Integrating Networks & IT the Tele2 Way

Self-styled 'challenger' Tele2 moved early to integrate its networks and IT teams and that's paying off for the pan-European operator as it embraces NFV.

Michelle Donegan, Contributing Editor, Light Reading

April 27, 2015

9 Min Read
Integrating Networks & IT the Tele2 Way

After more than 20 years of operation, pan-European operator Tele2 still considers itself a challenger, taking on the status quo in the industry and within its own four walls.

Founded in 1993, Tele2 has 14 million mobile, fixed and broadband subscribers across nine varied markets, from its home country of Sweden to Kazakhstan. The company's challenger status can be partly derived from its reputation over the years for being a "price leader" in some markets.

More recently, Tele2 has been looking to challenge itself, as well as its rivals, since it launched a new strategy called the Challenger Program at the end of 2014. The aim of the initiative is to improve efficiency and productivity and, ultimately, achieve cost savings of 1 billion Swedish kronor (US$116 million) annually from 2018. (See Tele2 gets green light to sell Norwegian unit to TeliaSonera and Tele2 Launches 4G Offering for M2M.)

Being a challenger is simply part of Tele2's DNA, according to Joachim Horn, the operator's Group CTIO, who is about to leave the company after four years to take on a new role at an unnamed "telecom company in Asia." During a recent interview with Light Reading, Horn explained that Tele2 is never satisfied with what it has and it is not afraid to do things differently.

"We dare to be different and find our own way," he said. "In management and employee meetings, people are open to saying, 'Why can't we do it better or differently?'"

Figure 1: Joachim Horn: 'We dare to be different and find our own way.' Joachim Horn: "We dare to be different and find our own way."

One example is Tele2's vocal focus on connectivity, which inevitably provokes accusations that Tele2 does not have aspirations to be anything more than just a dumb pipe. "We have no problem if people look down on us. If you make enough money with that, it's not a problem," said Horn. "I'm not saying Tele2 is a dumb pipe -- it does not just copy what others do."

In February, Tele2 caused a bit of a stir in Sweden when it introduced new mobile price plans with substantially increased monthly data allowances. The data buckets in new mobile plans for consumers range from 500MB for SEK198 ($22.85) per month up to 100GB for SEK548 (US$63.25).

"If you listen to analyst comments [about the new plans], they vary from 'It's the beginning of a death spiral,' to 'They're showing the way forward with the most innovate tariffs out there,'" said Horn. "There is no consistency of opinion, and this is what we do. If you are a challenger, you challenge yourself, your customers, your competitors, and you can see this in many things we do."

Next page: Bridging the networks-IT divide

Bridging the networks-IT divide
Tele2's internal structure also differentiates it from many of its operator peers.

When Horn was appointed Group CTIO in April 2011, he was tasked with merging the operator's networks and IT technology teams. At that time, most network operators were only just beginning to recognize that bridging the chasm (as Light Reading likes to call it) between the telco network and IT organizations would be a good idea. (See Bridging the Chasm: A Manifesto, Meet the New CTO – It's the CIO and Bridging the Chasm[s]: Easier Said Than Done.)

Horn accomplished the integration two years ago at Tele2 group level and at the operator's Swedish operations. He said it took just three months to bring the networks and IT teams together and that the staff are enjoying the benefits.

"Within weeks, I got excellent feedback from the teams saying things had become so much easier to achieve," he said. "That's because the typical projects we run in order to introduce new functionality impacts both sides of technology -- network and IT. Before it was a kind of silo approach where you had to run complex management around it. Now, we have merged the [networks and IT] teams and it has become much more synergetic to get projects implemented."

Rather than sticking with the typical networks-IT divide, Horn reshuffled his technology teams into two new groups: one for operational functions, which includes everything to do with running platforms and services; and another group for strategic activities, which includes longer-term architecture and roadmap decisions and supplier selection.

The operational teams account for about 80% of Tele2's technology efforts and were easier to merge than the strategic teams, Horn said. The operational teams "can merge quickly … because there is not a big difference whether you run a box from the network side or from the IT side," he explained. "The main target is all about ensuring quality for the customer and with the lowest possible cost."

For the more strategic activities, the network and IT teams were not as easy to merge, he explained, which is why he decided to separate these functions from operations and subdivide them into three groups -- radio and transmission networks, core networks, and enterprise architecture.

Tele2 has implemented this network-IT strategy at the group level of the company, which primarily handles the strategic activities, as well as its Swedish business. Tele2's other eight markets are due to follow this strategy and Sweden will serve as a blueprint for implementation: That at least means Horn's successor will not be executing that part of the company's strategy without significant guidance and internal experience.

In total, Tele2 has around 2,000 employees working in technology, 800 of which work in the strategic group functions. So was it Tele2's relatively small size that made the integration easier? Not really, according to Horn, who previously held CTO roles at Bharti Airtel and Deutsche Telekom. The cultural differences between network and IT were the same at those larger operators as at Tele2, he said.

"The easiness starts with who is leading this change," he said. "I was assigned to do this when I came to Tele2, so I was empowered to get this done. Also, you need to be fast, very decisive and clear. I don't believe in gradual change because there is just too much arm wrestling of opinions at lower levels.

"And we did a relatively smart differentiation to merge fully where it made sense to merge," he added. "You can merge 80% of the technology functions and you get immediate benefit. Employee satisfaction has increased steeply since then."

Next page: NFV with 'no regrets'

NFV with 'no regrets'
While the operator's early moves to blend network and IT functions may set it up nicely for network functions virtualization (NFV), Tele2 is in no hurry to rush into the cloud and virtualization.

Horn said that Tele2 plans to slowly move into a virtualized environment during the next few years, but that it was too soon to go "all-in" on virtualization and change his entire network to an NFV-based system, mainly because there are unresolved standardization issues, particularly related to operations and maintenance and OSS functionality.

Also, Horn said that the current business case for NFV is more about cost savings, rather than adding new capabilities for customers. "The main driver is actually cost reduction, higher efficiency, better quality and more flexibility in terms of introducing new functions," he said.

So Tele2 is taking a "no regrets" approach to NFV: For all upcoming purchases, when it is time to invest in new network capacity or functionality, or equipment reaches end of life, the operator will look at what's available in the market and consider whether a virtualized solution makes sense and can be implemented "without regrets." This at least gives the incoming Group CTIO an opportunity to put their own stamp on that critical strategy: Inheriting an NFV strategy could be more problematic than developing one.

Virtualizing VoLTE
That's not to say that Tele2 has not taken any steps down the road to virtualization. It is implementing a virtualized voice-over-LTE (VoLTE) platform from Mavenir, which has been integrated with the network in Sweden but not yet used to deliver services to customers. Tele2 in Sweden aims to launch commercial VoLTE services on this platform this year. (See Tele2 Readies VoLTE and Mitel to Acquire Mavenir for $560M.)

As Horn notes, having just one element virtualized will deliver limited benefits, but this small step that has been useful to the Tele2 team. "It's virtualized and I'm happy we did that because there were a lot of learnings."

For its next move, Tele2 is looking at whether the time is right to implement a virtualized Evolved Packet Core (EPC) and then plans to develop a roadmap for virtualization that will cover the full scope of its networks.

By taking a pragmatic, step-by-step approach to virtualization, Tele2 aims to allow time for NFV standards to mature and for its technology teams to be trained. Having already merged much of its network and IT organizations, the operator benefits from knowledge-sharing between the formerly separate technology groups: Horn wants Tele2 to build up even more of that knowledge and understanding about virtualization before making bigger moves.

Another reason for Tele2's measured approach to NFV, according to Horn, is that it is a relatively small company that doesn't have hundreds of people to work on early research into new technologies. As a result it needs to be very practical about the resources it can spend and wait for systems to mature. That's the "Tele2 way," said Horn, who is certainly not one to buy into technology hype. "We keep both feet on the ground. We look at the opportunities a new technology [like NFV] brings and see whether we have either a significant benefit for our customers or for our bottom line, or ideally, for both."

That's an approach that is hard to argue against and one that should help Tele2's next CTIO, whoever that might be, quickly adopt a pragmatic view on the industry's fast-moving technology developments and help Tele2 challenge itself, and the market, in even more ways in the coming years.

— Michelle Donegan, contributing editor, special to Light Reading

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About the Author(s)

Michelle Donegan

Contributing Editor, Light Reading

Michelle Donegan is an independent technology writer who has covered the communications industry on both sides of the Pond for the past twenty years.

Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications, including Communications Week International, Total Telecom, Light Reading, Telecom Titans and more.

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