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"Ericsson's Managed Services offering means that we can take responsibility for the entire network operations process, or an isolated part of it, on a continuous basis," says Erik Oldmark, vice president, Strategy and Marketing.

Although it is a relatively new development, this outsourcing trend is one of the fastest moving domains in the market. Since 2002, Ericsson has officially signed more than 100 managed service contracts worldwide. In August 2006, Ericsson passed a milestone when the 101st Managed Services contract was officially announced.

However, the move into traditional operator territory received a mixed response at first.
As Oldmark says: "Operators were thinking this is what we do - how can you do this better than us?"
 
But with the telecom market in a phase of maturity, price pressure has increased, telecom networks are becoming more complex and greater operational efficiency is paramount. Such demands are leaving some operators at a loss, but outsourcing can provide a profitable way out.

Oldmark says operators are turning to managed services for four reasons: cost, business focus, quality, and competence. Operators today have to focus on how to attract new customers and keep existing subscribers," he says.

And by freeing up time spent on network mechanisms, operators can pay even more attention to their business and their customers. "They can do this because they have the flexibility to concentrate on delivering new services."

Operators in most markets today are not competing on network quality - that is a given requirement. But competence, in terms of efficient use and turnaround of technology, is necessary.

"It's about designing, deploying, managing and supporting network operations and providing multivendor services," Oldmark says. "Together, Ericsson and operators are creating successful partnerships."

Managed services initially appealed to small operators with a large cost disadvantage. But now big-name operators are onboard and experiencing the benefits. In December 2005, Ericsson and 3 UK announced a managed services agreement where Ericsson became responsible for the management of the 3 mobile network and its IT infrastructure.

Adding to Ericsson's existing outsourcing agreements with 3 in Australia and Italy, it became the largest managed services contract in the industry.

Capitalizing on huge growth potential in the Indian market, where competitiveness is high and tariffs are low, Bharti Tele-Ventures outsourced its mobile network operations and deployment of infrastructure to Ericsson in March 2004.

Don Price, group chief technical officer at Bharti Tele-Ventures, believes that managed services agreements are a paradigm shift for the telecom industry: "It's the first time that the operator and the strategic partners' objectives are completely aligned," he says.

"And by having Ericsson focusing on the traditional network rollout deployment and optimization, it allows us to focus on other areas such as subscriber loading and value-added services."

"We look at Ericsson as a global technical resource with global expertise," Price adds. They really step up to the challenge of delivering the finest services and the superior network quality that we are after."