Market Feasibility of NGN Technology Helmut Schink helmut.schink@siemens.com Content 1. Trends 2. Convergence scenarios 3. use cases 4. market figures 5. trials 6. summary © Siemens 2 Broadband and IP open the door to IT Main trend Power shifts from network to the end user Network drives value generation Services drive value generation Network is differentiator Value added services are differentiator Network defines and constrains services IP Services are network-agnostic © Siemens 3 Convergence of: Networks – Services – Application Fixed Mobile Convergence Mobile Network Fixed Network Mobile Enterprise Home Entertainment Enterprise Network Home Network Hosted Office © Siemens 4 Examples for Converged Network Services Business Connection Fixed Mobile Convergence Home Entertainment Mobile Enterprise Hosted Office/ IP Centrex, Office Integration, Call Handling Applications Conferencing Push-to-Talk, Chat, Instant Messaging, Unified Messaging, Push Services Community Portal TV Centric Applications –Video Telephony, VoD/AoD*, Internet on TV, Games –, Ring Back Music Mobile Centrex Mobile Workforce Private mobile numbering office zone solutions Available on any device – seamless/unified user experience – – Single sign-on – *) VoD = Video on Demand, AoD = Audio on Demand © Siemens 5 Example for Converged Services: TV-based Home Entertainment Carrier-controlled home gateway Stefanie: What do you think about this movie...? Messaging (SMS,MMS) Broadcasting Audio/video on demand, Personal video recorder Video telephony Gaming Internet on TV § bandwidth of network access is driven by Home Entertainment and Video Communication. © Siemens 6 LifeWork Applications: Business Impact of Push-to-talk Value Add Penetration (%) § Revenues in Fixed networks generated by IOC § Dedicated use case will benefit from convergence, Taxi, Cycle Courier, Police, Firefighters, Emergency services, Transportation services, Delivery services (DHL, …) § Faster service uptake for Mobile due to higher critical mass and use cases that require fixed end station We ste Eur rn ope 2007:Mobile Consumers: 33%1 Mobile Business users: 10% Fixed Users: Low Case: 0,5%2 Fixed Users: High Case: 3%2 (Nextel US: Mobile Business 70%) Revenue per active user 2007: Mobile Consumer: € 4,50 / month Mobile Business: € 20,00 / month Major Barriers § No critical mass of SIP capable fixed phones § Service might be offered by ASPs/ISPs with portal based service, which provides a lot of challenges for Siemens to obtain business 1 ARPU Contribution 2007: Mobile Consumer: € 1,50 / month Mobile Business: € 2,00 / month ICM User Survey: 06/2003 2 Own analysis © Siemens 7 LifeWorks Applications: Business Impact of Presence We st Eu ern rop e Penetration (%) 2007:50% of mobile subscribers1 5% of fixed subscribers2 26% of internet users3 Price 2007: Fixed/Mobile: € 1,50 per month additional charge 1 Value add Usage § Service is basis for many other services (IM, Chat, PTT, …) and implies to be offered in Fixed and Mobile network 2007: For all IMs, Chats, PTTs, Gaming Sessions Barriers § Service in Fixed might be introduced by ASPs/ISPs mainly § No critical mass of SIP capable fixed phones 1 ICM ARPU Contribution 2007:Mobile € 0,75 / month Fixed € 0,1 / month User Survey: 06/2003 2 All SIP subscribers 3 All Instant Messaging Users © Siemens 8 LifeWorks Applications: Business Impact of Instant Messaging Value add § IOC will make it possible for fixed operators/ISPs/ASPs to bill for this service § Mobile Operators benefit from installed base of Internet IM/Chat users § Faster service uptake due to higher critical mass – enhanced reachability We st Eu ern rop e Penetration (%) 2007: 30 % of mobile users1 26 % of internet users2 5% of fixed users3 Price 2007: Mobile: € 0,10 (per receiver) or € 5 flat monthly fee1/ 4 Fixed Corporate: € 2 per user /month 5 Major Barriers § Standardization on SIP or Wireless Village? § No critical mass of SIP capable fixed phones § Providers such as AT&T provide interworking with AOL/Yahoo based on AOL/Yahoo Messanger installed on mobile phones § Challenge for Siemens to obtain business in case of portal based solution ARPU Contribution 2007: Mobile: € 1,50 / month Fixed: € 0,25 / month 1 ICM User Survey: 06/2003 2Raymond James & Associates, Inc. 3Deutsche Telekom 4AT&T Wireless & Yahoo & AOL 5MSN © Siemens 9 The Message remains: No market growth without Applications, IP and Ethernet as well as Services Wireline Carrier Market Highlights and Trends u The Wireline Carrier Market reached 52.4 bil € in 2003. The overall market growth (CAGR 03-09) is estimated at 7.6%. Asia/Pacific with most attractive growth rates (9.0%) among the top regions (Western Europe 7.8%, North America 5.9%). u The combination of secure wireless home/office networking with entertainment applications such as online gaming, networked Private Video Recording and digital audio is fertilizing the whole CPE industry. u Most carriers making steady progress toward sustained profitability, but they continue to spend CAPEX conservatively to ease their debt burdens and improving cash flow. Instead of building new, most incumbents are optimizing existing infrastructures. u WLAN and WiMAX are opportunities for wireline carriers to provide wireless and even mobility services u Blurring of Communication, IT and Entertainment around the Internet does change the role of carriers u Delayering of Handware and Software; Modularization of HW and Software components u A new Security model is a key issue for Next Generation Networks u Asia Pacific is dominating the Local Loop Market in mostly all subsegments. While the DSLAM market is flat, new access alternatives such as PON, WLAN and WiMax are growth drivers. u Vendors add additional functions to NG SONET/SDH such as WDM support, distributed cross-connect, and data aggregation and switching, enabling carriers to reduce the number of equipment in the metro network u Service providers see the need for packet-based services as a key driver to deploy next generation voice equipment u The growth in Converged Network investment will not compensate the decline in traditional CO Switching. u Data Network Convergence and adoption of MPLS are driving factors in future network deployments u As Carriers were not able to reduce OPEX significantly over the last few years (compared to their successful CAPEXreductions ), the Service Market continues to open up for external service suppliers. © Siemens 10 Tomorrow‘s Voice Service will be different from Yesterday‘s Voice Service Class 4 replacement, IP offload, International Long distance globally Incumbents like SBC, Qwest, Verizon, BT starting VoBB offerings to reduce churn. First Voice over WLAN offerings. Users / lines in Service (bn) 3 5mil VoBB lines in Japan (Yahoo BB, NTT), 100k in USA (Vonage) Free of charge offerings like Skype, Yahoo IM 2 2 Packet Voice Clients (incl. VoWLAN) 1 Main Telephone Lines (MTL) 1 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 Characteristics Technology: Topology: Tarif structure: Main Line TDM, proprietary centralized time and distance Quality: Hard QoS, lifeline Subscriber associated with: Services: Service Provision: physical fixed line voice centric Telco 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Packet Voice Client IP, standardized De-centralized flat rate, part of defined service bundle Soft QoS, „lifeline“ through multiple access alternatives one personal number, network/access agnostic data centric, voice is only one application Telco, ISP, MSO, etc. © Siemens 11 Digitalization, Miniaturization, Internet and Broadband Access are underlying trends Wireline Carrier Market Highlights and Trends Business Trends u Revenue growth u Competitive advantage u Real-time enterprise u Virtualization u Globalization u Business continuity u Productivity u Cost reduction IT Trends Telecom Trends u The new systems architecture u Convergence u Internet Protocol Web-based applications u Broadband Business process fusion u Wireless u Mobility u Video u u u u CRM, supply chain management or enterprise resource planning Consumer Trends u Convergence Entertainment with Computing u Networked and Connected Home u Broadband to the Home Net intelligence vs. Peer to Peer u Wireless/Power-line Home Netw. u Net applications u Personal Area Network u Ad-hoc Network u Video on-demand u Smart Home u Vehicular network u Web services u u Decentralization Grid computing u u Disaster recovery Outsourcing of Services u Distinction blurring with computing © Siemens 12 In 2015, more than 40 bn devices/Smart objects will be connected. This „connectivity“ trend is driving Routing & Switching and Applications Number of Computers connected to the Internet (in million) Including smart objects the number may reach more than 40 bn in 2015 Including mobile devices, computers on the Internet may reach 1.3 bn in 2005 7 70 6 6 60 5 5 50 4 billion 7 billion million In 1995, there were 6 million computers on the Internet 4 40 3 3 30 2 2 20 1 1 10 0 0 1995 0 2005 2015 Industrial Devices Industrial Devices Industrial Devices/Smart Objects Home Networking Devices Home Networking Devices Home Networking Devices Mobile Devices incl. Phones Mobile Devices incl. Phones Mobile Devices incl. Phones Computer & Server Computer & Server Computer & Server Source: DellOro, ICM, IDC, ICN GS SD © Siemens 13 Broadband Access is Key for Application Revenue Access Technology Change [million broadband lines in service] Ethernet, Router Modems, DataMux,X25, FR PON, Optical Switching DSLAM, ATM, Router 100% 800 700 80% 600 500 60% 400 40% 300 200 20% 100 20 18 20 14 20 10 20 06 20 02 19 98 19 94 19 90 2020 2017 2014 2011 2008 2005 2002 1999 1996 1993 0% 1990 0 Modem/ISDN xDSL Modem/ISDN xDSL Ethernet/CableModem PON/Dedicated Fiber Ethernet/CableModem PON/Dedicated Fiber Wireless/Other Wireless/Other © Siemens 14 Worldwide telecommunication services revenues grow at 5.5% p.a. The growth is in Wireline/Mobile Internet/Data Services. Carrier Service Revenues Growth rate by service Carrier Service Revenues, world, bn US$ (CAGR 03/08) 1 600 Mobile Data Services 21% 1 400 Mobile Telephony Services 5% 1 200 1 000 Wireline Internet/Public IP 15%* 800 Wireline Data Services 8% 600 400 Wholesale/Carrier Services 4% 200 Wireline Voice Services 1% 0 2001 2002 2003 2004 2005 2006 2007 2008 0% 10% 20% 30% Source: Gartner June, December/2003, ICM for mobile data trend; *Wireline Internet Service Revenue w/o Games, Video, Audio © Siemens 15 Applications use Network Architecture and Building Blocks According to TISPAN and ITU NGN NGN Application Logic Voice, Video, Mulimedia, Unified Messaging, Collaboration, PTT, … TISPAN NGN guides early phase of Network Architecture and Function split IETF, ITU-T and ETSI defined Interfaces and Protocols Application Enabling Presence, Media Resources, Security Interworking Session & Resource control Session connection, Admission, Authentication, Authorization PSTN, PLNM Signaling Gateway Circuit Switched Infrastructure Media Client Phones, Home Gateways, IADs, Setop Boxes,… Media Gateway © Siemens 16 FMC trial implementation up and running Application Push and Talk Voice and IP CTX Application Server (2´nd step) Instant Messaging IM PoC SIP Group List Manag, Presence Application enabling MPM HSS HSS Switch STP SS7 PSTN / ISDN PSTN Session control SIP Legacy interworking CS-Domain P-CSCF I-CSCF S-CSCF MGCF GMSC SIP ALG/ NAT-PT MGCP MSC SIP Fixed IP Net Router + IP Phone Client PS-Domain trunk, access MGW © Siemens 17 extended FMC trial Application Voice Appl. Server Instant Messaging Chat IM Chat UM Group List Management PoC SIP Application enabling MPM MRF Presence ENUM. SIP Session control HSS P-CSCF I-CSCF S-CSCF HSS SIP Legacy interworking MGCF SS7/ ISUP MRF Firewall/NAT SIP MGCP H.248 Client CPG Router +PC Client Router + IP Phone Wireless Router WLAN PDA trunk, access MGW © Siemens 18 Conclusions The market is ready § for cost savings § for new applications § for various kinds of convergence Technology § very mature for softswitches, gateways § IMS successfully introduced § provides for real value add Let go ! © Siemens 19