Be creative in tough economic times
As a principal analyst at Informa Telecoms & Media, Dr. Malik Kamal-Saadi provides thought leadership across different
sectors of the global telecommunications industry including Devices, Networks & Infrastructure, and Multimedia Services.
COMMUNICATE caught up with Dr. Kamal-Saadi at 2009 Huawei Global Analyst Summit and shared his views on some
of the hot topics in the mobile telecom industry.
COMMUNICATE: How do you
believe the financial downturn will
impact the telecom market both in
the short and long term? Specifically,
how does it effect operators’ network
deployment?
Dr. Malik Kamal-Saadi: So far the
telecom industry seems to be more
resilient to the economic downturn than
any other business. Having said that, the
investor community judges operators on
their ability to generate free cash flow at
country rates. For that reason, operators
are quite vigilant and are trying to better
control their CAPEX and OPEX. They
are currently putting contingency plans
in place to protect their cash flow in
case of economic headwind. They are
well prepared to reduce the TCO if
their margins are threatened by revenue
weakness or an inflationary cost base.
A number of operators have already
reduced their CAPEX and OPEX spending
this year by 10% to up to 30% in some
cases and the trend will continue in 2010
and maybe beyond. Operators are slowing
down their spending mainly on next
generation networks’ equipment but they
seem to be willing to spend in any solution
that will enable them to better control
CAPEX and OPEX now and in the future.
The slowdown of operators’ capital
expenditure has already affected the
equipment market. Some vendors, mainly
Western vendors, seem to be affected
more than their Chinese counterparts.
However, 3G launches in emerging market
mainly in China and India will represent a
fantastic opportunity for some equipment
manufacturers to maintain revenue growth
33 MAY 2009 . ISSUE 49
or reduce the decline of these revenues.
COMMUNICATE: In your opinion,
what technologies have most viability
for mobile operators, and what are the
adoption trends of those?
Dr. Malik Kamal-Saadi: I will talk
about solutions instead of technology. In
fact, operators are looking for solutions
that could help them maintain the
balance between reducing the total cost of
ownership (TCO) and keeping up with
innovation to answer their subscribers’
needs in terms of future generation
services. So in current economic slowdown,
keeping that balance is key for operators to
make their buying decision. Good example
is the success of your own SingleRAN
solutions. I am personally impressed about
what it has been demonstrated to me
while at Huawei Global Industry Analyst
Summit. In addition, from the feedback I
have heard, SingleRAN is indeed providing
the right balance between reducing the
TCO and helping operators to keep up
with innovation.
COMMUNICATE: What is your
ranking and forecast of Huawei’s
SingleRAN solution?
Dr. Malik Kamal-Saadi: There are
different approaches to SingleRAN. A
number of other vendors are also offering
SingleRAN solutions. Clearly from the
numbers I have got from you, in terms
of shipments of SingleRAN solutions,
Huawei is leading that market. Your
products have some key differentiating
elements compared to competitors’. One
of them is the integrated approach between
By Julia Yao
2G and 3G+ network operations, which
not only enables bandwidth management,
but also power management shared across
different technologies. That is the key
important differentiator compared to your
competitors.
COMMUNICATE: Beyond
technologies, what are the creative
models and solutions for mobile
network deployment in the industry?
Dr. Malik Kamal-Saadi: I will talk
about three creative models right now.
These are not technology related, but are
more business models. Network sharing
is one of them. There is a huge trend in
Europe towards shared networks. Here, I
can see SingleRAN playing a great role in
facilitating the roaming across different
shared networks. Managed Services is
another huge trend, happening again
in Europe but also in other parts of the
world. The last trend is towards integration
rather than deploying separate equipment
to support different networks. Integration
is a trend, because it provides a lot of
cost savings throughout product lifecycle
compared with modular solutions. In
addition, integrated solutions seem to
significantly reduce power consumption
and product footprint, necessary points for
reducing the OPEX.
COMMUNICATE: How do you
comment on the deployment trends of
LTE across global markets?
Dr. Malik Kamal-Saadi: LTE has
got a lot of benefits compared to the
existing technologies. The cost-per-bit
is more effective compared with existing
 INTERVIEW

Dr. Malik Kamal-Saadi is the principal analyst at Informa Telecoms & Media and a frequent speaker
at international conferences on mobile telecommunications. He has over 13 years experience in the
telecommunications market as a technology expert, forecaster, and industry commentator. He has
also played a key role in a number of European and Government projects. Malik has a PhD degree
from Groupe d'Etude des Semiconducteurs (GES, France), specialising in Semiconductor Devices and
Materials, Design and Engineering.

and alternative technologies. However,
although LTE could enable operators to
create bigger pipes, it is still not clear how
can they monetize these pipes and how can
they get their return on investment.
So what’s the strategic motivation
behind deploying LTE at the moment?
The initial battle for LTE started with the
pressure from competition, mainly from
the WiMAX camp. But now the pressure
is easing since WiMAX is struggling to
become the 4th standard of 3G+. Then
operators are now no longer in rush; they
have got now enough time to think about
LTE rollout and strengthen the business
case for its deployment. They will likely to
deploy LTE in a progressive manner rather
than in a large-scale rollout from the first
day.
Before making any decision to deploy
LTE, one has to study data traffic trend in
order to evaluate the need of rolling-out
LTE at large scale. If you do map the traffic
across wireless networks, actually you will
find out heavy traffic is localized in specific
geographies and this traffic is generated
only by a small number of heavy users.
So rolling-out a nation-wide or city-wide
LTE network for addressing the needs of
only a few customers, who are abusing the
network in some hotzone areas, does not
make sense and could not be financially
justified. For that reason, it will make sense
to deploy LTE- as hotspot not as network-
in hotzone areas first and then gradually
upgrade to cover other areas where the
capacity is needed. As demand increases,
then deploying LTE as network nation
wide or city wide will be more justified.
That is to say, for early deployment, LTE is
likely to be deployed as hotspot rather than
as a network. There are some exceptions to
that, for example the case of TeliaSonera
for which Huawei is the main equipment
provider. The operator will deploy LTE
as network city-wide, which means LTE
services could be accessed anywhere in the
city in conjunction with existing networks
using SAE architecture. The rational
behind this move is explained by the
operator ambition to gain edge in terms
of innovation. That is very important
for market positioning vis-à-vis LTE in a
longer term.
As for the timeline of LTE deployment,
we are likely to see some pilot projects
launched even in 2009, but Informa
does not expect LTE to be a large-scale
deployment before 2013.
COMMUNICATE: LTE aside, how
would you predict the growth and life
cycle of 2G and 3G across different
regional markets?
Dr. Malik Kamal-Saadi: I’m afraid I’m
not specialized in that field. But definitely
there is still room for 2G to be deployed
through equipment replacement and
for 3G deployment to grow mainly in
merging markets. For 2G, actually Informa
predicts that 2G networks will not be
switched off before 2017, and probably
these networks will still be around until
2020. Launches of 3G in some key
emerging markets such as China and India
will represent a key opportunity for some
equipment manufacturers, mainly Chinese
manufacturers and this within the next
two-three years, after which equipment
revenues from 3G networks will slow
down quite significantly.
COMMUNICATE: How would you
comment on Huawei’s performance
in 2008, particularly in the wireless
market?
Dr. Malik Kamal-Saadi: In the wireless
market, while almost all equipment
vendors are currently burned by the
economic downturn, it is very interesting
to see Huawei continue its pace to a strong
growth. The result of last financial year
proves that while competitors see their
revenues growth declining, Huawei still
poses a strong growth momentum.
COMMUNICATE: What impressed
you most in the Huawei Analyst
Meeting?
Dr. Malik Kamal-Saadi: Two things
impressed me in this year’s summit. The
first one is the shift from product-focus
to more solution-focus that is in line with
the interest of your customers: operators.
You are now interacting well with your
customers to provide them with the right
solutions for their networks. That is one
thing that has impressed me and my
colleagues.
The second thing that personally
impressed me on the summit is the breadth
of innovation across your entire product
portfolio. In particular, SingleRAN
certainly is a creative solution and again
the adoption level of SingleRAN and the
way operators are swapping their existing
equipment for SingleRAN is a proof of the
success of such a solution.
Editor: Gao Xianrui sally@huawei.com

MAY 2009 . ISSUE 49 34