Rushil Dave Thesis

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Aalto University

School of ScienceDegree Programme of Computer Science and Engineering

Rushil Dave

Mobile Virtual Network OperatorSystems on Cloud:

An Architectural and Cost-benefit Study

Masters ThesisEspoo, August 8, 2011

Supervisor: Professor Antti Yla-JaaskiInstructor: Yrjo Raivio Lic.Sc. (Tech.)


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Aalto UniversitySchool of ScienceDegree Programme of Computer Science and Engineering

ABSTRACT OFMASTERS THESIS

Author: Rushil Dave

Title:Mobile Virtual Network OperatorSystems on Cloud: An Architectural and Cost-benefit Study

Date: August 8, 2011 Pages: 9+98

Professorship: Data Communication Software Code: T-110

Supervisor: Professor Antti Yla-Jaaski

Instructor: Yrjo Raivio Lic.Sc. (Tech.)

Cloud computing technology is growing rapidly in the market providing elastic-ity, virtualization and most importantly cost savings to the computing industry.

Today, telecom operators especially MVNOs face challenges such as reduction ofARPU, need of differentiations and competition from all fronts of software in-dustry. Cloud provides major opportunities to telecom operators to reduce theiroperational costs, drive new differentiations and be active in cloud ecosystem.Telecom operators can take advantages of cloud by selling the cloud offerings totheir customers by using already established infrastructure as well as by usingcloud to deploy their own software systems to reduce operational costs.

In this research, the techno-economic analysis has been carried out to analyzeimplementation of telecom systems on cloud in Business Support Systems domain.The research focuses on application mapping strategy required and financial cost-

benefits gained for MVNOs if their systems are implemented on cloud. Thethesis research involves Delphi method based study in which expert interviewsare conducted in two rounds to get expert views on the subject. The responsesand related analyses are drawn while introducing a proof-of-concept hybrid cloudarchitecture to implement MVNO systems. An innovative solution of billing-as-a-service on cloud is discussed in the thesis as well. The implications and futureprospects are presented evaluating the thesis results. In the end, conclusion isderived to summarize the thesis research.

In summary, most of the MVNO systems are viable candidates for cloud imple-mentation and significant benefits can be achieved. Cloud will help MVNOs to

make transition from CAPEX to OPEX based model while reducing OPEX andgaining other advantages like economy of scale, SaaS based solutions, lower time-to-market, enhanced performance etc. There are certain implications related todata security, availability and government regulations which can impose difficul-ties on MVNO systems while moving them to the cloud. However, the future ofcloud in telecom industry seems bright with emergence of everything-as-a-servicemodel.

Keywords: MVNO, BSS, cloud, cost-benefits, hybrid, SaaS, SLA, OPEX

Language: English

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Acknowledgements

This work was done as a part of the Cloud Software Program of Tivit(Strategic Centre for Science, Technology and Innovation in the Field ofICT, www.tivit.fi).

I wish to express my gratitude to the people that have supported meduring this thesis research.

Firstly, I would like to thank Professor Antti Yla-Jaaski, who acted as asupervisor for the thesis and helped me to initiate the thesis research.

Secondly, I would like to extend my sincere gratitude to Mr. Yrjo Raivio,who was the instructor during thesis research. His guidance, support andcomments helped me a lot throughout the research process to carry out thethesis research.

I also thank all the experts and researchers for their anonymous partici-

pation in the interview process providing expert knowledge and comments.I would also like to thank Amit Soni and Koushik Annapureddy, who

helped me to setup the CRM proof-of-concept on hybrid cloud and reviewthe thesis.

Last but not the least, I thank my family and friends for their support.

Espoo, August 8, 2011

Rushil Dave

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Abbreviations & Acronyms

4G 4th Generation (Communication Systems)APAC Asia PacificAPI Application Programming InterfaceAR Account RecievableARPU Average Revenue Per UserB2B Business to BusinessB2C Business to CustomerBSS Business Support SystemsCAPEX Capital ExpenditureCDR Call Detail Record or Charging Data RecordCPU Centralized Processing Unit

CRM Customer Relationship ManagementCSP Communication Services ProviderCSR Customer Service RepresentativeDDoS Distributed Denial of ServiceERP Enterprise Resource PlanningEU European UnionHLR Home Location RegisterHTTP Hyper Text Transfer ProtocolIaaS Infrastructure-as-a-ServiceIMSI International Mobile Subscriber Identity

I/O Input/OutputIPDR Internet Protocol Data RecordIP Internet ProtocolIT Information TechnologyKPI Key Performance IndicatorLTE Long Term EvaluationMbps Mega bit per SecondMNO Mobile Network Operator

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MSISDN Mobile Station Integrated Services Digital Network

(Number)MSS Mobile Switching System (Server)MVNE Mobile Virtual Network EnablerMVNO Mobile Virtual Network OperatorNAS Network Attached StorageNIST National Institute of Standards and TechnologyOPEX Operational ExpenditureOSS Operation Support SystemsPaaS Platform-as-a-ServicePHP Personal Home Page (Hypertext Preprocessor)

RAM Random Access MemoryROI Return On InvestmentSaaS Software-as-a-ServiceSIM Subscriber Identity ModuleSLA Service Level AgreementSMS Short Messaging ServiceSP Service ProviderSTOF Service Technology Operation FinanceTCO Total Cost of OwnershipVAT Value Added Tax

VLAN Virtual Local Area NetworkVOIP Voice over Internet ProtocolxDR x (Call or IP) Data Record

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Contents

Abstract ii

Acknowledgements iii

Abbreviations & Acronyms iv

List of Tables viii

List of Figures ix

1 Introduction 11.1 Background of Research . . . . . . . . . . . . . . . . . . . . . 1

1.2 Research Questions . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Research Objectives. . . . . . . . . . . . . . . . . . . . . . . . 31.4 Research Methodology . . . . . . . . . . . . . . . . . . . . . . 41.5 Scope of Research. . . . . . . . . . . . . . . . . . . . . . . . . 51.6 Structure of Thesis Report . . . . . . . . . . . . . . . . . . . . 6

2 Overview 92.1 MVNO Architecture and Systems . . . . . . . . . . . . . . . . 92.2 Business Support Systems . . . . . . . . . . . . . . . . . . . . 112.3 Cloud Environment and Architecture . . . . . . . . . . . . . . 14

2.4 Existing Scenario with Telecom Systems on Cloud . . . . . . . 192.5 Application Mapping and Finance . . . . . . . . . . . . . . . . 222.5.1 Application Mapping . . . . . . . . . . . . . . . . . . . 222.5.2 Finance . . . . . . . . . . . . . . . . . . . . . . . . . . 24

3 Action Research 273.1 Action Research Methods . . . . . . . . . . . . . . . . . . . . 27

3.1.1 Action Research Setup . . . . . . . . . . . . . . . . . . 283.1.2 Qualitative Data Analysis . . . . . . . . . . . . . . . . 28

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3.1.3 Interviews . . . . . . . . . . . . . . . . . . . . . . . . . 29

3.1.4 Delphi Method . . . . . . . . . . . . . . . . . . . . . . 303.2 Expert Interviews Setup . . . . . . . . . . . . . . . . . . . . . 313.3 Interview Responses . . . . . . . . . . . . . . . . . . . . . . . 34

3.3.1 MVNO Systems. . . . . . . . . . . . . . . . . . . . . . 343.3.2 MVNO on Cloud . . . . . . . . . . . . . . . . . . . . . 413.3.3 Cost-benefits . . . . . . . . . . . . . . . . . . . . . . . 483.3.4 Implications and Future Prospects . . . . . . . . . . . 513.3.5 Round 2 Results . . . . . . . . . . . . . . . . . . . . . 53

4 Techno-economic Analysis 55

4.1 Mapping MVNO Systems to Cloud . . . . . . . . . . . . . . . 554.1.1 Interview Analysis . . . . . . . . . . . . . . . . . . . . 554.1.2 Application Mapping . . . . . . . . . . . . . . . . . . . 574.1.3 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . 604.1.4 Hybrid Cloud Setup Experiment. . . . . . . . . . . . . 614.1.5 Analysis of Round 2 . . . . . . . . . . . . . . . . . . . 65

4.2 Cost-Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . 674.2.1 Cost Calculations . . . . . . . . . . . . . . . . . . . . . 684.2.2 Opportunity Gains . . . . . . . . . . . . . . . . . . . . 70

4.3 Parameters Evaluation . . . . . . . . . . . . . . . . . . . . . . 714.3.1 Importance in MVNO Context . . . . . . . . . . . . . 714.3.2 Influence of Cloud in MVNO. . . . . . . . . . . . . . . 73

5 Discussion 765.1 Billing as a Service . . . . . . . . . . . . . . . . . . . . . . . . 765.2 Business Model Analysis . . . . . . . . . . . . . . . . . . . . . 795.3 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . 805.4 Future Prospects . . . . . . . . . . . . . . . . . . . . . . . . . 83

6 Conclusion 86

Bibliography 87A Appendix 95

A.1 Questionnaire for Interview Round # 1 . . . . . . . . . . . . . 95

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List of Tables

3.1 MVNO in Finland, adapted from[30] . . . . . . . . . . . . . . . 38

3.2 Results for mapping MVNO systems on cloud . . . . . . . . . 463.3 Results for parameter analysis . . . . . . . . . . . . . . . . . . 483.4 Results for interview round 2 . . . . . . . . . . . . . . . . . . 54

4.1 Analysis for mapping MVNO systems attributes on cloud sce-narios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

4.2 Cost Calculations for MVNO . . . . . . . . . . . . . . . . . . 694.3 Cost Calculations for SugarCRM Implementation . . . . . . . 704.4 Cost Comparison for SugarCRM Implementation . . . . . . . 70

A.1 Mapping of MVNO systems on cloud . . . . . . . . . . . . . . 97

A.2 Parameters affected while moving MVNO systems to cloud . . 97A.3 Resource needs of MVNO systems. . . . . . . . . . . . . . . . 98

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List of Figures

1.1 Thesis Research Methods. . . . . . . . . . . . . . . . . . . . . . 5

1.2 Structure of Thesis Report . . . . . . . . . . . . . . . . . . . . . 7

2.1 MVNO Positioning . . . . . . . . . . . . . . . . . . . . . . . . . 102.2 MVNO Types . . . . . . . . . . . . . . . . . . . . . . . . . . . 112.3 Telecom Operator Systems . . . . . . . . . . . . . . . . . . . . . 122.4 MVNO Business Support System Processes . . . . . . . . . . . . 132.5 Cloud Computing Structure . . . . . . . . . . . . . . . . . . . . 162.6 Advantages of Cloud Computing Services . . . . . . . . . . . . . 172.7 Cloud Implementation of Telco Systems by Carrier Grade Require-

ments, adapted from[45] . . . . . . . . . . . . . . . . . . . . . . 212.8 Telecom Cloud Offerings . . . . . . . . . . . . . . . . . . . . . . 222.9 Possible MVNO Applications Mapping on Cloud . . . . . . . . . 242.10 Cost Analysis Parameters for MVNO Cloud . . . . . . . . . . . . 25

3.1 Delphi Method in Research Environment . . . . . . . . . . . . . 313.2 Expert Interview Setup Scenario . . . . . . . . . . . . . . . . . . 333.3 Layer wise cloud deployment possibilites in Telco . . . . . . . . . 36

4.1 Snapshot - MVNO systems in brief . . . . . . . . . . . . . . . . 564.2 MVNO systems on cloud analysis . . . . . . . . . . . . . . . . . 574.3 MVNO systems mapping according positive response . . . . . . . 58

4.4 Snapshots - MVNO on cloud advantages . . . . . . . . . . . . . 614.5 Hybrid cloud setup for Telco . . . . . . . . . . . . . . . . . . . . 624.6 Hybrid cloud setup experiment architecture . . . . . . . . . . . . 644.7 Analysis of interview round 2 responses . . . . . . . . . . . . . . 654.8 Snapshots - MVNO Cost analysis . . . . . . . . . . . . . . . . . 684.9 Analysis of important parameters in MVNO context . . . . . . . 724.10 Parameter analysis for MVNO on cloud . . . . . . . . . . . . . . 74

5.1 Billing-as-a-Service conceptual architecture . . . . . . . . . . . . 785.2 Major implications while implementing MVNO systems on cloud . 81

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Chapter 1

Introduction

1.1 Background of Research

Telecom operators are moving towards the flat network architectures andsharing of network resources is now possible in this domain by introductionof Long Term Evolution (LTE) and 4G standards [46]. The flat networkarchitecture is lowering the barrier to network sharing initiatives also en-abling the sharing possibilities of Telecom IT systems. The network sharingwas started taking place in the past when MVNOs [30] were introduced.

MVNOs share network resources with MNOs and they implement their ownCustomer care, inventory management and billing systems as part of theirIT systems. Most of the MVNOs are aggressive on the pricing of telecomproducts and services offered and price differentiation is vital in MVNO busi-ness operations. MVNOs pay large amount of their spending on buying thenetwork capacity from MNOs as they introduce products and services whilecompeting against the MNO offerings. So its important for MVNOs to lowerthe operational expenditures by lowering the cost of running their IT systemsin place to stay in the highly competitive market.

Now the cloud computing technology [6]has given possibility to host sys-tems which require high processing power and large data storage capacityin an efficient manner. In addition to that, cloud computing environmentsprovide possibility of hosting Infrastructure, Platform and Software as ser-vice by dynamically setting up the use of different types of cloud. Privatecloud gives possibility to share in-house IT resources efficiently while sharingwith the processes, batch jobs and services in a highly secured and reliablefashion. Public cloud gives possibility to use public computing resources dy-namically and on pay-as-you-go basis which gives very cost-beneficial setupfor processing the complex data. Hybrid cloud combines private and public

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CHAPTER 1. INTRODUCTION 2

cloud computing space for managing sensitive data storage and processing

in-house and consuming the public computing resources whenever there is aneed [64].

In highly competitive market of telecom offerings, every operator is tryingto reduce the operational expenditure in one or the other way and cloud en-vironment gives such possibility to minimize the expenditure and maximizethe revenues. Telecom networks have various functions and network elementsthat might be implemented in clouds, called a Telecom Cloud. Operatorscan utilize all kinds of cloud computing services, including Infrastructure(IaaS), Platform (PaaS) and Software as a Service (SaaS). On IaaS layercommunication, computation and storage services can be provided by the

clouds. PaaS layer has close links to Business and Operations Support Sys-tems (BSS/OSS)[40]. Finally, SaaS matches the service delivery platforms.The Telecom Cloud can be supported with private, public and hybrid cloudslocated outside of the operator domain, and separated by open APIs [13].

In cloud environment, however, the mapping of application is also impor-tant as to meet with critical SLA and throughput requirements [ 45]in telecomsector. Also nature of applications in Telecom IT systems vary significantlyand mapping of applications allows choosing cloud deployable applicationsaccording to their attributes. Mission critical telecom systems may haveimpact of the complex telecom operations and using cloud for such systems

may not be a good choice for telecom operators. Cloud provides cost-benefitswhile sharing the ideal IT resources with other in-house or public applica-tions, security and availability is a concern for telecom operators as someof the telecom operators think cloud is not ready for some of the telecomsystems. Its also important for telecom operators to know how and whatcost-benefits can be driven by implementing their telecom systems on cloudas there factors involved such as application migration, network usage, in-tegration and enhancement possibilities which may impact the operationalexpenditure for telecom operators. So the architectural changes and cost-benefits are very important factors here to consider while moving telecomsystems to the cloud.

1.2 Research Questions

In the highly competitive telecom services market, every operator seeks possi-bilities to reduce the costs and to maximize the revenues [ 58]. The cloud tech-nologies provide several ways like IaaS, PaaS and SaaS to improve CAPEXand OPEX values by migrating or implementing telecom systems on cloud.Because MVNOs share various network resources with MNOs, MVNOs can


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become natural appliers of clouds. However, the mapping of MVNO ar-

chitecture to the cloud has to be carefully planned because of the businesssensitivity of MVNO systems. The research questions for this thesis are de-rived in the direction of MVNO applications mapping possibilities and relatedcost-benefits on cloud computing architecture. The main research questionis followed by the sub-questions which are narrowed-down to illustrate im-portant areas of the thesis research.

Main Question:How and which Business Support Systems (BSS) can be deployed for

MVNO on Cloud computing environment as to offer high performance, cross-location architecture and cost-effective system to share resources among other

operators?Sub Questions:

1. Which BSS can be deployed on cloud? (BSS Application Mapping onCloud)

2. How will the current architecture be affected in this case?

3. If high-performance will be gained with cloud implementation? How?(SLA, Throughput in focus)

4. How much cost-benefits can be driven? How much cloud resourcesshould MVNO buy?

5. What are the implications of BSS cloud deployment? (Like security,government laws etc.)

6. How much carbon footprints can be saved by using Cloud?

7. How big is the market? What changes will business models have in thiscase?

1.3 Research ObjectivesThe objective of the research defines the criteria and framework for answeringthe research questions. It also defines the evaluation criteria for research anda structure for research while deriving step by step procedure to answer theresearch question.

The main objective of the thesis research is to design the mapping ofBSS applications on Cloud for MVNOs and do financial analysis to find outthe cost-benefits related to the implementation. The following objectives


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establish the research direction for the thesis while answering the research

questions stated in section 1.2:

1. Define criteria and methodology for the thesis research to map MVNOsystems to the cloud and finding related cost-benefits.

2. Gather qualitative data from industrial and research partners relatedto the thesis area of research and analyze it further to derive the results.

3. Conduct architectural and design changes study for MVNO systemand map MVNO systems to the cloud taking qualitative data intoconsideration.

4. Calculate cost-benefits while finding impact on MVNO capital and op-erational expenditures when moving MVNO systems to the cloud.

5. Evaluate parameters like performance, revenue, market, carbon foot-prints, cloud resources and business model changes for the MVNO sys-tems on cloud implementation.

6. Discuss the solution for providing Billing as a Service for MVNOs usingcloud computing environment using the analysis conducted during thethesis research.

7. Describe the technical and other implications for the MVNO systemimplementation on cloud. Also discuss the future prospects for thethesis research based upon the input gathered during qualitative dataanalysis.

1.4 Research Methodology

Action research will employed as the main research method involving re-searchers and practitioners together. Expert interviews will be conducted

based upon their area of expertise with pre-formatted and validated ques-tionnaire. The Delphi method [49] will be exercised for the interview for-mations. The business critical information and knowledge imparted frominterviews will remain confidential and anonymous in the thesis report andresearch publications.

Following methods shall be employed during the thesis research for whichthe a brief agenda is illustrated in Fig. 1.1:

Literature Review


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Figure 1.1: Thesis Research Methods

Expert Interviews

Design/Architectural Study

Statistical/Financial Analysis

Business Model Analysis

1.5 Scope of Research

Scope of the research is limited to the MVNO systems and especially thebusiness support systems in place for the MVNOs. This is due to the fact


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that most of the MNOs have implemented complex in-house telecom IT sys-

tems which hold large amount of customer sensitive data. Telecom operatorsbelieve that the cloud is not yet ready to hold such complex, mission criticaland data sensitive systems[38].

MVNOs, on other hand, have systems which are light weight in natureand hold small amount data and configurations. Some of the MVNOs havealso outsourced their IT systems to the Business process outsourcing compa-nies. So its easy for the MVNO systems to move to the cloud compared tothe IT systems of large MNOs. Also the Operation Support Systems includenetwork elements and switches which are required to fulfill carrier grade SLAand in these cases, telecom operators believe that cloud is not yet ready to

hold such systems. So to make the viable case of telecom systems imple-mentation on cloud, MVNOs and their Business Support Systems have beenconsidered for this thesis research. MVNO in this thesis research includesMVNE, Service Providers (SP), and resellers in telecom value chain.

1.6 Structure of Thesis Report

The structure of the report will provide information on how the report willproceed and what types of different research methods are used to support theobjectives of the thesis. Fig. 1.2 depicts the structure and blocks of thesis

report which are explained as following.The first part of report starts with Introduction to the report. Intro-

duction also includes research problem, research question and sub-questions,research objectives, research methods and also the research framework ordesign. It also comprises of background and scope of the research beingconducted as part of the report.

The second part mentions some theoretical aspects needed to build thebackground of the report. This part consists of several topics supported byliterature reviews and expert interviews. First topic on MVNO systems ex-plains the MVNO positioning in telecom operator environment and different

MVNO types along with MVNO operation and business in brief. Secondtopic focuses on the business support system along with its positioning intelecom IT systems environment and processes involved in MVNO context.Third topic describes the cloud computing architecture and related benefitsof cloud implementation. Fourth topic discusses the existing scenario of cloudin telecom system environments. Fifth topic illustrates the theoretical partfor the application and finance related to the MVNO systems implementationon the cloud.

The third part of the report carries out qualitative data analysis in which


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Figure 1.2: Structure of Thesis Report

action research methods and the results are described in detail. First sub-section mentions different action research methods used in the thesis in detail.

Second sub-section describes the expert interview setup and the Delphi pro-cess followed while conducting interviews. Third sub-section demonstratesthe results gathered for the semi-structured interviews conducted as part ofthe thesis research.

Fourth part analyzes the gathered results with techno-economic meth-ods in a structured fashion. First topic maps the MVNO systems on cloudtaking views from the action research conducted. Second topic calculatesrelated cost-benefits taking the cost-structure and pricing information intoconsideration. Third topic evaluates different parameters mentioned in the


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research questions.

Fifth part discusses different aspects derived from the thesis action re-search which are related to the telecom systems implementation on cloud.First section discusses and analyzes an innovative solution of Billing-as-a-service for telecom operators using cloud architecture. Second section ana-lyzes market and business model changes for telecom system on cloud. Thirdtopic demonstrates technical and other implications while moving telecomsystem on cloud. Fourth section discusses future prospects in the directionof thesis research.

Sixth part concludes the thesis research while briefly reviewing all partsof the thesis report.


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Chapter 2

Overview

2.1 MVNO Architecture and Systems

Mobile Virtual Network Operator i.e. MVNO [30] is a telecom servicesprovider that does not own licenses for radio frequency spectrum. MVNObuys communication bandwidth or radio frequency spectrum from MobileNetwork Operators (MNO) which allow physical channel usage for MVNO.MVNO does not require having all infrastructures needed for telecommuni-cation but it shares such infrastructure with MNOs paying rent for the leased

spectrum and/or systems.MVNOs usually compete with the price differentiation rather than servicedifferentiation [56] as to offer the lowest possible prices to their customersfor the service offerings. They provide telecommunication services in formof voice and data services along with several value added services in general.Several MVNOs also have a long term exit strategy in place. MVNOs canalso work across multiple geographical locations and thus having geographicaldifferentiation. In this way, MVNOs versatile operations background can bedivided into categories like:

Fixed network operations

Network operations in different geographical market

Operations with non-telecom business (must have strong brand)

Mobile network operators have classifications based upon their area offunctioning across the telecom services systems and processes. MNO hasability to control the whole value chain as it owns all or most of the systemsand processes across the mobile telecom service provider value chain. MNOcan rent their systems, network and services to other participants in the value

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CHAPTER 2. OVERVIEW 10

Figure 2.1: MVNO Positioning

chain based upon the contracts or agreements [8]. MVNO and MVNE buynetwork capacity from MNO while paying the network usage cost on pay-as-you-go manner. MVNO further provides services to the end-users owningbilling and marketing systems. MVNE sells network capacity and services

[48] to service providers and in some cases to MVNOs. Service provider sellsservices to the end-users and in some cases it focuses solely on marketing,branding and reselling the services i.e. Brand Operator. Fig. 2.1 shows theclassification and positioning of network operator types in mobile networkservice providers value chain.

MVNO generally owns services and content delivery, billing, customermanagement and marketing systems. In some cases, MVNO also implementsswitching and networking elements on its own to have more service fulfillmentpossibilities [9]. MVNO has full control in different ways over their inventory,resource management, SIM card delivery, marketing and branding systems.

Depending on the market share and financial situations, MVNO buy orimplement telecom software elements for itself which differentiates it fromother MVNOs. Below are the types of MVNO[30]based upon the systemsit implements or owns also presented in Fig. 2.2:

1. True MVNO implements HLR, Switching and Intelligent Networkplatform on their own in addition to Services, Billing and Marketing.Such MVNO has control over service and tariff design, service imple-mentation and differentiation and service marketing as well as brand-ing.


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Figure 2.2: MVNO Types

2. Weak MVNO implements Billing, Customer care and Marketing whilesharing HLR, Switching and Services with MNO. Such MVNO hascontrol over service and tariff design and service marketing as well asbranding.

3. Reseller sales network services by implementing Marketing and Brand-ing. It only sales pre-packaged services while buying it from other op-erators. Usually, resellers own just marketing, branding and in somecases, customer management integrated with other operators.

On an additional note, MNO shares network capacity or radio spectrumwith MVNOs and MVNO runs the similar business while selling telecomproducts and services to the subscriber base. This scenario generally cre-ates the competitions among MNOs and MVNOs depending on the serviceofferings and subscriber group in focus. MVNOs have to pay high cost tobuy the network capacity from incumbent MNOs [17] and MVNOs spendthe large part of their expenditure for buying the network capacity. In somecases, MVNOs pay the cost for getting the network capacity on no of existingsubscribers (churn) basis and in this case, such network expenditure can betaken OPEX[57] for MVNOs.

2.2 Business Support Systems

Fig. 2.3 shows the traditional architecture of telecom operator system [40]which consists of three layers:

Business Support System (BSS) Layer

Operation Support System (OSS) Layer


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Figure 2.3: Telecom Operator Systems

Network Layer

Along with the system layers, operator systems also include integrationenablers to provide the interconnection between layers [21] which providesapplication connectivity and solution flexibility. Each of three layers hasspecific functions for the operator systems which are explained below:

1. BSS layer: BSS layer focuses towards the customer and financialtransactions segments of telecom operator systems. It also managespartner and marketing functions of operator systems. The front-endoperations for self-service portal for the end-users as well as for cus-tomer service representatives (CSR) are included as part of BSS. BSS


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Figure 2.4: MVNO Business Support System Processes

has integrations with OSS which can be configurable.

2. OSS layer: OSS layer has systems for managing network functionsof telecom operator systems. The layer is built around the products,services and resources inventory. OSS also includes several service man-agement systems and provisioning. OSS layer has complex integrationswith network layer.

3. Network layer: Network layer has systems managing network in-frastructure for telecom operator systems. Network layer can managemultiple networks together with one system in place.

As shown in Fig. 2.4, MVNO business support systems mainly possessthree processes[14]involving various BSS components or systems[29] [27]inplace mainly in case of post-paid subscriptions scenario:

1. Taking subscription orders: When subscriber (end-user) wants tobuy subscription from MVNO shop or web-shop; the self-service portal


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or CRM comes into the picture. Subscriber herself or Customer Ser-

vice Representative (CSR) enters subscriber details along with the priceplan, offers and discount plan are added to the system via CRM. Ordermanagement system then processes the order made in CRM or portalgetting offer related information from product catalog. Order manage-ment system then gets information of resources such as MSISDN, SIM,IMSI, Data number etc from resource management system or resourceinventory. Customer management system then enters customer-specificdetails like one time and recurring charges of the offers to the billingsystem database. After successful order completion BSS informs OSSand network systems to activate the subscribers SIM and MSISDN.

2. Processing bills: MVNO gets the Call Details Records (CDR) fromthe network operators from whom MVNO has bought the network ca-pacity or radio spectrum. Call detail records hold the information ofthe calls (voice and data) being made including the destination, callstart and end time, duration, call type etc. Mediation system gets theCDRs as an input from different network operator systems, analysesthe data and prepares data in a generalized format for the usage ratingpurpose. Rating system rates the calls based upon the prices fetchedfrom product catalog. Billing system calculates individual charges bothone time and recurring for the subscribers and enter the detail into the

database. Bill formatter gets the data from all BSS systems to preparethe printable bills and pass it to the distribution channel further.

3. Bill payments: Subscriber pays the bill via MVNO shop or web-shopor via online payment gateway. BSS has integration with the paymentgateways to receive payments from the subscribers. Account receivablesystem takes care of integration with CRM as well as payment gatewaysand makes database entry for the payments received from subscribers.Collection system collects the data from Account receivable and barssubscriber services if payment hasnt been made until the payment due

date. Collection also informs OSS and network systems to block thenetwork services for subscriber. After payment received for subscriber,collection unbars subscriber services again.

2.3 Cloud Environment and Architecture

According to US National Institute of Standards and Technology (NIST) [6],

Cloud computing is a model for enabling convenient, on-demand


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network access to a shared pool of configurable computing re-

sources (e.g., networks, servers, storage, applications, and ser-vices) that can be rapidly provisioned and released with minimalmanagement effort or service provider interaction.

Cloud computing [5]is a utility service for computing resources just likewater or electricity where users utilize services sharing with others and payingthe cost on pay-as-you-go or subscription basis. Cloud is a mixture of data-center hardware and software. Cloud provides benefits to use several serverinstances simultaneously for complex processing tasks. For example, largebatch-processing task can be executed using 1000 cloud instances in one hourwhich is equivalent one server for 1000 hours.

Cloud computing provides three aspects in form of hardware virtualiza-tion point of view:

1. Illusion of infinite processing power for cloud consumers.

2. Elimination of up-front investment in buying server capacity.

3. Ability to utilize computing resources on pay-per-use model just likethe utility services.

As defined by US National Institute of Standards and Technology (NIST)[6], there are four different cloud computing deployment models (See Fig.2.5)

giving possibilities to use cloud deployment according to the application orsystem infrastructure needs:

Private cloud: The cloud infrastructure is operated solely for anorganization. It may be managed by the organization or a thirdparty and may exist on premise or off premise.

Community cloud: The cloud infrastructure is shared by severalorganizations and supports a specific community that has sharedconcerns (e.g., mission, security requirements, policy, and com-pliance considerations). It may be managed by the organizations

or a third party and may exist on premise or off premise.Public cloud: The cloud infrastructure is made available to thegeneral public or a large industry group and is owned by an or-ganization selling cloud services.

Hybrid cloud: The cloud infrastructure is a composition of two ormore clouds (private, community, or public) that remain uniqueentities but are bound together by standardized or proprietarytechnology that enables data and application portability (e.g.,cloud bursting for load-balancing between clouds).


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Figure 2.5: Cloud Computing Structure

US National Institute of Standards and Technology (NIST) [6]has defined

three main types of cloud services models which can be used to build cloudbased services or application deployments on cloud:

Infrastructure as a Service (IaaS): The capability provided to theconsumer is to provision processing, storage, networks, and otherfundamental computing resources where the consumer is able todeploy and run arbitrary software, which can include operatingsystems and applications. The consumer does not manage orcontrol the underlying cloud infrastructure but has control overoperating systems, storage, deployed applications, and possibly

limited control of select networking component (e.g., host fire-walls).

Platform as a Service (PaaS):The capability provided to the con-sumer is to deploy onto the cloud infrastructure consumer-createdor -acquired applications created using programming languagesand tools supported by the provider. The consumer does notmanage or control the underlying cloud infrastructure includingnetwork, servers, operating systems, or storage, but has controlover the deployed applications and possibly application hosting


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Figure 2.6: Advantages of Cloud Computing Services

environment configurations.

Software as a Service (SaaS):The capability provided to the con-sumer is to use the providers applications running on a cloud in-frastructure. The applications are accessible from various clientdevices through a thin client interface such as a Web browser (e.g.,Web-based email). The consumer does not manage or control theunderlying cloud infrastructure including network, servers, oper-ating systems, storage, or even individual application capabilities,with the possible exception of limited user specific application

configuration settings.

There are certain attributes for the cloud [14] which define the archi-tecture and related services on the cloud. These attrbitues are categorizedas following while explaining how they provide various functionalities andbenefits to the IT industry in general:

Cloud Infrastructure provides virtualization of hardware resources. Cloudinfrastructure is simply the virtual servers in cloud. Its beneficial forlarge-processing tasks where virtualization is used to reduce time and


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cost significantly. With ability of cloud to provide server instances al-

most infinitely, it eliminates need to buy server resources and provideeconomy of scale by sharing cloud resources.

Cloud Storage is an effective and efficient medium of storing enor-mous amount of data with pay-you-you-go service model. In thiscase, cloud also provides services like data synchronization, NetworkAttached Storage (NAS), database-like functionality and also unstruc-tured data services. Data access to large amount of data is possibleanytime anywhere by using cloud storage infrastructure and services.There are certain limitations due to issues with availability, transactionsupport and data transfer bottlenecks in cloud.

Cloud Platform is used to build, test, deploy, and manage applicationson cloud with storage and processing power of cloud itself. Cloudplatforms are low-cost, reliable, accessible anywhere anytime and highlyscalable with provision of web-based services environment. Portabilityis an issue because as soon as applications or services start runningon one cloud platform. It becomes complicated task to move systemsdeployed on one cloud platform to another cloud platform or back tothe original platform.

Cloud Applications provide Software-as-a-service model which furthereliminates the need to install & configure applications on cloud. Alongwith this, it also provides cloud benefits related to virtualization &storage. Another model is S + S (Software + Service) on cloud inwhich cloud hosts use rich client applications interface into an extremelyhosted environment with ability to work in offline mode and synchronizedata when online.

Cloud Core Services provide customer services such as service-to-serviceintegration, payment, billing services, identity management, search,business process management services etc which can be consumed in-

dividually or on system to system integration basis.Cloud computing provides several technological and business related ad-

vantages as presented in Fig.2.6. Cloud can provide different deploymentservices models as described earlier. So in a way; cloud can provide anythingas a service including infrastructure, platform, software etc. New models likeSoftware + Services provide use rich client application hosted on cloud andan interface to work with such application. Cloud provides different archi-tectures as well as deployment service models and by using them its possibleto drive resource cost disruption and delivery innovation.


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Cloud provides several standard services [4]which are also known as core

cloud services mentioned in one of the cloud attributes earlier. These servicesenhance the functionalities at customer end and provide tools to monitorcloud usage, activities, performance, transaction etc. Different cloud servicesand deployment models also provide differentiations as per customer needsand they help in changing end customer behavior patterns.

Its important for any platform to generate complementary products andservices to achieve network externality and positive feedback [33]in the mar-ket. Cloud has ability to be flexible because of the virtualization and thestorage platform it provides. Along with different service delivery models,its possible to innovate different services and products [18] by using cloud

platform. Also the economy of scale is easily achievable due to the factthat cloud provides an illusion of infinite hardware resources for processingcomplex tasks and storing large amount of data.

New business models like flat rate pricing, pay-per-use can be establishedsuccessfully using cloud architecture. Also its possible to cut the CAPEXcompletely or partly for any company by using cloud services cleverly andalong with it, cloud drives reduction in the OPEX sharing computing re-sources with others[63]. This way cloud helps future business architecturesin transition.

2.4 Existing Scenario with Telecom Systemson Cloud

Cloud in Telco is believed to be a new consumption and delivery model [11].Cloud implementation in Telco provides benefits like;

Economy of scale: Cloud provides very flexible architecture of usingcomputing and storage resources on utility basis only when required.Cloud is an illusion of infinite for hardware resources available on de-mand for complex processing tasks and large data storage. This was

its possible to achieve economy of scale for telecom systems wheneverneeded. In telecom systems, many systems have peak load of user traf-fic at particular hours in a day and cloud gives flexibility to utilize ITresources catering to any amount of peak load when necessary.

Resource sharing and centralization: Cloud eliminates the need of in-dividual IT hardware and software resources where it provides pos-sibility to run the systems at one centralized location and users canshare software and services by web-based clients. The SaaS and S +


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S models mentioned in section 2.3 can be utilized here for sharing re-

sources. Cloud also provides sharing possibilities which is useful toconsume ideal resources from other system for processing tasks or letother systems use ideal resources. This is possible in case of telecom ITsystems including self-service portals, CRM, billing systems and otherindividual IT resources.

Cost reduction: Cloud has business model of pay-per-use paymentswhich gives possibility to let machines go when they are out of re-quirement. Cloud also gives option to start with small amount of re-sources and increasing resource utilization further when there is a need.

This elastic attributes make cloud a strong candidate to reduce telecomCAPEX and OPEX.

Cloud services to enterprises and consumers: Cloud is relatively newbusiness phenomena in the market which gives telecom operators apossibility to innovate and introduce new cloud based services to theconsumer and enterprise market. Also telecom operators can using thenetwork, branding image and marketing channels to sale cloud basedofferings to the consumer market.

In the current scenario, Major Telcos are more focused on the providing

cloud computing services rather than implementing their systems on cloudcomputing platforms [10]. The main reason behind this is the critical SLA re-quirements defined for telecom systems and services especially in OSS area.Service Level Agreement or SLA is an important requirement as well asparameter for telecom systems delivering various telecom carrier-grade ser-vices. SLA is a document that specifies the rules of legal contract betweensubscribers and service providers also stating technical performance details.In telecom industry, SLAs are critical and often regulated by government.Telecom vendors and operators often claim that clouds cannot yet meet thetelecom Service Level Agreement (SLA) requirements [45][26]. For that rea-son a cautious approach is recommended. According to that a three steproadmap depending on the carrier grade requirements is proposed as shownin Fig. 2.7. Firstly, operators can utilize clouds in their support systems,then step into tactical systems and finally to strategic systems [66].

Telecom systems have functions and services that are being implementedon cloud by several operators, service providers and software vendors. Thepossible scenario of cloud implementation of telecom software and services[45] is depicted in Fig. 2.8.

Cloud implementation for telecom systems vary as per the applicationfeatures and attributes. There are different patterns[35] to deploy telecom


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Figure 2.7: Cloud Implementation of Telco Systems by Carrier Grade Require-ments, adapted from [45]

systems on cloud using utility based services model. Cloud implementationfor telecom software and services [22] can be divided into three categoriesmentioned below, considering the model as one of the possiblities to deploytelecom systems on cloud:

1. Infrastructure-as-a-service (IaaS): Telco operators store large amountof customer data ranging from network usage, billing data, marketingdata and customer specific details. Cloud provides efficient mediumto store data which can be utilized further for the processing on cloudcomputing environment. Processing of xDRs (CDR and IPDR), billingsystem and business intelligence platforms require large amount of pro-cessing and cloud infrastructure provides cost beneficial platform forthis. Networking especially I/O operations among IT systems on cloudprovides performance optimizations for these system operations.

2. Platform-as-a-service (PaaS):Cloud provides a platform to deployBSS/OSS or part of these support systems on cloud to drive cost-benefits and better performance. Along with this economy of scale isimportant for these systems as to possess ability to tackle situationswith support system operations on special events for e.g. New YearsEve generate large amount of SMS traffic and a significant delay hasbeen seen in such cases. Cloud provides a platform to process extraamount of data without buying permanent resources.


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Figure 2.8: Telecom Cloud Offerings

3. Software-as-a-service (SaaS):Cloud is used to deploy service deliv-ery platforms and enterprise applications thus providing software-as-a-service with cost-benefits and economy of scale. A good example issalesforce.com which provides online CRM service on cloud for enter-prises.

Public and private both cloud architectures could be used along with themixture of both of them i.e. hybrid cloud. Telco and several other genericAPIs are used as connectors between cloud and Telco domain.

2.5 Application Mapping and Finance

2.5.1 Application Mapping

Application mapping[14] is important as not all application can be hosted oncloud or developed on cloud architecture or migrated to the cloud. It will beimportant to answer questions before implementing or migrating applicationson cloud:


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Will the application run successfully on cloud?

Will it be possible to migrate existing application to cloud successfullywithout any impact?

Could new functions or applications be developed on cloud withoutadding complexity to the integration?

Will migration on cloud architecture be cost-beneficial?

Answers to the above mentioned questions may not be the same for all ap-plication as the answers depends on several attributes of application which

will be mapped to the cloud. Each application solves a purpose and de-pending on the purpose application can be mapped to different attribute,for example, Billing and Order Management system have attributes suchas transaction, locking and integration with other external systems. Twoapproaches shall be taken into consideration to decide whether to move ap-plication on cloud or not:

1. Identify the application attributes and key factors important for ap-plication to work seamlessly on cloud. Map these attributes to thecloud service attributes to validate if cloud implementation for thatapplication will be feasible or not.

2. Evaluate cloud services providers to see if application or system at-tributes are matched can be hosted feasibly along with cost-benefitsgained from the implementation.

Based upon the common theories; several MVNO systems can be put intothe cloud computing environment such that the service delivery, customermanagement and telecom carrier grade requirements are least affected. Aspresented in Fig. 2.9, resource inventory, Services & content delivery, Billing& customer care systems [18] [15] are the viable candidates to move MVNOTelco systems to Cloud. MVNOs can share such systems on cloud witheach other which ultimately leads to higher cost-benefits for the MVNOs.However, the analysis and evaluation shall be done for these systems orapplications to find out if they are actually the viable candidates for thecloud implementation. The thesis analysis for application is done in section4.1 taking results of action research into consideration.

A Common Cloud Business Management platform [51] can be built forMVNOs which can provide:

Cloud based Platform as a Service (PaaS) for MVNO systems


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Figure 2.9: Possible MVNO Applications Mapping on Cloud

On-demand platform to deliver services as well as related content

On-demand run for the billing system

Hosting resource inventory and large customer database

2.5.2 Finance

Network operators focus on maximizing their profits from the subscriber baseand relative ARPU (Average Revenue per User) [50]. The basic calculationfor network operator profit can be presented with the below equation [30] :

Profit= ARPU SubscribersOPEXCAPEX (2.1)

Where;

ARPU = Average Revenue per User includes roaming and terminationapart from the revenue billed from subscribers. To maximize profits,network operators try to increase the usage of the services and offeringsby providing more and better products.

Subscribers = Number of subscribers including existing subscriber baseand target subscriber base for the period of profit calculation. To maxi-mize profits, network operators try to maintain existing subscriber base(churn) and acquire new subscribers by service or price differentiations.


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Figure 2.10: Cost Analysis Parameters for MVNO Cloud

OPEX = Operational Expenditure which includes administrative cost,marketing and branding expenses as well as expenditure on humanresources.

CAPEX = Capital Expenditure which includes network setup, equip-ment, licenses expenditures. In case of MVNO, fees to the MNOs fornetwork usage can be taken as CAPEX. Network operators generallysplit up the CAPEX to be covered in the course of 2-5 years of theiroperations.

While implementing MVNO systems on the cloud, CAPEX and OPEXare the most affected factors in MVNO profit calculations. Its obvious fromthe profit calculation equation that as we decrease CAPEX and OPEX forMVNO, the profit increases. So while analyzing the cost for MVNO systemsmigration to the cloud, CAPEX and OPEX are very important parametersto be considered [11]. Along with CAPEX and OPEX, several additionalNon-OPEX parameters as well as opportunity gains should be taken intoconsideration as well. Fig. 2.10 presents cost analysis parameters and relatedcomponents while implementing MVNO systems on the cloud.


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1. CAPEX: CAPEX is a capital expenditure required by telecom opera-

tors to spend while building the new systems or infrastructure. Devel-oping or migrating existing applications to the cloud requires spendingexpenses for enhancements in applications. Cloud deployment and in-tegration requires expenses for setting hybrid or private cloud infras-tructure and integration among systems.

2. OPEX: When hybrid or public cloud comes into the picture, the ex-penditures shall be counted as operational expenditures. Cloud relatedOPEX includes per unit charge for processing, per GB charge for stor-age and high bandwidth network charges.

3. Non-OPEX: Carbon taxes, VAT and other surcharges shall be takeninto account as non-OPEX charges and shall be counted in the cloudcost calculations.

4. Opportunity Gain: By using cloud, there are benefits gained apartfrom cost reduction as well. Shorter time-to-market [39] and optimumuse of hardware resource driven by cloud elasticity shall be taken asopportunity gained via cloud.


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Chapter 3

Action Research

3.1 Action Research Methods

Action research [42] is done for real situations and real organizations sug-gesting improvements at the end as a result. Action research is an importantmethod as it consists of actual practices, data and results. In action researchresearchers and practitioners come together. Problem finding, action analysisand result reflections are important in action research.

For information systems, action research serves as an important process

where current situation analysis will find problems. Action intervention willprepare the solution while designing, developing and implementing it alongwith reflective learning which analyzes the collected data and discuss lessonslearned from the analysis. Researchers take tasks such as analysis, interviews,team support, observations, findings and result publishing. One anotherimportant aspect regarding industry or area specific action research is thatresearch helps industry and institutions to understand the problem situationwhile tackling down the resolution for the problem.

The role of action researcher is very important for practicality of theresearch. Researcher should be neutral to the situation while collecting aswell as analyzing details and data related to the situation. Researcher shouldtake a look at both positive and negative aspects of the data or evidence forthe situation. Researcher should set himself free of any perception or biasedopinions he has regarding the situation. Also sensitivity is another aspectto be taken care of by the researchers to respond to delicate distinctions ofdata.

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CHAPTER 3. ACTION RESEARCH 28

3.1.1 Action Research Setup

To setup the action research project, there are certain steps need to followedin order to get correct results. These steps are defined as following:

Problem Diagnosis: Find a practically relevant problem which also hasresearch potential. Obtain a general and comprehensive understandingof the topic.

Action Intervention: Develop and define action research methods andthe research setup. Conduct the research and analyze the results.

Reflective Learning: Derive final results while gathering them from allsources of research evidences. Build the report and documents repre-senting the research objectives.

3.1.2 Qualitative Data Analysis

Qualitative data analysis [42] focuses on relatively small samples selectedpurposefully. Logic and power of purposeful selection derives from the em-phasis on in-depth understanding of the research topic. Sample size dependson what you want to know, what will be useful, what will have credibility,and what can be done with available time and resources. Its also impor-tant to know if the sampling strategy supports study purpose. The validity,meaningfulness and insight gained through qualitative data analysis havemore to do with the information richness of the cases selected and observa-tional/analytical characteristics of the researcher than the sample size.

Three principles are defined for qualitative data collection: [62]

Use multiple sources of evidence

Triangulation of data sources (data triangulation)

Triangulation among investigators (investigator triangulation)

Triangulation of perspectives to the same data set (theory trian-gulation)

Triangulation of methods (methodological triangulation)

Create a cases study database

Case study notes, documentation

Maintain a chain of evidence


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The principle is to allow an external observer (reader) to follow the

derivation of any evidence, ranging from initial research questionto ultimate case study conclusions.

Six sources of evidence are supported for the qualitative data analysis:[62]

1. Documentation

2. Archival records

3. Interviews

4. Direct observation

5. Participant observation

6. Physical artifacts

Three kinds of qualitative data can be taken into consideration derivedby following action research methodologies: [42]

1. Interviews

2. Observations

3. Documentations/Literature Reviews

The main method of research in this thesis is supported by Delphi processwhich involves all of the above mentioned methods. The expert interviewsare the most important method which is involved in the thesis action researchand therefore this method is described below in detail.

3.1.3 Interviews

Interviews [62] are considered as one of the very effective method of qual-itative data research where expert opinions and practical knowledge of theinterviewees help forming the qualitative results. The basic strategy for theinterview is to gather multiple sources of evidences, create case study likedatabase and maintain chain of evidences. During the qualitative data anal-ysis involving interview as primitive method of analysis, there are certainpoints to be considered. Planning for the interviews is the first step in whichthe data collection techniques should be linked to research questions. Goalsfor the interview analysis should be defined afterwards keeping interviewswithin the scope of the topic and not forgetting the sensitivity. Formulating


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interview questions is an important part to have neutrality and address right

topics throughout the process. Validation by testing / piloting the questionsfor interview is necessary to make sure the quality of action research.

Techniques such as audio-visual recording and note taking can be em-ployed to collect the interview responses. Identifying interviewees is alsoimportant where interviewees can be an individual or part of research / fo-cus group. Format of questions decides the structure of the interview andresponses. Questionnaire can be survey based, structured, Semi-structured,thematic or open depending on the research requirements. Order of ques-tions is essential to derive and formulate the results. Response types canbe selection from predefined choices, quantity, and frequency. Open ques-

tionnaires often have responses in interviewees own words including theiropinions, explanations etc. Interview can be in format of an open discussionamong interviewees in focus groups and interviewer herself. Its sometimesmeaningful to also note the noticing pause, hesitation, laughter, defensiveexcuse from interviewees.

3.1.4 Delphi Method

Delphi method [49] is an iterative process to collect and filer out the anony-mous opinions from the group of experts or customers or researchers using

the data collection tools and techniques interwoven with the feedbacks andintermediate result analysis.The goal of Delphi research is to improve understanding of the problems,

processes, future prospects, opportunities, solutions, ideas or to develop fore-casts. Classic Delphi method varies by the group size, question formats, datacollections processes as well as tools and techniques involved in the research[47].

Some of the important aspects of Delphi method are described as below:

Anonymity of interviewees or participants

Iteration and feedback mechanism Result aggregation of the responses received

The basic structure of classic Delphi method is described in Fig. 3.1:The classic Delphi method involves steps [49] described below in brief:

1. Develop the Research Question

2. Design the Research


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Figure 3.1: Delphi Method in Research Environment

3. Research Sample

4. Develop Delphi Round One Questionnaire

5. Release and Analyze Round One Questionnaire

6. Develop Round N Questionnaire

7. Release and Analyze Round N Questionnaire

8. Verify, Generalize and Document Research Results

Based upon the above described method the expert interview setup methodfor the action research in this thesis has been derived. In the exit interviewsetup for this research, two rounds have been considered following the stepsdescribed in this section. The exit interview setup and also the steps for theDelphi method involved in the setup are described in detail in next section.

3.2 Expert Interviews Setup

The expert interview setup is based on the Delphi method described in thelast section. This setup includes two interview rounds of interview where first


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Figure 3.2: Expert Interview Setup Scenario

into consideration. Questions were validated by the instructor and

questionnaire is modified taking the instructors feedback into concern.Round one was organized as face-to-face interviews so that discussionsare possible with the experts. Interview responses were recorded andnotes are taken down to analyze the responses further.

5. Release and Analyze Round One: Intermediate responses werecollected from the Delphi round one results and analyzed to get thecommon answers to the questions. Results were formatted for bothopen and structured question-answers.

6. Develop and Conduct Round Two: Questionnaire for Delphi roundtwo was structured questionnaire narrowed-down for the thesis specificanalysis of application mapping and finance related to MVNO systems.Feedback was added from the round one so that experts get the com-mon opinion and responses considered by the other experts.

7. Release and Analyze Round Two: Round two responses were col-lected from the responses got for the structured questionnaire and an-alyzed to modify the round one response where it was necessary.


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8. Verify, Generalize and Document Results: The results were ver-

ified further with all the responses received from the experts in bothrounds of Delphi process. Results were then generalized where com-mon results were taken together and differences were marked and docu-mented as well. Further analysis was done and documented in followingsection based upon the interview results.

3.3 Interview Responses

3.3.1 MVNO Systems

Question:How does MVNO system work? (The main focus is on Business Support

Systems). What are the integral parts of the system? Please explain thearchitecture in brief. Also explain MVNO business and operations in brief.

Response:When setting up the MVNO, the first question need to be answered at

initial stage is why to setup MVNO? It generally takes 50-150 million eurosto setup a small to medium size MVNO. MVNO start-up decisions are madebased on the calculations of ARPU it will receive and no of subscribers innearly 2 years (called break-even point). Most MVNOs target to capture the

market as fast as possible and then make an exit (to be sold out). MVNOsmainly work on service and price differentiation where time to market isimportant due to fierce competition in the market. MVNOs should defineat initial stage whether they are a Telco, Media company or Media partner.Some MVNOs also work as mobile advertisements aggregators.

Fundamentally MVNOs operate exactly the same as MNOs. Most oper-ators have split their internal structure in three parts:

1. Customer relations and services, branding, marketing

2. Service layer includes product management, pricing, service manage-

ment

3. Network, infra management, radio, network management

MNOs possess BSS systems and also network related systems i.e. OSSand they have their own pricing structures for the products and services theyoffer. In traditional MNO, IT systems are very complicated called legacy jun-gle but MVNO do not have such complex systems and also integration bur-den to replace the systems. MVNOs want to have bare minimum interface.They buy network (the lower layer) from MNO or MVNE and implement


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or outsource service and customer layer in from of managed services. Fig.

3.3 shows the layer wise telecom systems classification especially for MVNOenvironment settings.

In MVNO case, MVNOs can possess BSS and sometimes OSS systemstoo. MVNO do not have much OSS but mostly they have CRM and self-service and in some case the whole BSS. Billing and rating systems are lighterin MVNO case than traditional systems. MVNOs have small and limited inhouse CRM system. Ordering has to be integrated with MNO provisioningsystem as well as debt collection systems.

MVNO may use their own billing systems where they get CDRs fromother operators or they can use network operator owned MNO owned billing

systems. They can also outsource the billing or managed services as a whole.MVNO might even consider taking all systems from other providers andin this case, MVNO not only rent network but also outsource billing andCRM systems. However, MVNOs would like to retain branding, campaignmanagement, resell marketing systems and operations to themselves.

It has been seen in some cases of MVNOs across Europe that when MVNOare small they want to outsource or rent everything but when they get biggerthey start investing and implementing some systems. MVNO doesnt reallyown radio network but they might own some network elements. MVNOsmight have switching and other network systems along with billing systems.

In case of prepaid, MVNOs use MNO network but own CRM system. Theymight have some elements under CRM dealing with real time charging andnetwork systems.

Branding building, distribution and cost factors are very important forMVNOs. In case of MVNO, communication services can never be as betteras MNO. MNO provide raw material and MVNOs rebrand and distributeit to potential customers. Some MVNOs sell mobile and customer relatedmarketing data to generate revenue while providing discounts to the end-users.

MVNO can be run by 5-10 people working in area of sales, branding, mar-keting, product management, distribution, partner management. For exam-ple, an MVNO Tele Finland started with only 5 persons organizing it severalyears ago. The managing director, marketing director, business controllerand two other consultants managed the MVNO. They used only outsourcedresource not TeliaSonera IT processes. The idea was to build operator inde-pendent environment to offer other services as well. They wanted to servicefor other parties as well than TeliaSonera. They outsourced billing systemsto star cell now Qvantel. Tele Finland didnt have any systems managed bythem but all systems were outsourced.

Partner management is essential managing partnership with BSS vendor,


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Figure 3.3: Layer wise cloud deployment possibilites in Telco

MNO and other partners. MVNO collaborate among partners to whom cer-

tain tasks have been outsourced. Service integration is also very importantfor MVNO especially integration with MNOs and other partners in business.

MVNO need to choose the focus group or target customers while mov-ing towards smaller segments of the market. They need to be much morefocused but the question is whether to focus on retail or enterprise sales.Differentiation strategy creates base for MVNO strategy. Demographic, ser-vice, product, pricing differentiations can be adopted by MVNO. For exam-ple, an MVNO can target Russian speaking callers in Finland by providinginexpensive calls to Russia. Some MVNOs also target niche markets of tele-com services. For example, TeliaSonera targeted corporate customers during

initial stage with high quality of services by charging premium prices to cus-tomers. MVNOs focus mainly on post-paid residential market, so subscriberhierarchy is simple. They need to focus on only one market at a time orat a place. MVNOs can provide bundle solutions along with voice and dataservices. In case of bundle solutions partner management is also importantfor MVNO. Price differentiation is easy for MVNO but service differentiationis limited due to dependency of OSS and network system on MNO. Most ofthe MVNOs are price sensitive and keep ARPU at low level as to do effectiveprice differentiation. They have low cost and agile operations in place to


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reduce OPEX. MVNOs work on price differentiation and tend to have happy

customers along with higher KPI. They have their own pricing structures forthe products. Subscribers win due to lower prcing mechanism but telecomindustry suffers because of high system administration cost. Telco industryis a challenging business to be in due to fierce competition and so MVNOsalways look for additional revenue streams.

In recent years, it has been observed that MVNOs outsource as muchas possible because their operations are not about system but they are allabout the business. MVNOs dont care about system architecture and itsimplementation. They just care about quality, branding, cost-benefits, SLAagreements and customer satisfaction as well as retention. MVNOs use Busi-

ness process outsourcing. Business process outsourcing in telecom domainprovides BSS as a service but its not Software-as-a-Service as there are cus-tomizations done for every telecom operator systems according to customerneeds.

MVNOs need lean business operations, business process outsourcing andvery effective as well as efficient systems and operations. MVNOs followrapid service delivery, development and marketing and so they need veryagile framework to support it. For MVNO to work there is no need to haveown processes, large organization and just by outsourcing it is possible to runMVNO. Outsourcing is possible even outside the country but data security

and legal issues are critical.MVNO do not invest on network so capital spending is low and they rentnetwork on pay-per-use or fixed monthly fees. CAPEX is low for MVNO.They invest to get customer base and volume in the market and define thresh-old to acquire customer base. MVNOs want to have good discount as to getvolumes. They are getting the network capacity from already existing play-ers so its regulated and competition is fierce for MVNO. MVNO pay somefixed fees and also fees per subscriber. Subscriber churn is high in Europeanmarket around 20% and that makes churn very expensive for operators. ForMVNO, more you are dependent on MNO more challenges you have on dif-ferentiation side. Since MVNOs introduce competition in market, MNOsdont want to give network capacity to MVNOs very easily.

Telecom network infra providers (MNO) rent the radio spectrum to otherMVNOs with high rates as they will face competition from those MVNOsin future. Telecom network infra providers have lower rates for their ownoperators, service providers.

Table 3.1 presents a situation in past with finnish telecom operator in-dustry. There are several MVNO examples given below which were discussedduring the interviews:


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MNO MSO or True MVNO Weak MVNO

Sonera Networks TeliaSonera

GlobetelFinnetcomNetFonet

Tele FinlandCDF Mobile

Elisa ElisaCubio

KolumbusTDC Song

Finnet Verkot DNA FinlandFujitsu Services

GoMobile

Wireless Maingate

Table 3.1: MVNO in Finland, adapted from[30]

Saunalahti: Grew from reseller to service provider to MVNO. Elisafunctions as an organization can be taken as MVNO in a view of orga-nizational structure.

Light Square: Planning to have all IP coverage all over US. They arewhole sellers to MVNO. They will never grow on service provider side.

Bharti Airtel: It has IBM to operate IT systems. Operationally theyare structured as MVNO.

Mobistar: It is an MVNE and a light weight organization. MVNOs canbuy infra from Mobistar and concentrate on branding and marketing.Outsourcing is the trend in MVNO if they are starting up.

Blyk: Blyk in UK were giving voice and SMS free and selling mar-keting data to other companies. You become Blyk member and tellus what you are interested in and we give you free SMS or free calls.

Selling marketing information, mobile ads etc. The business model isthe subscriber becomes a partner and let MVNO sell their preferencesto marketing companies and subscribers get free calls/SMS.

Question:How are high performance, carrier-grade SLA, cross-location architecture

(if applicable) and cost-benefits important in current MVNO operation con-text?

Response:


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As stated earlier, for MVNO its important to drive customer satisfaction

and price differentiation with lean and agile business processes. MVNO mayhire consulting firms to drive agreements with other companies to handleparameters such as SLA, performance of the systems etc. MVNOs want effi-cient and quality systems with cheap prices. Cost and customer satisfactionare directly important for MVNO and other factors are indirectly important.However, to map MVNO systems to the cloud it was important for us toknow point of views about these parameters and common points from theinterviews are described for main four parameters below:

Performance:One point of view was that performance and carrier-grade SLAs are not

that important for MVNOs as they do not possess network related systemsand provisioning. The MVNO system point of view can differ as systemperformance does matter in some cases.

High performance is important regarding rating system. If MVNO useprepaid then they have to have high performance rating and AR systems dueto real time charging. In prepaid case, high-performance is very importantas per regulation aspects while making calls and sending messages as thereis regulation to complete the call loop in 150 milliseconds. Also importantin post paid context due to the issue of customer satisfaction. The perfor-mance of the systems depends on how good the billing system is and how

much money is spent on it. Network level performance requirements are thesame for MNO and MVNO as you cannot differentiate quality of the net-work and on the network level its impossible to have different performancerequirements.

Latency factor makes a difference in MVNO as to transfer CDRs betweenthe systems operators systems and their own or outsourced systems. Also ac-tivations to provisioning from self service or CRM systems may delay becauseof the latency. One point of view differed as the interviewee mentioned thatlatency hasnt been an issue. CDR transfer doesnt require real time trans-fer. Latency is not an issue while transferring CDRs. MVNO has enoughcapacity to provide communication.

Carrier-grade SLA:Carrier grade SLA depends on position of MVNO. Replicated systems can

have SLA of 99.0% and cluster can have SLA of 99.9%. However, Carriergrade SLA has nothing or very little to do with BSS systems. Billing systemSLA can be much lower. Back office systems and billing services have SLAof around 85% while online systems such as Ordering, CRM and Self-serviceportal have higher SLA of 98%.

MVNO just buys SLA in case of OSS as well as BSS (if BSS has beenoutsourced). They dont care about hardware or systems in place. SLA is


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indirectly important as MVNOs are responsible for customer service delivery.

SLA could be problem for customer-facing self-service portals but Telcos arenot very famous for customer services. SLA agreement is also done betweenMNO and MVNO which is of carrier-grade level as it involves network ele-ments. Also if MVNO implement HLR then carrier-grade SLA comes intothe picture. SLA requirements are one of the reasons why MVNO have topay high fees or rent for network infra.

SLA is important because most of the telecom systems are affected withthe down-time. The after-effect can be huge in telecom sector even with theBSS system downtime involving CRM and customer facing systems. How-ever, this SLA can be managed at least on BSS side with cloud. Amazon EC2

provide good SLA agreements and managing processes with public providersmay improve the situation. BSS is not a problem but OSS could have prob-lems with SLA and performance. B2B corporate customers are critical partand if these corporate customers are from big companies then they may askSLA and similar things.

Cross-location architecture:Cross-location architecture is important and beneficial for MVNO sys-

tems and lot of MVNOs in Europe has this kind of implementation in place.Cross-location architecture is more feasible in MVNO context as most of theMVNOs use web-based systems and may run certain services in headquar-

ters only. Also to achieve economy on scale rapidly cross-location architecturehelps.Cross-location architecture is necessary if MVNOs operate in multiple

countries. This fact can also be applied in MNO context. Traditional TelcoIT used to be built with web based systems and hardware is not utilized asper their full capacity. However, cross-location architecture helps improvinghardware capacity utilization and operational perspective of the systems asa whole.

One point of view during the interviews was that no government laws stoptransferring CDRs within EU and if customers give you consent then its pos-sible to send to Asia-Pacific or other regions too. You need to give customersdetails regarding location of server instances, data backup mechanisms andsecurity formation details. Qvantel has dedicated servers creating privatecloud and virtualization sharing cloud resources among MVNOs. Qvantelsupports cross-location architecture of Yoigo.

Another point of view during the interview was regarding data regulationas a challenge in cross-location architecture. Also its important for telecomoperators to report to the authorities whenever needed as operators have totrack requests from regulation authorities. Such situations may arise but itspossible to have cross-location architecture with high network bandwidth,


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strong data encryption and consent from the operator. B2B customers do

not generally allow their customer information outside the country. MVNOsin most of the cases have B2B private customers. Cross-location architecturehas to be in EU depending on the country regulations. Some MVNO maynot allow data going outside of country. Languages could be an issue, Billsand online system in different languages

Cost-benefits:Cost-benefits are heart of any business. Cost benefits the most important

thing or Cost factors are much more important for MVNO than other fac-tors. Telecom business is a volume based business where price competitionsare fierce and low prices decide the volume. More cheaply you produce more

freedom you have upon pricing strategies. Outsourcing the systems is thebest option for MVNOs which are starting up their operations. SLA moni-toring and ARPU calculations are also important besides the core business.80% of MVNO cost incur to buy network capacity while marketing, adminand resellers cost varies as per the subscriber base and MVNO strategy.

Qvantel BSS costs just 1% of MVNO spending. They provide BSS ser-vices on pay-as-you-grow basis just like utility computing. The businessmodel is based on the size of MVNO subscriber base. If MVNOs have fewersubscribers then they pay less and when MVNOs grow with more numberof subscribers then they pay more. So outsourced BSS cost for MVNO is a

variable cost element and Qvantel share MVNO success as well as risks withthem. Qvantel asks a small percentage of ARPU for handling BSS operationsat initial stage and gets larger amount if customer base gets larger.

Along with these parameters, following parameters are important as wellfor MVNOs.

Regulation aspects

Customer experience

Service type

3.3.2 MVNO on Cloud

Attractive sides of cloud are cost-benefits and economy of scale. BSS is easyway to build, add functionalities in the system as BSS is easily configurable.In-premises applications may need dedicated systems but outsourced systemscan use cloud easily. Several responses suggested that MVNO should putall the systems that can be implemented on cloud. MVNO should be alight weight organization and cloud can help a lot along with providing cost-benefits and lean business operations. Apart from BSS, Revenue assurance


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within OSS and BSS makes an important system to be considered while

moving Telco system to the cloud. For example, Qvantel managed 50% cost-cost in IT Infra services. One dedicated Qvantel team manages around 10customers together. Today we have examples of CRM on cloud - salesforceand Business Process Outsourcing or managed services on cloud - Qvantel.

Large CSPs prefer to be provider of SaaS or provider of cloud for SaaS.They would also like to provide third party services and applications to usersas CSPs have channels and infrastructure to support them. In case of in-dependent MVNOs, there are more cases of using SaaS solutions for theirprocesses or internal work since cost-efficient services are important to them.Large CSPs prefer OPEX to CAPEX strategy as they tend to have lower

OPEX and invest in CAPEX. They want to have capital spending on infras-tructure because profitability is important. On the other side, small CSPsprefer CAPEX to OPEX transition as they have to mitigate risks of marketuncertainty. Therefore, MVNO should make decision to move to the clouddepending on its size.

Question:How does the cloud make an important factor to be considered in Telco

and especially MVNO systems? Which part of the MVNO system can bedeployed to the cloud? How the present architecture is affected in this case?(Please refer to table on page no 2 of the questionnaire in Appendix for

MVNO systems application mapping on cloud)Response:

MVNOOperation

MVNO Sys-tems

Comments from Interviewees

Taking Or-ders

Self-service(end-user facingweb-portal)

Self-service portal is a light-weight system andbased on SaaS architecture. It doesnt requirecarrier-grade SLA and some outage is consider-able. Self-service makes a good candidate for cost-beneficial cloud implementation of BSS. However,

integration and data access issues can be encoun-tered.


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