Q&A with Huawei's UK MD - Part II

NGN interviewed Edward Chen, the UK managing director of Huawei Technologies. This is the second and final part of the interview. For the first part, click here.


NGN: How many staff does Huawei employ in Europe?

EC: To date, we have 26 branch offices across Europe and products deployed in over 28 countries. There is currently around 1,800 staff working for Huawei within Europe.


NGN: Out of the total staff, roughly how many are support engineers and technicians and how many are management?

EC: Some 39% of Huawei’s European staff work within the Technical Services Department and 31% within the Sales Department (including Technical Sales). The remaining 30% of staff work within administration, finance, supply chain, marketing etc. Management functions are integrated into these categories.


NGN: And out of the total staff: roughly how many are local recruits and how many are staff relocated from China?

There are currently over 1,800 staff working for Huawei within Europe, over 60% of which are drawn from local expertise. As it continues to see growth in Europe, Huawei expects to expand its workforce accordingly to meet local demand, and will recruit staff best placed to meet local customer needs in terms of language and local market knowledge.

Across Europe Huawei has an R&D Center in Sweden and an R&D Centre, test bed and customer showcase in Amsterdam. Huawei has plans to build further R&D centers in Europe in the coming years. With Huawei’s local R&D strategy we aim to bring more investment and job opportunities within local markets.


NGN: What main network transitions in Europe offer Huawei the best opportunities for new design wins and why? Possible examples include 1) the upgrade from ATM to IP DSLAMs, 2) IMS, 3) FMC, 4) home gateways etc. But Huawei may look at this question in a different way

EC: Convergence is an ongoing trend in the telecommunications industry and carriers are increasingly looking at vendors that have a comprehensive, end-to-end portfolio of products and solutions. The industry has also moved towards a greater commitment towards open standards, which is a key strength that Huawei offers to its customers.

Huawei believes that IP-based ICT industry integration will create a profound and extensive impact on the future of telecom networks. The key to delivering excellence in service operations lies in the evolution of the existing network to a flexible IP-based multi-service network and the establishment of a win-win broadband value chain.

Huawei sees two key trends emerging in the telecoms industry:

• In the consumer market, operators will go beyond providing traditional services such as voice and broadband access, to offering IPTV, Portal, Payment, and Marketplace services. There will now be a need for operators to cooperate with various partners including media groups, schools, banks, and content providers. The operator will not only serve as a network service provider but also as an integrated service provider. In addition, their business model will change from one that is focused on getting the "share of communication minutes" to one that is focused on getting the "share of total consumer spending".
  

• In the business market, operators will expand the range of services that they provide, from "only service products" to "service solutions", especially in terms of IT services, meaning that operators will now need to understand the customer's business process and offer the right service solution accordingly. The operator will then become not only a product provider but also a solution provider or system integrator. Consequently, their business model will change from one that "offers leased line to businesses" to one that "helps optimize the business process".

The service model that Huawei envisages for the future is one that will provide users with a unified, ubiquitous experience: with the same level of service at home, on the move, at a hotspot, or in the office, and available anytime, anywhere, and via any terminal.

According to Infonetics Huawei holds the No.1 position in global IP-DSLAM market in 2005 (30.0% of ports market share). (Editor note: According to Infonetics' Jeff Heynen, directing analyst for broadband and IPTV, as of 2Q 2006, Huawei is number 1 in IP DSLAM ports shipped, but is second to Alcatel in worldwide IP DSLAM revenue.) The goal of many operators will be to achieve all IP architecture by 2010. Huawei sees the following four key migration directions:

1. Fixed Mobile Convergence
: In the future architecture, only access networks will be different; the rest will remain the same. IMS will serve as the core of FMC and although softswitch and IMS will coexist for a long time, softswitch will ultimately become a part of IMS as AGCF or MGCF. Huawei's IMS has the ability to support fixed and mobile convergence.
2. Unified user database
: Different kinds of user data such as AAA, HSS, HLR, and IPTV will be managed through a unified database. The foundation of FMC can provide a more user-friendly experience, such as featuring one ID, one billing, and one-time authentication. Huawei's SHLR will provide operators with the capability to manage all user data.

3. Unified transport network
: It is inevitable that the packet-oriented transport network will replace the TDM-oriented transport network. Carrier Ethernet, NG-WDM and IP+Optical will become key technologies. With its extensive range of products, Huawei has the ability to provide end-to-end solutions of next-generation transport platform.
4. Unified service platform: Many operators today have several service platforms including IN, portal, SMS, MMS, and IPTV, which requires more complex operation, resulting in high cost, and poor user experience. The integration of service platforms is necessary and SDP will play a key role in the integration process. Huawei's ENIP will also be able to provide a common platform for all kinds of applications.

Huawei is also working with a number of mobile operators for HSPDA network upgrade to support mobile broadband services and was the first vendor to provide a full-performance HSDPA commercial system in December 2005, for the Portuguese mobile operator Optimus. The network became one of the first HSDPA networks that was deployed on a large scale in Europe, and at the same time, the first full-performance HSDPA commercial network in the world.


NGN: What percentage of its income did Huawei invest in R&D in 2005? What will it be in 2006?

EC: Huawei has over 21,000 people (out of a total of 44,000 people worldwide) in its global R&D office, with no less than 10% of revenue invested in R&D e?ach year.

Across Europe Huawei has an R&D Centre in Sweden and an R&D Centre, test bed and customer showcase in Amsterdam. Huawei also works closely in France with Neuf Telecom and in the UK with BT to develop products to meet local market conditions.

Huawei has plans to build further R&D centers in Europe in the coming years. With Huawei’s local R&D strategy we aim to bring more investment and job opportunities within local markets.


NGN: BT’s network upgrade winners were announced in 2005 yet many carriers are considering or undertaking NGN upgrades (KPN, FT, DT). Why has there not been other Huawei design win announcements since?

EC: Huawei is currently in discussion with many operators regarding NGN networks in Europe to both fixed and mobile operators, unfortunately this is company confidential information. Huawei can’t comment on any business that has not been awarded as yet.


NGN: How confident is Huawei that it will be able to repeat its BT success with other European incumbents – and if it is confident, why?

EC: Huawei is in cooperation with all the major operators across Europe and expects to announce further contracts with Tier 1 operators in the near future.

Huawei Technologies focuses on meeting our customers’ needs and challenges; We help customers to overcome market challenges by providing excellent communications network solutions and services and continuously creating maximum value for our customers; We do our best to satisfy the needs of customers and generating potential growth for our customers. We believe that our customers choose to partner with Huawei Technologies for our understanding of their needs and the ability to provide customized solutions in a timely manner; Our high-quality and reliable products and excellent customer service help build a strong trust between Huawei Technologies and our customers.


NGN: Why has Huawei not been able to repeat its BT success with RBOCs in the US, who are also undertaking key network upgrades? Is Europe for some reason an easier market for Huawei than the US?

EC: Compared to our industry peers, we are a relatively young company. Huawei embarked on its international expansion drive in 1996. In 2005, Huawei’s international sales exceeded its domestic sales, accounting for 58% of overall sales. In 1H2006, Huawei’s international markets generated 65% of total sales. This was achieved based on our unwavering commitment to customized innovation and our customer-centric approach. We have won the trust of numerous carriers around the world within a decade and as a result, Huawei’s products and solutions serve 28 of the world’s top 50 operators.

Huawei’s presence in North America only started in 2002, later than other regions such as Europe, which started in 1999. Successful market penetration requires investment of resources over a period of time. This is especially true given Huawei’s early development of technologies compatible with European standards and the many long-term vendor partnerships North American operators have maintained with incumbent players.

Unlike Europe, the North American market is much more fragmented with over 1000 operators. It takes time for customers to really understand what Huawei brings to the table. For example, the contract with BT for the deployment of its multi-service access network (MSAN) and transmission equipment for the BT 21CN network was sealed only after two years of rigorous procurement and authentication process. In the United States, we are concentrating in the optical and wireless markets, and we are encouraged that we have penetrated each of these markets with Huawei solutions that are in commercial use.

In August 2006 Huawei announced that it had signed a 3G agreement with Leap Wireless International, Inc., a leading provider of innovative and value-driven wireless communication services. According to the agreement, Huawei will deploy a CDMA 3G network for Leap to support its Cricket® wireless services in Spokane, WA., Boise, ID., and Reno, NV.