The money to be made from access networks, by carriers or vendors, is being squeezed mercilessly ‘ for the former by unlicensed spectrum rivals and stagnant consumer ARPU; for the latter by equipment price wars and virtualization. Both sets of companies need new revenue streams, and both are looking to tap into areas of network growth, such as HetNet and internet of things (IoT), with new managed services offerings.
Ericsson is already the king of mobile managed services, handling more of the world’s subscribers than any carrier via its huge outsourcing deals. Now it is looking to expand these in many directions. Its Mediaroom acquisition gave it a stronger play in supporting TV and video providers, and brought it a signature global contract with Telefonica’s pay-TV business.
It made another acquisition this month, of UK TV specialist Red Bee Media, and said it was now fully ready to bring telecoms-style managed services to the broadcast industry, and would make the UK its ‘global media hub’. Red Bee brings it expertise in delivering TV content to any device on demand, which will be particularly important as Ericsson’s mobile and TV services start to converge, with multiscreen content and the nascent LTE Broadcast technology.
Red Bee’s customers include BSkyB, EE and Virgin Media in its homeland, as well as Canal Digital in France. Magnus Mandersson, head of Ericsson’s Global Services business unit, said: “Broadcasters must respond to increased competition from over-the-top content providers and changing viewing habits, but many of them don’t have the time, scale or infrastructure to effectively tackle technical challenges such as media asset management, multiplatform multiscreen delivery, archiving and disaster recovery.’
Ericsson has been steadily building cloud-based platforms to support all kinds of services for its telco customers, from apps stores and payment engines, to M2M management systems for the internet of things. This week, it announced the kind of deal which will become more common as operators work out their strategies for the IoT. It has won a contract from Brazilian cellco Vivo to manage the deployment of smart parking and lighting solutions. This is part of a digital city project in Sao Paolo and reflects Ericsson’s particularly active interest in the smart city sector. The Swedish giant will not just participate on the wireless side but will act as the lead integrator for the lighting system, taking responsibility for design, installation and deployment as well as post-deployment managed services, operations and maintenance. The system will monitor the power consumption of each street light and switch it on and off accordingly, while the parking solution will monitor available spaces around the city.
However, while this example is a happy one for the operator, there are others where Ericsson will face a dilemma between pushing the interests of its traditional customers and seeking new ones. It has already done deals for M2M managed service platforms directly with car makers, potentially sidelining the cellco in the contract, and in smart cities, the traditional carrier may be competing with owners of specialized IoT networks, such as Sigfox and Senaptic (see separate item). Smart lighting and parking, for instance, are a key target for Senaptic, which aims to provide a ‘cellco-free’ IoT platform using ultra-narrowband technology in unlicensed spectrum.
Another interesting growth area for managed services will lie in new types of mobile network architecture, particularly small cells and carrier WiFi. Ericsson has not ventured too far down this road yet, though it has announced a cloud-based service based on its Radio Dot technology for indoor coverage. But others are taking SCaaS (small cell as a service) seriously, whether to take on the infrastructure build-out and offer hosted services (as Colt Telecom, Alcatel-Lucent and Virgin Media have trialled), or to provide cloud-based management for existing enterprise access points, whether WiFi or cellular.
This kind of model is drawing some old faces out of the woodwork, including the veteran of US dial-up, Earthlink, and one of the WiMAX pioneers, Towerstream. Earthlink has reinvented itself several times ‘ notably as an MVNO, in its Helio partnership with SKT, and as a municipal WiFi provider ‘ but never found a sector to deliver the market share and profits it got from dial-up. It does still offer broadband (and even dial-up), but its growth is coming from a specific type of managed services, focusing on supporting hosted voice, data, WiFi and security for enterprises, such as retailers, with large numbers of small sites to serve.
Having established its multi-location model in the retail sector, the provider now aims to apply it to banking, healthcare and other verticals. This sees new CEO Joseph Eazor building on the shift towards business services instigated by his long-serving predecessor Rolla Huff, who stood down at the end of last year. On the most recent earnings call. Eazor told analysts that while it was hard to compete with cablecos for small businesses’ connectivity and IT needs, where they only had one or two locations, there was real differentiation in applying Earthlink’s investment in IT and cloud technologies to multisite customers.
This will harness a string of acquisitions of small cloud, IT and telecoms providers which have ended up with Earthlink operating a national IP-MPLS backbone and Gigabit Ethernet fiber rings, as well as eight data centers linked by fiber to a new cloud hosting platform.
Also in the US, Towerstream made its name building wireless backhaul rings using sites on top of tall buildings, which then supported businesses, and WiFi or WiMAX hotspots, down below. Now its tower-top sites are its golden egg, and unsurprisingly the firm is turning its model towards metrozones. It already has a master lease deal with Verizon and has now formed a partnership with Alcatel-Lucent to target other operators with small cell services.
The companies will cooperate to offer a ‘single end-to-end solution’, CEO Jeff said. This is an area where ALU is already building a broad web of partnerships and Towerstream is a natural fit, with its new HetNets unit. This leases real estate on towers and buildings, and its high capacity backhaul network, to small cell deployers in its target cities, notably New York. While that will provide a useful piece in ALU’s SCaaS jigsaw, Towerstream also hopes to have similar agreements with other vendors such as Nokia, so that operators are not tied into a single OEM.
Carriers will ‘take almost any backhaul they can get to certain locations, and we are actually pretty excited with what we might get in our first RFPs for some of those small cells using our fixed wireless,” Thompson said. “We think our fixed wireless is a great asset to be able to get to certain locations.”