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Sweden-based telecoms giant Ericsson expects the provision of "professional services" to Chinese telecoms operators will be the major driver of its future business in the country.

 

Professional services are those connected with network design, planning, optimization, and managed services where mobile telecoms equipment makers take over and operate networks for operators.

 

How Siew Lee, vice-president of Ericsson China, said a business model transformation of operators and technology advancement is driving demand for professional services in China.

 

Chinese operators are now seeking a shift from telecoms service providers to the so-called "integrated information service providers."

 

And they are also seeking to upgrade their current networks to the more advanced fixed-broadband access networks and 3G (third generation) mobile networks.

 

That is creating "a continuous long-term growth market" for professional services, said Lee.

 

Sales of professional services accounted for more than 20 per cent of Ericsson's global revenue in 2004.

 

In China, the figure could be smaller due to regulatory issues.

 

But the market for professional services promises great potential due to increasing deregulation.

 

The rapid growth of professional services could help Ericsson, the world's biggest maker of mobile telecoms equipment, to take up some slack in an industry-wide slump in China.

 

Chinese telecoms operators in recent years have cut spending on expansion of existing networks in anticipation of setting up 3G networks, which could cost billions of US dollars.

 

Regulators have yet to decide when and how to award operators the 3G services. That has largely caused a slowdown of operators' spending, which has hurt mobile telecoms equipment makers.

 

But operators are turning to professional services as they seek to cut operational costs.

 

For instance, typically a spare parts management service in which professional service providers own, store and distribute spare parts can help an operator save up to 20 per cent on costs.

 

Ericsson has already signed a three-year contract with Hubei Mobile for spare parts management.

 

Lee said the upcoming 3G network build-out, which will be much more complicated compared to the existing networks, will need more professional services.

 

"3G is not only a technology program. It's also about how to do business in a cost-saving manner," he said.

 

Chinese cellular operators, China Mobile and China Unicom, are gearing up for the 3G roll-out, which has spurred demand for services such as training, competence development and business consulting.

 

(China Daily May 25, 2006)