Multivendor network build strategies allow mobile operators to play one vendor off the other, creating competition that should help drive down network-build costs.
Softbank in Japan provides a possible example of this. As of April, four different vendors – Ericsson, Huawei, Nokia Siemens Networks, and ZTE – have announced LTE base station wins with the operator.
Softbank, to no surprise, hasn’t come out and said that cost was a motivator in working with four different vendors, but it is hard to believe it didn’t play a factor. It also isn’t hard to see other mobile operators doing the same, especially as LTE is built to a common standard, which allows for mixing and matching of different vendors.
This ability to source multiple base station vendors will create even more pressure on infrastructure companies in an already competitive market. Maintaining market share and profit margins won’t be easy.
Multivendor strategy boosts RAN competition
The week of April 15th saw two LTE deployment announcements regarding Softbank of Japan. The first was from Nokia Siemens Networks on April 16. Ericsson announced its own LTE win at Softbank the following day. Both wins involved building an FDD LTE network in the 900MHz spectrum band.
Prior to those two announcements, September of 2011 saw both Huawei and ZTE announce TD-LTE wins with Softbank. No doubt one of Softbank’s motivators behind having so many RAN vendors is cost. By having four different base station vendors Softbank can keep capex down through competition.
While four RAN vendors might be more than most operators want to deal with, it serves as a reminder of how hard RAN vendors will have to fight to maintain market share.
Success goes beyond the base station
Digging deeper into Ericsson’s and NSN’s announcements, one sees that both vendors are selling more than just LTE base stations to Softbank. Ericsson’s deal includes an Evolved Packet Core (EPC) solution and network integration services. NSN’s deal includes an HSPA+ network upgrade, network integration services, and backhaul.
Having transport and data network assets certainly helps build confidence that a vendor recognizes that a good mobile network is about more than just the base station. Service support, however, might be even more crucial given the increasingly complex nature of mobile networks. Strong service support can also help operators minimize the opex costs that come with running a multivendor network.
Both Ericsson and NSN are well positioned in this area. According to Ovum’s ICT service market share data for 4Q11, the vendors were ranked first and second, respectively, in terms of vendor services to communication providers in 2011.
ZTE’s position in doubt
In September 2011, ZTE claimed it was the primary network vendor for Softbank’s LTE network. Ericsson’s and NSN’s announcements appear to be substantial and counter ZTE’s statement.
Ericsson claims in its release that it will provide FDD LTE coverage for over half of Japan’s population. Huawei’s initial TD-LTE deployment will cover parts of Tokyo (the country’s largest city), Osaka, and Fukuoka. It is possible that ZTE will eventually deploy a TD-LTE network larger than Huawei’s, but that hardly makes it the primary base station vendor to Softbank.
ZTE isn’t the only vendor to have ever overstated its market position. However, that doesn’t mitigate the fact that it appears to have overstated its position in Softbank, which hurts its market image and distracts from its true success. Just getting into Softbank in a market where it wasn’t the incumbent RAN vendor is a big success; greater restraint would have done more for ZTE’s image than aggressive marketing.
Daryl Schoolar is a principal analyst for network infrastructure telecom at Ovum. For more information visit www.ovum.com/