Survival of the fittest -- Carriers need partners not vendors

In today’s competitive communications market, service providers continue to face intense margin pressures and need to focus on reducing expenses. Research firms such as Gartner and Nomura Securities show infrastructure spending contracting slightly, or at best remaining flat. A recent market report from the Telecommunications Industry Association paints a brighter picture, but there is no disputing an industrywide focus on lowering costs.

So providers need more today than just high-quality infrastructure. In today’s climate of “what have you done for me lately,” the litmus test for choosing an infrastructure vendor is not only equipment, but also services that deliver quantifiable benefits to the top and bottom lines.

What are these quantifiable services? They are certainly a lot easier to describe than to implement. Services that enable an equipment vendor to be a strategic partner do three things for carriers:

• Save money – reduce operating expense while improving network performance.
• Speed time to market – enable carriers to become more nimble and shorten deployment times.
• Optimize performance – help carriers keep their networks running at peak efficiency and maximize return on investment so they can introduce new services more quickly.

What do these services look like in the field? Here are three examples of what our customers achieved in the past year.

A Tier 1 North American wireless provider identified more than $18 million in immediate and annual operating expense savings in three metropolitan markets. The savings per market delivered a return on investment (ROI) of more than 10:1 while improving network performance for users. The projects moved quickly from start to finish, attaining completion on average in 12 weeks per market.

A wireless provider in India needed to execute an aggressive roll-out with limited internal resources. Tellabs provided full program management, acting as a single point of contact from planning to implementation. The client deployed 250 nodes in four weeks, beating an already aggressive timeline.

A wireline provider in North America needed to upgrade its existing IPTV network. The company wanted to offer new high bandwidth services – HDTV, VoD, VoIP – and increase its Internet access speeds beyond ADSL/ADSL2 rates. The services solution included network architecture, traffic migration, program management and training. The network was transformed from OC-12 Sonet-based to a 10GE MPLS network, enabling these advanced offerings and increasing new revenue growth. This growth was accomplished with a seamless migration of traffic from ATM-based access to Ethernet, enabling bigger bandwidth to the home.

Carriers are often in a bind – costs are rising but they can’t raise user fees due to competitive pressures. This situation is driving the increased need for services. They don’t want to hear “my box is better than their box” anymore. If vendors can’t help providers reduce costs, move faster, or improve reliability, they will remain just that – vendors, and not necessarily successful ones.

Providers need partners who can help them prosper in the current climate. With every dollar squeezed, they should look to spend their first dollars on optimization, not gear. Done correctly, this saves money immediately and enables the provider to adapt more quickly to market demands. It also gets the most out of their current network and establishes a strong foundation for future network expansion. Delivering this kind of quantifiable value gives the provider a strategic partner, not just a vendor.

Rob Pullen is CEO and president of Tellabs. Prior to being named CEO in February 2008, he was vice president and general manager of global services, where he grew services revenue 22% in 2007.