Regional Development Forum 2008
“Bridging the Standardization Gap in Developing Countries”
for the Asia-Pacific Region
Hanoi, Vietnam, 15-17(am) September 2008
NGN Migration Strategies &
Scenarios
Krishna Ayagari
Director-Business Development
Alcatel-Lucent
Asia Pacific
Agenda
ƒ Drivers for NGN migration
ƒ What needs to be migrated
ƒ Migration Approaches & Perspectives
ƒ Migration Strategies
ƒ Summary
Hanoi, Vietnam 15-17 September 2008
2
What is the Need to Migrate (1)?
Current Service Provider’s Environment:
ƒ Declining revenues from legacy services
ƒ High operational expenses
ƒ Technology Silo’s
Declining Revenues & Margin
‘Legacy’
services
dominate the
revenue mix
Growth
~ 45 %
Legacy
Fast erosion
of
legacy
revenues
Low margins
on
new services
+
~ 55 %
Revenue Mix
Hanoi, Vietnam 15-17 September 2008
Growth
Legacy
~ 25 %
*
(~ 2- 4 %) YoY
Impact on
EBITDA margins
=
42 %
35 %
~ 75 %
EBITDA Mix
Legacy revenues
2000
2003
2004
2005
2007
Source: service provider reports, Morgan Stanley
3
What is the Need to Migrate (2)?
Comparison of Service Providers with New Entrants
Low return of investment & limited innovation
Market Cap
/Revenue
EV/PPE
OPEX
/Revenue
CAPEX
/Revenue
Traditional service
Providers
<3
<5
> 62%
> 18%
New market players
(Google, Yahoo,
eBay, ...)
>8
> 53
< 47%
< 10%
EV = Enterprise Value; PPE = Property, Plant, Equipment
Hanoi, Vietnam 15-17 September 2008
Source: the Yankee Group, Alcatel-Lucent
4
NGN Migration: What Needs to be Migrated?
Operations
Voice
Content
IT
Applications
SDP/SDE
OSS/BSS
Video
Next-Gen
Voice
Data
Call/Session
Control
PSTN
IP
Multiservice Edge
IP/ MPLS
Core
Internet
IMS
IP/MPLS
Transport
High-Speed
Access
Access Networks
Data
Center
Consumer
Enterprise
Migration is needed at all layers of the infrastructure
Hanoi, Vietnam 15-17 September 2008
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NGN Migration: No One Common Approach
ƒ Mobile NGN to greatly reduce the cost of wireless core network
“… positioned to quickly provide our customers with new innovative
services, while optimizing our switching costs.”
Cole Brodman, Senior VP & Chief Development officer for T-Mobile
USA
ƒ Fixed NGN for fixed voice evolution and IMS MM over broadband
“Enterprise FMC is a perfect demonstration of BT’s strategy that
customers should be perfectly connected anywhere, regardless of
networks and handsets”
Steve Andrews MD Strategy, Convergence and Products, BT
ƒ SDF & IMS for launching new services across fixed/mobile networks
“To give the customer a powerful, seamless user experience across
all devices and all platforms in a 1 Click, 1 Touch, 1 Button, 1 Screen
way – whether that customer is an individual, small business, large
business or governmental agency”
Sol Trujillo, CEO
Hanoi, Vietnam 15-17 September 2008
6
Migration- Different Perspectives
Service Provider’s perspective
+
End-User’s perspective
+
Voice
IP
VoIP
Phone
iPod
+
Mobile
FMC
Gaming Communication
+ +
+
Internet Telephony Video
Fixed
PDA
iPhone
+
Fixed
+
+
+
Mobile
ISP
Hanoi, Vietnam 15-17 September 2008
Triple Play
NextGen SP
TV
Personalization
+
Mobility
Office
XBox360,
Wii, PS3
ShareTV
Mobile Office
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Migration Strategies
Subscriber-driven
end-users opt for IP-based service
Carrier-driven
Operators based schedule
Benefits:
Benefits:
ƒ Lower transition costs due to better
ƒLower initial CapEx due to
control of customer transitions
staged deployment
ƒ Lower OpEx due to rapid legacy
ƒMinimal feature transparency
decommissioning
or lower costs for transition
ƒGreater customer tolerance for ƒ Avoids creation of additional
technology silos
transition issues
Trade-offs:
ƒHigher costs due to multiple
touches in access network
ƒLonger term overlay network
leading to higher costs
ƒExtreme workload on
provisioning systems
Trade-offs:
ƒ Higher costs due to stringent
feature transparency
ƒ Higher initial CapEx without much
revenue from new services
ƒ More sensitive to End-User
impact
Most IP migration programs have evolved to blend both
Hanoi, Vietnam 15-17 September 2008
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Combined Migration Strategy
1. Overlay capability is first established and used to serve
growth
2. New additions to legacy network discontinued at
appropriate time
3. Carrier driven migration used to complete migration when
legacy networks reaches a critical threshold
Subscribers
NGN
TDM with
NGN Overlay
Overlay
Hanoi, Vietnam 15-17 September 2008
Subscriber driven
(Customer PULL)
Time
Carrier driven
(Network PUSH)
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Business Performance
Migration Approaches & Transition Costs
OPEX associated with
Legacy + NGN, Service
Offerings, Network
Migration
Growth
Revenues
CAPEX required
for Network &
Systems
components
Present
Transition
Operational
Savings
Future
Time
Time is critical: flatten the curve + shorten the
time to maximize savings
Hanoi, Vietnam 15-17 September 2008
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NGN Migration Needs a Holistic Approach
End-User
Experience
Organization
Processes
Technology
OSS/BSS
Applications
Business
Model
Network
Service-Product
Portfolio
Migration is not only about technology, successful
migration needs sound business decisions
Hanoi, Vietnam 15-17 September 2008
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www.alcatel-lucent.com
www.alcatel-lucent.com
Hanoi, Vietnam 15-17 September 2008
12
Future of Voice in Asia-Pacific
ƒ Developed Markets:
Fixed
(2005-2010)
ƒ Fixed voice connections
to decline by about
20% and revenues to
decline by about 30%
ƒ Mobile voice
connections to increase
by about 22% and
revenues to increase by
about 13%
Mobile
ƒ VoIP revenue to increase
from 4% to 13%
Source: Ovum 2007
Hanoi, Vietnam 15-17 September 2008
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Future of Voice in Asia-Pacific
ƒ Emerging Markets:
Fixed
(2005-2010)
ƒ Fixed voice connections
and revenues will
marginally improve
ƒ Mobile voice
connections and
revenues will almost
double
Mobile
ƒ VoIP revenue to increase
from 4% to 13%
Source: Ovum 2007
Hanoi, Vietnam 15-17 September 2008
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