ITU Cross Regional Seminar on Broadband
Access (Fixed, Wireless including Mobile) for
CIS, ASP and EUR Regions
Trends on Convergence and Migration Leaps
Chisinau (Republic of Moldova)
4-6 October 2011
Oscar González Soto
ITU Consultant Expert
Spain
oscar.gonzalez-soto@ties.itu.int
Chisinau, Moldova, October 2011
ITU - Trends on Convergence - OGS
International
Telecommunication
Union
Agenda
• Convergence
• Convergence related questions
• Dimensions and profiles
• Key factors: Economies of scale
•
Market and Business trends per category
• Technology and Business Leapfrogging
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Convergence related questions
Does convergence refer only to Fixed and Mobile?
Does convergence matter only to developed
countries?
Is convergence more expensive?
What benefits may be addressed by
convergence?
How convergence may help developing countries?
Others…………?
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Convergence dimensions
Convergence is taking place at several domains
At Network domain
One network for all service types: NGN, IMS
At Service domain
Fixed, Nomadic, Mobile, Interactive and
Broadcasting, Content, etc.
At radio Access domain
DECT, WiMax, 3G, LTE, etc.
At Operational and Business domain
OSS, Billing, etc, for all customer classes
At Terminal domain
2G, 3G, PDA, iPhone, iPAD, etc.
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Convergence profiles
Level of convergence
Convergence
Domain
Separated
Implementation
Low level
convergence
Medium level
convergence
Full
convergence
Network Core
Operations
Services
Network Access
and Edge
Terminals
Traditional Mode
of Operation
Initial traditional status: Separated networks, services and
International
operations
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Convergence profiles: trends
Level of convergence
Convergence
Domain
Separated
Implementation
Low level
convergence
Medium level
convergence
Full
convergence
Network Core
Operations
Services
Network Access
and Edge
Terminals
Traditional Mode
of Operation
Transition
Convergence
Profile
Example of convergence for most operators in developed
International
economies
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Convergence profiles: trends
Level of convergence
Convergence
Domain
Separated
Implementation
Low level
convergence
Medium level
convergence
Full
convergence
Network Core
Operations
Services
Network Access
and Edge
Terminals
Traditional Mode
of Operation
Transition
Convergence
Profile
Ambitious
Convergence
Profile
Example for leading operators on convergence (100% NGN on
core and 30 to 70% on edge and access with IMS base)
International
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Convergence profiles: trends
Level of convergence
Convergence
Domain
Separated
Implementation
Low level
convergence
Medium level
convergence
Full
convergence
Network Core
Operations
Services
Network Access
and Edge
Terminals
Traditional Mode
of Operation
Transition
Convergence
Profile
Ambitious
Convergence
Profile
Complete
Convergence
Profile: E2E IP
Future profile driven by: Initial status, Market development,
International
Economy of scale and Operator Strategy
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Convergence profiles: trends
- Most leading operators implemented IMS subsystems since 2007:
>20 operational and few hundreds under pilot or planned
--
Higher number of IMS started with fixed networks (mainly in
EU) driven by the service convergence, followed by mobile
networks (mainly in APAC)
-Main implemented subsystems are: CSCF servers, HSS, BGCF,
Voice Application Servers and Media Resource Functions - audio
and video announcements, multimedia conferencing, text-to-speech (TTS)
conversion, speech recognition, etc.-
- Full functionality of IMS requires end to end IP that will enable
innovative services and Reach Communication Suite (RCS)
--
LTE with IP terminals will be a key driver of IMS and
convergence growth at service level after 2012
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Key Factors: Economies of scale
Economies of scale (EoS) are an inherent characteristic to
the telecom technologies that impact on solutions,
efficiency and cost reduction
The five dimensions of the
economy of scale:
By Size of the systems
Cost reduction per unit (i.e.: 10%
to 30%)
By Technology capabilities
By Traffic efficiency with
the occupancy
Benefits per dimension
New technologies with higher
productivity (i.e.: x10)
Better utilization for a given GoS
when larger systems (i.e.: +20%)
By customers Density
Quadratic decrease with coverage
radio increase
By Volume of purchasing
Discount per volume in log scale
(i.e.: up to 40%)
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5
Cost reduction per technology
evolution. Example for Ethernet
ports
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
1997
1998
1999
2000
2001
2002
2003
2004
Source: Dell’Oro Group
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ITU - Trends on Convergence - OGS
Economy of scale per traffic
efficiency
Impact on efficiency increase for a given quality
with traffic and group size (non-linear effect)
Resource Efficiency
0.9
0.8
0.7
0.6
0.5
0.4
P = 0.02
0.3
0.2
0.1
5
10
15
20
25
30
35
40
Offered Traffic
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Cost reduction per technology
evolution. Example for fixed BB
residential access in EU
[Source: Analysys Mason, 2010]
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Agenda
• Convergence
• Convergence related questions
• Dimensions and profiles
• Key factors: Economies of scale
• Market and Business trends per
•
category
Technology and Business Leapfrogging
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Business domains and trends
Example of Value Added chain and operators
movements to gain economy of scale and market
Applications
and Services
Application Service
Providers
• Agreements with
content providers
and e-commerce
Network
nucleus
• Agreements with content providers
Chisinau, Moldova, October 2011
Metropolitan
network
Agreements and
merging
• Agreements with
wholesale operators
Local
Access
• Acquisition/merging
of service providers
• Development of new
access loops and
Unbundling
Backbone Service Providers
(BSPs)
Internet Service Providers
(ISPs)
• New multi-service
development
• Agreements with
content and application
service providers
Edge
Access Providers
(CAPs)
Mobile Service Providers (MSPs)
Established Service Providers (ESPs)
• FMC
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Business Planning case
Evaluations to be based on robust techno-economical
tools due to high number of alternatives and complexity
Case study performed for medium size country with
mixes of customer classes and services domains:
Multiservice IP Network with integrated operation
available
Three service categories: Voice, Data/Internet, Video
distribution
Modeling demands, multiservice traffic flows,
dimensioning, network
resources, CAPEX, OPEX and financial results for
different levels of competition
Evaluate differential future Cash-flows, NPV, IRR, etc.
for a 10 years period
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Business Planning case
Effects of the mix of customers on Reference Scenario: Low
competition level Network NPV
8e+08
7e+08
Euro
6e+08
5e+08
SOHO and
Small
Enterprise
4e+08
All
Segments
(reference)
3e+08
Residential
2e+08
1e+08
Y0
0e+08
Y1
Y2
Y3
Y4
-1e+08
Y5
Y6
Y7
Y8
Y9
Y10
Year
SME and SOHO with quicker recovery but less NPV and company value at
medium term
“All customer segments” case with much better behavior
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ITU - Trends on Convergence - OGS
Business Planning case
Effects of the mix of services on Reference Scenario: Low
competition level Network NPV
7e+08
6e+08
Internet
5e+08
Euro
4e+08
Internet &
VoDSL
3e+08
Internet &
Video
2e+08
1e+08
Y0
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
All
Services
(reference)
0e+08
-1e+08
-2e+08
Year
Major impact of service classes on NPV and company survivability
Single service classes without future
High benefit of “all services” case
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Business Planning case
Effects of the mix of services on typical scenario: Medium
competition level Network NPV
5e+08
4e+08
Internet
Euro
3e+08
Internet &
VoDSL
2e+08
Internet &
Video
1e+08
Y0
0e+08
Y1
Y2
Y3
Y4
Y5
Y6
Y7
Y8
Y9
Y10
All
Services
(reference)
-1e+08
-2e+08
Year
Increase of competition level amplifies the previous effects on feasibility:
big differences between service mixes
Data only or single service classes without feasibility at medium term
Very robust behavior for the “all services” case
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Agenda
• Convergence
• Convergence related questions
• Dimensions and profiles
• Key factors: Economies of scale
•
Market and Business trends per category
• Technology and Business Leapfrogging
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Technological alternatives at
core
Scenario A
Circuit based
Scenario B
Packet based
Managed
Dark
Fiber Lambda Bandwidth
Multiservice
ATM/FR/IP
ATM VPN, IP VPN
IP
Ethernet ptp
Internet
Gbit access
IP VPN
LAN to LAN
connection
GigE,10/100BT
Ficon,Escon,
Fibre Ch..
ATM/FR
IP Routing
SDH
Optical switching
Ethernet
GigE
DWDM equipment
Optical fiber
Physical Infrastructure
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Network Architecture towards NGN
Trends in WLL technologies for Bandwidth and
Mobility
Convergence of different radio systems towards the
integration of solutions and services at the IMT advanced
International
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Network Architecture towards NGN
Trends in UMTS solutions for higher capacity
and performance
Evolution of the 3G and 3,5G versions towards 4G with increasing speeds
and decreasing latency time
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ITU - Trends on Convergence - OGS
Network Architecture towards NGN
Fixed network steps/leapfrogging
Grow for
Bandwidth
Cost decrease
per bit
NGN full IMS
NGN pre-IMS
NGN-SWST
ATM/FR/SDH
ISDN
PSTN
Digital
Steps by
developed
countries
PSTN
Analog
Technology
timed evolution
Historical migration steps for fixed network operators
with early development and services deployment
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Network Architecture towards NGN
Fixed network steps/leapfrogging
Grow for
Bandwidth
Cost decrease
per bit
Example of Leapfrog for
developing countries
NGN full IMS
NGN pre-IMS
NGN-SWST
ATM/FR/SDH
ISDN
PSTN
Digital
Steps by
developed
countries
PSTN
Analog
Technology
timed evolution
Migration strategy is strongly dependent on country
opportunity, infrastructure and service maturity
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ITU - Trends on Convergence - OGS
Network Architecture towards NGN
Fixed Access network
steps/leapfrogging
Grow for
Bandwidth
Cost decrease
per bit
FTTH
FTTB
VDSL
ADSL2+
ADSL
Modem
128
Steps by
developed
countries
Modem
64
Technology
timed evolution
Historical migration steps for internet access operators
with early development and services deployment
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Network Architecture towards NGN
Fixed Access network
steps/leapfrogging
Grow for
Bandwidth
Cost decrease
per bit
Example of Leapfrog for
developing countries
FTTH
FTTB
VDSL
ADSL2+
ADSL
Modem
128
Steps by
developed
countries
Modem
64
Technology
timed evolution
Migration strategy is strongly dependent on country
opportunity, infrastructure and service maturity
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Network Architecture towards NGN
Mobile network steps/leapfrogging
Grow for
Bandwidth
Cost decrease
per bit
LTE
HSPA+
UMTS
GSM/EDGE
GSM/GPRS
GSM
Steps by
developed
countries
Technology
timed evolution
NMT
Historical migration steps for mobile operators with early
development and services deployment
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Network Architecture towards NGN
Mobile network steps/leapfrogging
Grow for
Bandwidth
Cost decrease
per bit
Example of Leapfrog
for developing countries
LTE
HSPA+
UMTS
GSM/EDGE
GSM/GPRS
GSM
Steps by
developed
countries
Technology
timed evolution
NMT
Migration strategy is strongly dependent on country
opportunity, infrastructure and service maturity
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Network Architecture towards NGN
Mobile network steps/leapfrogging
Current status for deployment of 3G networks and beyond as
reported by 4G Americas organization (November 2010)
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Business Migration Leaps
Extension for new
customer types
“staircase” for leading growing alternatives
Upgraded Telcos
Customers for
connectivity
Classic Telcos
Conventional voice
and data services
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Extension for new
services domains
+ Services of IN,
VPN and Mobile
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Business Migration Leaps
+ Customers for
new services
Extension for new
customer types
“staircase” for leading growing alternatives
Extended Telcos
Upgraded Telcos
Customers for
connectivity
Classic Telcos
Conventional voice
and data services
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Extension for new
services domains
+ Services of IN,
VPN and Mobile
+ Internet and video
Distribution (triple play)
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Business Migration Leaps
Extension for new
customer types
“staircase” for New Universal Telcos
+ Customers for
end applications
+ Customers for
new services
New Universal Telcos
ASPs
ISPs
Extended Telcos
Upgraded Telcos
Customers for
connectivity
Classic Telcos
Conventional voice
and data services
Extension for new
services domains
+ e-applications,
+ Services of IN,
+ Internet and video Hosting, CC and
VPN and Mobile distribution (triple play)
Virtual Net
Specific migration and timeframe to be optimized for the
International
country context and regulatory conditions
Telecommunication
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Business Migration Leaps
Revenue level
(ARPU)
Evolution of revenues with service domains
ASPs
Video and multiservice
voice revenues
IN and data
Time and Extension for new
services domains
Conventional voice
and data services
+ Services of IN,
+ Internet and video
VPN and Mobile distribution (triple play)
+ e-applications,
Hosting, CC and
Virtual Net
Convergence strategy is fundamental to grow in a competitive
International
environment
Telecommunication
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Charging migration based on utilization
Units and Market evolution
+ Resource
utilization
Charging
units
Usage
Monetization
+ SLA
+ BW
utilization
Package
Open + flat
+ BW
capacity
+ event
Mix regulated
and open
+ BW
capacity
Time and
distance
Online
Charging
Systems
Market
evolution
Predefined
regulated
Classic Telcos
PSTN
Upgraded Telcos
PSTN + Data
Triple play
NGN-SSW
Multiservice
NGN-IMS
Multiservice
NGN-IMS-RCS
High competition
Two dimensional view for charging systems by Units & Market
Intelligence: Avoid the “bandwidth crunch”
International
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Conclusions
• Recent higher capacity technologies take benefit
of economies of scale and are cheaper per
communication unit
• Skipping intermediate development steps will
reduce transition and operational costs
• Selection of Leaps per country is a function of
initial maturity stage and demand growing rate
• Developing countries may benefit from a business
staircase strategy based on the experiences at
developed ones
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Recommendations
• Take benefit of experiences, benchmarking and
proper modeling of key techno-economical
factors
• Focus on consolidated/proven migration steps
and technologies with multiple services domains
• Take benefit of all economies of scale
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