Embarq outsources NOCs to NSN

In a major move that could be the start of a North American trend, Nokia Siemens Networks today announced that as of the fourth quarter of 2008, it is assuming ownership of the Embarq voice network operations center (NOC) and will provide that functionality to Embarq on an outsourced, managed services basis.

While NSN already has 160 such arrangements globally, the seven-year Embarq contract is the first of its kind in North America for NSN and thought to be the first of its kind for any managed services vendor. The 265 Embarq employees currently working in the company’s four NOCs in Florida, Kansas, North Carolina and Tennessee will be invited to become NSN employees, at their current levels of compensation.

The advantage to Embarq of this arrangement is both cost savings through greater efficiency and the larger scope and scale of NSN’s global operations, and greater technical competency as well.

“We are always looking for ways to be more competitive and more cost- efficient,” said Embarq spokesman Charles Fleckenstein. “This deal gives us the ability for us to upgrade to offer the tools to better mange the network. We would have to make a large investment in those tools and capabilities. Overall, the NSN agreement brings us technical competency and cost efficiency.”

NSN is hoping the Embarq arrangement lays the groundwork for more such deals in North America, said Sue Spradley, head of Nokia Siemens Networks’ North American business.

“Nokia Siemens intends for North American to be one of our growth markets and this was one of the areas we saw for growth, in the managed services arena,” Spradley said. “This agreement is the first of its kind in North America and we think we’re at a tipping point in what we see operators do, in terms of developing managed services relationships with their vendors.”

At present, Nokia Siemens does not supply any equipment to Embarq, but the company has developed expertise in managing multi-vendor networks in its global operations, said Gary Paris, head of North American managed services operations. “We cover our own equipment and equipment from other vendors, because all networks of this type are multi-vendor,” Paris said. “We have experience with that globally.”

North American service providers are behind the curve on the outsourcing trend, said Phil Frank, head of North American managed services for NSN.

“After many years in the industry both on the carrier side and on our side here, I think a good way to find a parallel is to look back at the IT industry,” Frank said. “When it started doing outsourcing, it was a 10-year process. This conversation has been going on for quite a while. Service providers do look at the operations of their networks as a critical piece and they need to know they can go to someone who will run it as well or better than they can.”