Timeline Global Telecom Solutions BV is exhibiting at AfricaCom taking place on 12-14 November 2013 in Cape Town, South Africa
Peter Booth is the Managing Director of
Timeline Global Telecom Solutions BV with more than 25 years
international experience in the telecom industry.
Reused
Telecoms Equipment
The Telecoms
Equipment Reuse Market is a well-established industry that has been in
operation for more than 40 years. The trade of Reused telecoms equipment is
freely active between OEM’s, End Operators, Service Companies and Trading
Companies and has increased with the multivendor service offerings.
There are some basic
principles to be considered in the trading of Telecoms equipment which include
Hardware, Application Software & Licensing, Trade Restrictions and Title of
the equipment.
Hardware is the physical unit and can include
micro chipsets of varying complexity, where these microchips set have embedded
programing (Firmware) set at the time of manufacture and is not user
accessible, configurable or replaceable as per any other hardware item at
component level. This renders the Firmware an integral part of the physical
unit in which it cannot be added too, changed or removed without physical
intervention at component level, unlike the Application Software which is
system loadable and configurable.
A change at component
level, including firmware would be to modify the specifications of the original
unit, thus impacting original Part number and revision designated to the unit.
If this was required, it can only be done under agreement with the OEM,
otherwise it is a breach of their IPR as per any software licensing breach.
Used / Reused
Hardware is sold between parties excluding any software licensing, where the
purchasing party commits to indemnifying the selling party of any claims
related to licensing breaches for the future use of the Hardware.
This is not limited
to Telecoms equipment but all devices and products that we encounter in our
daily lives.
The Application Software is a user loadable
and configurable package that has a particular market and user features /
functionalities. The Application Software is loaded and stored on a media
device (e.g. Hard disk) in the central system and is downloaded to network
nodes while they are powered and connected to the network. If a new Node or
module is connected to the network, it will need to be downloaded and
configured with current core Application Software (typically automatically) for
the node to operate within the network. E.g. a Used Base Station is moved from
one network to a new network, the Base Station Application Software is
downloaded from the central BSC upon commissioning.
Application Software
is governed by an End User Agreement / License from the OEM that is normally
part of the Frame Supply Agreement. The Application Software typically sold on
system and/or capacity basis known as the “Right To Use” (RTU) License (e.g.
RTU per 1000 subscribers or RTU per Transceiver). It is therefore the
responsibility of the End User to ensure they have the required OEM Application
Software Licenses / RTU.
The Application
Software / RTU is not a product that is traded within the Reused Telecom
equipment market. This is taken into consideration when an offer is made for
the Hardware only sale / purchase of the reused equipment.
The OEM traditionally
has placed commercial restrictions on Application Software by licensing it to a
single End Network but with the advent of large Group Companies owning multiple
networks, the Group companies now included in the Frame supply contracts the
Right to transfer the Application SW / RTU to another Group company where the
group company has control and can maintain the license usage conditions. The
trend is for Group Companies to make it mandatory for OEM’s to allow internal
Transfer of Application SW, including previously purchased Licenses or be
excluded from new supply opportunities, use the Operators purchasing power to
break the OEM’s commercial model.
New or additional
Licensing is only needed for Hardware where the existing license limit is
reached. Thus for the case of Spare Parts Replacement / Exchange or Repair
Avoidance (largest reuse activity), no additional license is needed for the
hardware when one unit is replaced by another regardless of its source.
Trade Restrictions due to governmental or UN sanctions need
to be adhered too per product type, country of origin and financial payment
process regardless of another OEM commercial agreements or License
arrangements. Though broad restrictions can be in place for some countries,
these do not always include basic telecoms equipment and each situation should
be reviewed on a case by case basis.
Equipment Title is an import issue to clarify prior to any
sale / purchase of equipment. This should not be mixed with licensing
obligations or restrictions as these are to separate legal matters.
The Selling party
needs to ensure that they have the full legal tile to the goods and that here
is no other financial obligations restricting them from disposing of the asset.- · Does the seller have the full legal tile to the equipment?
- · Are all loans or other payment obligations relating to the equipment meet?
- · Are all Tax related matters settled (e.g. import duty exemption but payable if re-exported)
In a network upgrade
or swap out, it can be that the operator signed as part of the commercial
agreement that the OEM, that the OEM takes the responsibility to de-install the
equipment and return it to a central warehouse (recommended that the
installation party is responsible for the physical de-install & return of
equipment to a central location). In such chases it can be that the commercial
agreement can included that the OEM takes tile of the equipment (buy back or
trade-in discount). The operator needs to ensure that they understand such
arrangements for managing the removal of the asset from their own balance
sheet, the adjustment in book value and that the asset is no longer available
to sell gaining additional cash return.
Recycling – In the event that equipment is
recycled, then there is no reuse of the equipment and as such no on-going
Application Software licensing requirement.
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