In close collaboration with Ericsson, Vodafone Netherlands becomes the first in the Vodafone group to hand over responsibility for the operation and maintenance of its multivendor access, core and transport network.
Active in a hugely competitive arena, Vodafone Netherlands is the second largest operator in the mobile market with 4.5 million customers. While mobile is Vodafone’s core offering, its aspirations lie in moving into integrated mobile and PC communication services through wireless 3G, HSDPA and fixed-line broadband services such as DSL. Although well positioned in this mature market, Vodafone Netherlands is not alone in its ambitions. The Netherlands has a mobile penetration of more than 120 percent and has already experienced a consolidation, with five operators merging into three with next to that more than 40 MVNOs.
Driven by these rapidly changing market conditions and the need to stay ahead of the competition, Vodafone Netherlands decided to partner with Ericsson in a managed services agreement. Adjusting its operating model and organization, the operator took action to become more flexible, reduce costs and ultimately pursue its goal of being the country's communications leader. Ger Coolen, CTO, Vodafone Netherlands, details the outcome of the contract: "The Managed Services solution has brought us exactly what we were hoping for; the network quality was maintained, we have made cost savings and the employees that transferred were taken care of. We have been able to focus on new areas of development for the company without worrying about the technical details. We have a long-standing relationship with Ericsson and building on that it will definitely be one of the partners that we will use in the future."
The five-year contract includes engineering, implementation and operation of Vodafone’s access, core and transport network. The implementation was carried out in two phases. Firstly Ericsson took over the radio access network and approximately 170 employees were transferred to Ericsson. The project involved a vast range of responsibilities, from highly technical IP engineering to negotiations with landlords to build antennas on rooftops. The second phase included the management of the core and transport network and the transfer of an additional 115 employees from Vodafone to Ericsson. Ger Coolen explains why Vodafone chose a managed services agreement: "In this competitive market, the network is no longer a unique selling point. We wanted to retain our competitive position and this was not determined by the technology we use but on how we create value for our customers. It was more beneficial for Vodafone to focus on the things that were really important to our customers and leave the network to someone more capable of providing the technical support."
Transferring the responsibility and resources to Ericsson enables Vodafone Netherlands to evolve from a technology oriented company to a customer-services oriented company. The quality of the network was maintained and the shift to a partnering model allows Vodafone to focus on additional elements of the value chain that will encourage growth and enable the introduction of new products.
The success of the project relied on the close collaboration of both partners to overcome the challenges faced. Jeroen Dorrestein, General Manager, Ericsson, Netherlands explains: "For Ericsson, it was important to think and act like an operator in order to understand what Vodafone wanted from the contract. One method of measuring the results of the Managed Services contract is through a KPI chart which indicates a positive result in green and a negative result in red. With the majority of KPIs in green the results showed solid and good technical performance from Ericsson, however this did not always represent the true coverage. For example if there was an area in red that covered a motorway or a busy area this was still a problem. So we worked very closely with Vodafone to ensure that the KPIs were a true reflection of the success of the project."
To make continuous improvements, Ericsson performed a 'health check' to refresh the relationship between Ericsson and Vodafone as well as to revitalize the project. Meetings were set up in addition to the regular governance meetings in order to further emphasize the frequent communication between the partners – a key to success in any managed services partnership. After close collaboration on the first project, the knowledge and experience gained and the alignment of expectations meant that the second phase ran in an even more smooth and structured way and was therefore executed faster.
As this was first time that the Vodafone Group had transferred operational responsibility for part of its network to an external partner, this was a great opportunity for Ericsson to showcase its services capabilities. Already, Ericsson had supplied a substantial part of Vodafone Netherlands' network and it was looking for ways to diversify its business portfolio with Vodafone to strengthen and enhance the overall relationship. Ericsson provided Vodafone Netherlands with a full scope service, resulting in lower operational expenses and top-quality network performance as well as enhancing the company's platform for growth. Ericsson was chosen based on its competitive edge in managed services and Vodafone recognized the benefit of having one partner for its access, core and transport network.
Rene Herlaar, Head of Enabling Platforms, Vodafone Netherlands explains the benefits for Vodafone: "Not only have we retained our competitive advantage but from an EBITDA position we have become stronger. As a company we have gained flexibility and can focus more on our core business activities and those areas that bring value to our customers without having to handle the technical side. It is important to use trustworthy partners and have a good relationship on all levels of the organization and we have had that with Ericsson for many years."
Customer: Vodafone Netherlands
- Improve market position
- Reduce costs
- Develop integrated mobile and PC communication services
- Greater focus on customer services than technology
- Managed Services, including responsibility for the design, planning, building and operation of access, core and transport networks
- Greater flexibility
- Lower opex
- Improved network quality