Nokia Siemens Networks

Cloud computing
business boost for
communications industry

Telecommunications
service providers will play
a central role in the cloud
computing boom

2/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Executive summary
Cloud computing already commands $60 billion global market, and
is growing at a rapid pace. It provides major opportunities for
telecommunications service providers (hereafter called operators) to reduce
cost; generate new revenues and differentiate in the cloud ecosystem with
the network services.
Cloud computing helps operators rationalize their telecom and IT computing
platforms across organizational and geographical borders. Moreover, by
procuring telecom and IT software like OSS, CRM, CEM and Value Added
Services as a service, the operators will soon be able to convert their own
CAPEX to OPEX, as well as scale their services in accordance with
business needs. Surely so, a large number of Tier 1 carriers have already
begun to offer infrastructure as a service (IaaS) business model; a sign of
more things to come in the future!
As on date, the operator community has access to a variety of unique
assets; including end-customer user profile, location information, billing
relationship and messaging platforms that can enhance and customize
cloud services across all end-customer segments, thereby empowering
them with a host of new revenue opportunities.
In the consumer segment, these assets have been largely untapped owing
to a number of reasons; fragmented technologies and business practices,
technical barriers for developers in terms of understanding telco protocols,
along with commercial barriers between small developers and very large
operators, have always been detriments in the path of Cloud computing.
In terms of the enterprise segment offering, Software as a Service (SaaS)
has proved to be one of the most attractive options as it has contributed
significantly towards the acceleration in the take-off of cloud services and
allowed operators to expand their scope of value-addition beyond traditional
connectivity services. In the Machine-to-Machine area, the connectivity and
Smart Object Enablement Services (SOES) provide operators with new
revenue sources from adjacent industry verticals.
Given the fact that applications are used as a service on the cloud, quality of
network services becomes one of the key customer experience factors; as
third parties are relying on the operators know-how on how to deliver
reliable and high quality data connectivity to ensure high quality of service
for their applications. This consolidates the position of operators as
important players in the cloud services ecosystem, while also adding
incremental value to broadband network services.

3/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Nokia Siemens Networks is set to lead the transformation of Telecom

industry by providing cloud solutions, which enable operators to improve
their customer experience and operational efficiency, expand their services
portfolio and optimize their networks for quality of service differentiation. The
wide range of cloud solution portfolio of Nokia Siemens Networks includes
solutions from cloud optimized Telecom applications such as OSS, CEM
and value-added-services to new cloud based software as a service
solutions targeted to consumers and enterprises including different M2M
verticals as well as the network optimization services.

1.

Business opportunities for Operators

1.1

$60 billion market and growing

The cloud is one of the most talked about topics in ICT. But its much more
than media hype. Its a real business on which enterprises where spending
around $60 billion globally in 2009, according to analyst company Gartner.
The growth rate of this spending is expected to be at about 20% CAGR from
2009 to 2014.
Enterprises spend money on a variety of cloud services. A major share of
cloud revenue comes from Business Processes as a Service (BPaaS),
wherein advertisement automation happens to be one of the largest areas.
Other typical cloud offers include Software as a Service (SaaS), such as
office tools or CRM, (see picture 1 for SaaS deployment plans), as well as
Infrastructure and Platform Solutions (IaaS/PaaS) providing computing and
data storage resources.

Figure 1. Yankee, July 2010 FastView Survey: Cloud Computing Grows Up

The success of cloud computing is further underlined by the huge numbers

of users enjoying services based on cloud technologies. It seems that
consumers cant get enough of services such as Facebook, YouTube and
Microsoft Live which are based on cloud approaches. The user experience
is further heightened by the fact that these do not require any upfront
commitment or expenses by the consumer, nor are limited by the device
used. In addition to the aforementioned benefits, the Enterprise segment
also benefits substantially from cloud services; point-in-case being a report
that talks about Google Apps being used by more than 3 million enterprises

4/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

in 2010, taking into account both the paying enterprises, as well as those
who use Google Apps for free. Another example is salesforce.com, which
offers CRM in a Software-as-a-Service (SaaS) model managing customer
information for approximately 87.200 customers (Salesforce.com statistic by
October 31st 2010).
A growing number of telco CSPs are already offering cloud services. They
are bundling their assets to deliver a range of services, such as storage and
back-up, resale of third party applications and targeted cloud-based
business solutions for different vertical markets, such as healthcare, in a
cloud business model. In US market for example Verizon and AT&T have
offered infrastructure as a service.

1.2

What is cloud computing?

Briefly speaking, Cloud computing is a new business model that promotes a
new way of managing infrastructure and service delivery. It advocates
changes in the traditional process of resource delivery and business model,
typically in the way of a public cloud service, which implies that services can
now be accessed by customer with an internet connection:
IT resources (Physical resources) are shared on demand basis (i.e.
resources are not allocated statically to the client)
IT resources in the cloud are virtualized, which means clients see logical
runtime units, but not the physical ones. This also reliefs the client of
having to deal with resource limitations.
Cloud services are provisioned over the internet. With the help of webbased tools or portals users can access the resources as if it were
installed locally on their own computer.
Cloud services (public) are sold with for example pay-per-use or per user
pricing model i.e. the client pays only for and when using the resources,
not for owning them.
In addition, some large and geographically diverse organizations may opt to
invest in their own data centers to create cloud computing capabilities for
use within the enterprise only (private clouds). This allows them to optimize
their IT investments, as well as reduce operational costs involved in running
the IT infrastructure from a (few) single facility.
The evolution of high bandwidth networks is a key enabler for cloud
computing. Without fast and ubiquitous available IP connectivity, it would not
be possible to run software and share resources in a centralized data center
for millions of users (as done in the cloud model). Laptops with dongles,
smart phones and tablets have indeed facilitated 24/7 access to ones
favorite applications from anywhere across the globe. Cloud provisioning of
services for all these users and devices increases the dependency and load
on networks, because applications are used in an online and typically
always-on environment, and not as a local application in the device.

5/15

2.

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Business opportunities for Operators

In the current scenario, operators can look forward to three major business
opportunities on the immediate horizon:
Reduction of internal costs through carrier-grade cloud solutions
Generation of new revenue streams, by combining the telco and Internet
applications from cloud for services offered to consumers and enterprises
Leveraging on new business opportunities arising from Service Level
Agreements (SLA) assuring connectivity, privacy and security services to
dedicated cloud services, as well as Quality of Experience (QoE)
differentiation.
Apart from the new efficiency opportunities and revenue that Cloud
computing brings on an operators table, the latters role assumes greater
importance in terms of maintaining network services with a view to ensure
the best-in-class quality of experience for cloud services. In addition, privacy
and security concerns strengthen the role of an operator as a trusted partner
for the end-customers. How and where these opportunities can be
leveraged, depends on the strategic directions the operator will choose;
what kind of role it wants to play in the overall ecosystem of the
communications service providers and how it wants to organize its internal
operations and partnerships.

3.

Transforming telco applications

Enterprises have started to adopt cloud across relatively less mission critical
applications such as e-commerce, payment, human resources and
automating advertising. In fact, Gartner indicates that the financial &
manufacturing sector has become one of the earliest adopters of public
cloud services, with the Communications and High-Tech industries following
closely on their heels.
An undying and constant need to improve efficiency across business
processes becomes the primary motivator for operators to explore cloud
opportunities in a much more detailed manner. Centralization of the
processes and supporting tools across the organization, as well as
partnering for out-tasking some of the processes or outsourcing complete
operation, offer the best possible options for business process optimization..
Although the cloud can provide internal efficiency opportunities for the
operators, it doesnt follow a one-size-fits-all approach. They can now
address the topic as any large enterprise by keeping in mind a variety of
crucial factors; their future aspirations, the evolution of the organization, its
geographical location, partnership strategy; what to keep in-house and what
and how to partner, are among the points that need to be considered
carefully. Privacy and security also happen to be key issues for regulators,

6/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

which require careful business and technology planning of the operators to

comply with regulatory requirements.
Considering all the cloud enabling factors as well as the concerns, there are
many examples where the telecommunications applications can leverage
cloud computing. The adaption of the cloud computing and as a service
business model can be approached as an evolution, beginning (for example)
with virtualization of the computing environment prior to the actual
transformation to cloud and focusing on applications such as customer
relationship management (CRM), Customer experience management (CEM)
and Value added services (VAS) as a service.
Capacity need increases with the number of operators customers for both
the traditional IT functions as well as the delivery of end-customer services
such as SMS, MMS, email, mobile content and service portals. The usage of
these applications causes unpredictable peak resource needs. Additional
capacity can also be procured from the cloud, in line with usage patterns
visible across services as well as for short-term needs to avoid investments
in mostly idle hardware/software resources.
Time-to-market is one of the key benefits of cloud services. As the cloud
based services support the web-based usage, the operators can provision
needed applications through self-service immediately after the decision
making.
The applications, which are related to the more complex areas of the
networks and applications on the local, regional and global level and which
require real time transactions such as charging, require more detailed
investigations what are the evolution steps to cloud and which parts of the
systems can be executed in public cloud and where there might be a need
for private cloud.

4.

New revenues
Applications business through cloud is estimated to grow from USD 5.79 B
to USD 20.72 B between 2009 and 2014. (Gartner: Forecast Public Cloud
Services, Worldwide and Regions, 2009-2014).
Software as a Service (SaaS) has been the key area for adoption by
enterprises, which provides operators with the opportunities to enhance their
connectivity offering with the SaaS, targeting the Small and Medium Size
(SME) segment. Business users are more critical for the quality of service
and willing to pay premium for the service levels and complete packages
with application and connectivity. Operators are in the central role in service
assurance of often complex technological environments of the cloud
computing.

7/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Consumers are increasingly spending on the latest innovative mobile

applications and services. Keeping the interest alive are millions of
developers who are building applications for platforms like android, apple
and networks sites like Twitter and Facebook. Moreover, operators have
unique assets, including voice control, messaging, charging and location
information, which can be exposed to developer communities with the aim of
developing new & enriched services.
As an example, for an end-user buying an android game, and during the
purchase process, the subscriber is asked if they want to pay by credit card
or by debiting your prepaid account. Operator can get additional revenue by
revenue share of the charged purchase and developers can reach those
end-customers who dont have credit cards. Cloud computing allows
operators to respond to this still untapped opportunity in more dynamic
fashion, especially with partners more willing to work with revenue-sharing
model.
Beyond human users, the integration of communications technology
continues to grow across a wide range of industries. As a result, we are
experiencing the internet of things or Machine-to-Machine (M2M) that is
growing fast in its breadth, with domestic and industrial devices connected,
communicating, and controlled over the network. The two fundamental
revenue sources for operators are the M2M connectivity services and the
Smart Object Enablement Services (SOES) such as remote object
management, service creation, data collection and processing etc. Here the
operator can leverage the platform as a service (PaaS) to re-use the same
service enablement functions for several vertical industries thus make better
business from low-ARPU (average revenue per subscriber) services.
Hence operators have unique new revenue opportunities in bundling the
connectivity with the cloud applications, exposing the telco assets to
applications developers through cloud and leveraging the platforms on cloud
to enter to adjacent industries with low upfront investments and business
risks.

4.1

Re-establishing the role of telco networks

Success of cloud services increases the demand for reliable and high
capacity data connectivity solutions for data centers. Operators providing
data connectivity services for enterprises benefit from this development.
Use of cloud services and generally demand for Internet access has positive
impact on operators broadband access revenues. Fixed broadband
business for enterprises and households grows due to new access
subscriptions as well as upgrade to higher capacity connections. There has
been a constant rise in the overall demand for access to cloud services
anytime anywhere, driven by smartphones, netbooks, and tablets Both
business and private reasons drive the significant growth of mobile
broadband users.

8/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Enterprises providing and enterprises consuming cloud services face the

fact that the data connectivity services are even more critical for daily
business operations. Therefore cloud computing increases the demand for
premium data services including SLA guarantees. Two key qualitative
parameters of the data connection are fast response time and quality of
service (QoS); fast response time requires low latency time in the access
network, i.e. for the mobile access the selection of the right radio network
can make a clear difference, while, owing to the fact that mobile networks
capacity is shared between users within the same cell, end-to-end quality of
service (QoS) differentiation becomes the key to deliver a superior user
experience. Operators that expand their service offering with cloud services
are in unique position to differentiate from 3rd party cloud providers by
bundling the cloud services with high quality data connectivity services and
different service levels.
Furthermore, security of personal data and the privacy of end-customers (in
terms of who can access it and how is it being used) continues to be an area
of prime concern. This area warrants immediate attention of the regulator
community, in addition to the focus on high profile security needs, such as
protecting children from harmful content. There is a clear opportunity today
for operators to protect and raise their brand image by ensuring their
network and systems are clean and totally secure, and also to offer security
services to their customers and act as a trusted identity provider.
As on date, subscribers place a high premium on QoS and are becoming
increasingly aware of possible threats, given their dependence on
applications, services and data provided over the network. They are also
willing to pay to ensure privacy, security and confidentiality of their data. As
such, cloud services provide a golden opportunity to operators in terms of
re-establishing their central role in the communications ecosystem.

5.

Nokia Siemens Networks driving the

transformation of Telecom industry in
experience and efficiency
Nokia Siemens Networks is set to drive the transformation of Telecom
industry in experience and efficiency by providing cloud solutions to the
operators.
We will:
Lead the adoption of cloud technology and business models in telco
products and solutions both by developing the telco application on cloud
and providing telco applications as a service to the operators

9/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Innovate for new consumer and enterprise services for operators, offer a
broad M2M solution portfolio and help operators expand cloud offering to
adjacent industries.
Provide the best end-to-end telco solutions, including privacy, security
and the customer experience and insights to help operators provide
quality of service differentiation for cloud computing
Our cloud solution portfolio includes Telecom applications such as voice,
messaging, OSS/BSS, customer experience management and value-addedservices, enterprise and consumer cloud services and machine-to-machine
solutions. In addition, we offer professional services such as consulting,
integration and management, completed with strong insight and expertise
gained through internal development and testing of cloud applications as
well as in numerous customer projects. Our focus is on the areas where our
customers, have the biggest business opportunities and where we as
solution provider to telecommunication service providers have most value
to add.

Figure 3. Nokia Siemens Networks cloud solutions domains

5.1

Examples of Nokia Siemens Networks telco

applications
Case European operator Our VaaS Solution
Business issue: The legacy messaging solutions, MMSC and Messaging
Gateways had sustainability issues with huge OPEX and uncontrolled cost
structure. The objective of the operator was to break down application silos
to create new innovative services while improving their internal operations.

10/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Our solution: As all transformation projects, we recommend phased

approach for complete renewal of the systems. Our value added Service as
a Service (VaaS) with the virtualized environment and our capability to
integrate the VMWare/RHEV environment from the customer, wide
messaging portfolio complemented with unique SDF value proposition and
with strong track record on system integration convinced the customer to
start the transformation journey with us.
Nokia Siemens Networks Value-Added Services (VAS) products support
private clouds. For example SMS Center and MMS Center products can be
deployed in virtualized private cloud environment, which means SMSC and
MMSC are Virtual Machines (application and operating system bundled
together) that can be run on the supported Hypervisor (the software layer on
top of bare metal hardware that decouples the application from the
underlying hardware) on any Hardware Infrastructure in the Private or Public
Cloud. Operator benefits are for example better HW utilization, simpler
maintenance and faster time-to-market for new VAS application launches.
This is an example of telecom products in figure 4.

Figure 4. Evolving VAS from virtualized infrastructure to public cloud

Case Empower Field Services Management (FSM)

Customer issue: Multinational group offering construction, maintenance
and professional services, was facing an issue in terms of sustaining its
competitive edge through improvements in resource utilization while also
delivering high quality of services.
Our solution: Nokia Siemens Networks Field Services Management (FSM)
is a SaaS application for managing field engineering and maintenance
tasks. The application is implemented on Amazons cloud technology using
Framework for managing the Cloud Infrastructure developer by Nokia
Siemens Networks. This is an example of enterprise applications in Figure
5. In the category of enterprise services an example of field management

11/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

solution as a service helps Empower manage field engineering and

maintenance tasks.

It is important for us to adopt a consolidated solution for our

multi-national operation that will support us to identify
repeating elementary tasks and streamline the processes.
Nokia Siemens Networks solution will help us to boost our
competitiveness and our flexibility, providing us the much
needed agility to manage our recourses.
Juhani Vanhala
Chief development officer
Empower Group

5.2

Bring new innovations

Nokia Siemens Networks is investing strongly in innovative cloud computing
solutions and services. We drive internal innovation in our existing business
units, as well as in our Silicon Valley-style ventures team, Startups at Nokia
Siemens Networks. In addition, we collaborate with external developers to
help us deliver solutions to our customers more quickly than the typical
industry development cycle.
The example solutions from the development cycle on Cloud domain
include:
Case Indosat Telco asset marketplace services
Customer issue: The operators need to provide application developers with
safe access to their telco resources like messaging, charging, billing,
location information etc., primarily with the aim of enriching their overall
services portfolio for new revenue streams.
Our solution: The Nokia Siemens Networks cloud-based telco asset
marketplace development platform will allow Indosats application
developers to access network assets easily and at a low cost. Cloud
computing technology removes the need for any heavy, and upfront large
capital costs, normally associated with such development platforms.
Furthermore, the platform will be tightly integrated with Nokia Siemens
Networks Service Delivery Framework (SDF) deployed at Indosat. Our
platform enables operators to bridge the gap between end users and
developers while using the operators assets to enhance the end-customer
experience.

12/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Nokia Siemens Networks telco asset marketplace will

facilitate a cost-effective and collaborative application
development platform along with accelarating the
development of a vibrant developer community.
Stephen Hobbs, Director and Chief
Technology Officer Indosat

Case Cubio Configurable messaging services

Customer issue: Oy Cubio Communications Ltd is based in Finland and is
the oldest independent virtual service provider in the market. Cubio is
currently undergoing complete reorganization and has revised its strategy
with strong focus on next generation of value added services to enhance
their service portfolio and customer segments for new revenues.
Our solution: Configurable messaging application that allows end-users to
create personalized voice messaging, integrate it with social networking
applications such as Plaxo and Twitter and to provide more personalized
services with local relevance. For example, it will take only few minutes for
Cubios SME customers to register in the portal and use pre-defined
templates for their customer centric messaging services that assure no
customer call goes unanswered. The as a Service business model is also
attractive for the SMEs. For consumers, the integration with the other social
media tools will enable them with the personalized messaging service,
which they can integrate for example with the social media applications,
email and SMS to ensure that they can provide immediate response to their
friends although not personally available for the call.

This application will make us much more interesting partner

for our business customers as well as provide us with a
platform, which we will use to further develop our contextual
and proactive content and messaging services,.
Harry Jrn,
CEO of Cubio

Case: Open capacity trading marketplace

Customer issue: Operators have dimensioned their networks for the
estimated usage behavior of their customers. However, the end-customers

13/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

can be un-predictable and furthermore special occasions can cause issues

in quality of experience when the traffic grows above beyond the capacity
available.
Our solution: Buy and sell connectivity on-demand
Imagine the next Olympic Games in London; an event that will attract a large
number of sports enthusiasts who would prefer to stay up-to-date through an
online medium of their choice. Moreover, the local capacity need might also
vary drastically from one nation to the other, depending on the sport being
broadcast at a particular point in time. Consider a situation where in an
operator could dynamically transfer his spare capacity to an interested
counterpart whose country is more inclined towards one particular sporting
event, like cricket as an example! Simplifying the process of trading capacity
near real time, would assure a win-win situation for both the parties; the
operator catering to cricket fans stands to gain the double benefit of
incremental revenue as well as delivering a superior customer experience
through the enhanced capacity, while his counterpart can also enhance his
revenue by offloading spare capacity.
Case: Machine-to-Machine platform
Customer issue: M2M business is high volume business: the ARPU
(average revenue per unit) is typically far lower than traditional
communication services, but the associated margin is higher. The reasons
for this include lower acquisition costs, service delivery is typically cheaper
and the network usage is far less than with a personal user. However, the
operators need to control the other costs such as integration and object
management low for better profitability.
Our solution: Nokia Siemens Networks Machine to Machine Application
Platform is a dedicated M2M solution. It design enables operators to move
above simply providing connectivity for M2M, to delivering M2M applications
and automated device control, all the way through to enterprise application
integration. Added to this is the Nokia Siemens processes for service
delivery: assessment, design, build, sell and deploy. The target is to enable
operators to offer cost efficient Smart Object Services, such as prepaid
energy, Logistics management and medical service, over the full life cycle,
utilizing existing business, service and network assets. We support
operators keeping maintaining and enhancing their position as an M2M
service provider, offering both retail and wholesale M2M offering. We enable
operators to offer M2M multi-vertical business cost efficiently with optimized
business framework, and optimally utilizing existing assets.
Case: Customer Experience Management as a Service
Customer issue: Declining ARPU and rising churn force CSPs to leverage
their existing customer base by improving the customer experience and
lifetime value. But most are cautious due to the large initial investments to
get customer insights and the long lead times to be operational.

14/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

Our solution: Existing customer-experience impacting offerings such as

Device Management, Serve atOnce Intelligence and Mobile Quality
Analyzer will be evolved into SaaS-capable subscriptions available via a
portal. It lowers up-front investments, reduces asset ownership and makes
costs more predictable. Infrastructure complexity, CEM applications and
maintenance is moved from the CSP to the cloud that can be accessed
device-agnostic and CSPs are up and running quickly.
Examples of business processes that can be improved are corporate
customer management or VIP customer management. Other areas are
Smartphone insight & action, mobile broadband optimization, service usage
or roaming analysis.

5.3

Taking care of the security

Case: With Telefonica O2 - Czech companies gain secure Internet
access
Customer issue: Security is a multifaceted task, given the fact that we have
to encounter new threats on a daily basis while addressing the multifaceted
challenge of protecting an equally diverse range of customers and devices.
The sheer complexity of the situation calls for leveraging upon considerable
operator resources to sustain the security mechanism on a long-term basis.
This is where Cloud computing steps in to introduce a series of new
elements, including ever increasing regulatory concerns and requirements.
Our solution: With this Security as a Service solution, CSPs can offer their
customers with the benefit of deploying a reliable, easy-to-manage, and
always up-to-date protection mechanism. Moreover, it is device
independent, doesnt require any further investments in terms of expertise,
and doesnt incur a high running cost. The solution is built on a modular
portfolio of services that can be tailored to each CSPs needs.
The key elements of this solution includes a host of features like:
Web / WAP filtering
Parental control / guardian control for enterprises
Anti-virus, Anti-Phishing, Ads-blocking, Anti-malware, Anti-spyware and
file blocking to Web Portal for self care and reporting to help users
manage their security easily.

15/15

Copyright 2011 Nokia Siemens Networks.

All rights reserved.

With its thorough knowledge of our network and expertise in

smooth deployment of security suites, Nokia Siemens
Networks was chosen to create a bespoke Internet service
that we can offer to enterprises that addresses both security
threats and responsible use.
Oscar Gmez,
Director of Product and Services
Telefonica O2 Czech Republic