Ericsson has signed a seven year deal to manage 3 UK's mobile network and IT infrastructure. Ericsson will manage operate the network as well as supply equipment and related services. 3 Uk will retain ownership of the network and IT assets.
Ericsson has managed services partnerships already in place with 3 in Australia and Italy, where it manages 3's multi-vendor networks and service delivery environments and in Sweden where it manages 3's messaging platform.
This deal will see network infrastructure from Nokia, a major supplier to 3, come under Ericsson's management.
Terms of the deal were not announced but when Ericsson signed a managed services contract with 3 Italy in April 2005 the deal was said to be worth €1.6 billion.
Bob Fuller, CEO of 3 UK said, “We are very pleased to be announcing this innovative partnership with Ericsson. This is an important step in the implementation of our strategy and means we can focus on our core business of providing a convergence of communications, entertainment and information to our customers. 3 will continue to lead the development of 3G services.”
He added, “Ericsson is a managed service specialist and a long-term and trusted partner for 3. This agreement is not just the most efficient way to own and manage infrastructure of this kind, but also the way to deliver the best possible service to our growing customer base. We are delighted that Ericsson will be bringing its extensive management expertise to the 3 network.”
As well as taking charge of the management, maintenance and expansion of 3's network and IT infrastructure, Ericsson will be responsible for the ongoing radio network rollout, the maintenance of the existing 6,300 radio sites and the management of the core network and operations centre.
Over one thousand employees from 3's network and IT functions will be transferred to Ericsson.
The deal is also indication of an increasing strategic focus on Ericsson's part, to increase the amount of outsourced services and systems integration capabilities it offers to operators.
Ericsson Global Services now encompasses around 18,000 of the company's staff. Erik Oldmark, Vice President Strategy and Portfolio Management, said that Ericsson calculates operators' external network operations spend is $55 billion annually, compared to around $135-140 spent internally. $15 billion of that managed services spend is on network rollout services, Oldmark said. Ericsson is addressing this spend by combining its managed services portfolio into a "prime integrator" concept. One win Oldmark already credits to this concept is a deal to migrate Cinglar's network from GSM to HSDPA. Ericsson is also taking over Cingular's site management as part of that deal.
Ericsson currently has 50 managed services contracts, with 47 million subscribers under management.
Managed services is not just about delivering network installation and management, Oldmark says. Ericsson is also using its scale to manage content provider relationships for operators.
“The management focus for operators is on business growth and getting the services right on their networks,” Oldmark said. “We are meeting their marketing demands by hosting a total service management platform. We also have the structure to deal directly with content providers and media companies to take them in a simple way to end users.”
Ericsson has launched an off-portal billing solution letting media companies use the solution without having a direct connection to operators. Ericsson's IPX billing engine interconnects with operators billing in 140 countries, Oldmark claimed.