Análisis Estadístico:

Question:

Which cost factors are involved in telecom systems especially for MVNOs? How do you calculate pricing for telecom cloud? How do you get Return on Investment (ROI) while implementing MVNO systems on the cloud?

Response:

MVNO prices are very much competition driven and not cost calculation driven however cost-benefits can be driven by moving implementing MVNO systems on cloud which makes MVNO further lower the prices. Cloud brings advantages for MVNOs to cut system administration costs while moving from

CAPEX to OPEX. MVNO assets can then be taken as an expense or OPEX. CAPEX to OPEX transition makes a difference as investment is smaller. It is interesting to note that the profit margin is also small if systems are not owned however cloud makes a case where profits can be improved. Cloud makes fixed cost as low as possible and variable cost as high as possible.

MVNO pricing is mostly based on ARPU while studying quarterly in- come. MVNO profits are not always calculated per subscriber costs and ARPU as the calculation involves other factors too such opportunity gains etc. There is no CAPEX involved in MVNO calculations as such for cloud and OPEX is the only thing which needs to be taken care of. There is no need to invest for MVNOs as it’s possible to go for utility based cost calculations. However, if CAPEX is needed then such onetime charges or expenditures can be divided for 3-5 years and considered as OPEX only.

Another point of view is that ARPU may not be that important in MVNO cost calculations but such calculations are more concentrated on customer base or customer churn. MVNOs drive the business based on price and service package differentiation. So in this case to calculate cost-factor always one should go for ROI calculation which is valid for any project in this industry. Cost and ROI will be final deciding factor and for MVNO, it’s important to prove that cloud is cheaper and ROI will be higher. Cloud can improve ROI. By default ROI will be very high for MVNO because of low CAPEX and high profits as ROI is generally calculated on CAPEX or fixed costs. However, it’s difficult to say whether it will affect ROI more than any other means of outsourcing as it depends on pricing. As mentioned earlier that for MVNO investment is smaller and so ROI is higher which leads to lower profitability. So there is a question of balancing the ROI.

Question:

How do you improve the cost-benefits for MVNO system? How are the high-level calculations made to derive cost-benefits? Cloud may drive the cost-benefits in MVNO context. Are you willing to accept cloud only on the basis of cost-benefits?

Response:

If MVNO systems are moved to the cloud then cost of cloud usage in terms of processing and memory consumption must be considered in calcu- lations. Geo-graphical location of cloud makes difference along with the idea of centralization. Cloud cost can be calculated based on some cents per user or CDR or mixture of both. In billing and CRM systems, estimated number of customers or activities decides the price but price does not fluctuate much. Along with it, factors such as network bandwidth and data transfer cost shall be taken care of.

• Cover minimum cost of BSS

• BSS license as a fixed cost

• Variable costs

• Elements in cost calculation: – BSS license - Fixed – Network Bandwidth – Hardware

– Hosting

– 24*7*365 monitoring

– Third-party software (like db license) – Profit-margin

– Support and end-user guidance

Another cost factor involved in MVNO calculation is rent of network el- ements and radio spectrum MVNO pays to MNO based on agreed network pricing structure. MVNO pay different prices to MNOs for network band- width sharing and it’s generally pay-per-use basis. MVNOs usually calculate the TCO in the systems in their own hands and then they have to look towards price they are paying for the cloud services along with bandwidth costs. MVNOs use low cost and light weight processes and cloud provides significant benefits to lower MVNO operational costs. MVNO could choose cloud on the basis of cost-benefits if security issues are taken care of be- cause the competition is harsh and every operator is looking for low-costs and pricing games

Case Qvantel: No ROI calculation is done in Qvantel as the model is mainly pay as you go. So, for example, MVNO pay 0.7% of ARPU or cost to Qvantel to manage their BSS. BSS hardware is in the software vendor package. Network bandwidth prices are also based on pay as you go mecha- nism. Other managed services can be outsourced as part of Business Process Outsourcing.

The common consent during the interview sessions was that MVNO should move their systems, and in simple cases whole managed services, to cloud since cloud does provide cost-benefits to MVNO operations. Capability of cloud to keep MVNO operation compact i.e. agility and have minimum risk on investment is an important point to consider. Cost-benefits improve- ment can be done by making business processes smoother and agile and cloud

can help. Correlation for price competition among operators. Oligopoly set- tings among operators. Along with cost-benefits; assurance, legal aspects and flexibility factors are also important for MVNOs as to adjust themselves with the competition as fast as possible.