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.
Find out more: meet Timeline Global Telecom Solutions BV at AfricaCom, visit Stand P4. Visit the website: http://www.timelinegts.com/