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August 07, 2012

UK Mobile Managed Services Market Heats Up as Ericsson Faces Stiff Competition in Upcoming Billion-Pound Contract Renewal

A £1 billion (British pound, or $1.56 billion) contract is a monster contract. That number accurately describes what is currently at stake in the UK for outsourcing wireless operator network operations. For whatever reason, mobile service providers in the UK were among the earliest to embrace the concept of managed services. Without a doubt that market remains one of the largest and most advanced of any global managed service opportunities.

It turns out that a number of key contracts for such outsourced telecom services are expiring in 2012, and there is now a major race going on for either renewal or the landing of these contracts by new parties. Since 2005, when it won its first mobile managed services contract with European operator 3, Ericsson – a household name in the communications space, has more or less dominated the market. But other significant players have built up businesses over the last several years that are now able to compete directly with Ericsson, and both renewal and new contracts are no longer considered Ericsson locks – rather they are all now in play, with billions of pounds at stake.

Ericsson’s original seven-year contract for managing 3’s core network is coming to an end in 2012. What is interesting is that 3 has decided to send an RFP out to several of the vendors that have developed the resources to compete with Ericsson. Whether 3 is simply doing its due diligence to keep Ericsson honest on pricing, or if it isn’t happy with the quality of Ericsson’s services is anyone’s guess, but with so many pounds at stake it is clearly the smart move for 3 to make.

According to ABI Research, which has put out a new report on Managed Services (and which includes additional competitive analyses, vendor matrices, market data, and additional insights), however, there has emerged an even greater opportunity is from Mobile Broadband Network Limited (MBNL), the 3G network sharing joint venture between 3 and T-Mobile. The Ericsson contract has included much of MBNL’s managed services business, but with the contract ending this year and the RFP out to several vendors, there is blood in the air.

Aditya Kaul, ABI practice director, mobile networks, notes that “Instead of awarding a contract to multiple vendors as is common in some countries, the network operators in the UK will probably award each contract to one main contractor, who will then sub-contract portions of the work out.  Ericsson is in a very strong position based on established relationships with the operators in managed services, but Nokia Siemens Networks (NSN) is well positioned to get a big piece of the business, and it is always possible that a low bid by Huawei might get some consideration from an operator facing cost pressures.”

Nokia Siemens Networks has been the Orange’s managed services prime contractor in the UK (which in turn is part of a global managed services relationship with France Télécom). NSN also provides at least a part of the managed services for MBNL. NSN is also the equipment supplier for MBNL, and has supplied equipment to most of the other UK operators as well.  Huawei, the Chinese computer, cloud computing and telecommunications hardware (among other things) giant that is working hard to expand its businesses on a global scale, is a newcomer in the UK managed services business, but did recently win a five-year managed services contract with Telefónica O2 UK, and is looking for additional opportunities.

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Tony Rizzo has spent over 25 years in high tech publishing and joins MobilityTechzone after a stint as Editor in Chief of Mobile Enterprise Magazine, which followed a two year stretch on the mobile vendor side of the world. Tony also spent five years as the Director of Mobile Research for 451 Research. Before his jump into mobility Tony spent a year as a publishing consultant for CMP Media, and served as the Editor in Chief of Internet World, NetGuide and Network Computing. He was the founding Technical Editor of Microsoft Systems Journal.

Edited by Amanda Ciccatelli


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