Handing off the operation: Wireless carriers look to outsourcing for expertise

Operators don't like to talk about it, but they do it. Outsource, that is. While the trend in outsourcing the construction and maintenance of wireless networks is more common among younger companies, even the big, established players outsource some network maintenance functions.

"We can do a better job for less money than they can," said Ken Rapoport, president and CEO of Electronic Environments Corp. "It's a core competency issue - this is all we do." EEC installs and maintains network components such as power, air conditioning and generators, although it sometimes installs radios and antennas for operators.

Nextel was able to increase the quality of its network when it began outsourcing with EEC about two years ago. Nextel has two contracts with EEC: preventative maintenance and 24-hour emergency repair for heating, ventilating and air-conditioning systems and emergency generator units. EEC visits each HVAC unit, located at each of Nextel's cell sites, twice a year to check for potential problems.

"Heat becomes a large issue - we'll go off the air if it's high enough," said Neil Manning, facilities manager for Nextel's New England region. Before contracting with EEC, Nextel handled those components from a less preventative standpoint, Manning said. EEC is valuable because its employees have the expertise to properly maintain generators and air conditioning, he added.

Nextel handles the radio and base station portion of its network internally, Manning said. Most large operators do the same.

"They're much more leery of handing control over any one aspect of that operation to anyone else. They have shareholders that would scream bloody murder if something screwed up," said Brian Cotton, director of wireless communications for Frost & Sullivan.

Rapoport agrees that for now, most operators are cautious about handing off that area of the network.

Usually the start-ups or small operators farm out the design and implementation of the whole network. "It's the newer operators from after the latter rounds of the PCS auctions specifically," Cotton said. Some of today's small license winners have little or no wireless experience.

"For them, it's like hiring a consultant," he said.

WFI is one company that offers network design, construction, maintenance and decision-making services for purchasing equipment. It counts some new but solid players as customers, such as Telecorp and Triton PCS. Competitive pressures and decreasing revenues per subscriber are driving the trend toward the outsourcing of more functions, said Charles Sackley, senior vice president of sales and business development for WFI. When the market was a duopoly, operators were "fat, dumb and happy and could do it all," he said. He believes that one day operators will outsource almost everything. "I think carriers won't own their networks - vendors will."

Some other trends are keeping companies such as WFI busy. Mergers create opportunity for WFI because the merged companies often decide to replace equipment to achieve a seamless network. Operators also will soon begin migrating to third generation networks, which will present different optimizing and coverage issues than existing networks, Sackley said. Operators may decide to outsource that upgrade to bring new services to market more quickly.

In addition to traditional wireless voice network operators, the new broadband wireless operators are relying on outsourcers. Sackley expects 40% of WFI's business next year to come from broadband operators. In July, WFI announced a deal with Advanced Radio Telecom for nationwide deployment.