Telecom vendors have trotted out new strategies in preparation for a massive 3G build. In the scale envisaged by the vendors, the rollout would have been out of proportion with their own implementing capabilities. The necessity arose from the perception that all license holders would have built all 3G networks all at once. The reality is showing that 3G networks real rollouts are still in a distant future, and the build out, will prove to be not as massive as it was envisaged.
UMTS rollout will be scaled down because the 3G regulations are changing due to the financial constrains and new proposals are being accepted. Ex: Some operators will delay rollout, network will be shared, coverage only in selected areas and not country wide. Not being as massive as vendors have originally expected, 3G rollout will be executed in a similar way 2G was built: managed by the vendors and executed by a small specialized firms and free-lancer contractors.
Why ABB is baking at the wrong tree
I have tried to dissected the on going strategies of telecoms vendors as related to networks' rollout which is important to us who work in the implementation side of the business. Lets leave aside all the hype the marketing people are putting out and the hot air surrounding this thing. Lets focus only on how the rollout was supposed to happen as by the end of last year.
The charge of the UMTS brigade was supposed to take the world by storm. The whole thing was staged to happen. But the fact is that the projections fell very much short of the reality. Now that the true state of the UMTS is shown, we can have a better view of the market as rollout is concerned and how this is really going to happen:
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For Ericsson Annual Report
"In preparation for an expected massive roll out of 3G networks starting at the end of year 2001, we entered a number of cooperation agreements with reputable construction companies such as ABB, SKANSKA and NCC. The objective is to safeguard sufficient capacity and competence to satisfy network build-out demand."
ericsson.com
ABB in new mobile telecom cooperation with Nokia and Ericsson
Big business potential in building mobile telecommunications networks
Zurich, Switzerland, October 05, 2000 – Global technology group ABB said today it has formed separate agreements with Nokia and Ericsson to build new-generation mobile telecommunications networks, highlighting ABB’s strategy to become a major player in IT infrastructure.
ABB said both agreements are aimed at offering rapid execution of so-called 3G (3rd generation or UMTS) mobile communications networks currently under development in most European markets.
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Those construction companies were brought on board under the assumption that the UMTS storm was going to happen at the pace envisaged by the how the market perceived it by Summer 2000. The market perception, at that point in time, was that all operators holders of licenses would be building all at once. Just for illustration's sake: Figures given by the Financial Times were: "Each operator's total network could be 15,000 cells or more.... Contrast this with GSM, where a typical network operator today might have 5,000 cells after nearly 10 years of operation". Under this perspective, telecom vendors would require all the help in the world to build UMTS networks. That's why they have brought those engineering companies to help them build networks. It is interesting to note that the vendors were not only eyeing subcontractors that could build UMTS networks, but had also the market clout and the banking contacts to finance the buildout. Because they knew that at that scale they would need to provide vendor financing and partners with contacts with the banking community would come in very handy.
What next? For a while vendors and engineering companies will put a brave face and will pretend that what they planned is still going to happen since they had come out with a bang and cannot backstep without losing face. As time passes their initial plans will be forgotten and no one will ask about that any more.
But UMTS is still going to be built, right? Yes, it will but we know that it is going to be built slowly and steadily. The fact is, rollout of wireless networks lends itself much more for an specialists type of work. And that was 2G! 3G more so. To integrate all those disparate technologies and functions is more feasible under a 2G type of rollout rather than the projects those large engineering those companies are used to deal with. They may well be good at building airports in Hong Kong or tunnel under the English Channel, but to build wireless is another story. The 2G buildout was done solely by telecom vendors with a constellation of small specialized firms and free lancer contractors. It has never had the scope of a large engineering project such a hydroelectric power stations and its ancillary systems. |
