Network hosting is just one kind of managed service offering that could change the way the major vendors do business.

Ericsson has so far excelled at winning managed services contracts, having garnered at least 50 worldwide since 2002 through its Ericsson Global Services business unit. About 25 of these contracts call for Ericsson to completely manage network operations or capacity processes, while the other 25 involve Ericsson hosting specific applications. The Global Services unit also operates the Internet Payment Exchange, an m-commerce transaction engine connected to more than 220 mobile content providers and reaching up to 550 million users.

The Global Service umbrella includes three different kinds of managed services, among them hosting and operation of core network, access network, service network or enterprise networks — including multi-vendor environments — and a transfer of Ericsson staff to the customer site if needed; capacity services, including building, operating and directing network capacity where needed; and content and application hosting services, including enterprise services, messaging, prepaid, device configuration and other services.

At the company's Global Service Briefing for financial analysts and investors in New York City earlier this month, Ericsson executives said their aggressive move into managed services within the last few years has been partially driven by the growing desire among carriers to work with fewer vendors overall, while handing those vendors more responsibilities to develop, acquire, integrate and manage any technologies and solutions they need.

Ericsson CEO Carl-Henric Svanberg, in an exclusive interview with Telephony prior to the New York briefing, said the extent of managed services that carrier require varies dramatically — some carriers are interested in having vendors host new applications to get them out to the market more quickly, but balk at having vendors run their networks.

“I was sitting with a European customer of ours [about one year ago], and he said, ‘How can we be an operator if we don't operate?” Svanberg said. “So, it's a slow process. If a carrier turns a network over to us, you aren't necessarily going to read about it in the newspaper.”

But, Ericsson makes a powerful argument by focusing on the overall cost saving that can come from outsourcing network management. “If we take over a network, the advantage is that we can collapse a number of overlapping functions into a support structure that is better overall and reduces costs for the carrier,” Svanberg said.

Hans Vestberg, the executive vice president and general manager of Ericsson's Global Services unit, added, “What we promise operators from a cost savings point of view depends on the operator. It is normally around 10% to 15%, and if we can't find at least that much savings for them, then there is really no reason to continue the discussion.”

Content and application hosting is a different story, particularly in a market environment in which it takes carriers much time and effort to launch new applications, not all of which are guaranteed to succeed. Carriers also have to connect with and manage relationships with an increasing number of applications developers, and those developers face the same challenge in working with many carriers.

“If you are Sony, you can go to 400 different operators and make 400 different agreements or you can go to us and make one, and we can do the rest,” Vestberg said. “For carriers, it's the same argument, with too many developers to manage, but a need to know what all of them are up to.”

Svanberg and Vestberg know that Ericsson isn't the only vendor in the managed services game. Go to any major vendor these days, and they will all say their business is much more about services than it used to be. But, Vestberg added, “I think we have a global breadth and experience in all parts of the network that other vendors will find hard to match.”