Q&A

Q&A

Convergence, consolidation, amalgamation – these are the current watchwords of the telecoms industry, as buy-out and merger speculation (and reality) abounds, and the Tier One players jostle for power and position. But as these growing entities position themselves to tackle an equally expanding global market, their requirements for operations systems support are becoming commensurately greater and more complex, as they respond to the need to deliver continued customer loyalty, cost-effective operations and profitable revenue growth.

Lead interview – Building on success

Central to the success of any business, of course, is its revenue, and, certainly, in the telecoms industry, proving the business case for revenue assurance and fraud prevention programmes should be an easy task, especially given that telco revenue leakage never falls much below 10 per cent. For the large Tier One providers, an OSS supplier with the stature and reputation within its own field that can match that of the telco – not to mention the products and services to help solve the problems – is becoming vital. 
Subash Menon, head of the newly merged Subex Azure Limited, comments: “We recognised that to provide the large telcos with the revenue maximisation facilities they need, you really have to be a large powerhouse that can deliver the breadth and depth of service they require.”
To that end, Subex Systems, leaders in the supply of fraud management systems, and Azure Solutions, the number one revenue assurance systems provider, joined forces with the aim of helping telecoms operators establish Revenue Operations Centres (ROC) through an integrated suite of solutions. Subash Menon, Chairman, President and CEO of Subex Systems will have the same role within the new company, while John Cronin, president and CEO of Azure Solutions will oversee the integration of the combined entity, ensuring a smooth transition of services and products from both the customer and employee points of view.
Commenting on the merger, Menon notes: “Clearly, there is a great deal of consolidation underway among operators, and we believe that it is critical for OSS vendors to also consolidate in order to take advantage of the opportunities going forward. We believe that the large operators are now seriously looking at the revenue maximisation space, and will need a significant and reliable partner with whom they can tackle the issues.  This is not about buying or licensing a point solution, it is about partnering for the very long term. We aim to fill that space.”
Subex is acquiring Azure for a little over $140 million in an all share deal. Subex is the smaller company in revenue terms – at around $25 million – compared to Azure whose revenues last fiscal were $31 million. In the merged entity, venture funding companies including Doughty Hanson, Intel Capital and New Venture Partners, which are investors in Azure Solutions, will  hold a 34.5 per cent stake, while the current shareholders of Subex Systems will hold 65.5 per cent. These current shareholders of Subex Systems include Subash Menon and a variety of funds.

Issues to be addressed
There are certainly plenty of issues to be addressed in the revenue maximisation space. Operators across the globe have to deal with a whole range of threats to their revenues, including internal and external fraud, invoicing system errors, poor systems integration and processes, rating errors and credit management, to name a few. The downturn in the telecom industry's fortunes during the early part of the decade understandably generated a surge of interest in both revenue assurance and fraud prevention – the old adage of 'every penny counts' holding sway. But as we begin to move back into a more entrepreneurial business environment, it is vital that operators do not lose sight of the fact that wealth creation in telecoms continues to be determined by the ability to manage and extract business value from the highly complex services they offer.
Subex Azure's John Cronin comments:  “More and more, the big operators are integrating the various elements of revenue maximisation. They now need to move into the next stage, which is the Revenue Operations Centre, offering a centralised, integrated operations infrastructure that monitors, controls, and ensures integrity of the revenue chain through continual automated tracking of performance indicators.
“This involves the provision of tools to ensure proactive revenue chain optimisation and expedited error correction,” he explains. “The ROC concept is similar to that of the Network Operations Centre which allows the telco CTO to monitor the technical health of the network 24/7. In the case of the ROC, of course, it would be the CFO, for instance, who could monitor revenue generation and leakage across the network 24/7.”
Subex and Azure bring a wealth of different experiences and expertise to their joint table that will facilitate the establishment of the ROC concept in the telco psyche. Subex, founded in 1992, is based in Bangalore, India, and has a global presence across North America, Europe and Asia. The company went public with an IPO in 1999, and its shares are listed in India on the Mumbai, Bangalore and National Stock Exchange, while its GDRs are listed on the Luxembourg Stock Exchange.  Azure – spun out from British Telecom in April 2003 – is headquartered in London, has its R&D centre in Ipswich, UK, and has staff based in the USA, the Far East, Australia, South America and across Europe. The newly merged Subex Azure's global and Asia-Pacific headquarters will be in Bangalore, while the EMEA and American operations will be based in London, UK and Westminster, Colorado respectively. The new company counts some 23 of the world's 40 largest operators among its customers, with a customer base of around 150 installations in over 60 countries. Tier One customers include BT, Telenor, Vodafone, Orange, O2, Cable & Wireless, TeliaSonera, T-Mobile, Verizon, Bharti Televentures and AT&T.
The merger continues both companies' recent strategy of market consolidation. Acquisitions by Subex include the fraud management assets and technology of Mantas in March 2006, Lightbridge and Alcatel in October 2004 and Magardi in May 2001. Azure acquired US-based cost and revenue assurance company, Connexn Technologies, and UK-based telecoms software company Anite Calculus in November 2004, and it also acquired route optimisation company, Monnet in January 2004. 
Against this background, Subex and Azure began discussions some 12 months ago. “There was obviously a 'get to know each other' period, during which time we were able to look at and discuss technical capabilities, product sets and the specific relationships we each had with our customers,” Cronin explains. “At the end of the day, we clearly felt that this is a perfect match, and must stress, of course, that all existing customer and partner agreements will be fully supported by the new company.”
Menon adds: “We both looked at other options during that one year period, but obviously came to the conclusion that this is the right marriage. Our customer overlap was minimal – almost nil – and our different product sets combined perfectly to address the needs of telcos around the world.”
The advantages of being able to more easily reach each others' markets also played a part in the decision to merge the two companies. Cronin comments: “Looking specifically at Asia, we felt that the only way we would be able to establish ourselves quickly and – most importantly – effectively, was by having local people, working within the local culture, to service customers. We felt that we couldn't continue to ship people from the UK and North America into Asia in order to service our customer base in those countries, and we recognised that going through organic growth in any region that presented as big an opportunity as does Asia, would simply take too long. Clearly through this merger, we now have an acceleration into Asia.”
For Subex, equally, there was the attraction of adding more Tier One companies to their client list, and the recognition that the merger would enhance their geographic presence and credibility, especially in Europe, but Menon is keen to stress that it is the complete package of the two companies – their product offering, their market experience, and their customer relationships, as well as their geographic spread – that provides the strengths to be leveraged in the marketplace.
“In order to create a successful and sustainable software product organisation in our space, I think there are three or four basic elements that must be in place,” he explains. “In no particular order of importance, I would say that one is the ability to create profits – the whole sustainability and execution part of being in business.  Certainly I believe that Subex has proven itself in that area. We are an extremely profitable organisation. We have grown from the ground up in six years to reach some $25 million revenue last year, providing profits of around $8 million. 
“Second,” he continues, “is having a great product offering, and clearly we believe that we're bringing a fantastic solution to the marketplace, via our ROC concept, including the well-proven elements of revenue assurance and fraud control, originally from the two separate companies.
“Third is stature – the company's image and credibility in the marketplace. Now while I certainly believe that Subex has built up excellent credibility in the telecoms market, Azure has an even better image and has built up an exceptionally strong brand.
“And fourth is the most important element of customers – who they are, and the nature of your relationship with them. Obviously, Azure has a brilliant relationship with such companies as BT, and between us we serve well over 150 customers worldwide. 
“To my mind,” he concludes, “it is these four elements which basically make or break an organisation in the long run. Clearly, on each of these fronts, the combined company of Subex Azure is extremely well placed.”
As is generally the case when two well established companies combine their operations, the management of both Azure and Subex recognise that such a development is not merely a question of merging products and services, but must also take account of the different and specific company cultures that will have grown up. Subash Menon is keen to emphasise that while some issues of corporate culture may need to be addressed, he does not believe that the different national cultures of the two companies is in any way relevant to the current marketplace.
“I really don't think it's valid to look at a company in terms of national culture anymore. Both Subex and Azure are international organisations, with several national cultures working within each company.
“As to the corporate culture – that, between the two companies, is fairly similar in that we both have a pretty aggressive approach in going after new business, and are both particularly supportive of our customers.
“Certainly, I don't believe there are any significant differences between us, although there are bound to be some gaps – no two organisations are ever identical”
He goes on to note: “When looking at an integration of this nature, there are certain fundamental things that we need to hold sacred. First and foremost is the fact that any commitment made to customers by either of the separate companies will be met. That is absolutely vital.
“Second, we must recognise the impact on our own people. We are determined to ensure that any such impact will be minimal, and that we will conduct ourselves in as professional a manner as possible to ensure a smooth transition.
“These are two absolutely cardinal principles,” he stresses. “Once we have these set in stone, and are guided by them, the rest falls into place pretty simply.”                                                     

• Lynd Morley is editor of European Communications

For most people in the telecommunications industry, the complexity of the silicon chips that lie at the heart of their services, devices and profits remain largely – and safely – in the background. While the principles of Moore’s Law have continued to hold good, a couple of generations of both engineers and business executives have grown used to expecting constant falls in hardware price and radical increases in processing power.

Lead interview – Image is everything

Now, however, with network operators of all shapes and sizes trying to come to terms with a new universe of services based on content, openness and real consumer choice, the role of that core silicon in driving entirely new business models is coming under renewed scrutiny. In particular, as mobile phones become the world's most popular consumer electronics device, the power and functionality of that phone – whether represented by its image capturing capabilities or its storage capacity for multimedia – will form a key building block for the revenue chains of the coming years.
It was with these thoughts in mind that European Communications recently caught up with some of the senior executives of Micron Technology Inc., one of the world's most innovative semiconductor developers and a leading force in both memory and imaging technologies.
EC's Alun Lewis started by asking Bob Gove, Micron's VP of Imaging, what changes we could expect to see as the world's telecommunications companies responded to advances in imaging and memory technologies:
BG: At the risk of sounding like a Hollywood screenwriter pitching a horror story, we're starting to see the Internet – in both its fixed and wireless forms – grow eyes! That may initially come across as an overly melodramatic statement but, when you consider that cameraphones now account for two out of every three handsets sold today – out of an annual market of around 500,000 devices, and growing, sold each year – you get an idea of the scale involved in the mobile world alone.
Add onto that the potential for imaging in other applications – from security and surveillance to medical diagnostics and monitoring – and you soon see that the creation of low-cost, but powerful, imaging devices has a huge potential to drive near-exponential change in the ways that we work, live and communicate.
We're currently at something of a cusp when it comes to recognising how important these developments are going to be for the traditional telecommunications industry. Not everyone 'gets it' yet, but those that do – and many new business models and intermediaries in the imaging sector are still emerging – will have access to entirely new and original streams of revenue.
What's more – and just like the staggering and totally unexpected success of SMS – it's largely going to be down to the customers themselves as the driving force behind this new wave of services and money. What we, as an industry, have to do is give them tools that are up to the job and that fulfil their own particular needs.
AL: You mention SMS as an example of where the industry failed to appreciate the real dynamics of their customer base. How do you translate customer requirements in such a new area into designing and engineering real products?
BG: There's an old saying in the engineering fraternity that when it comes to making a product faster, cheaper and better, you can only ever have any two out of those three at any one time. The combination of the core characteristics of silicon – as represented by Moore's Law – combined with Micron's own specific expertise in both design and manufacturing, means that we can now get three out of three in both imaging and memory components.
What's important, though, is understanding the requirements of the end user. If we don't make products fit for each customer's usage – whether they're an enthusiastic mobile blogger, someone seeking to send images or video in to a TV show, or a grandmother wanting to capture images of her grandchildren – then we and our own customers will miss the particular points on the cost and performance curves that address those markets.
Traditionally, it's usually been the gadget-minded male who's the first to get into digital photography. The merging of imaging and the mobile phone and the greatly improved usability of these devices has opened this up to a female market with a huge potential. It is, after all, the wives and mothers who usually become the family archivists, capturing precious family memories and passing them down the generations.
That's one reason why Micron has concentrated on delivering very high quality image sensors that can readily operate in the great variety of situations where the amateur's going to want to capture an image without having to think about it. This is particularly acute in low-light environments, and we do have a saying that if your cameraphone still works under a table, then it's a Micron image sensor! We put a lot of effort into ensuring that things like colour sensitivity and accuracy get  taken for granted by the end user, without them having to negotiate complex image processing software to get a decent, fit-for-purpose picture or video.
AL: There are huge changes afoot in the wider telecommunications industry though – the entry of WiFi and WiMax into the mass market, cross-industry activity between content owners and telecoms carriers such as TV voting and reality programming, plus the development of real convergence between the mobile and fixed worlds through projects like BT's Fusion service, to name just a few. How are these impacting on Micron's business and technology strategies?
BG: In essence, the value chain for service providers is getting a lot longer and much more complicated and it's crucial for their business plans that the customer is more than just a passive consumer of bandwidth – they have to generate their own content now and imaging naturally forms a key part of that new value. Some people are just going to want basic point and shoot functionality, while others are going to go for a top range device – we have to meet both requirements and indeed people may cycle between different devices during a single day depending on their requirements.
Network operators themselves are realising that Quality of Service is a crucial attribute for increasingly sophisticated customers, and Micron can help them in achieving that by ensuring that the visual content  from the customer's cameraphone is excellent to begin with.
The domestic networking market, in particular, is also looking very interesting, with WiFi and WiMax driving the true integration of consumer electronics devices like TVs and HiFis with PCs and mobile handsets. Today's youth, for example, doesn't distinguish between different voice and data networks and services in the way that their parents do – to them it's all communications and media.
This development also plays to our strengths in the memory field. Our technology and manufacturing investments in CMOS for imaging and DRAM, DDRAM and NAND technologies allows us to bring high-yield, high-performance products to market quickly and reliably – essential for our own customers who have their own tight product schedules to meet.
In the wired/wireless home, users are far more likely to download multimedia content onto their mobile devices over DSL links that are effectively free, than they are to pay the traditionally high tariffs demanded by mobile data services. As content such as films and TV programmes become distributed over the Internet and Digital Rights Management issues become clarified, users will want to take this content with them on the move and that requires a lot of compact storage in the device itself.
In August this year, for example, we announced that we'd started shipping 8 Gigabit and 4 Gigabit NAND Flash memory products.
AL: Your earlier comment about the Internet growing eyes certainly has a particularly apt resonance in today's security conscious world. How do you see imaging developing in this area?
BG: It's far too simplistic to just see things through 1984-coloured spectacles, and the ability to monitor many different things visually can bring incredible benefits to us as both individuals and as societies.
For personal health applications, Micron's gone beyond the cameraphone to develop the camerapill, capable of capturing images of a patient's gut during its journey from mouth onwards, and then send these to a radio receiver on the patient's waist. This can dramatically reduce the need for invasive surgery or disruption to the patient's life.
Additional imaging applications that we see include 3D barcodes that can be read by mobile phones, allowing customers to carry out instant in-store checks on product information and prices, while another area of focus is on imaging for fingerprint readers in mobile devices. As these become increasingly important as highly personalised tools that allow us to interact with ever-richer sets of online services and applications, their own implicit security also increases in importance. It may be your device, but how can you guarantee that it's only used by you?
There's also the remote monitoring of home and family while people are away, as another important application area. Whether it's a working parent being able to see their child at nursery school via a webcam or just check up on their house while away from home, remote imaging can bring peace of mind, as well as new revenue opportunities for service providers.
Continued improvements in how we package devices are also allowing us to introduce them to more hostile environments, such as cars and lorries. On one hand there's legislation coming in around the world to introduce both high and low speed crash avoidance systems, and optical sensors are now ideal for this, replacing a profusion of mirrors. On the other, they can also control airbag deployment to make sure that a small child doesn't get squashed.
AL: And any final thoughts for the mobile industry?
BG: Keep watching this space – even if you're not directly using image processors or are involved in cameraphones! Most of the current, new wave of growth in telecommunications is riding on content – with much of it produced by users themselves. If you fail to spot what's happening at that end of the food chain, you'll miss out on opportunities further up the line. From almost a standing start three years ago, 20 per cent of our revenues now come from imaging and supporting  specialist memory – a proportion certain to increase in coming years as users move from transmitting just their voices and thoughts to include images of the world around them.                                               

Alun Lewis is a freelance telecommunications writer and consultant  alunlewis@compuserve.com


Manufacturing for an ever more complex value chain
Alun Lewis was also able to talk briefly to Dr David Burrows, director of Micron's UK  Design Centre, about the company's design and manufacturing strategy
AL: David, semiconductor manufacturing can be a pretty hairy place to be at times, given the speed the industry moves at. How has Micron approached these issues?
DB: It might sound like a cliché, but it's all about understanding what the customer wants – sometimes even before they're fully aware of it themselves, and then designing products and prices to meet that need. For example, we anticipated the demand for cameraphones and similar devices quite early on and pioneered the use of CMOS technology in manufacturing these, allowing them to be made using standard methods employed for DRAM production.
We're also able to place a great deal of functionality and power within the actual chip itself, drawing on Micron's in-house image processing and manipulation expertise to add considerable value to the basic image capture system. This means that we're able to supply both individual components as well as complete camera systems-on-a-chip that include features such as colour recovery and correction, and auto-exposure, making things simpler for both the device manufacturer and the end user.
These integrated features are not the only thing of course: our experience in designing high precision versions of our sensors manufactured in ceramic packaging with industrial temperature capabilities, global shutter and other features also allows us to supply additional markets, including those of automotive safety and driving assistance, medical, defence, security surveillance and aviation related systems. In addition we create very high frames per second sensors that are already being used for Hollywood film special effects.
AL: So how do we see these factors impacting on price and performance into the future?
DB: We'll still be riding on Moore's Law for quite a while yet!
The cameraphone market is starting to settle out and there's a huge potential with a dynamic demand that, in due course, should even see us beginning to manufacture our sensors here in Europe at our semiconductor plant in Avezzano, Italy. Another emphasis is on improving the performance of mid-range products such as our newly available 3.1 megapixel camera chip, which can still turn out a high quality A4 image in low light conditions. The top of the range continues to expand as well, hence our just-announced launch of a 5 megapixel digital still camera quality device. Our research and development in CMOS imager efficiency continues to advance, of course, and we recently gave the world's first demonstration of images produced by 0.17 micron pixel technology. This will allow even greater megapixel cameraphone targeted devices from us in the not too distant future.               

External Links

Micron

Sheer size alone is no longer the asset it once was in the ICT sector. That said, some industry giants do retain a dominant position – even as they step into the third century of their existence.

Interview – Joined-up thinking

One such organisation is NEC, the $42 billion market leader from Japan. While everyone knows its name – and has a broad idea of its size and scope – many Europeans may still not be aware all of its areas of expertise.
A solid global brand to be sure, with strong credentials in IT, communications, display technologies and identity management solutions, NEC has been an active player in Europe for over 30 years.
European Communications recently met the newly appointed Managing Director, NEC UK, David Payette,  and Kevin Buckley, Director of Mobile Network Solutions Division, NEC UK, to ask them what future they saw for the European communications sector and, more specifically, what a changing NEC had to offer the region.

EC: David – to start off on a somewhat personal note, you took Asian studies and Japanese as a discipline at university, what attracted you to this subject and did this affect your decision to join NEC?
DP: I felt early on that the interplay between Asia and the rest of the world would be a stimulating environment to work in, so after university I went to Japan in the early '90s and joined a Tokyo-based systems integrator. In a series of increasingly senior roles, I moved to EDS in Asia Pacific, then Lucent in Australia and five years ago ended up here in Europe with Avaya, before being headhunted to this post only a few months ago. These international experiences have been both challenging and culturally enriching, and yes, the fact that NEC offers me the opportunity to put my Japan experience to use in this part of the world, makes this new role a particularly attractive fit for me.

EC: And what are the specific benefits you feel that NEC brings to the market?
DP: For a start, we have a long history of bringing innovation and service excellence to Europe, and with that comes an emphasis on continuity and trust with customers and partners that can sometimes be hard to find in today's industry. This focus on long-term credibility is well received in the market, right down through the value chain to the end user. 
As an innovator, we're proud of the many market firsts we've achieved here in areas such as 3G networks and devices, and more recently with i-Mode, to name a few examples. We believe these experiences provide a platform that will help us go from strength to strength and deliver ever increasing value to our customers.

EC: It is widely recognised that much of Asia Pacific is well ahead of the West when it comes to innovation and deployment of advanced technologies. What cultural factors do you think influence this?
DP: When you talk about high standards of manufacturing and quality control, I suspect values and cultural factors are significant, particularly in countries such as Japan. But where innovation is concerned, I believe this is more a matter of basic economics. For example, it was only natural that the high population density you see in Asia's developed markets brought a high mobile subscriber base or 'teledensity' more rapidly there than in other parts of the world. Once this stage is reached, market forces relentlessly drive innovation through intensified competition and increasingly insatiable consumer appetites for more functionality. The game changes from simply laying the infrastructure and acquiring the subscriber base to building loyalty by delivering powerful data services to the handset and fortifying the network with higher technologies like HSPDA and IMS, which drive the necessary throughput and convergence.
We are seeing the same thing happening right now in the UK and throughout Western Europe. And, because NEC has always been a major player at the forefront of Asia's development we're well suited to bring that experience and technology to Europe, and in a time tested and proven manner. And i-Mode for instance is one of the more recent examples of this.

EC: For certain, the NEC portfolio is extremely broad.  Is it possible that it's too broad, or that you are trying to cover too much?
DP: We don't think so at all. Highly specialised companies and individuals will always be essential – and we partner with many of them, but I'd argue that there's also a growing requirement for corporations to take wider scopes, given the perpetually increasing 'joined-up' nature of the systems that support our societies, businesses and lifestyles.
The future of telecommunications is about breaking down boundaries and making the customer experience seamless. NEC sees the big picture and our joined-up thinking makes us the first choice for service providers of all types around the world. The future for ourselves, our customers and our customers' customers will be about enabling communications, information and commerce anywhere, anytime. For me, being able to provide broad based individual expertise across areas as seemingly diverse as supercomputing, identity management, wireless and so on, which in fact increasingly complement the communications arena – combined with our ability to join disparate components together to achieve higher value – will play an important role in the industry and that's good news for us and our customers.

EC: Kevin, how do you see this 'joined-up' thinking coming to market, specifically in the European mobile sector?
KB: I think what David just intimated about continuity and breadth is very important. If you look at the forces that now characterise the European communications sector as a whole, then openness, interoperability and adaptability are key drivers. The network's no longer closed and, in the case, say, of a service provider offering a converged fixed-mobile portfolio of services, they not only need access to 2G, 2.5G, 3G, HSDPA, i-Mode, WiFi, WiMax, DECT and Bluetooth expertise, but also to particular applications such as mobile TV – an NEC speciality – as well as enabling technologies such as identity and security management.

EC: Investing in R&D in such a fast changing industry is like trying to hit a moving target while aiming through a fogged-up mirror. How does NEC plan its investment?
KB: NEC itself has an interesting balancing act to play as it tries to help the whole industry move forward. On one hand we do possess what might be recognised as traditional strengths. We invest around £4 million each and every day in R&D; we play a major part in all the relevant standards bodies around the world; and we also place a lot of emphasis on local partnering with both academia and business.
On the other hand we have the ability to move very quickly when conditions demand. That necessarily involves being as close to the customer as possible and eliminating the unnecessary formality that can slow down the all-important 'time-to-market' factor.

EC: What joint R&D programmes do you run in EMEA with commercial or academic partners?
KB: One good example of the NEC character working together lies in some of our 3G work in Europe. In the background, we have Mobisphere, a long-term R&D  partnership with Siemens aimed at driving 3G development work onwards. Out in the 'real world', we worked closely in the field with Siemens deploying 3's UK and Irish networks in record time. At one point, that involved installing 140 cell sites each week.
DP: Particularly with a complex technology like 3G, the kind of end-to-end thinking from NEC that Kevin's just highlighted becomes highly relevant. NEC has been involved in nearly every first-stage roll out of 3G systems worldwide – we developed the world's very first 3G handsets and we were the first to bring both of these to Europe. But we also know that great technology in the network is only part of the answer. To maximise ROI, you also have to understand the wider behaviours of the customer and the whole service and applications environment as well.

EC: David, you mentioned i-Mode, which you are currently involved in bringing to Europe. What are the particular benefits it brings?
DP: i-Mode is a mobile experience that gives subscribers incredibly fast Internet access, among other things, starting in the 2.5G environment, with a rich and friendly user interface, and content designed specifically with mobility in mind. This winning combination has delivered proven results in user take rates, which is key for service providers, who also appreciate the time tested success and technological depth of the solution. 
Our long history with i-Mode in Japan has enabled us to help service providers across Europe differentiate themselves and grow data services revenues by enriching the mobile experience for their subscribers. And, for the content and applications provider – irrespective of whether they're Disney or a developer creating ring tones – the i-Mode handset is a compelling route to market, and anything that improves the user experience is good for both them and the actual network owner. We've already installed i-Mode systems in Russia, Greece, France, Italy and Spain and have just completed supplying the core infrastructure and terminals for O2's i-Mode launches in the UK and Ireland.

EC: Kevin, you mentioned Mobile TV as one specific application that NEC is involved in – along with the higher speed broadband radio technologies like HSDPA. What's your take on how the industry can deploy these new technologies to best advantage?
KB: There's a lot of talk out there about how the content owners or retail-oriented third parties like Google, Amazon and E-Bay might reduce the traditional telecommunications operators to a utility status as lowest possible cost, bit-pipe carriers.
Yes, the industry is transforming itself and yes, competition is now coming from a variety of new entrants who have radically different business models from the traditional telecommunications mindset. That said, the content and applications are still only part of the total offering.
If you don't have the appropriate handsets and devices for each emerging market niche, or network technologies that guarantee seamless delivery across multiple network platforms, then all the creativity of the content developers will count for nothing.
Consumers are becoming increasingly sophisticated buyers and, while parts of the communications industry will always reflect fast-changing lifestyle and gadget choices, fashion can also be a very fickle master to follow. Customers have long memories, with many buying decisions increasingly being made on word of mouth disseminated around on-line communities.At the risk of repeating ourselves, this is where NEC's corporate characteristics of continuity and extremely high reliability plays out very well, amongst both consumers and our network owner customers.

EC: What are your strategic priorities?
DP: Our strategy is three-fold and involves combining innovation and service excellence in unique and creative ways, exposing our major customers to more of NEC's diverse portfolio, and providing service providers with not just the right technology based solutions, but evolving value-add offers, such as professional services and end-to-end mobility offerings, that enhance their competitiveness and help them promote attractive data services and devices to their customers.
With that strategy, comes an appreciation from NEC of the consumer experience and the cultural characteristics of local markets. You referred to Mobile TV, which is another good example of this. We are a leading vendor of digital TV transmission networks in Europe, and with the mobile standard now being ready (DVB-H), we can offer both terrestrial and mobile distribution via the same network.
The same is true for our experience as a leader in microwave radio, ensuring that all the new high bandwidth variants of existing technologies – such as HSDPA, HSUPA and WiMax – perform out in the field in Europe with the same consistency and quality of services that they've shown in the lab and in the market in Japan.
EC: Do you think that traditional telecommunications business cultures are up to promoting content and applications as well as basic connectivity – especially where it comes to CRM?
DP: Yes, generally speaking, I do. I think we are really starting to see a sea change in this respect. But what I find interesting, is that while content, networks, and applications all help drive customer loyalty, it's 3G and Wi-Fi which have truly kicked the door open when it comes to opening up the world's markets to the next generation of data-based services, and it will be enhancers like HSPDA and IMS, which are major elements of our strategy, that help bring these services to fruition and create new opportunities for all.

EC: David, you've obviously got your own ideas about which directions NEC should be heading in over the coming months and years. Would you like to talk us through some of the changes that you intend making to the ways that NEC does business with its customers and partners?
DP: Sure. NEC intends to be more than just a high technology provider. We are well positioned to bundle our technologies, put more value-add services on top, and provide quantifiable business advantages to our customers in the B to B world from the CXO level on down and out into the consumer arena where the most important decisions are ultimately made. 
This will involve promoting our brand identity more proactively, building further operational synergies across our business units, and driving a greater level of cross-product training internally. Our people are already highly motivated and skilled professionals in their respective areas and they will increasingly promote more of the overall technology continuum in support of our customers.
I'll also be looking to build on the good feedback routes that we already have in place with our R&D operations in Japan and across the globe.
NEC can actively help the wider industry achieve its now inevitable transformation by continuing to lead in many of the vital background areas that underpin it. Super computing, client server and display technologies, as well identity management solutions, all complement the communications environment and form part of a broader continuum. We believe companies that are adept at joining up this disparity and translating it into tangible business value will have the edge in the future. That, fortunately, has always been part of NEC's broader strategic vision.

External Links

NEC UK

Scott G. Silk, CEO of Action Engine, explains to Priscilla Awde why he believes the company's 'browserless' mobile application platform is leagues ahead of the 'browsered' competition

Thinking outside the box

Optimistic, enthusiastic, energetic -- these are somewhat rusty epithets when applied to what has been the ailing telecoms sector. However, they are fundamental to Scott G. Silk, president and CEO of American software company Action Engine Corporation, who sees the market as both extremely dynamic, and as attracting investors. As operators are beginning to understand their customers, and brands are beginning to understand this powerful medium, Silk expects the mobile applications and content market to grow exponentially.
Backed by New York venture capitalists Baker Capital, the company is a relative newcomer to the industry albeit one on which many are keeping a close eye. Founded in 2000, Action Engine spent the first four years in intensive R&D developing a software platform for mobile operators, enterprises and application developers which, it believes, is several years ahead of what Silk refers to as the 'big boys'.
Employing all the advantages of a small, entrepreneurial company, the Action Engine founders never accepted the prevailing wisdom that operating systems for mobile devices should or could be similar to those developed for the computing environment. While others made what he believes were predictable responses to the whole idea of accessing mobile data services, Silk believes his company had the vision to 'think outside the box', investing over 100 man-years of development, and raising over 25 million GBT of funding to date. The result is the Action Engine Mobile Application Platform, the company's one-touch, client server solution which eliminates 80 per cent of keystrokes and decreases network response times to make all applications 20 times faster than existing systems.
 "We didn't want to replicate a PC-like experience but to create a new paradigm," he explains. "Early on we knew that phones would inevitably follow Moore's Law, becoming more powerful and including more available computing horsepower which we wanted to exploit to make the mobile experience faster and applications easier to use.
 "We have shattered the mobile usability barrier: people can now execute rich computing applications on their phones at the same speed as they do on their laptops. But we have done it with a client server platform rather than using browser technology optimised for the computing environment."
The fundamental advantage of the system is that most of the choices are made offline on the handset using resident software either previously downloaded from the operator or embedded into the ROM of the device at manufacture. Users quickly navigate their way through a series of drop down menus on the phone to refine their search. Unlike most existing systems which involve numerous exchanges between the phone and the network before users finally get what they want, Action Engine saves time by only accessing the network with a specific request once the user has specifically defined all parts of the request and chooses to send it to the network. The result is that because users find it considerably faster and easier, they use mobile data applications more.
Business customers will now be more willing to use their phones to access corporate databases and applications such as CRM, diaries and corporate directories, whilst sales staff can quickly update files and retrieve specific and relevant up-to-the-minute information.
All of the popular data services (travel, news, financial data, sport and film clips plus fashion information), including location based applications (people, place and facility finder), are available faster and more conveniently, which drives up usage. Downloading a one minute music clip or full song for example takes 30 seconds compared to the more common eight minutes.
Action Engine has significantly reduced what was originally a relatively big software package so that it can run on all of the mid and high tier phones in the market. The architecture has now been optimised to run on Java handsets and this next generation is expected to be available in September.
The system is expected to have a knock-on effect as application developers will have more of an incentive to create innovative content and products to sell in to the operators.
Offering more inventive applications makes it easier for operators to differentiate themselves from competitors, whilst speeding up the user experience may increase average revenues per user and therefore overall revenues. Although third generation networks supporting higher speeds are rolling out, take up of 3G services has been slower than anticipated. Although successful in Asia, in Europe, all but the early adopters still need to be convinced of the value of mobile data and video -- even they may be deterred because access is difficult and time consuming.
Feature rich phones are becoming more popular but many people use only a fraction of the available functions which has a negative effect on the success of the mobile data market. Estimates are that 76 per cent of people do not use the data services capabilities of their phones because they are too complex to operate. Neither do people use their phones as much as they might which, considering that operators are under pressure to increase revenues, does little to contribute to overall profits.                                 Â©
"Mobile devices have the computing power to execute many applications but usability is hampered by slow speeds, small screens and keypads. Based on drop down menus, our system is designed for the mobile form and leverages the power of the handset," explains Silk.
 "Because all the applications are integrated on a common platform, data is shared between them and the software learns patterns of use. The result is a personalised phone experience, as, with use, the device gets smarter and remembers preferences. People have regular patterns to their lives: generally they travel to the same few places, on the same airlines or trains and eat similar foods wherever they are. Drop down menus reflect these choices making it still faster to navigate through the system."
However, even the most innovative content and services will not drive mobile data growth if the people cannot use them quickly and conveniently because response times are slow and the number of keystrokes and transactions is intensive. A case illustrated by the fact that although location based services and other sophisticated applications have been available for some time, take up is relatively slow. Silk suggests that what is missing and inhibiting rapid adoption of mobile data is the user experience -- the time it takes to download anything -- a situation he suggests is quickly remedied.
From his perspective, all operators have to do is buy and install a server and roll out the Action Engine Mobile Application Platform which is licensed to them on a server and per user basis. To make deployment even faster, Action Engine also offers a turnkey pack of pre-developed applications called Brand-n-Go. With Brand-n-Go, Action Engine has sourced the content, built the applications, and absorbed the hosting costs -- operators only have to choose from the Action Engine application catalogue, place their "brand" on the pack and "go" to market. Since the system logs and reports the number of users by application, operators can judge the success of each package making it easier to segment and target their customers and drive up revenues. The ultimate goal is to add value, and therefore profit, to mobile phone and data sales.
Action Engine is currently running trials in North America, Asia/Pacific and Europe. Two large American operators are planning to introduce a phone with pre-integrated software later this year. An Asian telco is trialling the mobile application client to deploy and test a suite of branded services and, if successful, plans to roll them out to its wider customer base. In Europe, Action Engine is working closely with a number of key operators and distributors and is developing specific trials for a Tier 1 and a Tier 2 operator, as well as working with a European mobile phone distributor to create a tailored application pack which can be sold direct to operators and consumers.
SMART Communications in the Philippines has launched its own version of the system and used the Action Engine Mobile Application Platform to create a suite of applications sold as Amazing Explorer. As well as successfully differentiating itself from competitors, repeat usage of data service on high-end devices has risen by nearly ten per cent. SMART can update or add new applications by seamlessly sending an over-the-air command to customers' phones and users can switch between phones to access the range of services.
The system was deployed in stages the first of which involved installing the server in the data centre and pre-installing client applications on a ROM. Location based services have been integrated into the system and users are able to control when they want to access the network. Seven new services were developed: movies; music; travel; celebrities; personal; sports and fashion/beauty and branded to target particular customers.
Amazing Explorer is not only driving data usage but also allows SMART to expand its products beyond SMS. Customers have on or off-line access to information and, by tight integration with the phone's dialling, PIM and messaging capabilities, users can make calls, save and send information with one-click.
Silk believes that the SMART experience is just the start of what is a global market of operators waiting for the tools to help increase their data revenues. Silk is positioning the company for growth and spent the last year investing in sales, marketing, and business development, and making the transition from a purely technology company into a marketing led entity. However, the company plans to continue investing heavily in technology to expand what Silk calls its "unfair advantage" in the market.
Estimating they are at least two years ahead of their competitors, and recognising that operators and end users are ready to deploy and consume more sophisticated applications, Silk is expanding Action Engine in Europe and appointed Mike Kent as his European VP. Offices are now open in Britain and France with plans to expand into more countries. The goal is to demonstrate the system, to sell in to the top 20 telcos and target handset manufacturers, distributors, content providers, and enterprises.
 "Europe is ahead of America in mobile data services and it is a particularly attractive market since there are a small number of relatively large players as well as a large number of smaller operators. Although others may eventually get into the game, we have at least a two year lead and, with all the advantages of being a small company, we are very nimble and entrepreneurial and can therefore move fast. Lots of technology is developed by smaller companies which tend to execute products two or three years ahead of bigger players," explains Silk who was brought in to add value and take Action Engine into a public offering.
 "We are in a position of one: there is no real competition today although we expect it to happen because the realisation of the mobile dream is to put PC applications on phones."
Having appointed what he believes is an aggressive team of pre-sales, sales and support staff, Silk says the company aims quickly to gain as much market share in Europe, Asia/Pacific and North America as possible before the big players start coming into the market.
When it was first proposed, many people responded to this 'browserless', client server system with disbelief, scepticism and even contempt but, suggests Silk, they may well have to seriously revise their opinions as they try to play a catch up game with Action Engine's early gains in what he believes will be a significant market.

Priscilla Awde is a freelance communications writer

External Links

Action Engine

Cerillion CEO, Louis Hall, explains to Lynd Morley why he believes the company is on the fast track to success in the highly competitive convergent billing market

Agility is the key

The concept of the lean, responsive organisation, flexible and adaptive to client requirements, may not be entirely new, but it is certainly experiencing a strong re-birth in the current telecommunications marketplace. It is not always an easy brief for an industry rooted in the conservative 24/7 service provisioning ethos to fulfil, but it is certainly one that, according to its customers, convergent billing specialist, Cerillion Technologies, is delivering.
Louis Hall, Cerillion's CEO, is undoubtedly keen to foster the image of an agile organisation, able to answer the complex and urgent needs of operators, but it is the testimonials of satisfied customers that ultimately give gravitas to any marketing claims. Chris Hall, Managing Director of Manx Telecom -- a long-standing Cerillion customer -- for instance, notes: "We telcos are being dragged into becoming much more customer centric and marketing focussed. That's why it's imperative that we have flexible systems. It's no good having a great marketing idea to stimulate sales if it's going to take two years to execute it.
"That's where Cerillion score so highly. They listen to their customers. They are invariably very constructive, very positive and, probably more importantly, they deliver, going from concept to execution very quickly."
Formed in 1999, following the management buyout of the in-house billing and customer care division of Logica, Cerillion provides carrier grade billing, CRM, interconnect and mediation solutions to fixed, mobile, IP and convergent operators worldwide. Having grown from an organisation of some 18 people, with a $4.5 million turnover, to a staff of over 140, and figures for the financial year ending September 2004 showing a 46 per cent increase in turnover to $17.5 million, Cerillion and Louis Hall are feeling, understandably, bullish.
"Certainly if an operator is looking for a small, flexible, responsive, customer focussed organisation that has a credible carrier-grade solution, we're pretty much all there is in that space -- most of our serious competitors having been merged into large corporations."
To date, a wide variety of companies, from Cable and Wireless, Jersey Telecom, Tele2, Manx Telecom and Tele Greenland, to Caudwell Communications, Maltacom, Go Mobile, Redstone Telecom and MobiCom Corporation have made exactly that choice.
In terms of its solution, Hall explains, Cerillion is very much focussed on breaking down the traditional paradigm between end-to-end and best of breed, and concentrating on what he terms a 'bundled components' approach.
He stresses that the Cerillion system supports any deployment model. The end-to-end model, for instance, offers workflow embedded as an integral part of the system, while the systems modules are all pre-integrated encompassing everything from rating, CRM and billing, through to mediation, point of sale and directory management.
"But we're equally comfortable with a mixed deployment project," Hall explains. "Our modules can be easily replaced by third party packages where desired to meet specific project needs, allowing for seamless evolution with no restrictions on an organisation's future growth. For Bulldog Communications Ltd, a subsidiary of Cable and Wireless in the UK, for instance, we installed our rating and billing modules alongside their own in-house Order Management System.
Add to these solutions, best-of-breed, managed service solutions, or indeed, bespoke developments, and the view of Cerillion as a truly flexible provider appears to hold water.
"I think that what we offer tells quite a different story to what the rest of the market is doing -- and that's partly why we're being so successful," Hall notes. He goes on to underline the fact that the success is based on a number of new contract wins (as opposed to upgrades of existing systems) -- including Cable and Wireless and Caudwell Communications in the UK, BTC in Bulgaria, and Gamtel and Gamcell in Gambia, the latter reflecting Cerillion's experience in both wireline and wireless markets as it undertakes to migrate more than 200,000 fixed and mobile subscribers from two separate legacy systems into the new convergent solution.
Based in Central London, with offices in the US and -- more recently -- Singapore, the company operates in both mature and slightly more 'emerging' markets, answering a wide variety of requirements.  But 'mature' Hall says, does not necessarily denote 'sophisticated'.
"In mature markets we are, in many ways, seeing simplification rather than sophistication," he comments.  "Many operators are really focussed on price and a fairly commoditised service. This is obviously partly a result of having been hit by the telecoms downturn, but it is also because there's a limit to the appetite among users for ever more sophisticated features."
He goes on to stress that, going back over, say three years, much of the hype generated by industry analysts and the press, stressing the promise of ever increasing sophistication of services through 3G, has not yet fully materialised.
"3G has, arguably, still not found a market," he comments. "A lot of the services available in 3G that are actually selling, are also available in 2.5G. Users are tired of hearing the 'next great thing' being continuously trumpeted, so the operators' focus is now much more on price and delivering the services customers actually want and believe they can get."
He points out, for example, that the success of the CPS (carrier preselect) and MVNO (mobile virtual network operators) models is based in their targeting of very specific segments of the end user base. 
"So, the CPS provider offers SME businesses, for instance, really neat packages that suit them perfectly.  The SME is not confused by the choice of some 40 different offerings, but can concentrate on what really works for him. Now that is getting close to the customer!"
The focus on price, of course, has led operators to pay considerable attention to their BACC systems, not only in terms of function, but also with regard to the cost of building, installing and running such systems. One solution, of course, is to outsource the whole procedure, taking up the offer of managed service billing operations from an outside provider.
Tele2 Ireland recently joined Tele2 UK in using Cerillion's managed service offering. The system is located in London's Docklands and is managed entirely by Cerillion staff. Bill Butler, CEO of Tele2 UK notes that by using this approach, the company has been able to launch the new Ireland service both quickly and efficiently.
Outsourcing the billing function is not, however, particularly widespread in Europe, despite the fact that it may seem an obvious solution for operators determined to concentrate on their core competencies, get closer to the customer, and keep a tight hold on the bottom line.
"There is a much greater trend towards outsourcing in the US," Hall comments, "particularly as billing is regarded very much as a commoditised service there. 
"The problem elsewhere is that the billing system is seen as the revenue generation engine, and if something goes wrong with that, it impacts directly on the bottom line. So there's an issue about control here.
"The other issue, of course, is security of data -- many European players still don't feel comfortable about giving up that information."
Certainly, given that many senior managers in telcos across Europe grew up in PTTS where so much of the data they held was government information, which they were charged with guarding, it is hardly surprising that they are still instinctively highly protective of their data.  In addition, data protection legislation in a number of countries across Europe specifically forbids the moving of certain data outside their borders -- so any managed service could only be run from within those countries.
Hall notes, however, that he believes there will be a lot more movement in the managed service space over the next three to five years.
"One of the great advantages that running the managed service give us is that we have the same experience as our non-managed service customers, dealing with the day-to-day operation. And that means that we're closely involved in how the system operates in a live environment. As a result of that first-hand experience, we can improve it to everyone's benefit."
This notion of using a specific development or experience to work to the benefit of all its customers, is a central plank of Cerillion's reputation among those customers. Manx Telecom's Chris Hall notes:
"I view Cerillion as a partner, not a supplier. I know a lot of people aspire to partnership with their clients, but for me, of all my suppliers, Cerillion are among the few that have actually achieved it.
"They do have an excellent product, but one of their great strengths is their people. They put real effort into understanding what we're trying to achieve, and they're very responsive. We have loads of good ideas, and we want to get them out to the market quickly, and Cerillion will find a way of doing it.
"Indeed, the resulting work will often go into their general release, so the whole club of Cerillion users is effectively working together, putting new innovations into the system, from which we all profit."
Having established a sure footing, both in terms of turnover and customer base, Hall sees his company moving increasingly centre stage to work with the larger operators. "In today's market" he comments, "productised solutions increasingly make sense for telcos. In cost-based organisations -- which telcos are now undoubtedly becoming -- there really is no option. This procurement model, which was always used by the smaller companies, is now moving up to the larger operators."
To date, the company has traditionally been focussed on Europe, but now has a growing customer base in the Americas, and is looking to the Asian market with the opening of its Singapore office.
"I believe we'll see a great deal of activity in the Americas, and particularly in the Caribbean, over the next couple of years," says Hall. "There are a lot of legacy systems out there, and a lot of billing vendors that have gone under, and that's left many operators high and dry. Certainly it's a highly competitive marketplace, with a lot of operators such as AT&T and Cable and Wireless establishing themselves in the region.
"At the same time, the growth in the holiday industry has meant that the corresponding growth in the roaming traffic is massive. There are operators running services in the Caribbean just for roaming -- because, obviously that's where the money is. We're currently in discussions to start work with three operators who are doing just that."
Setting up the Singapore office is a longer-term investment. Hall believes that while the region does have a lot of home grown suppliers, it is nonetheless a very brand conscious market, and the fact that Cerillion is building a solid brand in Europe is helping the company in Asia.  It is, of course, a potentially huge market, and Hall comments that while the 19th Century could be viewed as the 'English' century, the 20th as the 'American' century, the 21st will certainly be the 'Asian' century.
In the meantime -- back in the old country, or, at least, the old region -- Hall notes that differentiation in the telecommunications market will increasingly be based in marketing and branding -- given that everyone is offering much the same service. He points to the emergence of the re-seller market through the CPS providers on the fixed networks, and the MVNOs on the mobile side, and while he notes that this does not necessarily represent a power shift -- as all these providers have to sit on somebody's network anyway -- the resultant competitive pressure means that all these players must increasingly look to managing their relationships with customers, package their products and services effectively and, of course, bill for them.
"There are something like around thirty CPS providers in the UK alone, and the trend is moving into the European market. These companies are coming in with little experience of billing and customer care in the telecommunications environment, which provides us with a tremendous opportunity.
"At the same time, the growth in MVNOs is also great for us. These companies know exactly what they're doing in terms of establishing their brand, but they will look to outsource the network, billing, customer care and debt collection. So what you have at the end of the day is a marketing organisation. And that's commoditisation."
It will doubtless not have escaped Hall's attention that in a commoditised market, it tends to be the agile, flexible and responsive companies that win the day.

Lynd Morley is editor of European Communications

Just as was predicted long ago, much of the technology underpinning telecoms  networks these days has become a commodity. As a result, the areas that service providers now need to concentrate on instead involve finding the most efficient ways to set up, manage and control the myriad processes and events that take place on top of those enabling technologies.

Kim Perdikou is the Executive Vice President and General Manager of Juniper  Networks' Infrastructure Product Group. She tells European Communications how her company can help carriers and service providers meet the challenges that they face today

EC: What challenges are your customers facing in the evolution of their business models?

NEC's investment in NetCracker as the global brand for all its telecoms software and services assets positions the company as a multi-billion dollar entity operating across the entire range of OSS/BSS activity. Andrew Feinberg, President and CEO of NetCracker, talks to Keith Dyer, Editor of European Communications, about how the company's recent physical and strategic expansion is positioned to meet the transformational needs of today's Tier 1 global operators

Continuous Computing's Manish Singh says that femtocells are well suited to the technical demands of LTE - including adaptive modulation and the need for high capacity.

    

@eurocomms

Other Categories in Features