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
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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
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Convergence of:
Networks – Services – Application
Fixed Mobile
Convergence
Mobile
Network
Fixed
Network
Mobile
Enterprise
Home
Entertainment
Enterprise
Network
Home
Network
Hosted
Office
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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
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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.
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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
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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
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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
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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 !
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