Exploring Business Operation-Oriented Integrated Network Planning
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With the advent and development of the mobile broadband (MBB) era, the extensive,
high-margin growth period of the telecom industry has come to an end and the
traditional operation model is no longer suitable for the current market. The business
model and profitability have become important issues that mobile operators need to
solve as soon as possible in the MBB era. How to plan a network that suits the
operation model of data services? That is a new service operation challenge facing
networks in the new era.
Growing Pains in the MBB Era
Operator X is a regional integrated operator in a particular country. As a
long-standing operator in a franchised region, it provides telecom services such as
fixed and mobile voice, multimedia network, and broadband Internet access services.
With more than five decades of experience in telecom service operations, it has good
network and subscriber bases.
With changes in the country's telecom market, however, Operator X sees a decline in
market development, as 3G services are growing rapidly and other operators are
entering the market. Facing the pressure from costs and competition, Operator X has
begun extensive research on business models, network deploying models, network
costs, and expected profits.
Operating data networks under the traditional "empty-pipeline" voice service
operation model has brought about growing trouble in which the revenue does not
increase with the volume. Satisfying the explosive demand for device data services
simply through capacity expansion has put Operator X under heavy cost pressure. It
has been thinking about new business models for 3G network operation since 2009 in
a bid to change the operation situation where the revenue does not increase with the
volume and, therefore, to increase network profitability.
Against that background, the operator's CEO required changes in its traditional
business model. How to change it? Increasing the revenue and leveraging the window
of MBB development involve multiple respects such as business development,
network building, and business consulting. The CEO hoped to discuss principles of
network planning and capacity expansion with Huawei on the precondition that MBB
operations are supported, therefore supporting Operator X in its efforts to make
profits.
Analyzing Operations Based on the Network
Operator X set up a joint team with Huawei consulting project team to analyze future
service revenue, cost, and profitability based on the way of guiding back-end network
demand through services. They reached a consensus on the customer's operation
model and network development plan under MBB:
1. The traditional coverage- and capacity-oriented, extensive operation model
and network planning ideas can no longer satisfy the need for business
success.
Operator X has long been operating its data services in the traditional way of
operating voice services. It has an MBB policy of aggressively promoting an
unlimited data service package. As a result, data card users represent more than 90%
of the total users in its 3G network, and the traffic generated by them represents 99%
of the traffic on the entire network. In contrast, data card users or subscribers of
unlimited traffic packages generally represent about 5% and almost never exceed 10%
in mature MBB networks.
Subscribers of unlimited traffic packages quickly consume the network bandwidth of
Operator X. The traffic has doubled without a significant increase of the subscriber
count since the capacity expansion of the entire network in 2009. Its huge investment
has not been translated into the expected output. Given that the revenue fails to
increase with the volume, Operator X has been nearly unable to withstand the heavy
cost pressure.
2. Dilute the network deployment cost with high profits from small-packet
subscribers and high ARPU from big-packet subscribers to achieve sustainable
MBB development.
When it comes to data services, small and big packets bringing high profits and
ARPU respectively has become a consensus in the industry. Designing good packages
is the most effective way of attracting users with different needs, leveraging networks,
and controlling the network investment.
3. The "20–80 phenomenon" is extremely notable in MBB networks, as
unbalanced single-subscriber usage and data service time and locations have
resulted in negative effects such as local congestion and light network load as a
whole, leading to a significant decrease of network efficiency.
The joint team analyzed and presented changes in the network traffic and the
subscriber voice service model. It found out that a small number of data card users
had consumed a large number of network resources, leading to low network
utilization since the network was unable to limit their use.
4. Network development should transform toward mobile Internet services for
smart device users from MBB services only for data card users. With support
from intelligent networks, MBB development and profitability can be promoted
through devices and services.
In the early period of MBB network development, MBB quickly attracted users due to
broadband Internet access experiences similar to those from DSLs. Nonetheless, data
cards generate high traffic and, with a limited size of the broadband market, the
growth of the data card user count will inevitably hit the ceiling in a particular phase.
In contrast, the huge IT industry market, along with the trend of a growing number of
smart devices with small screens, provides big space for MBB development and has
become an important source of profits for MBB networks.
Operation-Oriented Integrated Planning
Based on the analysis of and understanding about Operator X's operating status and
network conditions, the project team reached a consensus that network development
should match its business plan and the objective of maximizing the return on
investment (ROI). With such an understanding, the project team established an
objective and a method for network planning.
The network is required to support various MBB operation services and pricing
modes along with enhanced management and control over traffic and services. The
joint team made comprehensive discussions on business models as well as business
and network development plans, providing support for the business plan in terms of
network. It also based its consideration about network development policies on
real-world requirements from the business plan.
1.
Operation Policy
The main idea of business consulting was around aggressively developing and
providing contents services with high-value smart device users in mind.
The project team assessed intra-network services and some new services. It designed
tariff packages based on a single service or a combination of multiple services in
addition to sorting through existing usage-based tariff packages.
After establishing market tactics for Operator X, the team comprehensively
considered the traffic models of data card users and smartphones, the trend of
subscriber growth, the number of subscribers selecting different traffic-based tariff
packages, and the penetration of each service, enabling it to accurately estimate the
trend of network data traffic increase and service types in the future and, therefore,
providing accurate market inputs for network planning.
2.
Network Planning and Design
With conditions of the telecom market where Operator X is and network conditions in
mind, the team comprehensively considered data bearing requirements from changes
in the operation policy and conducted integrated network planning.
As for network deployment tactics, it is necessary to consider functional and capacity
requirements from business model changes and new services as well as "go-smart"
requirements from traffic and service management. The team updated network
equipment requirements and positioning according to the analysis of performance data
about the existing network. It summarized the real-world conditions of the market and
the network to guide product and equipment planning and design.
With market segmentation and user service prediction as part of business consulting,
it provided accurate input information for network traffic growth. Changes in the
market tactic, service-based tariff package design as well as new requirements from
core networks and application & software equipment, such as smart network control
and the new value-added services (VAS) platform, had all become references for
functional requirements on network equipment. The voice service model as an input
for wireless network capacity expansion had been expanded into a service model from
a simple traffic model in order to support exact capacity expansion requirements.
3.
Network Utilization
With established market tactics and pricing principles as well as predictions about
traffic and service development, the team was able to expect the overall revenue from
the MBB network. Meanwhile, it completed overall planning of network development
and capacity expansion based on service development requirements, laying a solid
foundation for the analysis of future costs.
The team made accurate forecast of the customer's cost mix in the next few years
based on Operator X's historical CAPEX and OPEX data as well as network
deployment requirements from different scenarios in our business and network
development plans. It was then able to make complete analysis of the ROI of network
operations in combination with revenues in relevant scenarios, providing quantified
data support for complete business analysis.
The ideas and actions for the overall planning, ranging from market tactics and
network planning to the analysis of operating returns, had become clear at this point.
The team finished network evolution and product/equipment design and planning
under the guidance of operation-oriented ideas.
The network design and plan based on market and service requirements gave good
answers to the customer's questions about the reasonableness of network deployment
and capacity expansion, while facilitating subsequent network monitoring and control.
The final business and network plans were highly recognized by the customer after
communication with the customer. Operator X expressed its willingness to discuss
further with Huawei in terms of business plan, market development, and network
evolution.
Outlook of Integrated Network Planning
The new growth period of the telecom industry requires that equipment suppliers be
able to provide customers with end-to-end solutions and high-quality professional
telecom services. Transforming network-oriented product planning into
operation-oriented network planning has become part of the core competitiveness of
telecom equipment and professional service providers.
With the increasing maturity of 3G markets and networks, operator requirements on
network equipment have been shifted toward operation-supporting business model,
revenue, cost, and profit issues from network-only issues such as technology
evolution, equipment capabilities, and network performance. Operators hope that
network deployment will be guided through a clear business plan. They also require
that network development and capabilities of the entire network provide more
opportunities for market development. More importantly, they hope that equipment
suppliers can consider network support for business operations and development with
them. That raises higher requirements on equipment suppliers in terms of market
development and integrated network planning along with more opportunities.
Network planning should allow for influences of operation factors. It is necessary to
learn about the knowledge of the operator's market department about service
development and take the customer's business requirements as inputs for the network
solution, therefore designing a network solution that suits the operator's service
development. An integrated, low-cost, profitable network solution that is able to
satisfy the changing market demand and to continuously evolve stands for the
direction of future network planning.
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