Stephan Scholz: Bringing the future to life

Interview with Stephan Scholz

What are currently the biggest trends in connectivity?

There are three major challenges on everybody’s mind right now. The first is the increasing number of subscribers in rural and mostly low ARPU regions. That’s where the growth in voice calls is coming from now. Before too long, there are going to be a billion new subscribers in these areas. The question is how operators are going to bring connectivity to these out-of-the-way places while remaining profitable.

The second challenge is the increase in data traffic we are seeing in mature markets. More and more often, people are using their mobile phones to go online. That’s where the growth is coming from in these areas. In five to seven years, we will have a hundred times the traffic there is today. But subscribers are not willing to pay a hundred times more - quite the contrary. Many will only accept to pay a flat rate. To handle this scenario, operators have to become more efficient on every level.

Also, how are operators going to increase their revenue in a saturated market, when subscribers are increasingly unwilling to pay for all the new services they want? The hunt for new revenue streams is the third big challenge that everyone in the business will have to contend with.

What technologies is Nokia Siemens Networks providing customers to help them deal with these challenges?

In the long run, we believe that everyone will have to switch to an all-IP based architecture to keep costs down. That is going to be the only way to cope with the increase in traffic. There is not going to be any real difference between fixed and mobile, which also points towards IP-based architecture.

We have also been pioneering the LTE field for several years. In 2006, we were the first to conduct LTE demonstrations. Our Flexi BTS is on the market and fully prepared for this new technology.

When it comes to fixed broadband, everything is going to be optical fiber sooner or later. In a couple of years, we will be able to offer next-generation optical fiber cable that provides amazingly fast connections at much lower costs. In a couple of years, online applications are going to be so large that current fixed connection bandwidth will become an issue again. Next-generation optical fiber solves this problem.

Laying new cables is very costly. Maybe you do it once every twenty, thirty years. This new technology is so good that more and more operators indicate they will be able to wait a few years until it’s ready. We believe it’s a very good long-term investment; much better than anything that is available today.

You mentioned Nokia Siemens Networks' pioneering role in developing LTE.  What are you currently doing to bring the technology out on the market?

Nokia Siemens Networks enables the fastest LTE network deployment with the e-2-e solution and field-proven BTS hardware. Deliveries of the LTE compatible Flexi Base Station have been under way since September 2008, and at MWC we launched our core network solutions for LTE.

Nokia Siemens Networks and PMC were chosen by NTT DoCoMo for its Super 3G/ Long Term Evolution BTS project (Dec 2007), NTT DoCoMo selected Fujitsu to provide Nokia Siemens Networks’ Core technology for its Super 3G / LTECore Network – (PR Oct 27 2008), NSN has LTE trial agreement with Vodafone Germany (Sept 23, 2008)

Nokia Siemens Networks also runs LTE test labs in China, Germany and the United States. We chose these locations to be close to the customers who we believe are going to be the first to launch LTE.

We support both the TDD and the FDD “flavors” of LTE in our research. Handsets will probably support both varieties as well, to facilitate roaming between regions that use different versions of the technology.

Right now, we are working on LTE Advanced, or 4G, a technology that gives mobile users a connection speed of up to 1 Gigabit per second. In December 2008, we demonstrated relaying technology for LTE Advanced.

It’s a technology that not only gives a great end-user experience, but also provides consistent coverage at the cell edge, where users are the furthest from the base station. Relaying technology can be integrated in normal base station platforms and does not require additional backhaul.

Will LTE solve any problems for operators who are suffering from the economic downturn?

If all goes according to plan, the first deployments for LTE services are foreseen end of 2009 with volume rollouts of commercial networks in early 2010. Rollouts for trial networks have already started.

Let’s hope that the economy will have improved by then! Having said that, LTE is by far the best solution for providing bandwidth at a low cost.

When it comes to fixed broadband, everything is going to be optical fiber sooner or later.

 

Various vendors like Nokia are also preparing for the rollout of commercial end user devices. The first LTE users are probably going to be laptop owners, not phone users, since laptop modems will be the first to carry this new technology.

Can LTE help operators reduce churn?

Subscribers need more bandwidth, and LTE is going to make them happy by shortening download times and generally providing a superior customer experience. So the answer would be yes. It is also a potential driver for fixed to mobile substitution in countries like Finland where we already see the first initial evidence.

However, we expect that voice calls, SMS and MMS are going to remain the main sources of revenue for some time yet. To reduce churn while preparing for LTE, operators will have to look at the entire customer experience to keep subscribers loyal.

As the economic climate cools down, efficiency is quickly becoming a hot topic. What kind of solutions does Nokia Siemens Networks provide to improve efficiency?

You can look at efficiency from several different angles. One is pure cost reduction. For example, we have several requests for solutions for network sharing, particularly in Europe. Many operators, especially small and medium-sized players, need to share network resources due to the high costs of maintaining the physical network.

By introducing new technology, you always increase complexity. Unfortunately, you can’t get rid of all the old technology as you move forward. 2G, 3G, different data and voice networks - they all need to be administered differently. To this end, we have an efficient management system that lets our clients handle all their different technologies in a streamlined way, eliminating the need for new management systems when a new technology is added.

Looking into the future, fixed, mobile and even TV networks are going to merge. These networks all come with different types of databases. One of our unique technologies for improving efficiency is the “one database” system that lets operators keep all network data collected and accessible from one point in the system.

Reducing energy consumption is another important way of increasing efficiency. The energy bill is a major part of operators’ costs. We have actually had cases where energy costs have been the limiting factor when rolling out the network.

To use less energy is an important part of every company’s overall social and environmental responsibility. Aside from reducing network energy consumption, we are also working to improve the energy efficiency of the core, and increase the use of renewable energy sources.

Telecom solutions can also help to save energy, the obvious example being teleconferencing, which cuts back on travel expenses as well as CO2 emissions.

We also have a solution for intelligent energy. At the moment, it’s on the experimental stage, but the results so far are very promising. Information about who is using a certain area in a building is transmitted through the telecommunications network and fed into the energy supply system. Energy is then switched off automatically in the areas that are not being used.

Any final thoughts on the future of the industry?

We are going to see the IT and telecommunications industries converge even more in the future. For example, HP and IBM are already trying to get a foot in the door by offering solutions for operators, like billing, charging and CRM solutions, as well as frameworks for application integration.

Parallel to this development, the telecommunications industry is going to become even more focused on connectivity and technology. Content and end-user applications are going to be developed by third-party collaborators, and not by the telecom companies themselves. In spite of the current world economy, I believe we have a very exciting time ahead of us, with lots of opportunities for new players as well as established companies.

Stephan Scholz

Stephan is the Chief Technology Officer of Nokia Siemens Networks – in this capacity he is responsible for all research activities and future technology developments.

He joined Siemens in 1990 after graduating from the Technische Universität München and the Max Planck Institute for High Energy Physics. In Siemens Communications, he was heading Carrier Development worldwide, being responsible for all carrier products including softswitches, gateways and next generation applications like IPTV, and their respective network management.

Previous to this, he was Senior Vice President of Wireline Networks Carrier Convergence, Vice President of Product Management at Siemens Wireline Networks Carrier Switching Division, and held various sales, marketing and business management positions at Siemens Information Communication Networks, in the United States from 1997 to 1999.