Technology does not stand still, and nor can service-provider business models. Services may evolve through network cannibalisation
in the short term, but leaps in functionality and core replacement make wide-ranging network transformation projects inevitable.
Re-building a network from the ground up offers a once-in-decade opportunity to
improve business results through an enhanced service portfolio and increased operational
efficiency. Determining an optimal strategy requires the meticulous comparison of
wide-ranging scenarios for market evolution and technology development based on
a model detailed enough to capture the complexity and topological specifics of the
core network.
STEM (Strategic Telecoms Evaluation Model) provides a robust and efficient
platform for creating business and investment plans which embrace alternative market,
technical and economic futures. STEM automatically generates a demand and cost allocation
framework, geographical variants and scenarios, and calculates consistent service
revenues, equipment installation, utilisation and replacement, capex and opex. You
can focus on the network architecture and topology and business dynamics while STEM
manages the integrity of the underlying calculations.
Network-evolution modelling process
Migrating separate voice and data services to a common NGN platform
The majority of incumbent operators worldwide carry voice traffic on traditional
circuit-switched networks. Data services such as ATM or frame relay are typically
handled by separate network architectures where each service is switched separately.
Major capex and opex savings may be made by migrating these services to a common
NGN platform where individual services are delivered at the edge of the network
by multi-service access gateways.
The best strategy will vary according to the design and age of the existing network.
STEM has been used to create a reference model which explores the cost implications
of different scenarios for this transition and offers a scaleable methodology for
modelling these diverse network architectures.
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Service architectures in transition
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Network topology
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Three scenarios are
modelled: a proactive migration, where equipment in the traditional networks is
removed before the end of its life and replaced with IP equipment; a ‘migrate as
required’ migration, where equipment is replaced only when it reaches the end of
its life; and no migration, which is used as a base case to examine the effects
of not migrating to IP at all.
The key results are the different operating costs, capex and depreciation for the
various networks and scenarios considered. This model provides a natural basis for
exploring the incremental revenue opportunity that the new IP platform provides,
e.g. video-on-demand services.
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Extra structure for video-on-demand services
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Incremental business case results
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Adding data revenues in transition to W-CDMA
An established GSM cellular network operator provides voice and low-speed circuit-switched
data services. This network will be adapted to provide GPRS packet-switched data
services and eventually UMTS voice, packet- and circuit-switched data services.
A STEM reference model captures independent scenarios for the leasing of existing
GSM base stations and site-sharing for new roll-out of UMTS coverage.
Migration from 2G to 3G and growing importance of data revenues
Demand for services from different customer revenue types is mapped into common
network circuit or bandwidth requirements, and then disaggregated into different
geographical classifications in order to capture critical configuration and cost
distinctions in the deployment. STEM defines the structure and executes the calculations,
while all the input variables are available to the user in a linked Microsoft Excel
spreadsheet.
GSM, GPRS and UMTS services
Interface between STEM and Excel
Managing complexity
Network-transformation models are likely to undergo very many iterations as topics
are understood and propositions refined. STEM’s logical separation of structure,
data and generated calculations enables these models to be agile with respect to
modification and extension, and the tool is therefore the natural choice for these
vital applications. An add-in toolbar interface for Excel has helped the majority
of our customers to use Excel as the main interface for inputs and results when
working with non-STEM-literate colleagues, and can also be used to generate financial
outputs in a range of management formats.
STEM has the power to communicate business logic, and to iterate model structures
with speed and confidence. Decision makers will have greater confidence in models
built on a reliable, standardised business-modelling platform.