation. The North American operators are the least willing, and European operators are somewhere in the middle. It is almost an inverse of the regulatory model that started in the West and moved East. European operators aren't in the vanguard, but they are not laggards either.
Different players are driven by different pressures and are taking different approaches. BT with its 21st Century Network initiative is certainly a big rock in the pond in the transformation area, focused on rapid cuts in operating costs, primarily starting with the network. Vodafone too is setting a pace driven by the need to streamline operations across their numerous operating companies. Telecom Italia is taking more of a portfolio transformation approach, leading with the market and letting the infrastructure follow.  But it is in Asia that you see the greatest appetite for change because they are not just transforming from a pretty good infrastructure to a better cheaper one, they are transforming from outdated, highly manual, business infrastructures and reaching for the best on the planet. This is because their countries realize that for economic success they need a first-rate telecoms infrastructure.
In the US we're seeing a lot of re-consolidation in market. When that is completed, there will be huge pressure for transformation because that's the only way that these mergers cost in - to gain operating economies of scale. But right now, people are diverted by organizational change.

Do European service providers face particular challenges or have any advantages because of how the regional markets and regulatory regimes have evolved‾
The US and the UK liberalized telecom and opened up their markets around the same time in the mid-1980s. It didn't happen in the rest of the EU until the mid-1990s. One could argue that this means that the US and UK would be the most competitive and most transformed markets. But in fact, you could observe that the US is now moving the other way to become less open than Europe or parts of Asia. Similarly, many continental operators are further ahead than the UK in areas such as loop unbundling.
One lesson I learned with this is it's not necessarily the early mover that ends up the winner. And watching the activities of regulators around the world, I've become convinced that it is competition, not regulators, that transform markets. Whatever regulatory tweaks you put in, you can't beat long-run economics. Economically, one heavily loaded network is more efficient than ten lightly loaded networks, so the first wave of competition, where regulators encouraged alternative infrastructure players, has largely been an economic nightmare. The second wave of service led-competition (VNO's etc.) looks like being far more successful.

Do you think Europe is in the vanguard of NGN developments‾


BT was definitely the first to put c20 billion on the table and say we're going to transform our business and network, so yes Europe certainly is.  Since then, we've seen a lot of echoes of that announcement. But I think it has more to do with inspired boards of individual operators than regions. Take Telstra for example, the new team there is certainly making many of the right moves, yet it's about as far from Europe as you can get geographically but maybe much closer culturally. Korea Telecom is also one of the most advanced players. But one thing is for sure, as with cellular, we're seeing that the US is not in the vanguard for NGN change and that's a big change from the way that US operators dominated innovative thinking for decades.

Right now triple play is generating considerable interest among European service providers. What are the main OSS/BSS challenges‾
The fact that it's triple- or quad-play implies there is a seamless service bundle that includes common pricing, common packaging and common order handling. But when you get into the back-office, they are all handled by different people on different systems. It is difficult to deliver a bundled set of packages when in reality they are all standalone stovepipes. So solving that problem of fragmented and disconnected islands of data is a key challenge in delivering multi-play service bundles. Sadly, most operators aren't even really thinking of this issue yet; most are making the network plumbing work. But the ability to fully integrate the services and allow customer self-care in a simple and secure way will probably be the deciding factor in who wins and who loses the triple-play game.
On a technology level, behind the high-speed DSL technology and set-top boxes, the copper access networks used to delivery triple-play services are in the Dark Ages from an OSS perspective. Often you'll find paper-based records still in use, and data accuracy is very low - as low as 60%. That means every time you provide a broadband or IPTV service, four times out of ten it goes wrong because the records are so bad.
It's a European problem and a global problem.

Similarly, fixed-mobile convergence is currently floating quite a few European operator boats. Are the FMC OSS/BSS requirements different to those for triple play‾
You're seeing some of the same problems as triple play in that you are effectively bundling multiple services in a seamless package. Easy to say, very hard to do when your order handling, assurance and billing are fragmented into different systems, different customer care agents, etc. Fragmentation of the back-office caused by years of developing and launching services in isolation is biting hard at attempts to bundle multiple services, especially fixed and mobile, into a holistic and easy-to-use new package. As soon as you put a combination service together - whether it's fixed-mobile or triple-play - you've got a problem when it comes to a single point, single touch, Web-based customer interaction for ordering or billing. When it comes to where information is stored, how information is handled, the ability to be able to share information seamlessly is a significant problem.
And in an FMC environment, fixed-line operators will have to get out of the mindset that the network ends in your hallway. Services end on the screen of the handset or the TV set. Most OSS/BSS only looks at the core network, not the fixed or wireless access networks.


But go beyond the access network to the home, and you'll see that the management of diverse networks has a lot of the same problems.  

Does the TMF have a view on outsourced network operations‾
I see a lot of this starting to happen now, but personally I wonder whether this is a reaction by equipment vendors seeing diminishing markets and shrinking equipment markets to move into a services play. I'm not sure a competency in making the stuff qualifies you to operate and manage the technology - it's a completely different set of capabilities - especially if you are promising to do it faster, cheaper and better.
I think it could all end in tears because if companies are indeed taking on outsourcing contracts, they are promising enormous economies of scale and quoting very low prices to do that. I'm not convinced that at the moment there is sufficient synergy between these networks they are taking on to be able to run them as one big network rather than as a series of small networks to get the economies of scale where you can deliver these benefits.
I wonder if five years from now we don't end up with all these equipment vendors wondering why they've taken on this business and a lot of the operators saying we get dreadful service from these guys. I think there are some specific areas where it makes sense, but I'm not convinced that it's going to last in the long run. We've seen a lot of IT outsourcing come back in-house. So, we should keep an open mind to see if it'll be sustainable over the longer term. I hope I'm wrong!

What's TMF's view on IMS‾
It is very important, and IMS is just the tip of the iceberg. The real issue is how do you make a viable service delivery platform that will use IMS technology in conjunction with billing, provisioning and assurance systems. So the big issue for us is, how do you manage the IMS world and get a complete working service delivery platform that allows you to rapidly build, deliver and change scalable, robust applications that can be accurately billed for. So IMS is the center of what some people see as the 'monetization plane,' but it's much more than IMS in the same way that a full IPTV service is much more than a set-top box.

Europe's been at the forefront of the MVNO phenomenon. How virtual do you think it's possible to get, and does 'virtuality' raise issues of responsibility for QoS and accountability‾
I think we'll see a layer cake approach with MVNOs. A number of operators are selling mobile phone service where they are just a brand on top of someone else's complete infrastructure. I think we're going to start to see operators that add their own value to someone else's underlying network infrastructure. For example, unlike the UK, the US Virgin service adds its own service creation, billing and customer care, but it uses Sprint's network to deliver that on.
So, in some cases we'll see MVNOs using bought-in airtime but adding application value, content, customer care and billing pieces. Other players may be happy to stick with a thin layer or just a brand. And we'll see all stopping points in between.
The big question in this type of relationship is whose fault is it if someone screws up.


At a supermarket, if a customer complains about a product, the store has a well-oiled system about the quality of goods coming in the store, what happened and how to get a refund.
That supply chain management type of idea is starting to occur in the MVNO world. One of the biggest issues coming down the pike for TMF to worry about is that kind of complex, multi-trading world. It wraps around everything. So if the quality of a film you are watching on your IPTV service is poor, who's problem is it, who refunds the customer‾ If the phone company is retailing the service, yet it's a content problem, how does the phone company get a rebate‾ These trading boundary aspects of the value chain are complex once you include service assurance, billing, revenue apportionment, digital rights management and so on. I expect TMF will concentrate a lot of its future efforts on the value chain model.  

Does the TMF have a position on network neutrality‾  
That's the idea that the Internet should be open and free, with equal access for everyone for the good of mankind. ISPs are saying people who are using more should pay more. There's a debate raging in the US right now about to what extent is the Internet a God-given right that everyone should have access to at very low prices.
From a TMF perspective, in all honesty we don't have a position on it, and I don't think we should have a position on it. At the end of the day, the TMF is a consortium of 520 companies and would have 520 views on this.
It's a live issue, and one that's starting to be debated. So we are looking at putting this on our agenda for our Dallas conference in December. So, we've opened up a dialogue on this, but the TMF is not a lobbyist organization; rather we reflect the view of our members. 

Is there a regional aspect to the TMF's activities, and if so what are the regional variations as you see them‾
We've been moving more and more to a 'think global, act local' kind of organization. In the past few years, we've started doing more with our regional events series, where we specifically target different regions of the world and set up local advisory boards and regional advisory councils. Although we have a 'think global' theme, the execution of issues and local variation issues are quite diverse throughout the world.
For example, in the West, the drivers for telecom transformation and change are largely economic, where you see prices falling and operators not making a profit, so that's changing the business. As you go further East, you see the need to change and improve society, bring information and education to all of the people, therefore they want a good quality, low-cost infrastructure. What we've taken for granted - cheaper telecom services in the US and Europe - isn't true in Thailand or Vietnam or parts of Eastern Europe, where there's a very poor telecom infrastructure. They are figuring out how to make the leap to the 21st century with a high-quality, low-cost infrastructure.

Does Europe have a distinctive voice inside the TMF or have your activities become entirely global‾


Most Americans think the TMF is a European organization, and most Europeans think it's an American organization. Europe definitely has a distinctive voice, although we don't have specific regional chapters. But we have a mechanism that balances our board between different geographies and industry segments. On the board of directors, there's very clearly a European voice on European issues.
We try to keep this roughly in balance to reflect our membership, which today is about 45% European.
In some regions of the world, it's just natural to have a standards-based approach. You see a sharp different between Europe and Asia and the US on that one. In the US it's much more a 'let the market decide' approach to life. In Europe the approach is much more ordered and organized.

What are some future areas of focus for the TMF‾
We are talking about the whole idea of bringing content applications into the network, so the whole IMS service delivery platform and management of that is an important one. Another important area is the value chain in areas like IPTV and fixed-mobile convergence. There's also the whole reality of transformation - not just talking about the need for transformation, but how to do it and how to get more real implementations. These are all areas that we are looking at in our strategic plans and things that we are working on right now.