Sunday, March 09, 2008

Vodafone - technology

Vodafone Technology Update

On Wednesday, 5 March, Vodafone held a "Technology Update" for financial and industry analysts. The event focused on what Vodafone saw happening in the market from a technology perspective, rather than focusing on applications and services. This was placed into the context of what Vodafone saw as four main themes:

• Customers demanding fast speed, more simple access, cheaper services and more choice
• Technology evolving in the networks to provide HSPA, all-IP networks and standardized device operating systems
• Emerging competitors in the form of device manufacturers, Internet players and new entrants
• Regulation driving competition, particularly around data and SMS roaming charges

Throughout the various presentations, there was an emphasis around cost control and reduction. This covered both capital (capex) and operational (opex) expenditures. To demonstrate the depths that Vodafone is going to in these areas, Global Supply Chain outlined how the cost of a 3G base station (Node B) had been reduced by more than 50% since January 2004, as well as the role of e-auctions in keeping costs extremely competitive. From an opex view, the role of network sharing and the potential saving were played out; "we are fans of network sharing," said Vodafone.

With HSDPA currently undergoing upgrades in the network, Vodafone will be upgrading its 3G network from HSDPA supporting 3.6 Mbps, to 7.2 Mbps, to certain focused hot spots having 14.4 Mbps by the end of 2008. Vodafone even raised the potential of trials at 28.8 Mbps sometime in 2009!

With the debate around the role of WiMAX continuing to rage, Vodafone outlined how it saw WiMAX potentially fitting in with Long Term Evolution (LTE). However, with Vodafone promoting the LTE trials it is holding with Verizon and China Mobile, along with its belief that LTE will be its dominant solution in Europe, its focus is clear.

On another hyped technology, femtocells were discussed briefly as trials are currently running and commercial services are being muted for late 2008. However, the business case behind this was not yet evident, which seems a common issue with femtocells. What was interesting was Vodafone's positioning of femtocells as a part of its radio network solution, with Vodafone seeing these reducing the need for macrocells in high-density areas. Given Vodafone's offering around fixed enterprise services, some form of converged enterprise offering around femtocells could be the first offering.

Convergence of IP Multimedia Subsystems (IMSs) to provide converged and new services was the direction outlined by Vodafone for its core network. This was placed within the context of a flat all-IP network vision.

The reductions in cost and introduction of new technologies were seen as enablers for Vodafone to expand its service offering to address what it sees as consumer demand, particularly around mobile data. Internet services such as search, advertising and social networking, along with a considered push on mobile widgets, matched the overall trend that Gartner has seen toward enabling Internet services on mobile technology. On the enterprise side, an interesting move was to introduce Vodafone's own enterprise offerings internally, thus enabling Vodafone to cite itself as a case study for how these services benefit corporations. We all realize that "eating your own dog food" is never easy for an organization, but it was surprising that this move had not already been taken.

Cost control remains central to Vodafone, which is not a bad thing for an operator, particularly as prices continue to drop. It was encouraging to hear that keeping cost down (be it capex or opex) was not limiting the expansion, upgrades and moves toward more Internet converged services. Rather, Vodafone sees it as a means to free capital to support this move. Whether Vodafone is able to balance this and not be drawn into short-term financial gains remains to be seen.

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