5 Reasons Why End-to-End Service Assurance Is a Critical Consideration in LATAM Telecom Mergers and Acquisitions

By Phil Anderson, Telecom Sector Analyst, Business News Americas

In recent years, LATAM telecoms have shifted toward a phase of mergers and consolidation with large players leading the way, and smaller providers forced to investigate similar options in order to stay competitive.

The emergence of America Movil and Telefonica as two juggernauts that have pervaded virtually every market in Latin America is a testament to the forces of consolidation that have taken place in the region over the last decade. In recent years, the two rivals took the concept even further by reorganizing their own group structures to maximize synergies: Telefonica reincorporated its Telefonica Moviles unit in 2006, so that mobile operations fall in line with general group strategy, and Carlos Slim’s Carso Global Telecom holding company made a similar move in 2010, placing Telmex Internacional and flagship operator Telmex Mexico under control of mobile unit America Movil.

Observers were quick to point out that new service offerings wouldn’t necessarily be the prime objective, and that America Movil’s first priorities would be to consolidate network infrastructure, eliminate functional overlaps between departments,  and nurture synergies to pave the ground for the adoption of group-level best practice methodologies.

Indeed, one of the first group-wide projects undertaken by America Movil after announcing the restructuring was the transformation of its mobile backhaul infrastructure to IP/MPLS, which is expected to take three years. This would bring mobile backhaul in line with the HFC infrastructure that sister company Telmex Internacional has already deployed in much of its coverage area, as well as the group’s efforts to have all of its IPTV offerings across the region run through a single NOC.

You may wonder how much scope there is for further M&A in this region, given the positioning that Telefonica and America Movil have already achieved, but some countries have hundreds of pay-TV providers, plus several outlier telcos that need a TV arm in order to compete with these two giants.

Whether through corporate mergers or through the consolidation of business lines intended to achieve operational efficiency (wireline/wireless), there are a number of challenges inherent to the convergence of complex organizational, operational, and architectural environments taking place in LATAM today and into the future:

1. It may be that the debt to shareholders is the prime driver for mergers, and the synergies that result, but it is customer satisfaction and quality of experience that will enable a telco to thrive at the end of the day. Telcos live in an end-to-end world, and require visibility across many domains—including data center, transport, packet core, IP RAN and back office—all of which have some bearing on each other at multiple levels, such as billing, service assurance, mediation and interconnection. A hiccup at any one of these domains or control layers will affect the service that end users receive.
2. Not only must existing services be aligned with the new company structure or roadmap, but eventually clients will also be expecting tangible change as a result of the merger, in the form of new service offerings. A wise carrier will only embark on new offerings once it has ironed out the wrinkles that a merger inevitably brings, and there are obvious advantages to be gained from completing that process rapidly and effectively.
3. OSS vendors often talk about fragmentation of data between the different units, primarily because  carriers may have turned to differing OSS vendors in the past for each domain of the mobile network. Worse still, those vendors will almost certainly have customized their solutions, which adds to the complexity of upgrading or integrating with a new system. This fragmentation is then exacerbated by the huge amount of data that is accumulating as customers adopt more services, as well as make more use of the services they already have.
4. Not only do carriers have different business units and operational domains to integrate into the overall strategy (mobile, fixed, TV, corporate), these large multinational groups also have to consider cultural or behavioral differences between the various markets they serve. For example, one country might be more of a tourist destination, in which case more attention must be paid to roaming; and in another there might be more of a culture of using text messaging. And of course a country’s economic situation plays a large part in determining the scope of services that the population will take up. So having dealt with integration of legacy systems that may have been customized years ago, there could still be a need for customization of the new, regionwide solution that the parent company eventually deploys.
5. Furthermore, carriers are constantly evolving, and system unification is almost guaranteed to clash with another long-term project, such as network upgrade to 3.5G or 4G. Each project might already be subject to several unknowns, a scenario that is likely to raise even more unforeseen issues when they clash.

Telcos can turn to some very advanced OSS systems for day-to-day administration, but how many of these solutions are equipped for the curveballs thrown in by a merger situation? Deployment of an end-to-end service assurance solution is critical to solving the complex service delivery challenges that impact the customer experience.

In order to meet and maintain the requirements for quality of experience in the future, service providers will have to overcome the barriers presented by segmented operations and tools.  This will require that they reconfigure teams that span from the data center to IP transport, mobile packet core, backhaul, RAN and voice, that until now have each used their own set of solutions for monitoring and analyzing network performance. Some proactive operators have already started to create cross-silo functions that are responsible for consolidating and leveraging multi-domain KPIs in order to monitor and manage QoE.

In day-to-day operations, the argument for complete end-to-end visibility of the network and the applications it delivers is already strong, but never is an operator subject to so much chaos as it is when undergoing a merger. That is when monitoring, reporting and analysis solutions can really pay dividends, particularly if, as in the case of InfoVista’s solution, the end-to-end visibility they offer can help to consolidate all existing tools into a single platform with operational reporting for multiple business units.