reliable networks superior services

Spectrum Auction

ScorecardBidding ’til It Hertz

Verizon Looks to Trump Cable

The D in MDU Stands for “The Donald”?Pick a Partner

Tellabs Marks 25 Years of Channel Partners

I n SID e

a P r I l 2 0 0 8

Swisscom’s

“Everything is an experiment now.” Page 10

Kurt Schmid, Swisscom

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TeLLAbS InSPIre:

new naMenew look

� Tellabs Inspire • APRIL 2008

Allow me to take this opportunity to introduce myself. I’m Rob Pullen, and I am the new Ceo of Tellabs. For more than 20 years, I’ve worked in various capacities with great teams at Tellabs to bring leading-edge technologies, services and solutions to our customers. I’m sure throughout the years, I’ve met many of you and look forward to working with you again, as well as establish-ing new relationships and, above all, validating your trust.

I have recently been given the opportunity of a lifetime. Having been appointed Ceo at the end of February, my job is to guide this great company into a new age and to help inspire our people toward a set of common goals: creating innovative solutions and providing excellent customer satisfaction. Tellabs recognizes the significant changes and challenges that this in-dustry poses for vendors and service providers alike. So I’ll share with you some insights and ideas about what I believe define the current and future landscape and how we’ll succeed together.

First, the state of our industry. everyone recognizes that the telecom industry is facing some heady challenges. Consolidation is occurring on both the vendor and service provider sides, and the fight for new and profitable revenue streams is white-hot. Tellabs has and will continue to adjust and adapt as needed to provide this industry with great solutions. we have enjoyed

A note from robert Pullen, Tellabs CeO

robert w. PullenChIef exeCuTIVe OffICer And PreSIdenT, TeLLAbS

l e a di n g ed g e a n e w b eg i n n i n g

why Emerge is now Inspire welCome to the first edition of Tellabs Inspire. For returning readers of the magazine formerly known as Emerge, you’ll likely notice a few changes — starting with the name on the front cover.

This is more than just a cosmetic makeover. our new title captures the spirit of the time, a time in which telecommunications technology has evolved from a plaything of the privileged few to a can’t-imagine-how-we-ever-lived-without-it necessity for the global masses. end users, once satisfied with simple utility, have become increasingly savvy, and ever more demanding of creative, flexible, personalized

solutions. The time span between “the next big thing” and the “next, next big thing” has short-ened exponentially.

The challenge to service providers — and to Tellabs — is not just to meet these new user expectations, but to exceed them. Not just to provide the answers, but to anticipate the ques-tions. Basic communication is a thing of the past. our industry is no longer “emerging” — we’ve arrived. So where do we go from here? wherever inspiration and innovation take us.

Tell us what you think at inspire@tellabs.com.d Av I d m o R FA S ,

e d I T o R I A l m A N A g e R

many long-standing relationships, and we look forward to build-ing new ones. most importantly, we are highly focused on those strategic applications and services driving network changes and profitable revenues for our customers.

Next, growth. Tellabs sees growth opportunity in the world. we are working with some of the largest and smallest providers on every continent and others in between, and our goal in every instance is to provide solutions that fit a business model for growth. while the blockbuster “killer apps” are few and far be-tween, the one killer app in which everyone believes is one with growth opportunity. despite being considered a largely North American company, Tellabs has a major presence on every con-tinent and continues to build on significant international market share. As a result, we’ve helped virtually every type and size of customer achieve some of their goals, including enabling cut-ting-edge services for their customers.

Finally, innovation. Innovation has always been a core value at Tellabs. our investment in innovation stretches from our people to our labs to our solutions. I’ve witnessed it firsthand. As an electrical engineer by education and in practice, I believe that at the end of the day, it’s innovation that drives this industry. And innovative solutions and services are what drive end-user demand and our customers’ success. Tellabs will continue to hold innovation sacred and offer solutions that differentiate and advance our customers.

For more than 30 years, Tellabs has been fortunate to serve great customers in an exciting industry. let me take this opportunity to thank all of you for your interest in Tellabs. Together, we will build on past successes and ensure a bright future for our industry.

APRIL 2008 • Tellabs Inspire �

Statements herein may contain projections or other forward-looking statements regarding future events, products, features, technology and resulting commercial or technological benefits and advantages. These statements are for discussion purposes only, are subject to change and are not to be construed as instructions, product specifications, guarantees or warranties. actual results may differ materially.

The following trademarks and service marks are owned by Tellabs operations, Inc., or its affiliates in the United States and/or other countries: TellaBS®, TellaBS and T symbol®, and T symbol®.

any other company or product names may be trademarks of their respective companies.

Copyright © 2008 Tellabs. all rights reserved.74.1928e – reV a – 2/29/2008

TeLLAbSone Tellabs Center1415 west Diehl roadnaperville, Il 60563 USaPhone: +1.630.798.8800Fax: +1.630.798.2525www.tellabs.com

PreSIdenT And CeOrobert w. Pullen

exeCuTIVe VICe PreSIdenT, GLObAL SALeS, SerVICeS And STrATeGyCarl a. Dewilde

edITOrIAL MAnAGerDavid J. Morfasinspire@tellabs.com

PubLIShed byTelephony Custom Media 330 north wabash avenue, Suite 2300Chicago, Il 60611Phone: +1.312.595.1080Fax: +1.312.595.0296www.telephonyonline.com

edITOrTim kridel

edITOrIAL COnTrIbuTOrSraymond Conway, Joan engebretson, Iain Gillott, Tim kridel, lynnette luna, karen lien Miller, raianne reiss, M.J. richter, Patty wetli

ArT dIreCTIOnCavedweller Studio

PrOduCTIOn MAnAGerMelissa langstaff

rePrInTSFor reprints and e-prints, call Fostereprints at +1.866.436.8366

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video Podcasts • Audio Podcasts • Download center

www.inspirethenewlife.com

Ë Read or subscribe totellabs Inspire online:

tellabs.com/news/pubs.shtml

a

Senior Heavy reading

4 uPLOAdlong tails. Mobile TV subs tuning out. Broadband for all? and more.

6 unLeASh The POwerIf your eMS/nMS isn’t living up to its potential, you’re not alone.By Tim Kridel

8 PArTnerInG fOr SuCCeSSThe Tellabs channel partner program passes the quarter-century mark.By M.J. Richter

10 The SwISS COnfederATIOnSwisscom gives itself a network makeover.By Raymond Conway

14 yOu’re fIOSed!Verizon Trumps cable in the MDU market.By Joan Engebretson

16 SPeCTruM Of OPPOrTunITIeSwhat’s up for grabs in this year’s spectrum auctions.By Lynnette Luna

18 AnALyST InSIGhTwinning the auction but losing in the market.By Iain Gillott

UPloaD

vo d | t u n i n g o u t | d i g ita l d ivi d e | H i e ro g ly pH S | M d u S cru M

CALendAr

IIR’s TNMO May 5-9, 2008 amsterdam

NXTcOMM June 16-19, 2008 las Vegas

cOMMuNIcAsIA June 17-20, 2008Singapore

� Tellabs Inspire • APRIL 2008

IF THeRe’S CoNTeNT to be viewed and a screen to watch it on, Comcast wants to be the one to point consumers in the right direction.

earlier this year, Comcast Ceo Brian Roberts announced a number of initiatives that, together, form the company’s “Project Infinity.” Perhaps the most intriguing venture: Fancast, which Wired describes as the “electronic programming guide that Tvguide.com only wishes it could be.”

The site, which builds on Comcast’s acquisition of the movie-

ticketing service Fandango, allows users to search for a television program or feature film by entering keywords such as title, actor or di-rector. A number of current television programs can be viewed directly on the Fancast site.

In other instances, Fancast will either link the user directly to the content — for example, by connecting the user to iTunes or Netflix — or provide a list of where the show can be found, by date, time and television station/network. For theater listings or times, Fancast will send the user to — you saw this coming

— Fandango, where the consumer can purchase tickets.other elements of Project Infinity include a portable dvd/

dvR, developed in partnership with Panasonic and available in 2009, and a massive expansion of Comcast’s Hd vod offerings. over the next couple of years, plans are to grow the existing library of 300 Hd films to more than 3,000.

Comcast’s initiative is the latest example of the telecom in-dustry capitalizing on the “long Tail”: a widely held theory that obscure, niche, older or even unpopular content — be it mov-ies, books or music — can be a significant source of revenue for consumer-focused businesses, including service providers, cable operators and wireless operators. — PAT T y w e T l I

Ë For more information about The long Tail’s influence on telecom, see “Chasing the long Tail” in the winter 2007 issue of Tellabs Emerge. It’s available online at

www.tellabs.com/news/reprints/emerge_winter07_longtail_reprint.pdf.

according to a recent M:Metrics study commis-sioned by Tellabs, new users continue to sign up for mobile TV services at a healthy rate. But it’s not enough to counteract the number of sub-scribers who are leaving the service in droves.

key takeaways from the survey of mobile TV users in europe and north america suggest ways in which service providers could stem this tide. after price, mobile users cite quality and reliability as major reasons for abandoning mobile TV. Yet those ex-users grant service

providers a clear window of opportunity. Sixty percent would sign up for mobile TV again if service quality and reliability significantly improved in the coming year.

M:Metrics conservatively estimates that by regaining just half of the potential market lost due to quality and reliability issues in the next 12 months, service providers could increase revenue by $270 million. The solution is simple — give the people what they want. — k a r e n l I e n M I l l e r

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MObILe TV TO SubSCrIberS: CAn ThIS MArrIAGe be SAVed?T U n In G o U T

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Ë For more information, go to www.tellabs.com/news/2008/nr021208.shtml

DVD: Digital Video Disc DVR: Digital Video recorder HD: High Definition VoD: Video on Demand

The Long Tail reaches to Infinity

Maybe those prehistoric cavemen had it right after all. who needs words when you can communicate with pictures?

Israeli-based Zlango has developed a universal iconic language designed for mobile messaging, among other applications. The service is beginning to catch on: a number of mobile operators have inked partnerships deals, including Pelephone and orange in Zlango’s home country, as well as Globe in the Philippines and kyivstar in Ukraine.

according to the company’s web site, “any type of communication done via Zlango creates smiles.” So try using it the next time you have to tell the boss your project’s running over budget. — PaT T Y w e T l I

whO needS wOrdS when yOu hAVe ZLAnGO?

APRIL 2008 • Tellabs Inspire �

wITH moRe THAN 65 mIllIoN subscribers, the United States is the world’s biggest broadband market, according to a recent oeCd study. But is it the best?

A number of recent reports provide conflicting snapshots of how various countries — developed and emerging — are faring in terms of not only providing access to information and communica-tion services, but utilizing them, as well.

Increasing broadband penetration has been a high priority of the Bush Administration. NTIA figures released earlier this year indicate improvement has been made, with the FCC reporting that more than 99 percent of U.S. ZIP codes received broadband service from at least one provider by the end of 2006. Critics argue that the ZIP code measure is misleading, as is the FCC’s definition of broadband: 200 kbps, barely capable of streaming video.

Further complicating the picture is the oeCd’s annual broadband survey, which shows that the United States continues to lag most western european countries in terms of broadband lines per person: It ranks 15th, well behind leaders such as denmark, the Netherlands and South korea.

yet in studies that tie usage to infra-structure, the United States fares much better. Since 2000, The Economist has provided “e-readiness” rankings that evaluate a country’s e-business environ-ment and openness to Internet-based op-

portunities. The 2007 survey placed the United States second, tied with Sweden and just behind the danes.

yet another new study, “The Connectivity Scorecard,” assesses how well a country’s consumers, businesses and gov-ernment employ information and commu-nications infrastructure. In it, the United States scored the top ranking among 16 developed countries. (denmark wasn’t included in the survey.) Commissioned by Nokia Siemens Networks and conducted by Professor leonard waverman at the london Business School, the Connectivity Scorecard rewarded countries for produc-tive use of information and communica-tions assets.

The e-readiness rankings and the Connectivity Scorecard argue that world-class infrastructure alone does not a com-munications powerhouse make. Instead, adoption must be widespread and by a skilled population. And no one should get too comfortable with their status in either ranking: expanding mobile and e-commerce applications coupled with aggressive government action are helping a number of emerging countries leapfrog their more developed counterparts.

The battle for broadband bragging rights continues. — PAT T y w e T l I

U.s. Leads and Lags in broadband

The Economist e-readiness Ranking (score of 10)

1 Denmark 8.88

2 U.S. 8.8�

2 Sweden 8.8�

3 Hong kong 8.7� (up from #10 in 2006)

4 Switzerland 8.61

OECD: organization for economic Co-operation and Development NTIA: national Telecommunications and Information administration

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15 U.S. ��.1

Stop us if you’ve heard this one before: your company orders a state-of-the-art emS/NmS solution, but it literally collects dust

because no one has the time to set it up. or maybe it’s set up, but no one got around to configuring it, so it sits idle. or the emS/NmS is used on a regular basis, but it still takes a significant amount of time to compile data that could be used to make major decisions, such as adding network capacity.

Any or all of these scenarios prob-ably sound familiar. An idle emS/NmS is a waste of the large invest-ment typically required for the hard-ware, software and training. And even if the emS/NmS is in service, usage is often inefficient if users do not un-derstand its full capabilities.

management systems are typically designed to simplify tedious, time-consuming tasks and have a wide range of enhanced features. In many cases, though, the systems are simply used for network monitoring or sys-tem provisioning. “Sometimes service providers are using it for just one or two features,” said Curtis Taylor, se-nior product manager for the Tellabs®

metrowatch® Integrated Network manager (INm). “Is it being fully utilized and doing everything it could be doing?”

Case in point: A wireless service provider was looking for a way to simplify the process it used to un-derstand its backhaul bandwidth utilization. Although this seems like a simple function, gathering the large amounts of necessary data and assembling them into an understand-able form was a lengthy and complex process. This is a critical component of controlling necessary costs for all wireless service providers.

CALL In The PrOfeSSIOnALSService providers increasingly turn to vendors and other third parties for help with tasks that require expertise or resources that they don’t have in-house, and network management is no exception.

“management systems have come a long way,” Taylor said. “They are very feature rich and unless you take the time to really learn them, it is easy to miss valuable time-sav-ing capabilities. why not lean on a partner to leverage all of the features and functionality that can help you

6 Tellabs Inspire • APRIL 2008

Network management Systems —

Unleash the Power

p R O f E s s I O N A l s E R v I c E s

M D U SCrUM

ImAgINe A BASeBAll gAme where the umpire calls one team out on two strikes and the other out on four. Not a level playing field — that’s how the cable industry feels as it at-tempts to compete in the mdU space.

Although it’s common for companies such as verizon to enter into exclusive service and mar-keting agreements with mdU building owners and property managers, cable operators have recently been banned from inking similar deals. That has the cable industry crying foul.

In a 2007 ruling, the FCC voted to prohibit cable operators from entering into and en-forcing existing exclusive access agreements, arguing that such arrangements limit consumer choice. But the ruling did not extend to ad-ditional mvPds such as dBS providers and PCos (cable companies operating a few, small systems), a decision the NCTA believes will tilt the competitive landscape in those companies’ favor. (See “you’re FioSed!” on page 14.)

Appeals of the FCC ruling — filed by NCTA and organizations representing mdU owners — are pending in the d.C. Circuit Court. The NCTA’s argument is two-fold, questioning the logic behind the ruling, as well as its terms.

where the FCC views exclusive access agreements as harmful to consumers, the NCTA takes the opposite position. In com-ments responding to the ruling, the NCTA notes that these arrangements often serve as incentive for providers to take on the signifi-cant cost and risk of wiring mdUs, while at the same time enabling building owners to negoti-ate benefits for residents, such as lower fees or improved customer service.

But what really has NCTA up in arms is the fact that the commission’s ban applies only to cable operators and common carriers. Failure to treat all mvPds equally “would simply give those companies not covered by the prohibi-tion an artificial advantage,” according to the NCTA’s response.

In other words, if the FCC decides to change the rules of the game, cable companies want to make sure everyone is playing by the same one. — PAT T y w e T l I

Playing by the rules

fCC: Federal Communications Commission MDU: Multiple-Dwelling Unit MVPD: Multi-Channel Video Programming Distributor DBS: Direct Broadcast Satellite PCO: Private Cable operator NCTA: national Cable & Telecommunications association

u p loa d

From collecting dust to saving money. By TI m k R Idel

APRIL 2008 • Tellabs Inspire 7

p R O f E s s I O N A l s E R v I c E s

effectively manage your business? That could help you optimize your network and save money.”

As an example, Tellabs® management System Services provide expert help with all of Tellabs’ emS and NmS systems:

● Management system deployment: Includes configuration site survey, hard-ware build and installation, oS installa-tion and configuration, database instal-lation, emS/NmS software installation, database configuration and system ac-ceptance testing.

● Database consulting and backup configuration: Includes reviewing data availability requirements, analyzing existing resources and backup strategies, custom-designing a backup and recovery strategy and testing in a variety of scenarios.

● Database redundancy configuration: Includes bringing in a team of oracle da-tabase experts to implement a customized moP and disaster-recovery test plan.

● Remote database maintenance: Includes administration and mainte-nance, proactive monitoring of the active database for potential problems and soft-ware upgrades and patches.

● Northbound interface integration: enables Tellabs management systems to communicate with oSS or umbrella management systems to support func-tions such as fault management, network

provisioning and network inventory.● Oss update service: Supports bulk

system updates to assist when new net-work elements are added to your network or when older systems are replaced.

● Management system consulting services: Includes services tailored to the service provider’s specific needs and cov-ers all aspects of management system im-plementation, usage and maintenance.

Tellabs management System Services essentially wrap around the service provid-er’s existing emS/NmS and then squeeze out the value trapped by underutilization.

“Tellabs can create custom script-ing and gUIs so service providers can print reports automatically, as opposed to having a couple of people assigned to manually retrieve the information and assemble it into a usable report,” Taylor said. “This service helps make sure a sys-tem is being effectively utilized and that service providers are taking advantage of all of the features and functionality.”

In the earlier case of the service pro-vider that needed to understand backhaul bandwidth utilization, Tellabs was able to provide a solution that included the Tellabs metrowatch INm and manage-ment system consulting services to create customized utilization reports. These reports are capable of providing detailed information for various time periods

throughout the day and week, so the cus-tomer can ensure sufficient bandwidth is available to handle peak calling periods while maintaining the lowest possible cost for backhaul facilities.

There are many other examples of fea-tures contained in a management system that users fail to leverage fully, such as performance management reports that help highlight troublesome facilities and capacity management to ensure system growth is planned as needed. Systems such as the Tellabs metrowatch INm or the Tellabs® 8000 Network manager include other features that take advantage of the ability to manage different types of network elements. Features such as “micro-Topologies” enable a service pro-vider to view a circuit that passes through multiple network elements and click any-where in that topology view to zoom in on potential problem areas. with proper training and a little extra help to utilize key features, service providers can greatly expand the value that a management sys-tem brings to their business. n

although demand for voice services has flattened in many mature mar-kets, subscriber growth is exploding in developing countries around the world. Customers in emerging markets now account for more than 50 percent of the world’s telecom subscriptions, accord-ing to a recent study by Gartner Group. This study also predicts that 69 percent of all mobile and fixed-line telephone users will be located in developing mar-kets by the end of 2010.

Disposable income in africa is general-ly low, and many customers face financial hardships. Despite these constraints, end users in developing countries often spend five times more of their disposable income on communications than their counterparts in the developed world.

Clearly, the fundamental need to com-municate and access information is as strong in emerging africa as it is in the developed world. “The need to communi-cate with others and share information is an important and fundamental part of the human experience and extends to all cul-tures and regions throughout the world,” said Tim ayers, Tellabs global consulting services director.

Service providers in emerging africa are moving quickly to grow their net-works and deliver advanced services to keep up with demand. The 40-plus sub-Saharan countries that make up emerging africa share a common vision of being change drivers in the region and are passionate about the need to provide access to information and

distribute knowledge throughout their population. arguably, few service pro-viders have a management team more devoted to becoming regional leaders than Telecom namibia.

“Customers in emerging africa expect the same services and network quality as customers in First world countries,” said Coenraad Coetzee, general manager, ICT & Corporate Business Solutions at Telecom namibia. “our customers are looking for us to provide advanced servic-es like metro ethernet and bandwidth on demand. Telecom namibia is committed to rising to the challenge and providing the communication tools and access to information we need to continue growing and developing as a nation.”

as Telecom namibia transforms its

TeLeCOM nAMIbIA: An eMerGInG LeAder In AfrICABy raIanne reISS – Senior Manager, Tellabs Global Services Marketing and Strategy

EMS: element Management System GUI: Graphical User Interface INM: Integrated network Manager MOP: Method of Procedure NMS: network Management System OS: operating System OSS: operations Support System

con t i n u ed on page 9

Ëto view the telecom Namibia video case study, go to www.tellabs.com/services

8 Tellabs Inspire • APRIL 2008

2 5 Y E A R s O f pA R T N E R s h I p s

when making pur-chases, service pro-viders and large en-terprise customers around the world

are a lot like individual consumers: They prefer dealing with established compa-nies they know and trust, especially those that are local. To find everything they need as fast as possible, they also like to do business with suppliers that offer one-stop shopping.

when it comes to buying Tellabs network equipment, many Tellabs cus-tomers can do it just the way they like, thanks to the Tellabs channel partner program. Channel partners — typically vARs — are companies doing business in their home markets in Africa, the Americas, Asia, europe and the middle east. Through formal agreements, these companies operate seamlessly as regional and local extensions of Tellabs sales-and-service capabilities. (Two large national stocking distributors in the United States are channel partners, as well.)

The primary goal of the channel partner program is to deliver maximum value to service provider customers, no matter where an individual service pro-vider operates, said Scott Jones, manager of the Tellabs Channel development group. Through the program, both the local partner and Tellabs contribute their individual strengths toward satisfying customers’ needs.

“In their local markets, our channel partners have been working with the service

providers and large enterprises for many, many years. In a lot of markets, they are Tellabs’ sole representatives,” Jones said. “They have a strong track record of being dependable and credible. So end customers rely on them and get the convenience of having a single, local point of contact, too.”

ThInk LOCALLy, ACT GLObALLyIn the international telecom market-place, service providers, large banks, utilities and other enterprise customers benefit even further from working with a Tellabs channel partner: conducting business in the local language with local resources. To illustrate the global scope of the program, attendees at the recent Tellabs annual Partner Conference in orlando, Fla., included companies from more than 25 nations. Among them were partners from Caribbean nations, Chile, China, Colombia, denmark, ecuador, guatemala, Israel, Japan, South korea, Panama, the Philippines, Russia, Saudi Arabia, South Africa, Spain, Switzerland, Turkey, the United States and venezuela.

during the conference, various chan-nel partners shared their successes from the past year in providing customers with Tellabs networking solutions. They also learned about new and emerging Tellabs applications that will be available to their customers this year and beyond.

ChAnneL PArTnerS wIn, TOO Just as service providers and their cus-tomers benefit from the channel partners program, so do the partners themselves. For one thing, Tellabs tailors the pro-gram to the specific partner’s busi-nesses. “we match our support to their

business,” said matt Hassett, channel development manager for Tellabs. “we provide a portfolio of support based on individual business models.”

This support includes:• Sales training.• A portal on the Tellabs web site, where

partners can obtain the latest sales tools.• various types of local marketing

assistance, from formal programs to at-tending local trade shows.

Combining Tellabs leading-edge technology with the Tellabs brand “al-lows our channel partners to offer a very robust solution to the customer,” Hassett said. “As Tellabs channel partners, they can fill out their portfolios and thus be-come stronger competitors within their individual markets.”

A partner portal on the Tellabs web site has helped streamline interaction between Tellabs and the partners. “If a channel partner needs certain informa-tion right away, they can just go to the portal 24/7 and get the information there,” Jones said. “By making it easy for them to do business with us, we're trying to reduce their costs.”

wIn-wInUltimately, channel partners broaden Tellabs’ global reach. “They give us the ability to cover much more of the world and to go deeper into many markets than we would be able to do alone,” Jones said.

Because some channel partners stock Tellabs equipment, they can, in some cases, deliver equipment to customers more quickly than Tellabs could if it had to manufacture the equipment to fill the order. In the United States, if a service provider customer needs an item im-mediately, some channel partners — par-ticularly distributors such as embarq logistics and windstream Supply — can often step in and deliver it right away. That capability enhances customer sat-isfaction, and it also strengthens Tellabs’ financial position.

“we're not only gaining more revenue by having more coverage but, because our channel partners are able to deliver equipment much more efficiently than we are when a fast turnaround is re-quired, it means we don't have to bear those rapid-delivery costs,” Jones said. “That, in turn, gives us more operating flexibility in the marketplace.”

Partnering for SuccessAfter nearly a quarter century, Tellabs’ channel partner program continues to deliver the goods.By m.J. R ICHTeR

MPLS: Multiprotocol label Switching 3G: Third-Generation VAR: Value-added reseller

APRIL 2008 • Tellabs Inspire 9

p R O f E s s I O N A l s E R v I c E s

business model toward next-genera-tion technologies, it often encounters the same barriers that challenge other service providers in developing markets, such as skill-set shortages, budgetary pressures, bandwidth constraints, infra-structure challenges and lack of expertise in new and significantly more complex technologies. To help overcome these barriers, Telecom namibia increasingly relies on partners such as Tellabs to provide the expertise needed to comple-ment its own staff and capabilities.

“Good partners are critical to our busi-ness. we are looking for partners who not only deliver quality products but add value to our business,” said Coetzee. “The companies we choose to partner with need to be committed to the success of Telecom namibia and to the success of emerging africa as a whole.”

Tellabs Global Services recently demonstrated this commitment by providing consulting services and developing a comprehensive business plan for metro ethernet services to help Telecom namibia make business and financial decisions about the future of their Information and Communications Technologies (ICT) business. Tellabs’ deep understanding of Telecom namibia’s technology requirements, business chal-lenges and local market drivers enabled Tellabs to deliver a plan that included a detailed market analysis, service launch strategies and roadmaps, service defini-tions and a robust financial analysis.

The business case enabled Telecom namibia’s management team to move towards the market release of their first metro ethernet service with the confidence that their decisions were supported by a sound business plan. with the launch of their progressive metro ethernet plan, Telecom namibia is well on its way to achieving their company blueprint of becoming a state-of-the-art ICT company by 2010.

“our partnership with Tellabs has contributed to the success of Telecom namibia by helping us reduce costs and reduce our time to market,” said Coetzee. “we consider Tellabs a part-ner, not just an ordinary supplier. we will increasingly look to partners like Tellabs to help us deliver the services our customers are demanding.”

na m i bi a con t’d f rom page 7

CuSTOMIZInG reLATIOnShIPSBecause channel partners are key ele-ments of Tellabs global operations, these relationships are carefully nurtured.

“It’s actually an advantage to have fewer channel partners because we can customize each relationship,” Jones said.

“when we recruit a partner, we under-stand that company’s business model and work very closely with them on a go-to-market program. we match the strength of our company to how that partner runs its business, not vice versa. In turn, we’re both able to provide better service to our mutual customers.”

This approach has led to long-term relationships; some partners have worked with Tellabs for 20 years or more. “That’s something we’re very proud of and al-lows us to leverage each other’s strengths and history when going into new oppor-tunities,” Jones said.

Recently, this bore out with two latin American projects. “In Central America, datatel’s engineering, consulting ser-vices and integration expertise won them a contract to upgrade the provider’s network along a major transporta-tion route,” Jones said. “That upgrade consisted of expanding existing Tellabs equipment and adding the Tellabs® 8600 managed edge System to the project.”

In venezuela, eprotel proposed a new voice and data infrastructure for a subway/bus transport system. “eprotel

offered the Tellabs 8600 system and the Tellabs® 6300 managed Transport System for integrating the voice and data infrastructure while supporting future applications like videoconferencing and telemetry,” Jones said. Additionally, the customer will be able to sell capacity on its fiber network, providing a new rev-enue stream.

But occasionally Tellabs has a need to recruit additional channel partners. For example, Tellabs may develop a new product, and none of its existing channel partners operates in that market sector, or perhaps a channel partner changes its business model. Sometimes emerging marketplace developments can also cause Tellabs to seek out additional channel partners. “we are being more aggressive in recruiting channel partners right now in the U.S. municipality market,” Jones said. “Cities in the United States are putting in their own networks. we want channel partners who can serve our cus-tomers in this market and help us expand our coverage.”

Although channel partners and Tellabs all benefit from the channel partner program, the number one reason for its existence is to deliver maximum value to service provider customers. If a given customer in a particular part of the world is working with a Tellabs channel partner, that customer effectively is getting every-thing Tellabs has to offer — and more. n

ChAnneL PArTner SuCCeSS STOrIeSDuring the the Tellabs Partner Conference, held earlier this year in orlando, Fla., sev-eral channel partners shared their successes from the past year. among them were:

channel partner: Miracom-Tellabs solutionclient: swisscom MobileUsing the Tellabs® IntegratedMobileSM solution in an end-to-end deployment, Miracom helped Swisscom migrate its wireless network to 3G using Pseudo-wire-based ethernet to backhaul traffic. Swisscom is now positioned to offer new, revenue-generating services while at the same time was able to reduce its Capex/opex. (For more information about Swisscom’s migration to 3G, see The Swiss Confederation on page 10 in this issue.)

channel partner: Grintek-Tellabs solutionclient: Telecom NamibiaTelecom namibia, an existing Tellabs 8100 system customer for digital leased-line service, was looking for a way to migrate to a converged MPlS platform to support all of its existing disparate technologies. Using a combination of the Tellabs 6300 system and Tellabs® 8800 Multiservice router Series, Telecom namibia can now aggregate metro ethernet traffic via the Tellabs 6300 system and converge that traffic to the IP core using the Tellabs 8800 series. (For more on Telecom namibia, see page 7.)

10 Tellabs Inspire • APRIL 2008

For kurt Schmid, head of the wireless access platforms business at Swisscom, the migration from 2g to 3g is much more complex than just deploying new infra-

structure. In a country perhaps best known for the accuracy of its watch-es, it should come as no surprise that Swisscom would focus not only on the big picture, but the smallest of details as well. The result will be a network that can shoulder the enormous load of bandwidth-intensive 3g services without sagging under the weight of too much opex and Capex.

For now, the 2g network and services of Swisscom — a carrier with more than 5 million customers — remain the com-pany’s “cash cow,” according to Schmid. However, Swisscom already reaches about 90 percent of the population coverage in Switzerland with its UmTS network and has HSPA (both HSdPA and HSUPA) coverage throughout much of the country. most users have mobile Internet access at up to 3.6 mbps, but the carrier is now in the process of launching 7.2 mbps access.

Although HSdPA at 3.6 mbps is competitive with dSl, doubling mobile broadband bandwidth will give Swisscom

By Raymond Conway

Kurt Schmid, head of Swisscom’s wireless access platforms business

c O v E R s T O R Y: s w I s s c O M ’ s M A k E O v E R

The SwissConfederation

APRIL 2008 • Tellabs Inspire 11

an advantage in the marketplace. yet as competitors race to upgrade to 3g, a fundamental question looms: what will customers do with all that bandwidth?

Schmid readily admits how difficult it is to predict customer behavior. “what it comes down to is that we don’t know how the customer will behave,” he said. “we are getting our feet on the ground with all of this. Behaviors are different from country to country.”

GIVe And TAkeRecent shifts in usage offer clues as to what the future might hold. “we are see-ing bandwidth demand growing on the

HSPA network by a factor of three [in] the last 10 weeks,” Schmid said in late January. “we’re about to do 7.2 mbps, and we are finding that as we roll out more bandwidth, the use of mobile data services increases. Right now, they can have the same experience with broad-band service that they get in the fixed environment, and they are finding uses for it. There is reason to think this will continue with 7.2 mbps.”

This trend provides some comfort for incumbent service providers enter-ing new territory. like many mobile carriers, Swisscom became accustomed to predictable, annual 2g growth in subscribers and voice minutes. Now, in the era of mobile content applications, Swisscom is banking that some of its growth will come from third-party ap-plications such as Napster mobileTm , which the company launched last sum-mer. Users have access to more than 3 million tracks that can be downloaded directly to handsets.

“everything is an experiment now,” Schmid said. “we were so spoiled by our own success before. Napster mobile is an example of what customers will do with 3g music downloads and is the type of service every operator has to support now. The customer does not want to wait tens of minutes for it; they want it more or less immediately.”

PArAdIGM ShIfTAs customers find new uses for 3g de-vices and establish new patterns of band-width consumption, Swisscom watches closely for the changes these trends will have on network and service quality. “Coverage everywhere — in trains and tunnels — is a commodity. Swisscom’s differentiation is quality,” said Schmid. “There’s a very high level of customer expectation.” As the carrier migrated to 3g, it recognized that the upgrade to a next-generation access technology with higher data-rate ceilings also required rethinking its approach to overall net-work management, backhaul transport of increasing amounts of traffic, as well as new traffic types.

“Bandwidth limitation in cellular net-works is not just in the air interface, but in the backhaul portion too, and both factors must be addressed,” Schmid said.

Swisscom relied on Tellabs to help

address the broader network transition prompted by the move to 3g. Investing in ethernet as a new backhaul solution was a major step in that transition, and it came after much discussion between Swisscom and Tellabs, according to karl erben, executive account manager for Tellabs.

“we had been working with Swisscom for 10 years, had regular meetings with them and talked to them extensively about this kind of change,” erben said. “They wanted to reduce transmission costs. They wanted to do that for the 2g services they already had, and we also talked to them about focusing on reduc-ing the costs to support 3g because we knew that was coming.”

In the 2g world of predictable band-width usage patterns, leased lines such as T1s and e1s have been the traditional mode for mobile traffic backhaul. The main advantage of Tdm circuits is their reliability. The main disadvantage is expense: At hundreds of dollars per line per month, they can account for 30 percent or more of a wireless carrier’s opex. Another drawback is that leased-line Tdm doesn’t scale cost-effectively as backhaul loads increase. e1s could also take weeks or longer to install, de-pending on the supplier, and once a car-rier adds a new e1 circuit, it is paying for excess capacity until bandwidth growth fills the pipe.

“The cost to add that backhaul band-width by adding more e1s is prohibitive,” erben said. “It’s also too cumbersome to provide so many e1s in so many cell-site locations when you start to need more than a couple for every cell site.”

These drawbacks have prompted Swisscom and other mobile carriers to view ethernet as the solution with the scalability and flexibility necessary to handle 3g’s increasing but unpredictable growth. ethernet is a much less expen-sive and more flexible technology to work with, supporting high-bandwidth scalability that can be brought online incrementally, with carriers paying only for what they use.

“For years we observed the situation with ethernet technology, and we knew we could no longer wait,” Schmid said. “we had to evolve a flexible way to react to the growth in air interface bandwidth to 7.2 mbps.”

By Raymond Conway

FreSH oFF THe laUnCH oF 7.2

MBPS HSDPa, SwISSCoM

SeeS 3G aS an oPPorTUnITY

To laUnCH a UnIFYInG

neTwork STraTeGY.

The SwissConfederation

1� Tellabs Inspire • APRIL 2008

The PSeudOwIre TrAnSITIOndespite the growing popularity of data services, the additional voice spectrum 3g provides remains a key benefit to network operators. But voice also hap-pens to be ethernet’s one perceived weakness. Combine this with the large numbers of existing 2g and 3g base sta-tions that do not yet support ethernet, and leaping directly from Tdm to IP and from ATm and SdH gear to ethernet isn’t an immediate jump many carriers want to take.

That’s where Pseudowires come in. This standardized technology enables Tdm traffic, such as voice, to be emu-lated over an IP network. It’s an in-creasingly popular interim approach to mobile backhaul that allows operators to make the most of their base station investments, while backhauling data and content traffic over ethernet.

“we saw Pseudowire as the hybrid approach to keeping more than one or two leased lines at a cell site,” Schmid said. “we keep the voice traffic on the traditional Tdm e1s, and go into the IP world step-wise by keeping the high-speed traffic separate. It’s a smooth tran-sition to all-IP backhaul.”

This hybrid solution allows Swisscom to introduce IP into its network while avoiding further investment in non-IP equipment, such as ATm switches and SdH infrastructure. “An ATm switch is not future-proof,” Schmid said. “It’s ex-pensive. our future will be fully based on an IP core with metro ethernet access.”

erben said Tdm Pseudowire-to-ethernet is just the solution some carri-ers need to embark on a major backhaul overhaul. “Carriers do not want a quality trade-off for moving to the scalability and flexibility of ethernet, nor do they want to replace much of their existing base station equipment,” he said. “you need a technology that is able to translate those interfaces, and that is why you do Pseudowires.”

Some of Swisscom’s competitors opted for SdH infrastructures and leased lines

ADSL: asymmetric Digital Subscriber line ANSI: american national Standards Institute ATM: asynchronous Transfer Mode CapEx: Capital expenditures DSL: Digital Subscriber line ETSI: european Telecommunications Standards Institute G.SHDSL: Global Standard High-Bit-rate Digital Subscriber line HSDPA: High-Speed Downlink Packet access HSPA: High Speed Packet access (Uplink & Downlink) IP: Internet Protocol OpEx: operating expenditures OSS: operations Support System RNC: radio network Controller SDH: Synchronous Digital Hierarchy SLA: Service level agreement TDM: Time Division Multiplexing UMTS: Universal Mobile Telecommunications System 3G: Third-Generation 2G: Second-Generation

c o v e r s t o r y: s w I s s c O M

“Coverage everywhere — in trains and tunnels — is a Commodity. swissCom’s differentiation is quality,”

Kurt Schmid, Bern, Switzerland

APRIL 2008 • Tellabs Inspire 1�

or microwave for backhaul, Schmid said. The hybrid approach gives Swisscom the edge in flexibility and cost savings that translates into more efficient response to customer demand.

PrOfITAbLe GrOwTh, bIT by bITSome carriers are also concerned about how the move from 2g to 3g will affect profitability of their services portfolio. will it decrease as they invest in each up-grade, from 3.6 mbps to 7.2 mbps and eventually up to 14.4 mbps? According to erben, that may be the case if opera-tors don’t take steps to ensure the com-mercial viability of mobile data services.

Swisscom addressed the issue in its backhaul migration strategy by selecting the Tellabs® IntegratedmobileSm solu-tion, which is designed to adjust to new traffic demands in a step-wise fashion while mitigating service profit erosion. Tellabs worked with its Swiss channel partner, miracom, to deliver several net-work elements into Swisscom’s network, including the Tellabs® 6300 managed Transport System, the Tellabs® 8100 managed Access System and the Tellabs® 8600 managed edge System, which in-cludes the Tellabs® 8660 Access Switch and the Tellabs® 8605 edge Switch. (See “Partnering for Success” on page 8.)

“The Tellabs Integratedmobile solu-tion was designed to help carriers move from 2g to 3g while making sure cur-rent services remain profitable and that new services are generating revenue,” erben said. “when investment goes for new technology to deliver more band-width, revenue does not keep that pace of growth. we want to break that linear relationship between bandwidth and cost, and revenue per bit.”

For Swisscom, deployment of the Tellabs 8600 series represented a key piece of the puzzle. The Tellabs 8605 switch operates as a cell-site aggregator that separates Tdm voice traffic from IP data and content traffic, and the Tellabs 8660 switch enables an efficient traffic handoff to the RNC. meanwhile, the Tellabs® 8000 Network manager is capable of managing the Tellabs 8600 switch, Tellabs 8100 system and Tellabs 6300 system.

“we now have the Tellabs 8100 sys-tem, the Tellabs 6300 system and the Tellabs 8600 series deployed, and the Tellabs 8000 manager managing all three systems,” erben said. “Swisscom liked that capability to have one system manage all three because they didn’t need to re-train people on a new system or integrate it into their proven oSS landscape.”

“we needed an upgraded network management system for this new struc-ture, and Tellabs has a very operator-friendly network management system,” Schmid said. Swisscom technicians were already familiar with the equipment, which made for a smooth transition.

The Tellabs solution proved better than those from several notable vendors, and Schmid said the battle between vendors was a competitive one. “we did our trials, and the products and the services support-ing the products were what convinced us.”

erben added that Swisscom’s diligent evaluation of the Tellabs gear also helped the vendor incorporate new attributes into its roadmap of system capabilities. Some of the Tellabs 8605 switch’s unique features have been shaped by this process.

The next step for Swisscom could be backhaul of its voice traffic over ethernet, as well. Schmid is prepared for this eventuality, but Swisscom re-mains cautious when planning for the future. moving traffic to ethernet, he said, is “one more step toward an all-IP network. But IP is an evolution, not a revolution. It has lots of advantages, but it is also a tricky technology. when you can compare IP service quality to Tdm service quality, that will be the right time to go all-IP.” n

The Tellabs® 8607 access Switch, launched in February at Mobile world Congress in Barcelona, Spain, is the newest member of the Tellabs 8600 series. The Tellabs 8607 switch enables service providers to offer high-band-width, cost-effective 3G services worldwide. The Tellabs 8607 switch, which includes TDM, aTM, IP and ethernet interfaces, is a single, flexible platform for seamlessly connecting any generation mobile site to the rest of the network. operators can migrate their existing infrastructure to support ethernet backhaul and ethernet-enabled networks to continue the utilization of an existing e1/T1 infrastructure. The Tellabs 8607 switch covers both anSI and eTSI standardized countries.

COST-effeCTIVeThe Tellabs 8607 switch is designed to handle even the most demanding cus-

tomer requests, and enables operators to benefit from low-cost DSl transport without adding any additional hardware. Integrating e1/T1 and ethernet inter-faces with DSl functionality brings clear cost savings to the service provider and makes network deployment and man-agement simple and efficient.

reLIAbLeThe environmentally hardened, carrier-class Tellabs 8607 switch supports site installations that experience extreme weather conditions. Power redundancy and extended operating temperature range increase reliability and enable service providers to lower the site investment and power consumption at cell-site locations.

fLexIbLeThe Tellabs 8607 switch’s small size, support for fiber, copper, ethernet and

DSl and ability to perform in extreme temperature ranges make it a versatile solution for mobile service providers. The switch has been designed to handle the most demanding flexibility needs and requirements of service providers. operators can easily reconfigure the switch to support a mix of e1/T1 and packet-based technologies to meet changing backhaul deployment needs. additionally, the interface modules — including Fast ethernet, e1/T1, aDSl and G.SHDSl, as well as the power modules — can easily be swapped out. The modularity of the device prevents spending money on powering unused interfaces and simplifies network chang-es and spares management.

The TeLLAbS® 8607 ACCeSS SwITCh — fLexIbLe CeLL-SITe AGGreGATIOn

1� Tellabs Inspire • APRIL 2008

Robert eddy was delighted when verizon’s FioS ser-vice brought high-speed data, telephone and ad-vanced video service to

Stonehenge Apartments, the 92-unit complex in St. James, N.y., where he lives and serves as superintendent. “The television picture is so much better and cleaner,” eddy said.

In addition to delivering higher qual-ity, FioS also has proven more reliable. with previous service providers, eddy notes that the picture used to freeze. But those problems are a thing of the past.

“we also have more channels,” eddy said. “The other service had 90 channels total. Now we have more than 200, plus music channels.”

eddy is just as happy with the tele-phone and Internet service he gets with FioS, a brand that plays off of its fiber-optic foundation. “The Internet service is great. you don’t have to worry about it slowing down or getting kicked off.”

wOrd Of MOuThPeople like eddy who live in mdUs are an important market for verizon. Twenty-five percent of households in the company’s local service area live in mdUs. once a building owner or condo association strikes a deal with verizon, the service tends to catch on quickly, even if it’s not the only voice, video or data service available on the property.

“If people love it, as we’re finding they do, they’re telling their neighbors, and this word-of-mouth recommendation tends to spread faster in cluster communities,” said eric Cevis, vice president of verizon enhanced Communities, the business unit

dedicated to serving mdUs and other planned residential communities.

A recent survey of FioS subscribers showed that 80 percent would recom-mend the service to others and that 60 percent have already done so. At the same time, FioS is becoming a key ame-nity for mdUs, with the service acting as a significant market differentiator.

“FioS is an effective amenity owners and property managers can leverage to improve vacancy and occupancy rates and to lower churn,” Cevis said. “we’ve found people are less likely to go some-where that doesn’t have the service.”

According to independent research done

B R OA D B A N D p R O p E R T I E s

when building owners make a deal to bring Verizon’s fiber-based FioS service to a property, they can opt to allow Verizon to offer FioS to individual residences rather than just to a single demarcation point. Verizon recommends that option because it makes the service more future-proof.

as a result, Verizon often has to ret-rofit existing MDU properties. In those cases, the company takes care to make sure the finished installation blends in well with the existing decor.

“we offer several options to cam-

ouflage the necessary wiring,” said eric Cevis, vice president of Verizon enhanced Communities, the business unit dedicated to serving MDUs and other planned residential communities. “For example, there are several moldings we can use in paintable plastic or real wood, including a crown molding style.”

Verizon uses a range of equipment from Tellabs to deliver FioS service to MDUs.

“we started with a wall-mounted unit that Verizon would mount in a common room, and from there Verizon would run voice, video and data to individual

living units,” said richard Miller, Tellabs account vice president for Verizon. “But some properties didn’t have enough wall space, so we provided a rack-mount unit that could accept multiple fibers. we were also called upon to make the units smaller. Verizon wanted as many tools as they could have to meet the needs of MDU owners.”

That strategy has paid off, Cevis said. “The reason we’ve been able to scale

to large numbers is because Tellabs has given us flexibility. They’ve been a tre-mendous partner.”

InSIde VerIZOn’S Mdu PLAy

you’re FioSed!From exclusive Trump high-rises to affordable Bronx apartment complexes, verizon’s service adds to a property’s appeal.By JoA N eNgeBR eTSoN

APRIL 2008 • Tellabs Inspire 1�

more bells and whistles and recognizes the needs of consumers.”

Cable television and communications service providers traditionally have offered building owners an up-front fee and often a percentage of revenues in exchange for the ability to offer service at a property. verizon offers similar incentives.

“we either do a revenue share or a re-sidual based on penetration in the build-ing, as well as a one-time payment based on how many marketing rights we’re allowed in the building,” Cevis said.

wIde deMOGrAPhIC APPeALverizon’s marketing efforts run the gamut, from cards promoting FioS hung on residents’ doors to complimentary barbecues where residents can experi-ence FioS and then sign up for service.

verizon carefully targets its FioS promotions. “we’re doing a lot of work in life stage segmentation modeling,” Cevis said. “Some mdUs are rather homogenous, and when that’s true, we leverage the nuances of what’s appropri-ate for that group.”

even mdUs that skew toward an over-55 demographic are good candidates for FioS, Cevis said. For example, grand-parents are interested in seeing videos of

grandchildren who live in other parts of the country — an application optimized by FioS Internet, offering connection speed of up to 50 mbps in some markets. At 50 mbps, downloading a 1.2 gB (gigabyte), or 90-minute, standard-definition movie takes approximately 3.2 minutes. In the future, verizon will be in a position to provide specialized applications, such as services involving telemedicine or moni-toring over its all fiber-optic network, for instance to help ensure that senior citizens take their medication on a regular basis.

“we’re working to develop specific applications for each life stage. FioS Internet has the bandwidth and the verizon network has the reliability to deliver these services.” Cevis said.

Perhaps the greatest testament to the power of FioS for mdUs is the change that Cevis has noted in the dynamics of the mdU FioS sale.

“The buzz is out there and property owners see FioS as a competitive differ-entiator,” Cevis said. “In the past some had a ‘wait-and-see’ attitude. But now they’re realizing that if they don’t jump on the bandwagon, they’ll be left behind.” n

by Praxis Research Partners, half of con-sumers surveyed said they’d be more likely to choose an mdU with verizon FioS service, other factors being equal. (Praxis Research Partners, “FioS Assessment in the mdU and SFU markets, 2007.”)

when a condo association or home-owner group is involved, FioS can increase the value of an individual home. A recent study by research firm Render, vanderslice & Associates found that ho-meowners estimate that the value of their house increases by more than 1 percent when they are served by fiber optics all the way to the home.

TruMPInG The COMPeTITIOnFioS has already captured the atten-tion of donald Trump, whose Trump organization has signed on for FioS at its posh Trump world Tower at United Nations Plaza and Trump Park Avenue properties. But the service is not just for higher-income customers. FioS is also finding its way into properties such as eastchester Heights, a 1,416-unit Bronx, N.y., apartment complex offering afford-able housing in one of the world’s most expensive real estate markets.

Residents of communities such as eastchester Heights can be excellent cus-tomers for FioS, Cevis said. “what we’re finding is that triple-play technologies rep-resent entertainment value in affordable communities. The usage rates are probably even greater at some affordable units as this becomes their pri-mary entertainment service.”

AmlI management Co., a Chicago-based company that owns 70 rental properties with 24,000 units through-out the United States, has in-troduced FioS at a property in Texas. Bob Faitz, who is in charge of ancillary services for AmlI, would like to make the service available on a wider basis.

“Residents, depending on demographics and age, are asking, ‘whose high-speed data service do you offer, and what speeds do you offer?’” Faitz said. “FioS is a very good product that offers

“We’re doing a lot of Work in life stage segmentation modeling,”Eric cEvis, vP of vErizon EnhancEd communitiEs

MDU: Multiple-Dwelling Unit SfU: Single-Family Unit

16 Tellabs Inspire • APRIL 2008

Freedom isn’t free. Just ask the bidders in the U.S. 700 mHz spectrum auction. The band is widely considered the last of the beach-front property,

partly because of its favorable propaga-tion characteristics: Signals travel farther at 700 mHz than at higher frequencies such as 1900 mHz, so operators need fewer base stations to cover an area. That translates into lower overhead costs — a major asset for any operator, but particu-larly for newcomers who want to be price competitive with incumbents.

Such optimism is reflected in the bid-ding. At press time, the auction had gar-nered more than $19 billion in bids, sig-nificantly more than the $10 billion to $15 billion the FCC had originally projected.

“Adding a new swath of spectrum gives new entrants an opportunity to enter the service provider mobile market and/or provides current service operators an op-portunity to enhance their current posi-tion,” said emmy Johnson, founder and principal analyst at Sky light Research. “It is not often that a large portion of spec-trum comes up for bid, and it is seen as a key strategic move to take advantage of it when it occurs, especially if this is one tool lacking in the service provider’s tool kit.”

The 700 mHz auction has also attract-ed attention because of the large number of bidders involved (214), particularly those companies with little or no associa-tion with traditional wireless operators or technology, including Chevron, and mSos such as Cablevision and Cox. But perhaps the biggest focus is on google, which pledged to bid at least $4.6 billion. why $4.6 billion? google and a coali-tion of other Silicon valley companies and consumer groups lobbied the FCC to require the winning bidder of some of the spectrum to allow open access — in which devices aren’t locked to a single carrier — and $4.6 billion was the mini-mum amount necessary to trigger the open-access provisions.

with the $4.6 billion reserve met, many industry experts believe google dropped out of the auction after securing the open-access provisions for which it had lobbied. If so, google has still had a significant impact on the U.S. mobile industry because AT&T and verizon wireless both have committed to open-ing their existing networks to new devices

and applications beyond those they offer. “Having won its point, google is ex-

pected to stay out of the auction,” said ken Hyers, an analyst with Technology Business Research. “However, other new players, such as cable companies, may be actively participating in the auctions. Regardless of who wins the auction, the outcome for consumers looks bright since the choice of devices and handsets that can be brought onto networks will expand — something that the operators will have to respond to with more competitive pricing and more attractive products and services.”

wiMAx AT 700 MhzAnother wild card is the technology that will be deployed at 700 mHz. most industry pundits believe it will be an all-IP, oFdmA-based technology such as mobile wimAX or lTe, the 4g path for gSm operators. CdmA operator verizon, which was expected to go big in the 700 mHz auction, has plans to align itself with partner vodafone to deploy lTe, which requires a significant amount of new spectrum.

Until recently, not much of the 700 mHz band was able to support mobile wimAX because the technology uses Tdd. much of the 700 mHz band’s spectrum, including the coveted C block, is configured for Fdd. That changed in January, when the wimAX Forum an-nounced that it is adding the 700 mHz frequency to its technology roadmap. The specs will be unveiled soon and will support both Tdd and Fdd certification profiles.

“The 700 mHz spectrum is set to become a key spectrum band globally and many administrations are now con-sidering spectrum arrangements in the band,” said Ron Resnick, president of the wimAX Forum. “Interest in wimAX deployments is also reinforced now that 802.16e is part of the ImT-2000 family of standards and certified products are becoming available.”

wimAX or not, few companies have revealed device or service plans for 700 mHz. one exception is Qualcomm, which announced in November that it had added support for wCdmA and CdmA2000 to its transceiver product roadmap. Qualcomm’s mediaFlo mobile Tv service already uses 700 mHz, and it is among the bidders. AT&T, meanwhile, has purchased Aloha Networks’ 700 mHz spectrum but hasn’t indicated its plans.

“what are these devices going to look like? Is it a phone? Is it going to be used for radio broadcast?” pondered Rick Segil, vice president of marketing at antenna-maker ethertronics. “we just don’t know if the initial applications are going to be data or voice.”

3G SPreAdS ACrOSS LATIn AMerICAThe rapid deployment of 3g across the globe largely missed latin America dur-ing the past three years, but the region is finally becoming a hotbed for next-generation deployments. Plans for 3g networks sat on the back burner during 2006 and 2007 as latin American opera-

I N s I D E T h E A I R wAv E s A u c T I O N s

From Asia to europe to the Americas, 2008 is the year of the spectrum auction. Here’s what to watch.By ly N N eT Te lU NA

Spectrum of opportunities

Ëview tarcisio’s video on Latin America communication markets at www.inspirethenewlife.com/podcasts > Get schooled

APRIL 2008 • Tellabs Inspire 17

tors recovered from the massive capital expenditures they incurred migrating from TdmA to gSm or CdmA.

But 3g has gained importance now that mobile data services are making inroads into the region and 3g handset prices are falling. As a result, latin American regula-tors are auctioning off spectrum, although some operators have already launched 3g services in their existing spectrum.

According to Tarcisio Ribeiro, Tellabs vice president and general manager of latin America and the Caribbean, the new 3g spectrum coming into the region will enable operators to extend services beyond voice and compete with both cable and wireline telephone companies.

“The spectrum they are acquiring will allow them to offer broadband services, with the added advantage of gaining mo-bility,” Ribeiro said.

Here’s a rundown of what has already happened and what is ahead:

● Brazil – Regulators auctioned off 3g spectrum in the 1900 mH z band. All of the country’s existing operators won spectrum at prices that reached up to a 104 percent premium over the minimum bid deter-mined by the government. In the first two years of offering 3g services, the operators are required to offer coverage of at least 50 percent of the urban area in Brazil’s capital cities, in the Brasilia Federal district and in cities with more than 500,000 inhabitants. wimAX spectrum will be auctioned this year in the 3.5 gHz band.

● Mexico – About 90 mHz is expected to be released this year, according to erasmo Rojas, director of latin America and the Caribbean with 3g Americas. Regulators plan to sell spectrum at 1900 mHz, 2100 mHz and 1700 mHz, which aligns with the U.S. AwS bands. wimAX spectrum in the 3.5 gHz band is expected to be offered this year.

● colombia – The 1700 mHz AwS band has been reserved for 3g services, and the government appears ready to auction it this spring, Rojas said.

● venezuela – Sixty mHz in the 1900 mHz band was auctioned in december 2007.

● chile – operators have launched 3g in existing spectrum, but Chile plans to auction 700 mHz spectrum for 3g in 2009, aligning itself with the United States. wimAX will be auctioned in the 2.5 gHz band in the second half of 2008.

Rojas said the initial steps for those operators that have launched 3g is to offer Internet access through laptop data cards, but as handset prices fall they can begin to target enterprises, as well as consumers with e-mail, music and streaming video.

eurOPe OPenS uP 2.6 GhzThe United kingdom, Norway and Sweden are expected to become the first european markets to auction spectrum in the 2.6 gHz band, which will be used for mobile broadband on a technology-neutral basis. These auctions will set a baseline for how much 2.6 gHz spec-trum will be reserved for operators that want to deploy oFdmA-based systems, such wimAX and lTe, rather than 3g technologies such as UmTS.

one question is how much of the spec-trum will be allocated to Tdd to enable wimAX. CePT says that regulators should allocate 50 mHz for Tdd and two 70 mHz blocks for Fdd. But U.k. regulators don’t believe those guidelines match the potential operators are look-ing for and are prepared to take another approach. Sources close to the wimAX Forum say it plans an Fdd version of wimAX at 2.6 gHz, although it’s un-clear when that might be released.

Also in europe:● united kingdom – ofcom plans to

auction spectrum in the 2010-2025 mHz and 2500-2690 mHz bands this summer. That spectrum will be offered on a tech-nology-neutral basis, a boon for opera-tors considering lTe and wimAX.

Amid objections from the country’s

operators, ofcom plans to buck the european Commission’s decision to al-locate Fdd/Tdd spectrum within the 2600 mHz band by allowing greater flex-ibility in allocating unpaired spectrum to accommodate wimAX. operator objec-tions include the perceived potential for interference.

● Norway – Regulators auctioned 2.6 gHz spectrum in November and didn’t follow CePT’s recommendations be-cause of demand from potential wimAX

CoN T I N U ed oN PAge 18

API: application Program Interface AWS: advanced wireless Services CDMA: Code Division Multiple access CEPT: european Conference of Postal and Telecommunications administration fCC: Federal Communications Commission 4G: Fourth-Generation fDD: Frequency Division Duplexing GSM: Global System for Mobile Communications IMT-2000: International Mobile Telecommunications-2000 ITU: International Telecommunication Union LTE: long Term evolution MSO: Multi-Service operator OfDMA: orthogonal Frequency-Division Multiple access PHS: Personal Handy-phone System QoS: Quality of Service SDK: Software Development kit 3G: Third-Generation TDD: Time Division Duplexing TDMA: Time Division Multiple access UHf: Ultra High Frequency WCDMA: wideband Code Division Multiple access WiMAX: worldwide Interoperability for Microwave access WRC: world radiocommunication Conference

brIdGInG The dIGITAL dIVIde

at its november 2007 meeting in Geneva, the wrC adopted an inter-national treaty to increase available spectrum for mobile broadband services. The ITU adopted a proposal, promoted by african governments, to identify a chunk of UHF spectrum for mobile broadband services in developing countries and rural areas of developed countries.

europe, the Middle east and asia all backed the proposal, agreeing to allocate the same 790-862 MHz band; the americas identified 108 MHz in the 698-862 MHz band for mobile broadband services. The wrC also identified 200 MHz of con-tiguous spectrum in the 3.4-3.6 GHz band for high-capacity, next-genera-tion mobile networks.

“This decision by the wrC is an important step towards enabling hundreds of millions of people in the developing world and rural parts of the developed world to gain afford-able access to broadband services,” said Tom Phillips, chief government & regulatory affairs officer of the GSM association. “radio signals in the UHF spectrum will travel further than signals in the higher bands, enabling future mobile broadband networks to reach as far as 2G networks do today.”

Ëview tarcisio’s video on Latin America communication markets at www.inspirethenewlife.com/podcasts > Get schooled

18 Tellabs Inspire • APRIL 2008

The wireless and mobile in-dustry has been an amaz-ing global success story: In just 25 years, cell phones have gone from analog

models the size of a small briefcase to today’s multimedia, music-and-Tv player, e-mail-spouting smartphones. yet despite the technical developments and advances in handsets and services, one constant re-mains — the need for spectrum.

The laws of physics dictate that many aspects of wireless technology are deter-mined by the spectrum used to provide the service. Although the details are complex, the basic rule is that the lower the spectrum used, the stronger the sig-nal, which then is better able to penetrate buildings. Conversely, higher spectrum

bands allow the use of lower power (and thus more cells in a given area), thereby increasing capacity. Historically, most cellular systems have operated in the 850-900 mHz band, with PCS services using 1800-1900 mHz. A few years ago, additional spectrum was licensed in vari-ous regions in the higher 2.3 gHz band.

without spectrum, a mobile service provider cannot operate. Competition for spectrum is intense and the license-holder can determine many aspects of the service. RF spectrum has a tangible value and can be traded easily. Although some service providers have tried to use unli-censed bands, such attempts typically fail because it is very difficult to control the quality of service and provide a positive and differentiated customer experience.

Today, several countries — including the United States, Chile and India — are licensing spectrum in the 700 mHz band. Although the ultimate winners are currently unknown and the rules vary de-pending on the license available — some dictate the type of service that must be offered, for example — there are some things we do know:

● given the price tag associated with spectrum acquisition, only the largest companies will thrive. The days when entrepreneurs could build sizeable operations from scratch are over. This doesn’t mean that smaller operators can’t succeed in emerging markets, but rather that the mature markets will continue to be dominated by incumbents and larger newcomers.

operators. The Norwegian plan for the 2500-2690 mHz band called for two 40 mHz blocks allocated to Fdd and 100 mHz for Tdd.

Craig wireless won 50 mHz and is planning a nationwide wimAX network. It’s not immediately known if the other winners will deploy wimAX, but the probability is high, say industry watchers.

● sweden – Two auctions are sched-uled: one for 1900-1905 mHz and the other for 2.6 gHz. Both bands will be service-neutral and, within certain limi-tations, technology-neutral. For exam-ple, the winning licensees could use the spectrum for mobile communications or wireless broadband services. The 1900-1905 mHz auction will be for a single national license, while the 2.6 gHz auc-tion will be for 15 frequency blocks: 14 for Fdd and one for Tdd.

ASIA: MObILe wiMAx hOTbedAnalysts say Asia will become a hotbed for mobile broadband services, with more than 40 million mobile wimAX subscribers by 2013, according to Jupiter Research. That’s more than half of all mobile wimAX subscribers world-wide. Jupiter expects countries such as Australia, India, South korea and Taiwan to drive growth of mobile wimAX tech-nology because they’re ideally suited for quick deployment in underserved areas.

“licenses in countries such as India, Japan and Thailand, as well as in more countries in other regions, will be auctioned over the next year,” said Howard wilcox, a Jupiter analyst. “Timely award of these licenses will accelerate market development.”

In december, Japan granted two 2.5 gHz licenses to wireless Broadband Planning, a wimAX joint venture headed by kddI, and willcom, which is planning an advanced PHS network.

kddI and its investors, which include Intel, kyocera and a number of Japanese companies, plans to spend about $1.3 billion on the wimAX network with the hope of covering about 90 percent of the population in 2013. Trials are due to start this spring, with commercial launch by summer 2009. The service will cost $47/month for unlimited data, mainly accessed via PC or laptop data cards.

free fOr ALL?Regardless of what’s being auctioned or awarded and where, the new spectrum is likely to shake up telecom markets worldwide. one example is the push for open access, where operators no longer sell contracts and subsidized devices but instead offer a broadband experience for many types of consumer devices.

open access is becoming a mantra of sorts, particularly for the U.S. 700 mHz auction. Accenture, a consultant to the

A N A lY s T I N s I G h T

The 700 mHz opportunityHistory shows that winning a spectrum auction isn’t the same as winning market share. By I A I N gI lloT T

AWS: advanced wireless Services CDMA: Code Division Multiple access EV-DO: evolution - Data optimized HSDPA: High-Speed Downlink Packet access MVNO: Mobile Virtual network operator PCS: Personal Communications Service UMTS: Universal Mobile Telecommunications System WiMAX: worldwide Interoperability for Microwave access

Spec t ru m con t’d f rom page 17

APRIL 2008 • Tellabs Inspire 19

world’s largest operators, has been advo-cating this open-access business model for several months.

“The writing is on the wall,” said Shahid Ahmed, partner with Accenture’s Technology Consulting group and the lead for the firm’s Network Technologies wireless practice. “Regulatory-wise and policy-wise, everyone is endorsing open access. Times have changed since the Internet debacle in the early 2000s. The cost of IT is now significantly less than it was then. All of this bodes well for a wire-less world. It’s the next frontier.”

Ahmed says operators can monetize open access by encouraging third-party developers to use their APIs and Sdks, which enhance the value chain and add stickiness because applications can only be used on that carrier’s particular net-work. QoS will also play a large role as

operators can now offer tiers of service, offering limited throughput to lower-spending customers and wide-open pipes to higher-paying customers.

“If you look at the investments hap-pening in the web 2.0 world, there is no place in the world like California, where investments in web 2.0 companies are greater than any other sector,” Ahmed said. “look at companies like Flickr and Facebook. There is tremendous move-ment and transformation happening in the Internet. The wireless industry has a golden opportunity to take advantage of all of these things happening on the web and translate them into new services.”

For those operators embarking on the open-access route, there are examples to follow in the United States. mobile wimAX operators Sprint Nextel and Clearwire are both pushing a new busi-

ness model that dismantles the tradi-tional walled-garden content approach, ends traditional wireless device subsidies, and doesn’t require long-term contracts. Both operators are encouraging their device partners to come into the market under their own brands. This enables customers to buy devices at major retail outlets and activate and program ser-vices without Sprint’s or Clearwire’s help before they make their first run on the mobile wimAX networks. The upshot: Freedom for carriers, for device vendors and for end users.

Ben wood, Clearwire Ceo, noted dur-ing the company’s recent analyst day event, “In 2009, we’ll start seeing wimAX chip-sets in consumer electronics services, open-ing up a wide variety of revenue streams and allowing consumers to do the same things they do on the tethered Internet.” n

● Network technology is no lon-ger a deciding factor. For example, a CdmA2000 1xev-do operator has as much chance of prospering as a service provider using UmTS/HSdPA. what is needed is a strong ecosystem of network infrastructure, devices, support services and applications, something the wimAX community is in the process of building.

● Brand, market differentiation, ser-vice, support and distribution channels are key drivers in today’s mobile market. Consider that one of the major mvNos has consistently been rated higher for network quality than its parent operator, even though both use the same network and the same handset vendors. Network technologies have reached such advanced states of development that consumers can no longer differentiate based on quality of service alone — but they can quickly identify poor customer service and high pricing.

● Incumbent operators will get larger. As markets mature, consolidation is likely to gain the required economies of scale required.

● Building a new network — or ex-panding current services into a new license — takes time. A general rule to follow is that after a license is awarded, it takes approximately 18 months to in-

troduce service and another five quarters after that before the operator will see an impact from the new network on their bottom line.

So although the 700 mHz spectrum is important to the industry, air alone will not separate the winners from the losers. There is no doubt that an operator needs licensed spectrum in order to succeed, but a license by itself is not a guarantee of victory in the marketplace. wireless his-

tory is littered with operators that owned valuable spectrum but were unable to launch a profitable business.

Iain Gillott is founder and president of iGR, an independent analyst firm specializing in the wireless industry. For more information, visit www.igr-inc.com.

U.S.: 700 MHz band

Latin aMericaBrazil: auctioned off 3G spectrum in 1900 MHz band; WiMaX spectrum in the 3.5 GHz band slated for later this year.Mexico: regulators plan to sell spectrum at 1900 MHz, 2100 MHz and 1700 MHz. WiMaX spectrum in the 3.5 GHz band is slated for later this year.Colombia: 1700 MHz aWS band slated for this spring.Venezuela: 60 MHz in the 1900 MHz band was auctioned in December.Chile: 700 MHz to be auctioned in 2009 for 3G. WiMaX spectrum in the 2.5 GHz band is slated for the second half of this year.

europeUnited Kingdom: ofcom plans to auction spectrum in the 2010-2025 MHz and 2500-2690 MHz bands this summer.Norway: regulators auctioned 2.6 GHz spectrum in november. Sweden: two auctions are scheduled: one for 1900-1905 MHz and the other for 2.6 GHz.

aSiaJapan: Granted two 2.5 GHz licenses in December.analysts expect licenses in india, Japan and thailand to release spectrum over the next year.

SPeCTruM uP fOr GrAbS

API: application Program Interface IT: Information Technology PHS: Personal Handy-phone System SDK: Software Development kit

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