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Market status report of IMS Issue 1
 

Market status report of IMS Issue 1

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This report provides an independent and quantified view of what is happening in the industry on IMS (IP Multimedia Subsystem), through the presentation of results from an industry-wide survey that ...

This report provides an independent and quantified view of what is happening in the industry on IMS (IP Multimedia Subsystem), through the presentation of results from an industry-wide survey that encompasses 137 interviews, 101 of them being operators. The report also includes operator and supplier case studies, presenting as factually as possible the current state of the art; without the hype and marketing spin that has frustrated many people on this topic. These two objectives are reflected in the two main sections of this report: market survey results and case studies which include Verizon, China Mobile, and Vodafone Spain.

Key Findings
IMS remains niche, with only 8% of those operators surveyed deploying IMS. Note, none of those operators have completed the conversion of their network, all considered it a 5-7 year process.
Another 12% are in an extended field trial, which is characterized by services being launched on the IMS core, with in some cases paying customers; but a decision has not yet been made to commit to service migration onto the IMS core.
IMS does not appear to be entering a period of rapid adoption, rather a linear growth in initial adoption over the next 5 years, with by 2014 about 32% of operators commencing an IMS deployment.
Regionally, NAR (North America Region) provides the bulk of the growth in years 2010 and 2011, while EMEA (Europe Middle East and Africa) and APAC (Asia Pacific) regions provide the bulk of growth in later years.
Lack of business case, lack of standards compliance and BOSS (Business and Operational Support System) integration were the top three barriers to adoption as identified by operators.

Target Audience
Mobile (CDMA and GSM), fixed, broadband and cable operators: providing an independent status report to cut through the marketing hype to aid in the definition of a realistic network evolution plan.
Network equipment providers: giving the market analysis necessary to determine where and when to make product investments, better meet operator requirements, better aid operators in their network evolution, and guidance on where to focus sales resources over the next 5 years.
Related network component suppliers, e.g. business and operational support system software suppliers, service broker / service middleware providers, SDP providers, customer premise equipment suppliers, mobile handset and software suppliers: providing the market analysis necessary to determine where and when to make product investments and where for focus sales resources.
Application developers: whether to invest in building IMS applications, and where to focus.
Investors: where the investment opportunities reside in the emerging IMS landscape.

Companies interviewed for this report include: AT&T, Belgacom, Bermuda Telecom, Bharti Airtel, BSkyB, BT, Cable One, Charter, City Telecom, Cox, Deutsche Telekom, Etisalat (and operating companies), Hong Kong CSL, Indosat, KPN (and operating companies), Kuwait Telecom, Maxis, Mobilcom, O2, Optus, Orange / France Telecom (and operating companies), Qtel, Rogers, SingTel, Sprint, Swisscom, T-Com, T-Mobile (and operating companies), Telecom Italia, Telecom New Zealand, Telefonica (and operating companies), Telenor (and operating companies), Telstra, Telus, Three (and operating companies), TWC, Verizon, Vodafone (and operating companies), 4dk, Alcatel Lucent, AppTrigger, Argela, Camiant, Cisco, Comneon, Comptel, Converged Network Systems, Dialogic, Ecrio, Espial, Genband, HP, hSeind, HTK, Huawei, IBM, Intellinet, jNetx, Motorola, NeuStar, Nokia Siemens Networks, Oracle, OpenCloud, Sigma Systems, Tekelec, Telcordia, TM Forum, Veraz, Wipro.

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    Market status report of IMS Issue 1 Market status report of IMS Issue 1 Document Transcript

    • ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT M A RKE T S TATU S R E PO RT O F IM S ( I P M ULTIM ED I A S U BS Y S TE M ) AN INDEPENDENT AND QUANTIFIED VIEW OF WHAT IS HAPPENING WITH IMS IN THE TELECOMS INDUSTRY; INCLUDING A GLOBAL SURVEY AND OPERATOR CASE STUDIES. © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT CONTENTS FORWARD 5 EXECUTIVE SUMMARY 6 OPERATOR RECOMMENDATIONS 12 NETWORK EQUIPMENT RECOMMENDATIONS 12 SERVICE LAYER COMPONENT (E.G. SERVICE BROKER) RECOMMENDATIONS 13 MOBILE HANDSET VENDORS 13 APPLICATION DEVELOPER RECOMMENDATIONS 13 INVESTOR RECOMMENDATIONS 13 INTRODUCTION AND BACKGROUND 14 PURPOSE 14 BRIEF IMS REVIEW 14 IMS MARKET SURVEY RESULTS 17 BACKGROUND ON THE RESEARCH 17 OPERATOR INTERVIEWEE ANALYSIS 17 SUPPLIER INTERVIEWEE ANALYSIS 19 IMS ACTIVITY 21 IMS BARRIERS 24 VENDOR PERCEPTION RANKINGS 27 IMS PLANS 28 IMS PRICING 30 RICH COMMUNICATIONS SUITE 31 ALTERNATIVES AND PATHS TO IMS 32 IMS MARKET SURVEY CONCLUSIONS 35 CASE STUDIES 37 VERIZON COMMUNICATIONS CASE STUDY 37 VERIZON BACKGROUND 37 PRINCIPLES BEHIND VERIZON’S IMS DEPLOYMENT 37 BREAKING DOWN THE SILOS 38 SERVICE DELIVERY ECOSYSTEM 40 INTEGRATION EXPERIENCE 41 CONCLUSION 42 CHINA MOBILE CASE STUDY 44 2 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT VODAFONE SPAIN SERVICE BROKER 47 EXPLAINING THE SERVICE BROKER 47 VODAFONE SPAIN HOMEZONE SERVICE 48 APPTRIGGER CASE STUDY OF AN APAC OPERATOR 50 CASE STUDY REVIEW 53 WHERE THE MARKET IS GOING: IMS PROGNOSIS 54 CONCLUSIONS AND RECOMMENDATIONS 55 OPERATOR RECOMMENDATIONS 55 NETWORK EQUIPMENT RECOMMENDATIONS 56 SERVICE LAYER COMPONENT (E.G. SERVICE BROKER) RECOMMENDATIONS 56 MOBILE HANDSET VENDORS 56 APPLICATION DEVELOPER RECOMMENDATIONS 56 INVESTOR RECOMMENDATIONS 57 APPENDIX 1 – ACRONYMS 58 APPENDIX 2 – COMPANIES INTERVIEW 63 OPERATORS 63 SUPPLIERS 65 3 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT TA BLE O F FI GU RE S Figure 1. Operator IMS activity, and Distribution by Operator Type ____________________________ 7 Figure 2. Cumulative Percentage of Operators by year they anticipate starting IMS Deployment ______ 8 Figure 3. IMS Barrier and Frequency of Occurrence from Operators ___________________________ 8 Figure 4. Supplier Ranking of Barriers ____________________________________________________ 9 Figure 5. Estimate of the Initial Application of IMS _________________________________________ 9 Figure 6. Alternatives and Paths to IMS __________________________________________________ 10 Figure 7. IMS Architecture ____________________________________________________________ 15 Figure 8. Split between Operator and Supplier Interviews ___________________________________ 17 Figure 9. Geographical Distribution of Operators Interviewed ________________________________ 18 Figure 10. Operator Types Interviewed ___________________________________________________ 18 Figure 11. Distribution of Operator Interviews by Role ______________________________________ 19 Figure 12. Geographical Distribution of Suppliers Interviewed ________________________________ 20 Figure 13. Distribution of Supplier Interviews by Role ______________________________________ 20 Figure 14. Distribution of Supplier Interviews by Type of Supplier _____________________________ 21 Figure 15. Operator IMS Activity and Distribution by Operator Type ___________________________ 23 Figure 16. Live IMS Services __________________________________________________________ 24 Figure 17. IMS Barrier and Frequency of Occurrence from Operators _________________________ 26 Figure 18. Supplier Ranking of Barriers __________________________________________________ 26 Figure 19. IMS Vendor Ranking (Perception based)________________________________________ 27 Figure 20. IMS Vendor Ranking Regional Variation _______________________________________ 28 Figure 21. Cumulative Percentage of Operators by year they anticipate starting IMS Deployment ____ 29 Figure 22. Estimate of the Initial Application of IMS _______________________________________ 30 Figure 23. Potential Service Drivers _____________________________________________________ 30 Figure 24. IMS Price Range per Region (Cost per Subscriber in US Dollars) ____________________ 31 Figure 25. Rich Communication Suite Results _____________________________________________ 32 Figure 26. Alternatives and Paths to IMS _________________________________________________ 34 Figure 27. IMS Evolution _____________________________________________________________ 35 Figure 28. Verizon’s IMS and SDE Vision (source Verizon) __________________________________ 39 Figure 29. Shared Infrastructure Vision (source Verizon) ___________________________________ 41 Figure 30. Legacy Integration (source Verizon) ____________________________________________ 42 Figure 31. China Mobile Network Architecture (source Huawei) ______________________________ 45 Figure 32. China Mobile Target Architecture (source Huawei)________________________________ 45 Figure 33. Service Roadmap (source Huawei) _____________________________________________ 46 Figure 34. Typical Prior Situation (source OpenCloud) ______________________________________ 47 Figure 35. Service Broker Extending Pre-pay Applications (source OpenCloud) __________________ 48 Figure 36. Vodafone Spain Service Broker Scenario (source OpenCloud) _______________________ 49 Figure 37. APAC Operator Situation (source AppTrigger) ___________________________________ 50 Figure 38. Operator Decision Matrix (source AppTrigger) ___________________________________ 51 Figure 39. Proposed Solution (source App Trigger) _________________________________________ 51 Figure 40. Total Cost of Ownership Analysis (source AppTrigger) _____________________________ 52 Figure 41. Return on Investment Analysis (source AppTrigger) _______________________________ 52 4 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT F O R WA R D The religious war has ended, IMS (IP Multimedia Subsystem) did not become widely deployed within the first decade of the 21st century. Surprisingly for many in the industry, SS7 (Signaling System #7) remains in rude health and VoIP (Voice over IP) continues its linear, not exponential, growth. So where is IMS? Telenor has recently launched a suite of business services based on IMS. Verizon and AT&T have been quite vocal on their IMS deployments. China Mobile and Telecom Malaysia are both in the midst of IMS deployments. However, most of the field trials and initial deployments did not migrate to full network deployments. No one can argue against the need for IP multimedia session control with dynamic QoS (Quality of Service), to enable 'reliable as the PSTN' voice communications across any capable network, and for call features to work transparently across those disparate networks. So given the transition to IP in most operators over the passed decade, why hasn't IMS followed that trend? This report was stimulated from a series of frustrating conversations around IMS where there appeared to be a significant gap between my experiences in working with operators around the world in the services layer and the “reality” presented by a number of senior marketing people. This document aims to provide a valuable independent status report that can help all in the industry have a clear view on the current status of IMS and the likely paths operators will take in the evolution of their networks. 5 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT E X E C U T I V E S U M M A RY During the months of July and August 2009, 137 phone interviews were conducted with operators and suppliers around the world, 101 of those interviews were with operators. The interviews consisted of a set of twenty open ended questions, designed to gather both hard and soft data. That is, specific technical and commercial issues, as well as perceptions because both hard and soft data influence decision making. IMS remains niche, with only 8% of those operators surveyed deploying IMS, see Figure 1. Note, none of those operators have completed the conversion of their network, all considered it a 5- 7 year process. Another 12% are in an extended field trial, which is characterized by services being launched on the IMS core, with in some cases paying customers; but a decision has not yet been made to commit to service migration onto the IMS core. Within this category are a group of mobile operators that have deployed IMS for FMC voice, but do not as yet see a case for extending IMS to other services. IMS does not appear to be entering a period of rapid adoption, rather a linear growth in initial adoption over the next 5 years, see Figure 2, with by 2014 about 32% of operators commencing an IMS deployment. Regionally, NAR (North America Region) provides the bulk of the growth in years 2010 and 2011, while EMEA (Europe Middle East and Africa) and APAC (Asia Pacific) regions provide the bulk of growth in later years. Lack of „business case,‟ lack of „standards compliance‟ and „BOSS (Business and Operational Support System) integration‟ were the top three barriers to adoption as identified by operators, see Figure 3. The suppliers‟ views of the barriers were firstly a shorter list, see Figure 4; and different rankings for the „Business Case‟ and internal to the operator „Network/IT organizational battle‟ barriers. Suppliers ranked „Business Case‟ fifth; instead rating technical issues higher. They ranked the „Network / IT organizational battle‟ barrier higher than operators; citing their experiences in the problems this posed in both gaining a decision from an operator for deployment, and then inflating costs during implementation. Hence, significant IMS deployment challenges remain related to internal operator organizational issues. Over the past 3 years NEPs (Network Equipment suppliers) have struggled to gain market interest in IMS, hence IMS prices have come down to the levels of softswitches at $2-3 per subscriber. This is a significant change from the initial price points of $25 to $33 per sub quoted by some vendors back in 2004/5 when IMS was first brought to market. On the initial application of IMS, shown in Figure 5, the results show significant consensus across operators and suppliers as well as across the regions. The top application is a „converged VoIP platform across broadband, mobile and legacy.‟ Next was „end of life softswitch replacement.‟ Operators, particularly in the US, are adopting this application of IMS as the price per subscriber is trending towards $2.5 to $3 and their softswitches are reaching end of life. Also service innovations such as HD Voice and mobile IP were not seen as drivers for IMS. Hence the value of IMS value is seen in the core, not at the edge. 6 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 6 shows the alternatives to IMS that were quoted by operators and suppliers interviewed. Continuing with the existing IN and adopting a softswitch with its closed SCE (Service Creation Environment) were considered top. Generally the qualifier around softswitch was its focused application in the support of commodity voice. Which given the initial application of IMS is anticipated to be by most operators as a core function in support of voice, rather than as a platform for service innovation, demonstrates why most operators have not considered IMS until this year as its pricing remained above that of softswitch. Figure 1. Operator IMS activity, and Distribution by Operator Type 12% Converged 25% Fixed only Mobile only 63% 8% Deployed, commercial 17% services live 12% Extended field trial, limited commercial 44% Converged service Fixed only Lab trial, under evaluation 25% 58% Mobile only Watching and waiting 36% 35% 45% Converged Fixed only Mobile only 20% 7 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 2. Cumulative Percentage of Operators by year they anticipate starting IMS Deployment 35% 32% 30% 26% 25% 22% 20% 17% 15% 12% 10% 8% 5% 0% 2009 2010 2011 2012 2013 2014 Figure 3. IMS Barrier and Frequency of Occurrence from Operators Frequency of Barriers occurrence Business case 80% Lack of standard compliance / proprietary extentions 62% BOSS integration 52% Gaps on basic service emulation - lawful intercept, ISDN2 48% Destination without a route map 45% Complexity 44% General confusion 44% Reaction to marketing hype 35% Network / IT organizational battle 31% Co-ordination between mobile, fixed and broadband divisions 28% Devices (mobile operator specific response) 25% Economy 25% Cheaper alternatives exist (Softswitch) 21% Lacking web-based protocols 20% 8 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 4. Supplier Ranking of Barriers Frequency of Barriers occurrence Lack of standard compliance / proprietary extentions 67% BOSS integration 55% Complexity 55% Network / IT organizational battle 51% Business Case 48% Figure 5. Estimate of the Initial Application of IMS Initial Application of IMS Frequency Converged voice platform across broadband, legacy and mobile networks 47% Voice over LTE (Long Term Evolution) 8% Voice over EVDO revA or HSPA+ 3% Converged multimedia service platform across broadband, legacy and mobile networks 2% Service innovation, e.g. RCS (Rich Communication Suite) 5% End of life softswitch replacement 29% Engineering bragging rights to maintain stock/share price 6% 9 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 6. Alternatives and Paths to IMS Alternatives to IMS Frequency JAIN SLEE 23% SDP 42% SIP Servlet and Service Broker 25% Service Broker 28% Softswitch 65% Existing IN/SCP 76% Paths being adopted Frequency Softswitch for commodity voice no plan for IMS adjunct in next 3 years 42% Softswitch for commodity voice with IMS adjunct in place or planned 29% IMS core for VoIP services between mobile, broadband and legacy (see Verizon case study) 18% Continue to leverage existing IN assets (annually reviewed) 47% Service Broker (Vodafone Spain and AppTrigger case studies) 23% Focus on service exposure harnesses web services SDP (SIP AS/Service Broker/ParlayX) 34% Case studies on the IMS activities of Verizon, China Mobile, Vodafone Spain and an APAC operator were reviewed. Verizon presents a leading deployment example of IMS adoption. Being a converged operator provides a strong opex (Operational Expenditure) benefit in migrating to a converged IMS core. Verizon‟s need to deploy LTE (Long Term Evolution, 4G) sooner rather than later given the end of life of CDMA requires voice over IP support with QoS (Quality of Service) over its RAN (Radio Access Network) before most other operators. Its high ARPU (Average Revenue Per User) and a track record of technology leadership means it‟s able to tolerate the risk of being an early adopter. Those characteristics are critical in driving Verizon to adopt IMS; we can see a similar decision process for other non-GSM operators such as NTT. For GSM operators the drive to LTE and IMS is not as strong, their 3G networks support circuit based voice, HSPA+ (High Speed Packet Access) with the potential to deliver 42Mbit/s within a 5MHz carrier delays their need to roll out 4G until 2013/2014, while CDMA operators are limited to 3.1 Mbit/s. Some suppliers in the interviews made an argument that RAN efficiency will drive all operators towards VoIP over LTE within the next 2/3 years. This argument is not reflected in the operators concerns; their concern is solving the problem of cost effectively supporting mobile broadband, not voice. 10 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT In contrast to the conclusions drawn above, the China Mobile case study presents an interesting scenario of a GSM mobile operator (or can be considered a relatively new converged operator) making the move to IMS. Critical in its decision making is the need to offer business services over its relatively new fixed broadband network. Hence it‟s in a relatively greenfield situation on the broadband side so is rolling out IMS for its fixed line business, while also taking advantage of its mobile service platform. The lack of a significant legacy fixed broadband network avoiding the issue of scrapping sunk costs, and an attractively priced IMS solution appears to drive their decision to adopt IMS. Vodafone Spain provides an example of how a Service Broker is introduced to solve a problem with current service delivery, which can then extend to manage the transition of services to SIP/IMS. And finally the Apptrigger APAC operator scenario provides a quantified analysis of the financial benefits in managing the transition from legacy to SIP/IMS through a service broker. The case studies are just a few of the many diverse scenarios covered during this market study. It‟s clear we‟re entering a phase of transition, where many more paths are being explored in the transition to IMS, given the varied operator circumstance. Also in some cases aggressive IMS price reductions have reached a point of parity with softswitch. However, the fundamental problem remains of sunk costs in existing IN assets which will in most cases delay an operator‟s need to evolve their network. Summarizing the operator types and their propensity to adoption IMS based on the interviews, from high to low:  Converged operator, CDMA based wireless infrastructure;  Converged operator, end of life softswitch or greenfield broadband with „softswitch-equivalent‟ IMS pricing being offered from a NEP;  Fixed only operator; and converged operator where fixed and mobile divisions still operate independently; and  GSM mobile only operator. IMS is certainly not dead. The World remains „watching and waiting,‟ even given the deployments in China Mobile, Verizon, AT&T and Telecom Malaysia to name just a few. From the market survey we‟re seeing a slow linear adoption through the next decade, as shown in Figure 2. Looking forward given the extended period of IMS adoption we could see several business models emerge in its delivery. For example, hosted IMS; IMS is simply software that makes complex session control decisions, hence a hosted model is feasible. For smaller operators given the higher prices they are charged for IMS on a per subscriber basis; hosted IMS could enable better economics by the time they consider deployment. 11 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT OPERATOR RECOMMENDATIONS  GSM operators can afford to wait and see on IMS for at least 2 to 3 more years. HD Voice can be supported on existing GERAN and UTRAN infrastructure without IMS. HSPA will help mitigate mobile broadband economics, though it will remain challenging.  Converged CDMA operators should follow Verizon, as CDMA technology will end of life quicker than they expect, so they will need to manage the transition to LTE in support of voice.  For fixed-line operators its really what deal can you cut with the supplier, if IMS is roughly the same price as softswitch then it can make business sense if your softswitch is EOL; as we‟re seeing with the cable companies in North America. NETWORK EQUIPMENT RECOMMENDATIONS  Focus on converged CDMA operators, converged operators with an end of life softswitch, and those operators where a clear Opex saving can be demonstrated through the introduction of IMS into their core network. Avoid unclear service innovation propositions to justify IMS.  Do not repeat the IMS marketing mistakes of the past in not acting in the customer‟s best interest. At a critical time when operators need to be increasing the rate of innovation, it was stalled through „brow beating‟ operators with a poorly thought out and quantified IMS proposition.  Rein back standard development, its running too far ahead of the market. It can be accused of “gilding the lily” rather than focusing upon market appropriate standards. Focus on implementation guidelines, rather than yet more “bells and whistles,” to aid deployment and integration as operators begin to deploy IMS.  Refresh the IMS marketing teams, they needs to be customer focused in helping operators manage the transition, rather than brow beating operators with high-level slideware.  Align business units to manage the transition to IMS, currently the business units are acting as silos, making the transition for many operators difficult. Put simply, focus on helping the customer, it will protect future shareholder value. 12 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT SERVICE LAYER COMPONENT (E.G. SERVICE BROKER) RECOMMENDATIONS  Focus on both opportunistic legacy service problems, e.g. extending postpaid VAS to prepay; and helping operators manage the transition to SIP/IMS through being able to reuse their legacy service platforms and provide a degree of vendor independence in the operator‟s choice of services.  Service layer components such as the Service Broker will be increasingly squeezed by NEPs who have some / all of the functionality bundled in their IMS platforms. Look to exit in next 2 years into a NEP or SDP provider. MOBILE HANDSET VENDORS  A critical gap is IMS clients on devices. Today handset vendors look to operators to pay. This creates a „chicken and egg‟ problem in extending IMS capabilities to the edge. Operators, NEPs and handset vendors should work together to ensure the IMS client (as well the HD voice codec) is just there, just like IPV6 is available on most PCs even though its generally not used today. APPLICATION DEVELOPER RECOMMENDATIONS  Only build IMS applications if the NEP or Operator pays as a consulting project, as the application will likely be constrained to a particular platform.  Focus on the developer initiatives that provide direct customer access with open web-based APIs. INVESTOR RECOMMENDATIONS  IMS will be dominated by NEPs and will likely not see any hockey stick adoption, rather a linear ramp through the next decade. Recommend focusing on service opportunities that have both a direct to consumer / enterprise channel and through an open telco channel. The service broker segment provides a near term opportunistic investment. 13 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT I N T RO D U C T I ON A N D BA C KG RO U N D PURPOSE This report provides an independent and quantified view of what is happening in the industry on IMS (IP Multimedia Subsystem), through the presentation of results from an industry-wide survey that encompasses 137 interviews, 101 of them being operators. The report also includes operator and supplier case studies, presenting as factually as possible the current state of the art; without the hype and marketing spin that has frustrated many people on this topic. These two objectives are reflected in the two main sections of this report: market survey results and case studies. An analogy that is frequently used during this survey is IMS presents a destination, however, there's no map on how we get there from where we are today. This report aims to provide some insight into the different paths operators are taking to aid operators in defining an appropriate network strategy and to aid suppliers in making appropriate product and sales investment decisions. This report is not an IMS primer, there are many good websites1 provide that function, and most of the NEPs (Network Equipment Providers) will happily educate/indoctrinate operators on IMS. Rather this report presents a level-set on IMS explaining and quantifying what people are thinking and doing without the marketing spin that has clouded and confused the situation. BRIEF IMS REVIEW The IP Multimedia Subsystem (IMS) is an architecture for delivering Internet Protocol (IP) based multimedia services with quality of service over multiple access networks from a common core. It was initiated in mobile standards body 3rd Generation Partnership Project (3GPP), as a part of the vision for evolving mobile networks. The original vision was the delivery of internet services over GPRS (General Packet Radio System). That vision was subsequently updated by 3GPP, 3GPP2, Cable Labs and TISPAN (Telecommunications and Internet Services and Protocols for Advanced Networks) to support multiple access networks, such as Wireless LAN, CDMA2000 and fixed broadband. IMS uses IETF (Internet Engineering Task Force) protocols such as Session Initiation Protocol (SIP), with some IMS specific extension, which has caused some frustration amongst the SIP purists. IMS is not focused upon standardizing applications but rather defining a common horizontal control layer for the access of multimedia and voice applications from wireless and wireline devices. Hence, services do not require siloed control functions. However, the architecture lacks implementation guidelines; in essence it is a destination without a map on how to get there. Also it‟s a destination that is moving, with work items for release 10 of the standard being discussed, while many mobile operators have only recently upgraded their core to some components of release 5. It presents an unfortunate side effect of vendor dominated standards bodies, they increasingly loose touch with the needs of operators. FSAN (Full Service Access Network) was a good example of a body run by operators for operators, which created the broadband passive optical network standard widely deployed today. 1http://www.rennes.enst-bretagne.fr/~gbertran/files/IMS_an_overview.pdf, http://www.3gpp.org, http://www.iec.org/newsletter/sept06_2/analyst_corner.pdf, 14 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 7 shows a high level IMS architecture. Briefly explaining the main components:  SIP AS, Session Initiation Protocol Application Server. This runs all the logic for the applications / services, e.g. IP Centrex.  S-CSCF, Serving Call Session Control Function. Call management and service coordination. Provides the registration of the endpoints, routing of the SIP signaling messages to the appropriate application server, and maintain session state. The CSCF works with the interworking and transport layers to guarantee QoS across all services.  P-CSCF, Proxy Call Session Control Function. Device control, interworking and security. This is the entry point for IMS devices through an attached access network, this routes the SIP messages to the user‟s home S–CSCF. It also manages the quality of service requirements over the access network.  HSS, Home Subscriber Server. Stores all the user profile data.  BGCF, Breakout Gateway Control Function. Selects the network in which a PSTN breakout is to occur, and interworking with the PSTN; its main role is IP level peering for voice.  MGCF, Media Gateway Control Function. Manages the distribution of sessions across multiple media gateways.  Media Server. Provides announcements, conferencing, etc. Figure 7. IMS Architecture IMS SIP AS HSS S-CSCF B/MGCF P-CSCF Media PSTN Server Interface Multiple PSTN Access Networks 15 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Put simply IMS provides multimedia session control across multiple access networks with standardized quality of service control. It enables an operator to have a common „core‟ across all its networks for communication services (principally voice), and provides a relatively open environment for value added communication services. 16 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT I M S M A R K E T S U RV E Y R E S U LT S BACKGROUND ON THE RESEARCH During the months of July and August 2009, 137 phone interviews were conducted with operators and suppliers around the world. The interviews consisted of a set of twenty questions, designed to gather both hard and soft data. That is specific technical and commercial issues, as well as perceptions because both hard and soft data influence decision making. The results of this survey are presented in this chapter. For the sake of transparency in this analysis, a notable interviewee exception is Ericsson which would only provide public domain information. Ericsson‟s public relations department would not allow any interviews. It is unclear why they need such control over information; this was in stark contrast to the openness of the rest of the industry. The split between operators and suppliers interviewed is show in Figure 8. The bulk of the interviewees were operators. An objective of this report is to help guide operators in defining their IMS strategy, hence gathering a broad set of data around operators‟ opinions and experiences enables reasonable quantification of opinions at the level of the general market, region and operator-type. The bias of the interviews also reflects the fact there are many more operators (750+) than suppliers (5 global Network Equipment Providers (NEP)). Figure 8. Split between Operator and Supplier Interviews Suppliers 26% Operators 74% OPERATOR INTERVIEWEE ANALYSIS The geographic distribution in Operators interviewed is show in Figure 9. Given the diversity of operator situations, the interview process attempted to provide as broad and representative a geographic coverage as possible. A notable feature in the operator interviews was many operators thought other regions where more advanced in the deployment of IMS than their own. A finding that will be explored in more detail later is North America has the broadest deployments and that situation is likely to remain for several years due to specific market factors that will be discussed later. 17 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 9. Geographical Distribution of Operators Interviewed Americas 24% APAC 38% EMEA 38% The split between operator types interviewed is shown in Figure 10, the definitions used are:  Converged: within a country of operation having both fixed and mobile operations;  Fixed only: for example broadband ISPs (Internet Service Providers)  Mobile only: within the country of operation. If an operator is planning to launch a mobile offer to its existing fixed line business they are considered a converged operator for this analysis because it impacts their decision making and business case around IMS. For example, a cable operator that is planning a mobile operation is considered a converged operator in this analysis. Figure 10. Operator Types Interviewed Mobile only 39% Converged 49% Fixed only 12% 18 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 11 shows the distribution of Operators interviewed by role. The aim was to gather a representative mix of roles across the organization. This was done to uncover any differences in opinions based upon role within an operator or uncover intra-organizational factors. There is a slight bias towards the technology office, in part because they are the group responsible for assessing IMS so in some cases only the technology office was prepared to offer time for an interview. Figure 11. Distribution of Operator Interviews by Role IT 20% Technology Office 33% Network Engineering 22% Marketing 25% SUPPLIER INTERVIEWEE ANALYSIS Figure 12 shows the geographic distribution of the suppliers interviewed. Global refers to supplier interviewees whose scope is across all markets, e.g. global marketing. While some of those interviewed also are focused upon a specific geography. This was captured to determine any regional differences in suppliers‟ opinions. APAC refers to Asia Pacific; and EMEA to Europe, Middle East and Africa. 19 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 12. Geographical Distribution of Suppliers Interviewed APAC 22% Global 38% EMEA 22% Americas 18% Figure 13, shows the distribution of interviewee roles. Again the objective was to achieve a representative scope across the supplier organization to see if there were any organizational differences. For example, marketing‟s role is to generate demand, so they will have a view slightly different to that of the technology office or account management. Figure 13. Distribution of Supplier Interviews by Role Sales / Account Management 23% Technology Office 44% Marketing 33% 20 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 14 shows the distribution of supplier interviewees by company type: NEP (Network Equipment Provider, e.g. Ericsson or Huawei), network component supplier (e.g. service broker or SBC (Session Border Controller), e.g. AppTrigger), BOSS (Business and operations Support Systems, e.g. Amdocs), device/edge component software supplier (e.g. mobile device or femtocell gateway). Figure 14. Distribution of Supplier Interviews by Type of Supplier Device/Edge component 19% NEP 43% BOSS 19% Network component 19% IMS ACTIVITY This section presents the general findings from the market research. Figure 15 shows the status of operator IMS activities. Note the percentages shown cannot be extrapolated to the general market, because by the nature of the interview process, i.e. operators being willing to give their time, the bias is to those operators active or considering IMS. Though with that said, 95% of the operators approached were willing to be interviewed; only 5% responded that they either had no IMS plans so would not interview or were not prepared to discuss their IMS plans. IMS is deployed in 8 operators interviewed, out of the 101 interviewed, with the majority of those being converged operators. The main driver for a converged operator is the opex gains as the IMS core can be shared across the fixed, mobile and broadband access networks in support of VoIP services. The criteria for an operator to be in this category is live commercial services are being migrated onto the platform. 21 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT The second category, extended field trial, of which there are 12 operators in this category that is differentiated by the fact service migration has not yet started. Specific services have been launched on the IMS core, with in some cases paying customers; but a decision has not yet been made to commit to service migration. As a result the IMS platform essentially remains a silo; for example several mobile operators have used IMS with their FMC (Fixed Mobile Convergence) voice service, but do not see a business case for migrating other services onto IMS. In this category converged operators still dominate. In about half the operators anticipated moving towards deployment, but the timing was uncertain. The third category of lab trial refers to an IMS platform being evaluated within a lab, generally by the technology office of an operator, 36% of operators interviewed were in this category. It is interesting to note that roughly half the operators in this category received their IMS platform for free as either an evaluation system, or as part of another deal; for example several operators had recently made a softswitch order, and an IMS platform was bundled in that deal. Roughly 80% of the operators in this category were unsure about when they would move towards deployment. Finally, the largest category is “watching and waiting,” accounting for 44% of operators interviewed. That is, there is no IMS platform under active evaluation; though there may have been such an evaluation in the past. The operator does not see the business case for deploying IMS, and hence is continuing business as usual. Once the business case becomes clear they would make the move. The majority of mobile operators are in this category. Within this „watching and waiting‟ category is a group of operators who questioned whether IMS in its current form would be relevant when they finally consider deployment; for example several brought up ideas such as hosted IMS. We‟ll consider this in a later chapter. Given the limited data set for deployments it‟s difficult to draw any geographic trends, but North America would appear to be leading in deployments and planned deployments. Some of the market factors considered to be the main driver for this situation are:  Converged operators are in the process of consolidating their broadband, mobile and legacy core networks / operations;  End of life softswitch infrastructure, and NEPs offering core IMS platforms at comparable prices;  Converged operators dependence on end-of-life CDMA which leads to the early adoption of LTE (Long Term Evolution) and the need to support VoIP support over DORA (EVDO (EVolution Data Only) RevA) to understand the implications of mobile VoIP, to enable LTE to adequately support VoIP; and  Relatively uncompetitive market with higher than average margins which enables strategic technology decisions to be taken, that in more competitive markets would be difficult to justify. 22 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 15. Operator IMS Activity and Distribution by Operator Type 12% Converged 25% Fixed only Mobile only 63% 8% Deployed, commercial 17% services live 12% Extended field trial, limited commercial 44% Converged service Fixed only Lab trial, under evaluation 25% 58% Mobile only Watching and waiting 36% 35% 45% Converged Fixed only Mobile only 20% Of those operators that have deployed IMS or are in an extended field trial the services supported are shown in Figure 16. Voice emulation (this includes FMC voice) is by far the most popular, i.e. using the platform to support voice (PSTN) services over IP, followed by IP Centrex, which is generally targeting the business market. PTT (Push To Talk) was more common in the extended field trial group, than the deployed group. 23 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 16. Live IMS Services 100% 80% 60% 40% 20% 0% SIP Trunking Push to Talk Voice emulation Communications IP Centrex / Unified IMS BARRIERS Given the maturity of IMS, and the move most operators have made to IP in their core networks; IMS remains niche, as is clear from Figure 15. Figure 17 shows the list of barriers quoted by operators on why they have not deployed IMS. Lack of a clear business case has been leveled at IMS for some time. A more accurate view may be a lack of a common business case, as operators must migrate from their existing situation, which means there is no one simple business case. Take for example the business case for NGN (Next Generation Network); it can be easily justified by the cost savings from simply closing down the multiple SDH (Synchronous Digital Hierarchy) silos built over the years. Of those operators who have started to deploy IMS a common factor is being a converged operator with the need to support voice services over multiple access networks. Their specific situation made IMS a much easier choice than say a GSM mobile operator. Lack of standards compliance and/or vendor proprietary extensions were raised by over half the operators interviewed, though to be fair to the NEPs many of the non-compliances are due to differences in the interpretation of the complex IMS standards. Most went as far as to say that they would likely adopt a solution from one vendor given the challenges and costs incurred in managing integration. This calls into question the scope of the IMS standard. A point raised by many of the suppliers of products that integrate to an IMS core is operator require IMS compliance on the RFQs, but then do not enforce compliance in the deployment, raising significant unexpected integration costs. This is compounded by the fact that because IMS is a software solution it tends to sits between network engineering and IT organizations within an operator; it‟s essentially a software integration project managed by network engineering, which tends to result in many expensive change orders. 24 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Surprisingly many operators in their experimentation with IMS discovered it could not adequately support legal intercept or ISDN2 emulation. This is a significant barrier for operators to start migrating services. Legacy service support is always a thorny issue, as how far should the IMS platform go in supporting services that perhaps would be better made end-of-life. Given IMS has only recently achieved a level of maturity that has allowed early adopter operators to start migrating services, this gap is to be expected, but will like constrain the scope of the more aggressive IMS deployments. Even the most anti-IMS operator still regards IMS as an inevitable destination, because no adequate standards-based alternative exists to provide IP based multimedia session control with quality of service. However, a common complaint was the lack of a map from today, their currently network situation, on how to migrate to an IMS core. Later we will review some of the paths operators are taking, see Figure 26, and map them to operator situations to see if there are some common characteristics. Rather than the IMS spec becoming simplified and more focused over time with deployment experience; more and more capabilities have been added, Release 10 is currently being defined; this leads to the complexity barrier. In part with a lack of broad based deployment experience, there was little feedback into the standards body, which should have perhaps taken a holiday for a few years to let the market catch up. Some operators consider the separation of the I-, S- and P-CSCFs an architectural mistake; where a simplified approach would have saved cost and implementation complexity. IMS has been presented in a number of incarnations over the years, initially presented as the method to support instant messaging and push to talk when those services were popular amongst operators. Once the PTT trials demonstrated customers weren‟t that interested in the services at the price necessary to cover the cost of the investment, the focus moved to service exposure and operational savings; which were difficult at best to prove. The focus then moved onto the fixed operators, linking it closely to the NGN transformation, generally with a service innovation spin. The NGN cases proved out, however, the IMS case did not. And of the past year the focus has changed yet again to IMS supporting IPTV, which is discussed in this weblog article2. This shifting proposition has resulted in general confusion. Reaction to the hype surrounding IMS cannot be understated. This factor caused by far the most venting from operators, even more than vendor proprietary extensions to IMS standards. Operators felt badgered by NEPs, being asked to believe not think. The blame for this is laid squarely at the NEPs marketing departments. This has resulted in a backlash. A lesson to the industry is B2C marketing doesn‟t work, it‟s a B2B business, hence work with your customers and don‟t treat them like „punters‟ to be „duped‟ into the „latest fashion.‟ The prioritization of barriers was common across regions, operator types, and role within the organization. Lack of business case, lack of standards compliance and BOSS integration were the top three barriers across the regions. 2 http://www.alanquayle.com/blog/2009/06/why-is-ims-getting-lumped-into.html 25 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 17. IMS Barrier and Frequency of Occurrence from Operators Frequency of Barriers occurrence Business case 80% Lack of standard compliance / proprietary extentions 62% BOSS integration 52% Gaps on basic service emulation - lawful intercept, ISDN2 48% Destination without a route map 45% Complexity 44% General confusion 44% Reaction to marketing hype 35% Network / IT organizational battle 31% Co-ordination between mobile, fixed and broadband divisions 28% Devices (mobile operator specific response) 25% Economy 25% Cheaper alternatives exist (Softswitch) 21% Lacking web-based protocols 20% When Suppliers ranked the barriers, shown in Figure 18 the main differences were firstly a shorter list with much less emotion attached to those barriers; and different rankings for the „Business Case‟ and „Network/IT organizational battle‟ barriers. Suppliers ranked „Business Case‟ fifth; instead focusing upon technical issues. However, they did rank the „Network / IT organizational battle‟ barrier higher than operators. Citing their experiences in the problems this posed in both gaining a decision from an operator for deployment, and then inflating costs during implementation. As described earlier a broad base of suppliers were interviewed, not just the NEPs. This ranking reflects the problems they are facing in integrate with IMS. In particular BOSS vendors reported the greatest number of problems even on what should be relatively mature diameter interfaces across both provisioning and billing. The difference between the supplier and operator barrier rankings reflects their positions in the value chain. However, there is a significant gap around the business case which suppliers will need to fill to move operators to action on IMS. Figure 18. Supplier Ranking of Barriers Frequency of Barriers occurrence Lack of standard compliance / proprietary extentions 67% BOSS integration 55% Complexity 55% Network / IT organizational battle 51% Business Case 48% 26 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT VENDOR PERCEPTION RANKINGS Now back to operator views, operators were asked to rank the main IMS vendors on a scale of 1-5 with 3 being industry average; based upon their perception of the NEP‟s IMS solutions. Note this question was not trying to provide a detailed feature by feature comparison of which NEP‟s IMS solution is best; rather provide a higher level insight into how operators ranked the vendors. In Figure 19 the aggregate totals are shown. I‟ve also broken the rankings down into regionally in Figure 20. There is the usual bias of NEPs performing better in the „home‟ regions. However, Huawei came top across all regions, even though Huawei has not been selected as often as say Ericsson. It is important to note that the smaller operators in a region carry the same voting power as a large national operator in this survey. So even though a traditional NEP may be selected by the large incumbent operator; the smaller operators, which appear to be a target for Huawei, helped Huawei to the top of the rankings. Figure 19. IMS Vendor Ranking (Perception based) 4.00 3.44 3.50 3.15 3.12 3.02 2.78 2.88 3.00 2.50 2.00 1.50 1.00 0.50 0.00 ALU Ericsson Huawei Motorola NSN ZTE 27 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 20. IMS Vendor Ranking Regional Variation 4 3.5 3 2.5 APAC 2 Americas 1.5 EMEA 1 0.5 0 ALU Ericsson Huawei Motorola NSN ZTE APAC 2.98 3.14 3.64 2.65 3.21 3.14 Americas 3.21 2.93 3.29 2.89 2.95 2.55 EMEA 3.16 3.38 3.39 2.79 2.91 2.95 IMS PLANS Figure 21 shows when operators anticipate starting an IMS deployment. There does not appear to be a knee, rather a steady growth over the next 5 years. Regionally, NAR provides the bulk of the growth in years 2010 and 2011, while EMEA and APAC provide the bulk of growth in later years. As discussed previously, the EOL (End Of Life) of CDMA, focus on LTE, and most operators having converged networks means IMS has a stronger proposition for NAR operators. EMEA and APAC mobile-only operators remain laggards with >50% anticipating deployment beyond 2015. Later we will review some of the initial IMS deployments in the case studies chapter, for example Verizon, China mobile, and Telecom Malaysia. 28 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 21. Cumulative Percentage of Operators by year they anticipate starting IMS Deployment 35% 32% 30% 26% 25% 22% 20% 17% 15% 12% 10% 8% 5% 0% 2009 2010 2011 2012 2013 2014 Operators and suppliers were asked what they through the initial application of IMS would be, shown in Figure 22. The results showed significant consensus, across operators and suppliers, as well as across the regions and other dimensions. The top initial application was considered to be a “converged VoIP platform across broadband, mobile and legacy.” Next was end of life softswitch replacement. Several operators particularly in the US are making this move as the price per subscriber for IMS is trending towards $2.5 to $3 (everything but the HSS). So IMS‟s principle value is seen in the core, not at the edge. Beyond the top two applications, where IMS is not taken to the edge of the network, its clear IMS is not being considered for service innovation. For mobile operators device issues dominate. Even for broadband operators, their experiences with IMS clients and SIP stack interoperability issues have made them rather shy of taking IMS to the edge. For service innovation the SDP would appear to have occupied that spot, even though ParlayX is part of IMS. IMS is seen to lack the necessary web-based protocols and integration, hence why operators are looking towards IT vendors such as Oracle for delivery of SDP solutions. 29 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 22. Estimate of the Initial Application of IMS Initial Application of IMS Frequency Converged voice platform across broadband, legacy and mobile networks 47% Voice over LTE (Long Term Evolution) 8% Voice over EVDO revA or HSPA+ 3% Converged multimedia service platform across broadband, legacy and mobile networks 2% Service innovation, e.g. RCS (Rich Communication Suite) 5% End of life softswitch replacement 29% Engineering bragging rights to maintain stock/share price 6% Extending the previous question into what specific services could potentially be a driver for IMS, see Figure 23, this backs up the results shown in Figure 22 on the perceived lack of service innovation as a driver for IMS. Postpay VAS on prepaid had strongest interest in APAC (Asia Pacific region) and LATAM (Latin American region), though in most cases the operator was not considering full IMS, rather an interim step towards IMS in the use of a service broker as discussed in the Vodafone Spain and AppTrigger case studies. Figure 23. Potential Service Drivers Service Driver Frequency HD Voice 0% LTE 6% Mobile VoIP 6% RCS 8% Open Innovation 10% Postpay value added services on prepaid 15% Operator App Store 8% Other 5% IMS PRICING Figure 24 shows the IMS pricing ranges quoted by operators. Note these prices do not include HSS (Home Subscriber Server), but do cover every other function and the integration necessary to have the IMS core in an operational state, e.g. for some operators they quoted it as their „turnkey,‟ or „build, operate, transfer‟ price. This is a significant change from the initial price points of $25 to $33 per sub quoted by some vendors back in 2004/5 when IMS was first evaluated. Over the past 3 years NEPs have struggled to gain market interest in IMS, hence prices have come down to the levels of softswitch, at $2-3 per subscriber. In the APAC operator interviews 22% of them claim to be evaluating IMS on either a platform provided for free, or bundled in a softswitch sale. Hence, it is shown as zero as it‟s claimed the license agreement would allow commercial traffic to flow. 30 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT There is always some difficulty in comparing quoted prices as some deals have IMS positioned as an adjunct to a softswitch, rather than standalone. The biggest determinant on price was the size of the operator, the smaller the operator the higher the price. Figure 24. IMS Price Range per Region (Cost per Subscriber in US Dollars) Region Low High APAC 0 3.9 EMEA 2.5 5.4 NAR 2.5 4.8 RICH COMMUNICATIONS SUITE RCS3 (Rich Communications Suite) is a GSMA initiative with the purpose of speeding up and facilitating the introduction of commercial IP Multimedia Subsystem (IMS) based rich communication services over mobile networks for both UMTS and CDMA initially and later extending to fixed networks. The focus of RCS is upon the user experience, interconnection and interoperability requirements tied to a core feature set of rich communication capabilities. The GSMA are positioning RCS as an important driver for the introduction of IMS. RCS‟s features include:  Enriched Call:  Interactive communications. E.g., content (video/Image) sharing, file transfer  Multimedia ID presentation; info of the caller is pushed to Callee (from device or network based)  Enhanced Messaging  Conversational messaging  Single entry point for all messaging services  Communications log  Mobile and Fixed environments  Enhanced Phonebook  Service Capability Indication (video call, One-shot / Ad-Hoc group messaging, File transfer)  Start voice call, video call, File Transfer, Messaging from phonebook 3 http://www.gsmworld.com/our-work/mobile_lifestyle/rcs/gsma_rcs_project.htm 31 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT  Customize Multimedia ID presentation and save Multimedia ID details on a call establishment  Presence info (Publish, authorize other users to see, display other‟s presence)  Allow searches locally and externally (yellow/white pages, corporate directories)  Back-up/Synch with network address book Figure 25, shows the results of questioning around RCS across both operators and suppliers. Only one third of the interviewees were actively tracking IMS, surprisingly 21% were not aware of RCS, they were generally from marketing departments which should be the target customers for RCS within operators, and technology office had the best awareness. Nearly half the operators interviewed had awareness but did not consider it significant enough to track. On deeper questioning around operator‟s view of RCS, the majority of operators considered RCS had a lack of web integration, citing web alternatives as already available and with a slicker user experience, this as also reflected in the suppliers views. In roughly one third of the interviews operators were examining integration with web based alternatives, rather than RCS, e.g. Yahoo! IM. Half of the operators interviewed considering it an attempt to maintain legacy business models and a political attempt to limit Skype‟s attempts to lobby for open access. Figure 25. Rich Communication Suite Results Aware of RCS? Tracking RCS 35% Aware not tracking 44% Not aware 21% View on RCS Frequency The break-through service IMS needed 18% A user-centric, integrated experience, that finally moves the address book into the 21st century 24% A political ploy to limit Skype's attempts at open access 43% Lacking web integration 75% An attempt to maintain legacy business models 55% ALTERNATIVES AND PATHS TO IMS So if operators are not adopting IMS, then what are they doing? Figure 26 shows the alternatives that were quoted by operators and suppliers interviewed. Continuing with the existing IN and adopting a softswitch with its closed SCE (Service Creation Environment) are considered top; which in general means business as usual. Generally the qualifier around softswitch was its focused application in the support of commodity voice. Which given the initial application of IMS is anticipated to be by most operators as a core function in support of voice, rather than as a platform for service innovation, see Figure 22, demonstrates why most have not started to make the move until this year as IMS pricing remained above that of softswitch. 32 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT SDP was considered a partial alternative, generally for service innovation. The term SDP4 requires further definition, the Verizon case study provide a good example of the roles of IMS and SDE (Service Delivery Ecosystem, which falls into the category of SDP). Beyond that JAIN SLEE, SIP Servlet (with Service Broker) and Service Broker were considered alternatives to IMS, though in practice they are stepping stones which allow existing capitalized assets to continue generating highly profitable revenue in support of value added services (not switching infrastructure). In the case studies we‟ll delve into this transition in more detail. After asking about alternatives, the next question focused on the paths operators are taking towards IMS, note these paths are not mutually exclusive, so in some cases operators are following multiple paths. For example, some operators were adopting an SDP for service exposure, while also adopting softswitch for commodity voice services. Slightly under half the operators interviewed were unsure on which path they would take, so the percentages do not apply across all operators, only of those who expressed an opinion. I‟ve also taken a certain amount of interpretation in the grouping of the paths, as the specific implementations are quite diverse. Leverage existing IN assets accounted for nearly half responses, which had a close correlation to those operators who were watching and waiting. Next was using softswitch (NGN) for commodity voice with no plan for IMS in the next 3 years, these options are not mutually exclusive as roughly half those interviewed selected both. Skipping over service exposure, as that option is relatively independent of the others; deploying an IMS adjunct to a softswitch was in third place. Essentially using IMS for more complex services, generally business services, followed closely by use of a service broker to reuse existing service silos on SIP/IMS. 4http://www.alanquayle.com/blog/2008/05/defining-soa-sdp-and-ims-and-h.html http://www.alanquayle.com/blog/2008/08/service-delivery-platform-land.html 33 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 26. Alternatives and Paths to IMS Alternatives to IMS Frequency JAIN SLEE 23% SDP 42% SIP Servlet and Service Broker 25% Service Broker 28% Softswitch 65% Existing IN/SCP 76% Paths being adopted Frequency Softswitch for commodity voice no plan for IMS adjunct in next 3 years 42% Softswitch for commodity voice with IMS adjunct in place or planned 29% IMS core for VoIP services between mobile, broadband and legacy (see Verizon case study) 18% Continue to leverage existing IN assets (annually reviewed) 47% Service Broker (Vodafone Spain and AppTrigger case studies) 23% Focus on service exposure harnesses web services SDP (SIP AS/Service Broker/ParlayX) 34% Figure 27 tries to map out these alternatives into a roadmap. The service broker is broken out as a separate element, even though most IMS adjunct and IMS core implementations include broker functionality, to highlight the case were an operator has decided on a third party for the service broker to provide some vendor independence on where their services come from. Those highlighted in red were most popular. The current transition is taking the industry into a more complex situation, were essentially an operator can add an IMS adjunct to a softswitch to support more complex services, or can transition out the softswitch to an IMS core. But regardless that legacy SCP keeps hanging on in there, though there are a few exceptions. Generally those operators implementing a service broker bring it in to solve problems around making postpaid VAS available to prepay customers. Or legacy service silos are still profitable so the operator wants make those services available across its IP based voice services. Or to solve a specific service interaction problem as described in the Vodafone Spain case study. The options shown in Figure 27 overly simplifies the situation as some operators have not yet integrated their fixed and mobile operations, so this adds another dimension to the evolution. And the evolution also ignored the BOSS integration, the approach taken by Verizon (see later case study) is the introduction of a mediation layer, but this approach is not yet being followed by the rest of the industry, instead the approach is custom integration which adds significant costs tin managing the transition. 34 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 27. IMS Evolution IMS Adjunct Service Softswitch Broker Legacy SCP Legacy SCP IMS Adjunct Softswitch Softswitch Service Legacy Broker Legacy IMS Core SCP SCP Current Softswitch Transition IMS Core Service Legacy Legacy Broker SCP SCP IMS Core Legacy SCP Summarizing the operator types and their propensity to adoption IMS based on the interviews, from high to low:  Converged operator, CDMA based wireless infrastructure;  Converged operator, end of life softswitch with softswitch-equivalent IMS pricing being offered from a NEP;  Fixed only operator; and converged operator where fixed and mobile divisions still operate independently; and  GSM mobile only operator. Geography and the country‟s economic conditions do not appear to play a role in the operators‟ propensity to adopt IMS. Rather whether they benefit from consolidating onto a common IMS core to achieve operational savings dominate. IMS MARKET SURVEY CONCLUSIONS IMS remains niche, with only 8% of those operators surveyed deploying IMS, see Figure 15. With another 12% in an extended field trial, this is differentiated by the fact service migration has not yet started, specific services have been launched on the IMS core, with in some cases paying customers; but a decision has not yet been made to commit to service migration. IMS does not appear to be entering a period of rapid adoption, rather a linear growth in adoption over the next 5 years, see Figure 21, reaching 32% of operators by 2014 starting an IMS deployment. Regionally, 35 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT NAR provides the bulk of the growth in years 2010 and 2011, while EMEA and APAC provide the bulk of growth in later years. Lack of business case, lack of standards compliance and BOSS integration were the top three barriers to adoption as identified by operators. When suppliers ranked the barriers, shown in Figure 18, the main differences were firstly a shorter list with much less emotion attached to those barriers; and different rankings for the „Business Case‟ and „Network/IT organizational battle‟ barriers. Suppliers ranked business case fifth; instead focusing upon technical issues. However, they did rank the „Network / IT organizational battle‟ barrier higher than operators. Citing their experiences in the problems this posed in both gaining a decision from an operator for deployment, and then inflating costs during implementation. Over the past 3 years NEPs have struggled to gain market interest in IMS, hence prices have come down to the levels of softswitch, at $2-3 per subscriber (excluding HSS). This is a significant change from the initial price points of $25 to $33 per sub quoted by some vendors back in 2004/5 when IMS was first evaluated. On the initial application of IMS, shown in Figure 22, the results showed significant consensus, across operators and suppliers, as well as across the regions and other dimensions. The top initial application was considered to be a “converged VoIP platform across broadband, mobile and legacy.” Next was end of life softswitch replacement. Several operators particularly in the US are making this move as the price per subscriber for IMS is trending towards $2.5 to $3. So IMS‟s principle value is seen in the core, not at the edge. Figure 26 shows the alternatives that were quoted by operators and suppliers interviewed. Continuing with the existing IN and adopting a softswitch with its closed SCE (Service Creation Environment) are considered top. Generally the qualifier around softswitch was its focused application in the support of commodity voice. Which given the initial application of IMS is anticipated to be by most operators as a core function in support of voice, rather than as a platform for service innovation, see Figure 22, demonstrates why most have not made the jump until this year as IMS pricing remained above that of softswitch. Figure 26 shows the alternatives that were quoted by operators and suppliers interviewed. Continuing with the existing IN and adopting a softswitch with its closed SCE (Service Creation Environment) are considered top; and even when an operator starts to implement IMS, its generally introduced incrementally, with converged operators leading the way. 36 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT CASE STUDIES VERIZON COMMUNICATIONS CASE STUDY VERIZON BACKGROUND Verizon is an incumbent US broadband and telecommunications company, a converged operator. It was formed in 2000 when Bell Atlantic, one of the Regional Bell Operating Companies (RBOCs), merged with GTE. Consolidation within the US market has resulted in two quad-play (voice, video, broadband, and mobile) telcos: Verizon and AT&T. Generally they operate in different regions for residential broadband and telephony, so only directly complete on wireless/mobile services and in business services. Within their incumbent fixed regions the main competition comes from cable operators, who deliver a triple play proposition of voice, video and data; and are now expanding into wireless services. Verizon‟s latest results published in July 2009 shows 2.5M FiOS (video) customers with an average ARPU of $135 per month (blend of voice and/or video and/or data). While retail ARPU is at $72.00. Across their 87.7 million wireless customers, 80 million or 91% of their base is retail postpaid, with a low churn of 1.37% per month. Data revenue growth was an annualized 33.2% with non-messaging services up 44% and messaging up 20%; and data ARPU increased to $15.00. BlackBerry users at Verizon have an average ARPU of over $100. Verizon‟s EBITDA was $6.2 billion for the last quarter, up 9.4% from last year on a pro forma basis. Compared to many operators Verizon has the benefit of high ARPU and low churn. And in the fixed space a duopoly with the cable provider. Satellite does provide a degree of competition for video services, though with customers‟ increased awareness and use of interactive video services such as VoD (Video on Demand) and catch-up TV, satellite is increasingly uncompetitive. In this case study I will review the role of IMS and Verizon‟s SDE (Service Delivery Ecosystem) in delivering their N-Screen services vision. This is done to clearly demonstrate the role of IMS; and the additional technology requirements to achieve service innovation. PRINCIPLES BEHIND VERIZON‟S IMS DEPLOYMENT Ubiquitous Broadband Broadband networks are the foundation of Verizon‟s strategy; they are investing to meet their customers‟ needs for speed and mobility, for delivering their digital experiences anytime, anywhere, and to whatever screen they have at hand. Specifics include evolving to 4G/LTE for wireless devices, and continuing to build out FiOS/FTTP, and their global IP network. 37 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Convergence: Shared IMS Convergence is about technology consolidation; bringing their networks, devices and processes under one centralized control/management to improve efficiency and enable a unified customer experience including ordering, subscribing, billing, management, and execution of services (which are no longer tethered to a particular network or device.) IP Multimedia Subsystem (IMS) is their chosen technical solution for enabling applications to work across their multiple networks, and across their customers‟ multiple screens. Integration: Services Delivery Ecosystem Integration is about applications and services inter-working, cooperating and leveraging the user‟s digital experience, which is across both equipment and subscribed applications and services. Integration is how Verizon delivers the benefits of converged infrastructure to their customers. Verizon‟s Services Delivery Ecosystem (VZSDE) is their technical solution for enabling the rapid development and delivery of integrated applications. Innovation: Open Development Initiative To improve the benefits of convergence, Verizon are working to tap into the innovative energy of their customers, suppliers, and partners; and to leverage the combined power of IMS, the Web, and attached devices/networks. This involves building the infrastructure as well as new developer- focused business processes to enable rapid service development and delivery on our converged networks. They have defined an Application-to-Network Interface (ANI) to expose key enablers (location, presence, conference, profile, address book, etc.) such that they are easily incorporated by developers into innovative new services; examples include Verizon‟s Open Development Initiative (ODI) and Verizon‟s Developer Center5. BREAKING DOWN THE SILOS Figure 28 shows Verizon‟s vision in how IMS and SDE break down the existing silos to enable a shared converged infrastructure across its fixed, broadband and wireless access networks. The main business driver for Verizon in this migration is operational expense reduction. 5 http://developer.verizon.com/blogs/ 38 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 28. Verizon’s IMS and SDE Vision (source Verizon) Voice Voice Voice Msg Msg Msg PSTN Wireless IP PSTN Wireless IP Communications Entertainment Information IMS + SDE Global IP Network FiOS LTE Verizon‟s vision is services will be available across all its networks. Verizon‟s N-Screen vision results in customers considering their services as independent of a particular network: whether it be mobile, broadband or legacy networks. Services can roam between those networks, or be transferred as required by the customer, with a common security framework; finally removing multiple logons and conflicting security settings which plague most multiplatform services today. Media within sessions can be added / dropped as required; e.g. a customer viewing an interest clip on Verizon broadband can share that with a friend on Verizon FiOS to view on their TV, or with another friend on their smart-phone over the mobile network. From a customer‟s perspective it‟s just drag and drop, with the network managing the complexity. IMS and SDE enable common service components such as security, charging, and media adaptation to be re-used across services; removing the need for multiple gateways. Coupling this with the Development Ecosystem enables Verizon to „mash-up‟ their services with the web. As well as opening up the network to non-traditional wireless devices, this goes beyond M2M (Machine to Machine), rather enabling many more consumer electronic devices to securely interconnect over the Verizon network. 39 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT SERVICE DELIVERY ECOSYSTEM The principles guiding the development of Verizon‟s service delivery ecosystem are:  Create Innovative Services: The ecosystem needs to support a wide variety of developers in order that creativity as well as utility is afforded an opportunity to reach customers.  Increase service velocity: Applications and services must be easy to build and able to use and reuse common building blocks. Applications and services must also be readily and easily integrated into the business and operations support systems.  Share infrastructure across multiple lines of business: Sharing and reuse of infrastructure within the ecosystem occurs at several levels: from the actual development environment tools and facilities, to the network resources (i.e., building blocks) that support the applications and ultimately to the management components that make the applications available to customers.  Grades of service from “Telco quality” to best effort: Not all applications and services, nor do all customers demand the highest quality for every scenario. Applications and services need to be tunable to the needs and willingness to pay of the customer. One of the primary drivers for the Verizon Service Delivery Ecosystem (VZSDE) is the ability to enable rapid development and delivery of new services and service suites to consumer and business customers. Verizon aims to offer applications that highlight their unique strengths and capabilities such as multimedia communications, wireline and wireless network connectivity and video content distribution. Verizon is able to offer Quality of Service (QoS) for services delivered on the Verizon network which is likely more difficult for “over-the-top” service providers. Since Verizon can reach the same customer in multiple ways, Verizon wants to tap into their unique ability to share common customer data and provide context and continuity across the various access devices and methods to enhance the user‟s experience with Verizon. The service creation capabilities within the VZSDE support a diverse development community. This development community ranges from trusted, in-house developers, to contracted third party developers and ultimately independent third party developers. All should be able to build applications that use Verizon network and/or device capabilities. The VZSDE will support Verizon‟s vision of an innovation lab framework. This framework provides a flexible process for application developers to use to create and test new service concepts and for Verizon to use to evaluate, assess and promote promising new applications and services. 40 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT INTEGRATION EXPERIENCE Part of the business case justification in deploying IMS was the creation of a single/shared view of the customer. Enabling the support of services independent of device or network, creating a stronger quadruple play proposition, for example customers can consume video services via their mobile phone, PC, or STB. This is a critical point in the rationale for Verizon‟s IMS deployment, operational expenditure savings drive the initial deployment, and then new service revenues will drive its scale. Figure 29 demonstrates Verizon‟s view that enablers are broader than just IMS (e.g. ParlayX), and should be available to all applications and services; as well as application partners. Hence the important role the SDE plays in aggregating enablers within a common policy framework. The enablers also extend outside the development community to enterprises, so they can mash-up presence from its enterprise networks with presence of its employees on the Verizon network. The ecosystem is also able to augment the enablers provided by VZ‟s SDE, allowing developers to mash-up additional services, to create innovative web-centric enablers that make it easier for applications to use network capabilities without being a telecoms expert. Figure 29. Shared Infrastructure Vision (source Verizon) IMS is not replacing Verizon‟s network one day; rather it is an incremental process very much linked to initially operational savings and then new service revenues. An “anchor tenant” creates the case for its introduction; in Verizon‟s case LTE and FiOS. And over time services are migrated onto that platform when economics make sense, e.g. when an existing service platform reaches its end of life. Hence the need for BOSS mediation so the traditional market-facing business units can transparently manage this migration, as shown in Figure 30. 41 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 30. Legacy Integration (source Verizon) For Verizon, 3GPP Release 8 closed significant gaps in the IMS specifications around convergence and multimedia support that had led it to define A-IMS (Advanced IMS,) their version of the IMS. The benefits of R8 include IP mobility to support VoIP services over the wireless network, particularly handover between cells. Note the mobile operator Three‟s Skype phone still uses circuit based voice over the RAN. Note Verizon is a CDMA operator, so their 3G networks lack the circuit based voice support found in GSM networks. This is a key driver for their early adoption of IMS, which we will review in more detail later. Additional benefits accrued from R8 include an evolved packet core, common IMS, and service continuity; all necessary for the support of voice over packet in both EVDO and LTE radio access networks. However, challenges still remain in areas such as converged policy management, transcoding, IMS video, emergency services, session shifting, common subscriber database and media plane security. CONCLUSION IMS builds on existing Web capabilities with new enablers like contextual awareness, network control, and a single notion of user. IMS is just a component, in the limit it provides multimedia session control with real-time quality of service; essential for supporting voice over packet across its multiple networks. Verizon‟s Developer Initiatives, aimed at fostering innovation requires a SDE. Verizon has one of the clearest views on how IMS and SDP work together; integrating communication networks and the Web. Creating simple things like being able to associate a web transaction with a voice call, a small innovation with the potential to significantly impact commerce, security and improved user experience. A second component of the Developer initiatives is to accelerate innovation, and integration (mashing up services). Enabling rapid service delivery (concept to commercial) to bring Verizon more inline with the innovation rates of web-based services providers. 42 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT IMS at Verizon means an IMS-centric convergence strategy, enabling best-of-both worlds integrated services and maximizing innovation thru openness to deliver all the benefits of ubiquitous broadband to their customers. Its introduction is very much linked to the unique situation Verizon finds itself with respect to both technology and market. 43 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT CHINA MOBILE CASE STUDY China Mobile Communications Corporation (CMCC) is the world‟s largest mobile operator by number of customers at roughly 500 million. It is undergoing a transformation from pure mobile to FMC (Fixed Mobile Convergence), with the need to deliver converged services innovation to differentiate in a market with strong competition from the incumbent fixed operators. CMCC‟s transformation requirements include reusing and inter-working with legacy fixed and mobile networks. The solution must encompass mobile, broadband and enterprise networks to deliver converged services such as: convergent IP Centrex, Convergent conference, eSpace (unified communications), and green call (transferring calls between fixed and mobile phones). They are working with Huawei in managing this transformation. China Mobile‟s previous network situation included traditional switches and softswitches co- exiting in the mobile network, and in the fixed network legacy TDM switches. Most of their mobile customers were individual customers, and in the fixed network they had a few business customers as it was a relatively new line of business. A traditional SCP was used to deliver VAS. This created a challenge in delivering converged services across their mobile and broadband networks. Essentially they had created two separate networks, which was operationally inefficient, and critically lacked differentiated business services, making it difficult for China Mobile to enter business market. Figure 31 shows the interim network architecture for China Mobile, source Huawei, where IMS is used to support new services over both the broadband and mobile networks, in particular converged communication services to enterprise customers. New services are hosted on the application server, and are able to be delivered over the mobile and broadband networks. Figure 32 shows the target architecture for China Mobile, source Huawei, where IMS supports all services across, packet and circuit switched mobile access, fixed broadband access, and even into the enterprise network for both legacy and IP-based services. This solves the challenges China Mobile faced in operating two networks, as well as being able to deliver a range of innovative converged services, particularly to enterprise customers. Figure 33 shows the service roadmap executed since launch in Nov 2008, and as of March 2009 now covers over 1 million customers. The roadmap provides classic business services such as IP Centrex and three way calling across their fixed and mobile networks, as well as services such as eSpace and green call; all of which are available across China Mobile‟s fixed and mobile access. 44 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 31. China Mobile Network Architecture (source Huawei) • Existing services cover new network Service SI P AS AS • New services cover SCP existing network • IMS is in charge of fixed network Core V/GMSC IMS • No influence to mobile network • xPON guarantee large Access broadband xPON • Support fixed, mobile and PC terminals Terminal • No requirements to current terminals Figure 32. China Mobile Target Architecture (source Huawei) 3rd HSS:unified data SIP Convergent SIP Standard and centre AS service platform AS open interface CSCF AGCF/MGCF mAGCF LS UMG AG PBX Mobile PS IAD Fixed BB OUN domain PBX BSC/ domain BTS Mobile CS Fixed domain narrowband domain 45 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 33. Service Roadmap (source Huawei)  Video conference  Do not disturb  Three way  Basic voice conversation  Convergent IP  Follow me Centrex  Green Call  eSpace Phase 3 Phase 2 Phase 1 Nov, 2008 Dec, 2008 Mar, 2009 46 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT VODAFONE SPAIN SERVICE BROKER EXPLAINING THE SERVICE BROKER Figure 34 shows the typical situation when an operator deploys SIP/IMS. It sits as a silo, unable to harness the functionality of the legacy platform and the capitalized investment. Through the introduction of a service broker, in this case a JAIN SLEE layer, shown in Figure 35, it enables:  Extend prepay across existing IN applications and SIP applications;  Prepay users have a richer set of services, which is critical for ARPU growth in high prepay markets; and  IP services can now be extended to prepay users, extending the popular payment method beyond just mobile services. Figure 34. Typical Prior Situation (source OpenCloud) Post-Paid Pre-paid Charging No Pre-paid application may run Platform capability on a dedicated SCP Pre-paid app. Embedded Apps. Embedded Apps. SIP/IMS Application Legacy IN Platform Server TDM Network TDM Network IP Network IP Network Access to pre-paid or Only IP Network hosted app. (but not Services available to both) IP Users 47 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 35. Service Broker Extending Pre-pay Applications (source OpenCloud) Post-Paid Extend Pre-pay to Charging Extend Pre-pay to all IN applications Platform SIP Applications App 1 App 2 App n … Pre-paid app. JAIN SLEE Embedded Apps. NGN Service Embedded Apps. Hosting & Interaction SIP/IMS Application Layer Legacy IN Platform Server TDM Network TDM Network IP Network IP Network Richer set of services IP services can now offered to Pre- now be extended to paid users Pre-paid users VODAFONE SPAIN HOMEZONE SERVICE Vodafone Spain is the second largest mobile operator in Spain with 14 million subscribers as of 2008, it offers GSM900/1800 MHz (2G), UMTS (3G) and HSDPA (3.5G) and fixedline PSTN services. HomeZone service is a fixed-mobile convergence solution, providing one phone for calling fixed & mobile devices. Convenience of taking calls on their mobile device whilst at home. Users know if they receive calls to their home number whilst away from the home and benefit from reduced tariffs when calling from home. The business drivers for Vodafone Spain‟s HomeZone service include:  Fixed mobile substitution, encouraging subscribers to use mobile more at home through to canceling PSTN line rental.  Generates additional call minutes from subscriber using mobile at home  Generates additional fixed line termination charges from callers dialing subscriber‟s virtual PSTN home number  Uplift in number of calls completed 48 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Consider this scenario: HomeZone and VPN are invoked concurrently. HomeZone returns the callers zone information (e.g. In-Zone), while VPN provides number translation (e.g. Short to Long), as well as call type classification (e.g. On-Net). When both HomeZone and VPN have returned their results, the service broker formulates new signaling that includes both the zone indication, the translated numbers, and the call type classification, see Figure 36. Once the signaling is formulated the prepaid platform is triggered. Finally the prepaid platform will rate the call appropriately (e.g. In-Zone, using the Long Number, and On-Net). Figure 36. Vodafone Spain Service Broker Scenario (source OpenCloud) The Service Broker is triggered (step 1) The Broker triggers HomeZone and VPN in parallel (step 2) The responses from HomeZone and VPN are received and merged in parallel (step 3) Prepaid is triggered with the merged results (step 4) Prepaid rates the call and determines the call can continue (step 5) The Broker connects the call (step 6) SCP Platform SCP Platform Prepaid SCP HomeZone VPN Prepaid 3 3 5 2 2 4 CDR JMX Diameter Rf SNMP Diameter Ro Charging OA&M Rhino Service Broker Platform 6 CAP, INAP SIP 1 Circuit Switched Networks Packet Switched Networks 49 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT APPTRIGGER CASE STUDY OF AN APAC OPERATOR AppTrigger‟s Ignite™ Service Broker combines media, signaling, call control, and a family of APIs for multi-network, converged application deployments. It aids network evolution by enabling legacy and IP-based communication services to interoperate. Providing advantages to the operator of time to market, reduces application deployment time, and provides feature transparency across disparate networks. The Service Broker enables the adoption of IMS migration paths shown in Figure 26, such as being able to leverage the existing IN assets. The operator reviewed in this case study had the following characteristics:  8 million subscribers and rapidly growing;  Current existing IN applications are provided by a variety of vendors, stable and generating revenue;  Pre-paid: Nortel;  Caller ring back: Ericsson; and  Freephone: Siemens. The operator estimated they had invested $12M on existing, revenue generating and stable applications, and were looking to continue to leverage that investment as margins are always higher on sunk costs, see Figure 37. They are partnered with Ericsson to launch a NGN / IMS network but current subscribers reside on their existing GSM network. Operationally they were focused on reducing operating cost structure and maximizing the return on existing investments. Figure 38 shows the classic decision matrix operators face in the migration of services. Namely, buy new applications and cut over; run parallel networks; or the decision enabled by the service broker of continuing to use the existing service platforms and extending them into the NGN/IMS. Figure 37. APAC Operator Situation (source AppTrigger) Operator has IN applications servicing their Subscribers Owned for: 5 yrs 10 yrs 2 yrs – The Freephone app has been capitalized – The PrePay app is 5 years old and has a PP Freephone RBT manageable operational cost. – The RingBackTone app has not been capitalized. Operator must decide what to do with these IMS applications in the NGN. Legacy Networks •Capitalized Assets Core •Revenue Generating •Currently in Operation 50 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Figure 38. Operator Decision Matrix (source AppTrigger) Key Decisions: Do I purchase new apps and do a cut over? Do I extend and migrate with the long term of decommissioning? Do I run parallel networks? Figure 39 shows the proposed solution, where the service broker (Ignite Service Broker is AppTrigger‟s product name) enables the reuse of the existing platforms, as well as the potential for new applications to be added that can work across both legacy and new networks. ServiceExtender isSolution Upon App Trigger) Figure 39. Proposed Built (source AppTrigger’s Proven Ignite™ Platform New App PP Freephone RBT Master License Agreement enabled unified platform migration to NGN. IMS Core In a joint financial analysis AppTrigger and the operator compared the two options of using a service broker, or replicating applications, as shown in Figure 40 and Figure 41. They were able to show payback within the first year, and a 3 year TCO savings of $7.5M. The service broker solution was 40% less expensive than buying new applications, and more importantly did not take on the operational challenge of supporting two applications, which lowered opex by roughly $1M US per year. Operationally it did not have to disrupt existing applications, meaning zero customer impact, and enabled the operator to continue earning profitable revenue on a sunk cost. 51 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT This case study provides a typical example of how an operator is evolving its network towards IMS using a service broker. It saves time, improves ROI, avoids vendor lock-in and keeps a clear separation between network infrastructure and applications through a network migration which could span 7 to 10 years. Figure 40. Total Cost of Ownership Analysis (source AppTrigger) Figure 41. Return on Investment Analysis (source AppTrigger) 52 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT CASE STUDY REVIEW Verizon presents a leading deployment example of IMS adoption, being a converged operator provides a strong opex benefit in migrating to a converged IMS core. Its need to deploy LTE sooner rather than later given the end of life of CDMA requires voice over IP support with QoS over its RAN before most other operators. Its high ARPU and a track record of technology leadership means it‟s able to tolerate the risk of being an early adopter. Those characteristics are critical in driving Verizon to adopt IMS, and we can see similar decision process for other non-GSM operators such as NTT. Verizon also presented a clear view on the importance of a SDP in enabling service innovation. For GSM operators the drive is not as strong for IMS, their 3G networks support circuit based voice, HSPA+ with the potential to deliver 40Mbit/s within a 5MHz carrier delays their need to roll out 4G until 2013/2014, while the CDMA operators are limited to 3.1 Mbit/s. Some suppliers in the interviews made an argument of RAN efficiency will drive all operators towards VoIP over LTE within the next 2/3 years. This argument is not reflected in the operators concerns; their concern is solving the problem in cost effectively support mobile broadband, not voice. In reviewing the North American market it‟s surprising given AT&T is a GSM operator that it‟s not leveraging HSPA and HSPA+. For example in Canada, Rogers now offers mobile broadband at 21 Mbit/s (HSPA+) compared to the 3.1 Mbit/s from the CDMA providers. So GSM operators in general do not have an urgent drive to LTE, nor to have voice support over LTE. In contrast to the conclusions drawn above, the China Mobile case study presents an interesting scenario of a GSM mobile operator (or can be considered a relatively new converged operator) making the move to IMS. Critical in its decision making is the need to offer business services over its relatively new fixed broadband network. Hence it‟s in a relatively greenfield situation on the broadband side so is rolling out IMS for its fixed line business, while also taking advantage of its mobile service platform. The lack of a significant legacy network on the fixed broadband side and an attractively priced IMS solution appears to drive their decision. Vodafone Spain provides an example of how a Service Broker is introduced to solve a problem with current service delivery, which can then expand to manage the transition of services to SIP/IMS. The Apptrigger APAC operator scenario provides a quantified analysis of the benefits in managing the transition form legacy to IMS. The case studies are just a few of the many diverse scenarios covered during this market study. It‟s clear we‟re entering a phase of transition, where many more paths are being explored in the transition to IMS, given the varied operator circumstance. Also in some cases aggressive IMS price reductions have reached a point of parity with softswitch. However, the fundamental problem remains of sunk costs in existing IN assets which will in most cases delay an operator‟s need to evolve their network. 53 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Summarizing the operator types and their propensity to adoption IMS based on the interviews, from high to low:  Converged operator, CDMA based wireless infrastructure;  Converged operator, end of life softswitch or greenfield broadband with equivalent IMS pricing being offered from a NEP;  Fixed only operator; and converged operator where fixed and mobile divisions still operate independently; and  GSM mobile only operator. WHERE THE MARKET IS GOING: IMS PROGNOSIS IMS is certainly not dead. The World remains „watching and waiting,‟ even given the deployments in China Mobile, Verizon, AT&T and Telecom Malaysia to name just a few. From the market survey we‟re seeing a slow linear adoption through the next decade, as shown in Figure 21. Looking forward given the extended period of IMS adoption we could see several business models emerge in its delivery. For example, hosted IMS; IMS is simply software that makes complex session control decisions, hence a hosted model is feasible. For smaller operators given the higher prices they are charged for IMS on a per subscriber basis; hosted IMS could enable better economics by the time they consider deployment. 54 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT C O N C L U S I O N S A N D R E C OM M E N DA T I O N S The religious war has ended, IMS (IP Multimedia Subsystem) did not become widely deployed within the first decade of the 21st century. Surprisingly for many in the industry, SS7 (Signaling System #7) remains in rude health and VoIP (Voice over IP) continues its linear, not exponential, growth. So where is IMS? This report provides some quantification around the status of IMS, and provides some case studies on the reality of its deployment. IMS remains niche, with only 8% of those operators surveyed deploying IMS; however by 2014 about 32% of operators interviewed anticipate commencing an IMS deployment, which they view as a 5-7 year process. Regionally, NAR (North America Region) provides the bulk of the growth in years 2010 and 2011, while EMEA (Europe Middle East and Africa) and APAC (Asia Pacific) regions provide the bulk of growth in later years. Of the early adopters there are generally specific circumstances that create the case for IMS, which do not universally apply. The top application for IMS is a „converged VoIP platform across broadband, mobile and legacy.‟ Next was „end of life softswitch replacement.‟ Operators, particularly in the US, are adopting this application of IMS as the price per subscriber is trending towards $2.5 to $3 and their softswitches are reaching end of life. Service innovation is not seen as a significant driver for IMS, the Verizon case study shows a SDP is required for that application. The IMS adoption barriers of lack of „business case,‟ lack of „standards compliance‟ and „BOSS (Business and Operational Support System) integration‟ must be addressed if IMS is to break into mainstream deployment. An analogy frequently used during this survey is IMS presents a destination, however, there's no map on how we get there from where we are today. Operators are adopting a range of interim steps including service layer components such as JAIN SLEE, SIP Servlet and Service Broker providing stepping stones to IMS that allow existing capitalized assets to continue generating highly profitable revenue, see Vodafone Spain and AppTrigger case studies. It looks like the legacy SCP will be around for most of the coming decade. OPERATOR RECOMMENDATIONS  GSM operators can afford to wait and see on IMS for at least 2 to 3 more years. HD Voice can be supported on existing GERAN and UTRAN infrastructure without IMS. HSPA will help mitigate mobile broadband economics, though it will remain challenging.  Converged CDMA operators should follow Verizon, as CDMA technology will end of life quicker than they expect, so they will need to manage the transition to LTE in support of voice.  For fixed-line operators its really what deal can you cut with the supplier, if IMS is roughly the same price as softswitch then it can make business sense if your softswitch is EOL; as we‟re seeing with the cable companies in North America. 55 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT NETWORK EQUIPMENT RECOMMENDATIONS  Focus on converged CDMA operators, converged operators with an end of life softswitch, and those operators where a clear Opex saving can be demonstrated through the introduction of IMS into their core network. Avoid unclear service innovation propositions to justify IMS.  Do not repeat the IMS marketing mistakes of the past in not acting in the customer‟s best interest. At a critical time when operators need to be increasing the rate of innovation, it was stalled through „brow beating‟ operators with a poorly thought out and quantified IMS proposition.  Rein back standard development, its running too far ahead of the market. It can be accused of “gilding the lily” rather than focusing upon market appropriate standards. Focus on implementation guidelines, rather than yet more “bells and whistles,” to aid deployment and integration as operators begin to deploy IMS.  Refresh the IMS marketing teams, they needs to be customer focused in helping operators manage the transition, rather than brow beating operators with high-level slideware.  Align business units to manage the transition to IMS, currently the business units are acting as silos, making the transition for many operators difficult. Put simply, focus on helping the customer, it will protect future shareholder value. SERVICE LAYER COMPONENT (E.G. SERVICE BROKER) RECOMMENDATIONS  Focus on both opportunistic legacy service problems, e.g. extending postpaid VAS to prepay; and helping operators manage the transition to SIP/IMS through being able to reuse their legacy service platforms and provide a degree of vendor independence in the operator‟s choice of services.  Service layer components such as the Service Broker will be increasingly squeezed by NEPs who have some / all of the functionality bundled in their IMS platforms. Look to exit in next 2 years into a NEP or SDP provider. MOBILE HANDSET VENDORS  A critical gap is IMS clients on devices. Today handset vendors look to operators to pay. This creates a „chicken and egg‟ problem in extending IMS capabilities to the edge. Operators, NEPs and handset vendors should work together to ensure the IMS client (as well the HD voice codec) is just there, just like IPV6 is available on most PCs even though its generally not used today. APPLICATION DEVELOPER RECOMMENDATIONS  Only build IMS applications if the NEP or Operator pays as a consulting project, as the application will likely be constrained to a particular platform.  Focus on the developer initiatives that provide direct customer access with open web-based APIs. 56 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT INVESTOR RECOMMENDATIONS  IMS will be dominated by NEPs and will likely not see any hockey stick adoption, rather a linear ramp through the next decade. Recommend focusing on service opportunities that have both a direct to consumer / enterprise channel and through an open telco channel. The service broker segment provides a near term opportunistic investment. 57 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT APPENDIX 1 – ACRONYMS 3GPP - Third Generation Partnership Program 3GPP R8 – Third Generation Partnership Program Release 8 A-IMS – Advanced IP Multimedia Subsystem ALU – Alcatel Lucent ANI – Application Network Interface APAC – Asia Pacific (region) API – Application Program Interface ARPU – Average Revenue Per user AS – Application Server B2B –Business to Business B2C – Business to Consumer BGCF - Breakout Gateway Control Function BSS – Business Support System BOSS - Business and Operational Support System CAMEL - Customized Applications for Mobile Network Enhanced Logic CAP - CAMEL Application Part Capex – Capital expenditure CDMA – Code Division Multiple Access CDR – Call Detail Record CMCC - China Mobile Communications Corporation COTS – Commercial Off The Shelf CSCF - Call Session Control Function DORA – evolution Data Only Rev A DSL – Digital Subscriber Line 58 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT EBITDA - Earnings Before Interest, Tax, Depreciation and Amortization EMEA – Europe Middle East and Africa EOL – End Of Life EOT - Establish, Operation, Transfer EVDO – Evolution Data Only FiOS - Fiber Optic Services FMC – Fixed Mobile Convergence FTTx – Fiber To The x=Home, Building, Pole, Cabinet FSAN – Full Service Access Network GERAN - GSM/Edge Radio Access Network HD – High Definition HSDPA – High Speed Downlink Packet Access HSPA – High Speed Packet Access HSS – Home Subscriber Server HSUPA – High Speed Uplink Packet Access IETF - Internet Engineering Task Force ID - IDentity IMS – IP Multimedia Subsystem IN – Intelligent Network INAP – Intelligent Network Application Protocol IP – Internet Protocol IPTV – IP Televsion ISDN – Integrated Services Digital Network ISP – Internet Service Provider IT – Information Technology JAIN SLEE - Java™ APIs for Intelligent Networks Service Logic Execution Environment 59 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT JMX – Java Management eXtensions LAN – Local Area Network LATAM – Latin America LTE – Long Term Evolution M2M – Machine to Machine MGCF - Media Gateway Control Function MSISDN - Mobile Station International Subscriber Directory Number NAR – North America Region NEP – Network Equipment Provider NGN – Next Generation Network NSN – Nokia Siemens Networks OAM – Operations Administration and Management ODI - Open Development Initiative Opex – Operational expenditure OSS – Operational Support System PC – Personal Computer P-CSCF - Proxy Call Session Control Function PON – Passive Optical Network PP – Pre-Paid PR – Public Relations PSTN – Public Switched Telephone Network PTT – Push To Talk QoS – Quality of Service RAN – Radio Access network RBOC - Regional Bell Operating Companies RCS – Rich Communications Suite 60 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT RBT – Ring Back Tone RFI – Request For Information RFQ – Request For Quote ROI – Return On Investment SBC – Session Border Controller SCE – Service Creation Environment SCP – Service Control Point S-CSCF - Serving Call Session Control Function SCE – Service Creation Environment SCP – Service Control Point SDE – Service Delivery Ecosystem SDH – Synchronous Digital Hierarchy SDP – Service Delivery Platform SIP – Session Initiation Protocol SME – Small Medium Enterprise SNMP – Simple Network Management Protocol SS7 – Signaling System #7 STB – Set Top Box TCO – Total Cost of Ownership TDM – Time Division Multiplex TISPAN - Telecommunications and Internet Services and Protocols for Advanced Networks UMTS - Universal Mobile Telephone System USD – US Dollars UTRAN – UMTS Radio Access Network VAS – Value Added Services VDC – Verizon Developer Center 61 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT V/GMSC – Visited / Gateway Mobile Switching Center VPN – Virtual Private Network VoD – Video on Demand VoIP – Voice over IP VZ - Verizon VZSDE – Verizon Service Delivery Ecosystem xPON – broadband or gigabit Passive Optical Network 62 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT A P P E N D I X 2 – C OM PA N I E S I N T E RV I E W This is not a complete list, only those willing to have their company name listed in this report, many operators where happy to share their views but preferred not to be identified because of their PR (Public Relations) approval process. OPERATORS AT&T Belgacom Bermuda Telecom Bharti Airtel BSkyB BT Cable One Charter City Telecom Cox Deutsche Telekom Etisalat (and operating companies) Hong Kong CSL Indosat KPN (and operating companies) Kuwait Telecom Maxis Mobilcom O2 Optus Orange / France Telecom (and operating companies) 63 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Qtel Rogers SingTel Sprint Swisscom T-Com T-Mobile (and operating companies) Telecom Italia Telecom New Zealand Telefonica (and operating companies) Telenor (and operating companies) Telstra Telus Three (and operating companies) TWC Verizon Vodafone (and operating companies) 64 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT SUPPLIERS 4dk Alcatel Lucent AppTrigger Argela Camiant Cisco Comneon Comptel Converged Network Systems Dialogic Ecrio Espial Genband HP hSeind HTK Huawei IBM Intellinet jNetx Motorola NeuStar Nokia Siemens Networks Oracle OpenCloud 65 OF 66
    • © ALAN QUAYLE BUSINESS AND SERVICE DEVELOPMENT Sigma Systems Tekelec Telcordia TM Forum Veraz Wipro 66 OF 66