Gartner Symposium ITxpo 2005 Presenter Name 16-21 October 2005 Walt Disney World Dolphin Orlando, Florida Presentation Title These materials can be reproduced only with Gartner's written approval. Such approvals must be requested via e-mail — firstname.lastname@example.org.
Tactical Guideline: Build wired and wireless networks to change as they evolve through several generations to achieve convergence. The many networks that exist today make it difficult for users to move seamlessly between the different wired and wireless networks. Wi-Fi and wired LANs will be the first to come together as Wi-Fi controllers integrated in Ethernet switches. Cellular sets with Wi-Fi radios will allow users to choose Wi-Fi (where available) for bandwidth-intensive data applications. Wi-Fi roaming, QOS and power management will be required for true VoWLAN — voice over Wi-Fi. The emergence of WiMax (and proprietary look-a-likes) will make fixed wireless access close in speed to wired alternatives. The use of UMA technologies will allow GSM and CDMA voice traffic to be transported over Wi-Fi networks. The IP Multimedia Subsystem (IMS) will permit the convergence of wired and wireless service provider backbone networks, making the delivery of services applications and content available on either network. The next step in the integration of Wi-Fi and cellular will come with the ability to roam between private Wi-Fi and public cellular with Wi-Fi/cellular handsets. True convergence of these networks will come when users can seamlessly move between public/private Wi-Fi and cellular networks. The backbone implementation of IMS, that is, IP, will be followed by IP to the handset, that is, over the radio to create an IP-everywhere network.
In 2005, the integration of WLAN technology into a subset of handset manufacturers offerings has become an imperative. However, other than permitting faster downloads over home networks, the mobile operators have been puzzled on how to make money off of this feature. In a manner parallel to what happened with cameras in handsets, end users seem to be thinking once again of using this new feature outside of the mobile network. End users who have negotiated flat-rate pricing, no longer have &quot;free&quot; minutes to spare to use their cell phones while in a building. As WLAN technology becomes more pervasive, organizations are seeking to offload cell phone traffic to the WLAN to avoid per-minute charges. In addition, organizations are finding it easier to achieve in-building coverage themselves as opposed to having to wait on the operator's engineering teams to fund an in-building base station. But the operators, believing that this phenomenon cannot be stopped, are learning that it may make sense to support this need because they can be assured that if nothing else, they can keep the client base committed to them. Furthermore, it was not as though the mobile operator was realizing this traffic anyway since in many cases the traffic moved via desk phones. But the way in which IT will implement wireless VOIP is still in question: Will calls be routed through the mobile operator or will they be routed via the PBX? Further studies and feedback are needed to spot the tradeoffs. Action Item: Organizations should procure and test WLAN-enabled cell phones to assess their impact on the future direction of in-building communications. Strategic Planning Assumption: By 2006, the top five major cell phone manufacturers will offer models that support voice over WLAN handsets in conjunction with PBX and IP-PBX vendors (0.7 probability).
Wireless VoIP will remain a niche in voice minutes through 2008. Many smartphones will support WiFi by 2008, but they represent a minority of the handset market. VoIP using 802.11b is not sufficiently scaleable for enterprise use (five to eight calls per access point). Wireless VoIP as a primary call mechanism will be limited to campus applications such as retail and warehouses; however, a large proportion of traveling employees will make occasional use of wireless VoIP, e.g. Skype, while traveling on business. Cellular will continue to displace fixes lines. This is both a consumer and a business trend. Many young people will never have a fixed line, in the U.S. and Europe. “Mobile only” consumers are probably around 10 percent of the total. In the corporate space, some cellular operators can now provide flat-rate calling between corporate user groups and can host applications that provide facilities similar to the corporate PBX. Coverage and capacity issues limit such solutions today, but in-building pico cells and the increased voice capacity of 3G will enable more such solutions. Cellular voice trends include falling prices, growing bundles of minutes and increasing numbers of contracts offering “free” or flat-rate calls to compete with VoIP. Action item: Explore wireless VoIP for special cases such as campus environments with low employee density. Strategic Planning Assumptions: Over 50 percent of smartphones shipping in 2008 will have WiFi support (0.7 probability). Through 2008, 80 percent of enterprise users will maintain more than one device to handle voice calls (0.8 probability). However, 80 percent of business travelers will occasionally use VoIP over WLAN for business or personal use (0.6 probability).
Two key trends which will significantly impact corporate communication services are bundling and convergence. These can be explained in three vertical slices of telecommunications services – Access, network services and content/media. Access is the provision of wireless or wired bearer technology, e.g. DSL, cellular voice and data and WiFi. Network services are applications and services related to the network, such as billing, customer care, presence and directory services. Content and media includes games, music video and related services such as micro and macropayment. Bundling is when a single provider offers multiple services within one of these vertical slices. E.g. an operator offers DSL, WiFi and cellular services in a single contract. There is little or no functional integration, but there may be some economies in procurement. Convergence is when an operator offers services which are integrated across the vertical slices, such as voicemail or a presence and directory system which embraces VoIP and cellular subscripts. Both bundling and convergence offer opportunities to corporations to save money. However, there are risks. Few operators will be “best in class” for all converged or bundled services. Also bundling and convergence may be used to try to get corporations to subscribe to services they don’t need. Action item: Explore bundled and converged offerings, as they may provide opportunities for savings. Client Issue: How will network services and service providers evolve in response to convergence and market changes? Strategic Planning Assumption: By 2009, 20 percent of enterprise buyers will source FMC services instead of buying communication services separately (0.8 probability.)
Mobile and fixed operators are striving to move up the value chain because most fear being relegated to the role of bit pipes. However, despite their attempts to morph into media companies, we believe they face a high risk of disintermediation. Apart from spectrum licenses and network infrastructure, everything the operator owns is under attack from someone: 1. Wireless broadband (WiFi) and future 4G technologies attack 2.5G and 3G bearer revenue. 2. Digital radio and video broadcast technologies such as DVB and DABS attack streaming media revenue. 3. Third party portals such as iTunes or Amazon are likely to be more attractive than operator portals. 4. IT outsourcers and service providers attack operator hosted applications. 5. Ever more sophisticated handset Internet browsers allow users easy access to off-portal content. 6. VoIP forces flat-rate voice pricing. 7. Technologies such as Bluetooth and WiFi provide content channels outside operator control. Action item: Resist operator pressure for value-added services that don’t match enterprise needs. Encourage operators to provide “intelligent bit pipe” services which support enterprise goals. Strategic Planning Assumption: By 2010 under 30 percent of mobile operators in the EU and U.S. will make more than 10 percent of their revenue from media (0.7 probability).
Aggregate mobile and remote access technologies into consistent services for users — independent of the access technology. Companies architect networks based on the capabilities that currently exist, but should prepare for the evolution of the infrastructure. Organizations should procure and test WLAN-enabled cell phones to assess their impact on the future direction of in-building communications. Once an IP telephony system is installed, companies should assess soft-phone capabilities for teleworkers and road warriors. Explore wireless VoIP for special cases such as campus environments with low employee density. Separate the hype from reality in your converged wireless implementations. Explore bundled and converged offerings, as they may provide opportunities for savings. Business users should expect more customer-centric offerings and enhanced after-sales service from communications providers. Resist operator pressure for value-added services that don’t match enterprise needs. Encourage operators to provide “intelligent bit pipe” services which support enterprise goals.
Strategic Planning Assumptions: By 2010, 90 percent of companies will depend on MSPs for nomadic mobility management needs (0.7 probability). Through 2010, 90 percent of enterprises will be forced to use at least two MSPs to fill gaps in coverage and services for nomadic mobile workers (0.7 probability) Users and businesses want flexibility to make connections anywhere, anytime, with good support, as well as independence from single service providers with uncertain futures. Proper evaluations dictate success or failure. The managed remote-access market has evolved in the past three years from roaming analog dial-up service to a broad portfolio of VPN, Internet, dial-up and broadband technologies, and a rapidly accelerating demand to accommodate wireless users. Managed remote access means taking care of companies that want partial or full help in connecting, securing and supporting users who are outside the traditional enterprise boundary. The managed remote-access market contains vendors that may not provide exactly the same services in the same way. Three criteria unite them in a common market. First, the vendors compete for the same budget money in companies. Second, although their means may not be identical, they achieve common ends. Third, they are aggressively forming alliances and partnerships that allow them to represent and resell each other to build larger and broader managed remote-access solutions. In essence, they depend on each other as much as they compete with each other. Action Item: Aggregate mobile and remote access technologies into consistent services for users — independent of the access technology.
Strategic Planning Assumption: By 2010, network equipment vendors will have a universal switch platform providing for all user and server aggregation functions at Layers 2 through 7 (0.7 probability). There will be several key initiatives in the LAN switch; some of these initiatives will be technology for technology's sake in an effort by equipment vendors to continually roll over the base of equipment. Several highly important initiatives will provide value; clients will need to pick and choose the technologies they will need and when. We have branded the new device a universal switch (US). We believe the most obvious example of technology that no one needs is high-speed desktop connections. By 2010, vendors will be offering 10 Gbps to the desktop over copper; while there are a few exceptions, we believe 90 percent of users will not have exhausted 100 Mbps. WLANs will have become integrated into the wired infrastructure, such that any US would support wired and wireless equally, from a physical, operational or management perspective. Security capabilities will have dramatically improved, as functions that were considered only required at the edge move into the network. The US will perform deep packet inspection as it parses packets for &quot;switching.&quot; This will allow the US to perform several functions from Layers 2 through 7. These include load balancing, antivirus gateways, firewalls, intrusion prevention and forwarding based on flows (as opposed to packets). Action Item: Companies architect networks based on the capabilities that currently exist, but should prepare for the evolution of the infrastructure.
Strategic Imperative: Voice options exist to provide mobility without requiring wireless. Strategic Planning Assumption: Soft-phone access using wireless VoIP will be available on 100 percent of computing devices to support wireless VoIP by 2008 (0.7 probability). Once IP telephony has been implemented into an organization, there is no longer a correlation between a specific location and a phone number. The phone number is now related to a specific IP phone. This reduces phone move costs because the user can simply plug the phone into any Ethernet port on the corporate IP network and the system will find the user. Unlike time division multiplexing systems, no physical wiring changes are required. Users can turn their PC into an IP phone by running a soft-phone application. This process enables users to turn their PCs into their corporate IP phones whenever they are connected to the corporate network. This includes connectivity via VPNs over broadband, Wi-Fi hot spots or cellular data (for example, Evolution Data-Only [EV-DO]) if their PC is so equipped. The user will have the complete feature set as if he or she were in the office. For the &quot;road warrior&quot; who stops temporarily at a hotel with broadband or an airport with hot spots, he or she can make or receive calls, or access voice mail or any other IP telephony function, through a VPN. When choosing public broadband services, the user will be at the mercy of the quality of the connection, which could result in poor-quality voice. Typically, users can expect cellular-quality voice over an Internet broadband connection. Teleworkers will also benefit from a soft phone-over-broadband connection. Action Item: Once an IP telephony system is installed, companies should assess soft-phone capabilities for teleworkers and road warriors.
Strategic Planning Assumption: The requirement for new handsets, new Wi-Fi infrastructure and a complex management system will make converged Wi-Fi/cellular voice primarily hype until at least 2009, with adoption under 1 percent (0.7 probability). Separating hype from reality is always important when planning services/technologies for your company —this is one of those situations. Although Wi-Fi/cellular handsets are starting to emerge in 2005, so are the complexities and limitations of what is needed to allow seamless integration of Wi-Fi and cellular. Today's implementations of 802.11 b Wi-Fi were not designed for voice, so 802.11a is better for capacity. Fast roaming, QOS and power management limitations make it difficult for reliable voice delivery, but these are being worked on by the Wi-Fi groups and the vendors. From a coverage perspective, very few organizations have built Wi-Fi coverage in-building that provides for ubiquitous coverage; that is, people expect Wi-Fi coverage in stairwells, bathrooms, storage areas and similarly secluded areas, which was not required for the initial Wi-Fi rollout. Through 2008, the cost of a WLAN implementation supporting voice will be four times more than one supporting only data (0.7 probability). There are also significant challenges on the cellular side. Handoff and billing are both complex, and there is no financial incentive for the wireless provider to offer this capability. In fact, the user's goal is to not pay for in-building wireless usage, that is, to move it to the Wi-Fi network. The wireless provider would prefer to see better in-building cellular. There has been significant work by many vendors in this space, which will result in products; however, it will only achieve minimal success at best. Action Item: Separate the hype from reality in your converged wireless implementations.
Strategic Planning Assumption: Fixed/mobile convergence is about telecoms evolution; it will not generate additional service revenue before 2009 — that is, it will only result in revenue &quot;shuffle&quot; (0.9 probability). The term convergence can be interpreted as the merger of different industries. The traditional communications industry has started to move toward the IT and multimedia sectors. Mobile service providers are offering ring tones, music downloads and video streaming as part of their multimedia portfolio. In addition, they are selling IT integration for security and wireless e-mail solutions as part of IT systems. However, the media and entertainment industry and the IT industry are encroaching on the telecoms sector as well, which creates new players and increased competition in the converged multimedia sector. Communications companies are responding to this industry convergence by changing their business model to a customer-centric model that consists of interactions between three different company types: Content companies: Produce, aggregate and manage content and related transactions. Key success factors: Creativity, innovation, customer orientation, newness and quality of content. Risks: No direct access to the customer, and dependency on service and network companies. Service companies: Provide innovative service, service bundles and related billing over a network company's network. Key success factors: Customer orientation and retention, marketing power, and ability to manage revenue sharing, including the upstream and downstream value chain. Risks: Dependency on content and network companies, and the (fast) changes in customer demands. Network companies: Build, operate and administrate telecom networks for the transmission of voice- and data-related service. Key success factors: Economies of scale, &quot;best-of-breed&quot; for business and operations support systems, investment decisions for network evolution, negotiation power toward supplier. Risks: High investment volumes, low margin, high volume and limited growth. Action Item: Business users should expect more customer-centric offerings and enhanced after-sales service from communications providers.
Notes accompany this presentation. Please select Notes Page view.
Market trends for convergence: Cellular/Wi-Fi devices, wireless VoIP and converged services Monica Basso Research Director
Road to Wired/Wireless Convergence Steps Along the Road 2006 2008 Many Networks Wireless Voice Wired 2010+ IP Ethernet Converged Network Wi-Fi/Cellular Convergence (data devices) LAN/WLAN Convergence Wired/Wireless Backbone Convergence (IMS) IP Everywhere Data IP Cellular Wired Access Wireless Access (WiMax) Unlicensed Mobile Access (UMA) Wi-Fi/Cellular Convergence (Voice) Wi-Fi Voice Wi-Fi/Cellular Roaming (Voice)
New Cellular-WiFi devices <ul><li>Cellular/Wi-Fi devices: </li></ul><ul><li>Ericsson P990 (IPT client support unclear) </li></ul><ul><li>Nokia E60, E60 and E70, all with IPT clients for Avaya and Cisco </li></ul><ul><li>QTEK 9100+8300 </li></ul><ul><li>Motorola CN620 (and others) </li></ul><ul><li>Nokia 9500 (Series 80 – unclear whether/which the IPT clients) </li></ul><ul><li>Alcatel One-touch 701 </li></ul><ul><li>Wi-Fi only handsets: </li></ul><ul><li>BlackBerry 7270 (Avaya IPT) </li></ul><ul><li>Cisco Wireless IP-phone 7920 </li></ul><ul><li>Others from Mitsubishi etc </li></ul>
WLAN-Enabled VOIP Device Strategies Full member of PBX/IP-PBX Discrete Cellular/WLAN operation WLAN-only soft phones Seamless desk phone to mobile phone roaming Seamless mobile phone to IP-PBX phone roaming Motorola CN 620 Firebox "Deskphone"
Wireless Voice: Still the Dominant application VoIP over Wireless Cellular replaces fixed lines Cellular voice trends <ul><li>Infrastructure costs 4x basic wireless networking to support VoIP </li></ul><ul><li>Only 5 percent terminations </li></ul><ul><li>But 80 percent of employees will use it occasionally, e.g. SOHO, Skype... </li></ul><ul><li>Costs fall, bundles grow </li></ul><ul><li>“ Free” voice and data </li></ul><ul><li>Operators look for value-added services to preserve the “cash cow” </li></ul><ul><li>Operator voice profits fall </li></ul><ul><li>Shift from fixed to mobile continues </li></ul><ul><li>Mobile replaces corporate PBX </li></ul><ul><ul><li>Requires customized contracts </li></ul></ul><ul><ul><li>Indoor coverage limitations </li></ul></ul><ul><ul><li>May lose some PBX features </li></ul></ul>
Convergence: Carriers and Services Access Cellular WiFi hotspots Fixed telephone Fixed Broadband Broadcast Wireless Broadband Network Services Customer care Billing and support Directory services Messaging, e-mail, voicemail Authentication Presence Content and media Games Music Video Ring tones News Payment Bundling — multiple vertical services, but little integration Convergence — horizontally, integrated service combinations
Mobile Operator Disintermediation Internet access and browsers on phones sideline WAP and operator portals Handset e-mail and IM erodes SMS, MMS “ Free” VoIP over WiFi / WiMax / Bluetooth erodes voice traffic Bluetooth and WiFi on handsets attacks everything WiFi and wireless broadband attack 3G DVB and DABS broadcast compete with streaming media 3 rd party media portals (e.g. iTunes) compete with operators Outsourcers and service providers attack value-added applications
Recommendations <ul><li>Aggregate mobile and remote access technologies into consistent services for users — independent of the access technology. </li></ul><ul><li>Test WLAN-enabled cell phones to assess their impact on the future direction of in-building communications. </li></ul><ul><li>Explore wireless VoIP for special cases such as campus environments with low employee density. </li></ul><ul><li>Prepare for the evolution of the network infrastructure. </li></ul><ul><li>Explore bundled and converged offerings, but resist to operator pressure for value-added services that don’t match enterprise needs. </li></ul>
Nomadic and Mobile Needs (Voice and Data) Network Dial Voice Cable Modem Data + Softphone Voice DSL Data + Softphone Voice Wi-Fi (Hot Spot) Data VPN Data + Softphone Voice Dial Data Data (GPRS, Edge, 1xRTT, EV-DO) <ul><li>Do-it-yourself or managed service providers (MSPs) </li></ul><ul><li>MSPs bundle remote access technologies (VPN, dial-up, broadband) and wireless Wi-Fi "Hot Spot" services </li></ul><ul><li>To come: policy-based management software and control </li></ul><ul><li> Routing based on: </li></ul><ul><ul><li>Security </li></ul></ul><ul><ul><li>Speed </li></ul></ul><ul><ul><li>Cost </li></ul></ul>Cellular Voice Cellular Voice and Data (GPRS, Edge, 1xRTT, EV-DO)
LAN Convergence: Switching and Mobility Come Together WLAN Switch = WLAN Control + WLAN Security Today LAN Switch With Layer 2/3 Capabilities Future Next-Generation Switch = LAN + WLAN Switch Features + 10/100/1,000/10,000M, Power Over Ethernet, IP Telephony, VoWLAN, WLAN Roaming, WLAN QOS, Authentication
The Soft Phone — Wired Mobility Head Office Telephony Server PSTN Branch Office Firewall VPN VPN VPN Hot Spot Enterprise Private Network (MPLS-Based) Internet Cellular
Fixed/Wireless Voice Convergence — With Cellular/Wi-Fi (circa 2009) Cellular WAN Calls From Outside the Company Dialing Within Company 212.555.1234 4321 Issues Free wireless calling in-building, but need excellent in-building coverage In Europe — Calling party pays In North America — Flat-rate plan will eliminate potential benefits Control of and better feature set in IP PBX Requires replacement of all handsets Complex billing and handoff Enterprise IP PBX In-building Wi-Fi Note: Wired handsets not mandatory Twinning 4444
Industry Sector Convergence Drives Change in the Telecoms Business Model Content Company Network Company Telecoms Media and Entertainment IT Sector Convergence Multimedia Sector Service Company Business Model Convergence Telecoms operators need to develop a business model for mobile data and new applications based on IP. Customer