1. Introduction to ZTE Lanka (PVT) LTD
ZTE Corporation (Zhōngxìng Telecom Equipments) is a leading global provider of telecommunications equipment and network solutions. Through its network of operators across 140 countries, the company delivers innovative products and business solutions. The major customers are the telecom operators in Asia Pacific, South Asia, North America, Europe and Latin America. It connects global customers via voice, data, multimedia and WLAN. ZTE now has about 62,000 employees and 10,000 of them are working in about 107 representative offices around the world.
ZTE Sri Lanka office (ZTE Lanka (PVT) LTD) was established in 2004, situated at Nawam Mawatha, Colombo 02 as a fully own subsidiary of ZTE Corporation. Currently ZTE Lanka is having more than 300 local staff and around 75 Chinese staff. The main business of ZTE Lanka is providing complete telecommunication solutions to its customers mainly comprises the system solution (Planning, construction, installation, commissioning, maintenance and Technical support services) and Terminal/handset solution. ZTE successfully completed major projects with most of the Sri Lankan operators.
Therefore ZTE has very good technology transfer experience in Sri Lanka context with many operators which includes,
• Mobitel – stage 6(Successfully completed) & Mobitel stage 7(Ongoing) • Dialog WCDMA/HSDPA+ Project(Ongoing)
• Hutch GSM/GPRS/EDGE Project(Maintenance ongoing)
• Etisalat expansion project
• SLT ADSL/ IPTV project
In addition to Telecom infrastructure level solutions, ZTE is selling handheld devices (for Data, Mobile voice and FWTs) through Sri Lankan operators.
Next sections of this report describe the technology transfer experience cases of ZTE Lanka (PVT) LTD and future technology portfolio analysis and implementation plan for technology buy/ acquire.
2. Mobitel stage 6 project: A Technology Transfer Experience of ZTE Lanka (PVT) LTD
Mobitel stage 6 is the largest expansion project done by any Sri Lankan telecom operator and ZTE is the sole equipment and service provider for that project. This is wireless project started in 2011 which included implementation of new wireless Network with GSMGPRS/EDGE and WCDMA technology. Since this is a turnkey project the key responsibilities of ZTE are planning, installation, commissioning, maintenance and optimization of both radio network and Core Network consist of BTSs, NodeBs, BSCs, MSCS/MGW, EMS, SMSC and CRBT. It included the maintenance works of Mobitel network. This project completed on September 2012 and maintenance works started from that period.
Since I’ve been a part of this project from the initiation phase to the closure phase I was able to get a good idea about the technology transfer, its environment, issues & difficulties. I’ll brief my personal experience in the following section
2.1 Technology Transfer Environment
By using the following conceptual framework we can easily explain the different components of the effective technology transfer which has been carried out between ZTE Lanka (Pvt) ltd. and Mobitel Lanka (Pvt) Ltd.
Figure No: 2.1: Conceptual model for analysis International Technology Transfer
Transferor Environment
Mobitel’s majority of the equipments and services were provided by Huawei until the year 2010. ZTE’s low cost strategy ensures the Mobitel stage six expansion project to ZTE and provides new a market opening in Mobitel. Following are the key points describe the transferor environment conditions.
• International experience of handling large scale turnkey telecommunication project
• ZTE has strong technological capabilities in 2G/3G/4G Technologies
• ZTE Technologies has many success stories in many countries as very stable systems
• Highly motivated and hard working staff of ZTE
Transferee Environment
Mobitel wants to expand their 2G/3G network especially in North- East area to compete with the market leader Dialog. In addition to that they need to finish this expansion work within a short period and they’ve found ZTE has that capability. Mobitel has good reputation in Sri Lanka as state own national mobile operator in this emerging market. The key aspects of transferee environment are described in following.
• Mobitel has employees with wide range of knowledge in 2G/3G/4G networks
• Since Mobitel is the complete subsidiary of SLT it has strong telecom infrastructures such as telecom towers and Transmission network which can share for new projects.
• Mobitel located several regional offices(Both technical and marketing) all over the island which ease to carry-out the project
• Mobitel has large reputation especially among the state service workers which is the catalyst to expand their projects
• Since Dialog shows steady market growth Mobitel required to quickly expand their network to capture larger market share.
Greater Environment:
Higher market potential observed in North-East part of Sri Lanka where Dialog is the only major service provider in early 2010s. Following are the key points describe the greater environment conditions.
• There was huge demand mobile services in North-East area
• Both Sri Lanka and China are good business partners for more than 30 years
• ZTE’s main competitor, Huawei already developed a good relationship with Mobitel which motivate ZTE to consider the equipment and service quality of the Mobitel stage 6 project
• Telecom technologies changing very rapidly therefore not required long lasting high cost equipments but 8-10 year life time of one telecommunication is more than enough
Motivations of the transferor (ZTE Lanka (PVT) LTD)
The key motivational factors of ZTE Lanka (PVT) LTD are discussed briefly below
• Capture the main market share in Sri Lanka’s telecom industry.
• Making profit by simply selling the technology (Products and services)
• Mobitel is the national mobile service provider and build up a relationship with them will open new doors for several state own projects
• Going for project with other Sri Lankan vendors by successful project proofs
Motivations of the transferee (Sri Lanka Telecom)
The key Motivations of Mobitel towards this project are briefed below.
• Mobitel identified itself as the national mobile service provider. So there is an indirect request from the state owners to provide the island wide coverage
• Chinese telecom vendors provides products and services for low cost compare to the westerns vendors Ericsson and Alcatel
• Majority of the mobitel’s requirements mentioned in the RFP are able to fulfill by ZTE’s present capacity
• Mobitel considers ZTE’s after sales services are in convincing level compare to counterpart Huawei
• Emerging telecom market and the profit Mobitel incurred through their ‘Upahara’ package motivates them to play a large role in the emerging telecom market
Linking Mechanism
The key technology transfer mechanism is used here is the project packed technology transfer. Whatever the technology is necessary to transfer is provided in the form of equipments, services and telecom infrastructure. Since these forms are bundled in a project we can consider this TT mechanism as ‘project packed technology transfer’. Here Project was signed as Turnkey Contract with 3 year Service agreement. The project process flow from initiation to acceptance is depicted in the below flow chart
Figure No:2.2: SLT CDMA Project Linking Mechanism
In the market initiation phase Mobitel’s requirements (technology components need to be transferred and the form of technology transfer) was identified through the RFP (Request for proposal). After thoroughly analyzing the RFP ZTE will provide the reply for RFP. During this phase negotiation and initial planning was done. In the initial planning both party jointly worked to achieve the viable method for TT. Once both parties came to an agreement then contract was signed. After this stage; project initiation, optimization and rectification were carried out. Since the technology is new to Mobitel, then ZTE had to obtain the POC (Proof of Concept) certificate after series of critical tests. Once all these steps successfully achieved then ZTE started to apply for PAC (Preliminary acceptance certificate) & FAC (Final acceptance certificate). Once the acceptances are completed ZTE started the maintenance works to ensure the sustainability of the transferred technology.
2.2 The Technology: GSM/WCDMA/HSPA+
For both 2G and 3G most of the standards are regulated by ETSI and 3GPP and these standards are controlled by TRCSL in Sri Lanka. The license for these technologies needs to be purchased by corresponding Telecom operator as well as the vendor. Technology evolution is from GSM ( WCDMA ( HSPDA ( HSPA+. Benefits in this evolution are
• Voice clarity is high
• High speed internet access
• Value added services
In Mobitel stage 6 project consist of transfer of process technologies of Telecommunication industry which describe in following section.
Project consists with a considerable number of technology transfer process which includes number of technology transfer components. Technoware consist of Telecommunication product (CS/PS Core Network and Radio Network Equipments) itself and configuration of them to meet a specific objective. Orgaware consist of how to organize Technoware to implement a complete telecom service. Here regular maintenance (daily, monthly) procedures were implemented. Humanware consist well trained people for contacting and operations. ZTE was provided complete training on GSM/WCDMA/HSPA technology and the related products, its maintenance procedures for both Mobitel staff as well ZTE local staff.
Inforware is a key part of technology transfer process where only few of Inforware is transfer to transferee. For example when consider the Technoware specific inforware only Technoware Attribute Inforware [tai], Technoware-operating Inforware [toi] and Technoware-maintenance Inforware [tmi] are transferred to operator but Technoware performance-enhancing Inforware and Technoware-design Inforware[tdi] are not transfer to operators.
2.3 Technology Gap Analysis
Technological capability gap between Mobitel and ZTE will be discussed in the following section. Technological gap analysis is one of key success factor of any technology transfer process.
Figure No: 2.4: Conceptual diagram for analysis the technology gap
Technology capability status of Mobitel can be identified as Medium Level
• Mobitel has large number of qualified technical professionals
• Since it’s a fully owned subsidiary of Sri Lanka Telecom there is an effective method of resource sharing which improves the technology level
• Well organized internal training mechanism upgrade their technology capability
Technology Component Gap between Mobitel and ZTE is identified as Moderate
• ZTE has many experiences in International Telecommunication Projects. • ZTE have all the technological capabilities of GSM/WCDMA/HSPA Technology (acquiring, modifying, converting, vending, generating)
When we analyze the technology capability of transferor and transferee we can conclude the ‘Technology transfer is most effective.’ Once maintenance period finished then Mobitel is the sole responsibility for the daily routine, additional expansion work and other maintenance works. That means Mobitel has successfully acquired the required technology as telecom operator. ZTE supports only in critical issues.
2.6 Learning points
• Mobitel stage 6 project is the largest mobile communication project in Sri Lankan Telecommunication history and several components of technology are transferred to Mobitel. Healthy relationship between two parties is the key for the successful project completion and the effective technology transfer. • During this technology transfer project both ZTE and Mobitel ensure the premium network quality and earn the praise from the customer. In addition to that the number of total subscriber also steadily increased. Even though Mobitel lags behind the market leader Dialog they also have some customer only because of the network quality, so quality is the key for the achievement. • If your technology is in a very high standard with high cost, then people will go for the moderate level (somewhat less than the very high standard) of technology with considerable cost. That’s why Mobitel chose Chinese vendors rather than European vendors
3.0 HTLL 2G/2.5G Project: A Technology Transfer Experience of ZTE Lanka (PVT) LTD
3.1 Technology Transfer Environment
Hutchison Telecommunications Lanka (Pvt) Limited is a fully owned subsidiary of International Telecommunications giant, Hutchison Whampoa Limited. Currently HTLL has business in both 2G and 3G networks. Hutch founded as “CallLink” in 1992 which was fully own subsidiary of Singtel which provided analogue Mobile service. In 1997 the company was acquired by Hutchison Telecom International and changed name as HTLL (Hutchison Telecommunications Lanka Limited) and expanded analogue service facilities. In year 2000 HTLL launch their GSM Network using the ‘InterWAVE Communications International’s’ equipments. In year 2004 ZTE got the chance to capture market in HTLL. From 2004 onwards ZTE partner with HTLL and successfully completed six phases of project. During these phases several technology components transferred to HTLL. I’ve been a part of this technology transfer projects for more than four years
Motivation for HTLL
Since HTLL is the fourth player in Sri Lankan mobile telecom market they want to expand the coverage and capacity of its existing network for voice service. Their key strategy is the low cost to capture market and they miss the quality factor in their services. Until the former part of this year (2012) they don’t much more concentrate on data services. Both ZTE and Hutch partnered in several countries which is the catalyst to partner both party in Sri Lanka
ZTE’s point of view
ZTE’s very first business partner in Sri Lanka is HTLL. So basically HTLL is the gateway to ZTE in Sri Lanka market. Further ZTE needs to tight the relationship with Hutch global.
3.2 Technology choice decision of HTLL
In year 2004 HTLL just find a new telecom vendor to replace their existing GSM network (build by Motorola equipments). In addition to that, they only concentrate on voice services and completely clueless about the data services. From the technology transfer perspective this decision is completely wrong and results them poor position in Sri Lankan telecom industry. Their strategic planning is completely wrong in both technical and marketing perspective. In year 2008 most of the mobile operators migrate to 3G network. In that time ZTE wanted to introduce that technology, but due to the cost consideration and management barriers didn’t allow HTLL to move up in the technology ladder. Therefore HTLLs Technological path in Telecommunication industry is not tally with the Customers demand and hence make difficulty to compete in highly competitive market. As a result of bad technology strategy HTLL is having lowest market share in mobile communication industry of Sri Lanka.
3.3 Technology Gap Analysis
We already discussed about the technology decision of HTLL and in this section we are going to analyze the effectiveness of the technology transfer using the below shown conceptual framework.
Figure No: 3.1: Conceptual diagram for analysis the technology gap
Technology capability status of HTLL can be identified as Low Level
• Lack of absorbing capability of HTLL staff. Most of the staff doesn’t have strong telecom background which results the poor technical framework inside the organization
• Lack of decentralization and lack of employee autonomy. This restricts the free thinking and self development of the employees
• Lack of work forces results a single person need to concentrate in several activities. This leads to poor job/technology specialization
• Regional staffs aren’t enough to maintenance works
Technology Component Gap between HTLL and ZTE is identified as high
• ZTE has many experiences in International Telecommunication Projects. • ZTE have all the technological capabilities of GSM Technology (acquiring, modifying, converting, vending, generating)
From the above mentioned facts and the analysis we can conclude the technology transfer in unlikely to succeed due to the poor absorption capability of HTLL. A good example for this is; HTLL depends on ZTE to carry-out the maintenance works even after five years of technology transfer between these two parties. That means HTLL has to relay on ZTE Services in future also. Improving the technological capabilities of HTLL is the key factor to them survives in Sri Lanka Telecommunication industry.
3.4 Transfer mechanism
There were several phases of projects has been carried out between this two parties. Most of the time transfer mechanism is turnkey project. But due to the lack of absorption capability this method is identified as failure. The most appropriate method is ‘Complete outsource’ where ZTE will be responsible for whole network even after maintenance period
3.5 Learning points
• Maximum output from a technology transfer depends on motivation of both parties. In this scenario transferee’s lack of motivation results the failure in TT
• Effective communication paths and good relations between vendor and operator are playing major role in Telecommunication projects.
• Recruitment of skilled employees will result a very successful technology transfer
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