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Major telecom equipment vendors Nokia-Siemens Network (NSN), LM Ericsson AB (ERIC - Analyst Report) and Huawei Technologies Co. have signed a Memorandum of Understanding (MoU) that will allow them to improve interoperability between different Operations Support Systems (OSS). NSN is a joint venture between Nokia Corp. (NOK - Analyst Report) and Siemens AG (SI - Analyst Report).

Per the agreement, the three related parties have agreed to license their OSS interface to each other for multi-vendor network management, which will simplify the interoperability between different OSS. Additionally, the partnership will speed up time-to-market new services from operators and will also reduce the OSS integration costs.

The deal, also termed an OSS interoperability initiative (OSSii), will detect faults, measure performances, configure network and will provide recent updates to management. Moreover, any third party OSS vendor can access cross licensing and interoperability testing facilities by joining the OSSii.

OSS necessarily integrates a number of telecom network technologies from several equipment vendors and from other telecom operator business systems making the process very complex and costly. However, OSSii simplifies the network operations, reducing the cost and time of the integration process.

NSN reported weak financial report for the first quarter of 2013. The company’s revenues were down 5% as compared to the last year. However, NSN’s operating margin of $259 million was much better than an operating loss of $103 million in the previous quarter. The improved operating result was backed by NSN’s restructuring measures as the equipment vendor plans to slash $1.35 billion in annual cost by 2013.

The OSSii agreement will largely enhance OSS development and will allow telecom carriers to avail the best solutions available within the industry. Although OSSii will promote healthy competition for network level OSS systems, we believe that the partnership will improve the top line prospect of NSN, going forward.

Nokia currently carries a Zacks Rank #3 (Hold).Among the other companies in the same industry where NSN operates, Interdigital Inc. (IDCC - Snapshot Report), with a Zacks Rank #2 (Buy), is a better option for investors.

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