itu cross regional seminar on broadband access (fixed ... · future profile driven by: initial...
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InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011
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 SotoITU Consultant Expert
Spain [email protected]
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 2
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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InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 3
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…………?
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 4
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.
Convergence dimensions
Convergence is taking place at several domains
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Convergence profiles
Initial traditional status: Separated networks, services and operations
Network Core
Operations
Terminals
Network Access and Edge
Services
Convergence Domain
Full convergence
Low level convergence
Medium level convergence
Separated
Implementation
Level of convergence
Traditional Modeof Operation
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 6
Convergence profiles: trends
Example of convergence for most operators in developed economies
Network Core
Operations
Terminals
Network Access and Edge
Services
Convergence Domain
Full convergence
Low level convergence
Medium level convergence
Separated
Implementation
Level of convergence
Traditional Modeof Operation
TransitionConvergence Profile
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Convergence profiles: trends
Example for leading operators on convergence (100% NGN on core and 30 to 70% on edge and access with IMS base)
Network Core
Operations
Terminals
Network Access and Edge
Services
Convergence Domain
Full convergence
Low level convergence
Medium level convergence
Separated
Implementation
Level of convergence
Traditional Modeof Operation
TransitionConvergence Profile
AmbitiousConvergence Profile
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 8
Convergence profiles: trends
Future profile driven by: Initial status, Market development, Economy of scale and Operator Strategy
Network Core
Operations
Terminals
Network Access and Edge
Services
Convergence Domain
Full convergence
Low level convergence
Medium level convergence
Separated
Implementation
Level of convergence
Traditional Modeof Operation
TransitionConvergence Profile
AmbitiousConvergence Profile
Complete Convergence Profile: E2E IP
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Convergence profiles: trends
- Most leading operators implemented IMS subsystems since 2007: >20 operational and few hundreds under pilot or pla nned
-- 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 Functi ons - 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
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 10
The five dimensions of the
economy of scale:
By Size of the systems
By Technology capabilities
By Traffic efficiency with
the occupancy
By customers Density
By Volume of purchasing
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
Benefits per dimension
Cost reduction per unit (i.e.: 10% to 30%)
New technologies with higher productivity (i.e.: x10)
Better utilization for a given GoS when larger systems (i.e.: +20%)
Quadratic decrease with coverage radio increase
Discount per volume in log scale (i.e.: up to 40%)
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Cost reduction per technology evolution. Example for Ethernet ports
1997 1998 1999 2000 2001 2002 2003 2004
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Source: Dell’Oro Group
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0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
10
Res
ourc
e E
ffici
ency
5 15 20 25 30 35 40
P = 0.02
Offered Traffic
Impact on efficiency increase for a given quality with traffic and group size (non-linear effect)
Economy of scale per traffic efficiency
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Cost reduction per technology evolution. Example for fixed BB residential access in EU
[Source: Analysys Mason, 2010]
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 14
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
Network nucleus Edge
Metropolitan
network
• New multi-service development
• Agreements with content and application
service providers
Local Access
Mobile Service Providers (MSPs)
• Acquisition/merging of service providers
• Development of new access loops and
Unbundling
Agreements and merging
Backbone Service Providers (BSPs)
• Agreements with wholesale operators Access Providers
(CAPs)
Internet Service Providers (ISPs)
• Agreements with content providers and e-commerce
Application Service Providers
Applications and Services
• Agreements with content providers
Established Service Providers (ESPs)Established Service Providers (ESPs)
• FMC
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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
Business Planning case
Evaluations to be based on robust techno-economical tools due to high number of alternatives and complexity
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SOHO and Small Enterprise
All Segments (reference)
Residential
Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Year-1e+08
0e+08
1e+08
2e+08
3e+08
4e+08
5e+08
6e+08
7e+08
8e+08
Eur
o
Effects of the mix of customers on Reference Scenario: Low competition level Network NPV
Business Planning case
SME and SOHO with quicker recovery but less NPV and company value at medium term
“All customer segments” case with much better behavior
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 18
Internet
Internet & VoDSL
Internet & Video
All Services (reference)Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Year-2e+08
-1e+08
0e+08
1e+08
2e+08
3e+08
4e+08
5e+08
6e+08
7e+08
Eur
o
Business Planning case
Effects of the mix of services on Reference Scenario: Low competition level Network NPV
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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Internet
Internet & VoDSL
Internet & Video
All Services (reference)
Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10
Year-2e+08
-1e+08
0e+08
1e+08
2e+08
3e+08
4e+08
5e+08
Eur
o
Business Planning case
Effects of the mix of services on typical scenario: Medium competition level Network NPV
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 termVery 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
Lambda BandwidthDarkFiber
Scenario ACircuit based
Scenario BPacket based
Managed Multiservice ATM/FR/IP
ATM VPN, IP VPN
Ethernet ptp LAN to LANconnection
Internet Gbit access
IP VPN
Optical fiberOptical fiber
DWDM equipmentDWDM equipment
Optical switchingOptical switching
SDHSDH
IP RoutingIP Routing
EthernetEthernetGigEGigE
ATM/FRATM/FR
GigE,10/100BTFicon,Escon, GigE,10/100BTFicon,Escon,
Fibre Ch..Fibre Ch..
IPIP
Physical InfrastructurePhysical Infrastructure
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 22
Network Architecture towards NGNTrends in WLL technologies for Bandwidth and Mobility
Convergence of different radio systems towards the integration of solutions and services at the IMT ad vanced
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Network Architecture towards NGNTrends 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
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 24
Network Architecture towards NGNFixed network steps/leapfrogging
Historical migration steps for fixed network operators with early development and services deployment
PSTN Digital
NGN-SWST
ISDN
ATM/FR/SDH
Grow for Bandwidth
Cost decreaseper bit
Technologytimed evolution
NGN pre-IMS
NGN full IMS
PSTN Analog
Steps by developed countries
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Network Architecture towards NGNFixed network steps/leapfrogging
Migration strategy is strongly dependent on country
opportunity, infrastructure and service maturity
PSTN Digital
NGN-SWST
ISDN
ATM/FR/SDH
Grow for Bandwidth
Cost decreaseper bit
Technologytimed evolution
NGN pre-IMS
NGN full IMS
PSTN Analog
Example of Leapfrog for developing countries
Steps by developed countries
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 26
Network Architecture towards NGNFixed Access network steps/leapfrogging
Historical migration steps for internet access operators with early development and services deployment
Modem 128
VDSL
ADSL
ADSL2+
Grow for Bandwidth
Cost decreaseper bit
Technologytimed evolution
FTTB
FTTH
Modem 64
Steps by developed countries
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Network Architecture towards NGNFixed Access network steps/leapfrogging
Migration strategy is strongly dependent on country
opportunity, infrastructure and service maturity
Modem 128
VDSL
ADSL
ADSL2+
Grow for Bandwidth
Cost decreaseper bit
Technologytimed evolution
FTTB
FTTH
Modem 64
Example of Leapfrog for developing countries
Steps by developed countries
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 28
Network Architecture towards NGNMobile network steps/leapfrogging
Historical migration steps for mobile operators with early development and services deployment
GSM
UMTS
GSM/EDGE
Grow for Bandwidth
Cost decreaseper bit
Technologytimed evolution
HSPA+
LTE
NMT
GSM/GPRSSteps by
developed countries
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Network Architecture towards NGNMobile network steps/leapfrogging
Migration strategy is strongly dependent on country
opportunity, infrastructure and service maturity
GSM
UMTS
GSM/EDGE
Grow for Bandwidth
Cost decreaseper bit
Technologytimed evolution
HSPA+
LTE
NMT
GSM/GPRSSteps by
developed countries
Example of Leapfrog for developing countries
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 30
Network Architecture towards NGNMobile 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
“staircase” for leading growing alternatives
Conventional voice and data services
+ Services of IN, VPN and Mobile
Extension for new services domains
Ext
ensi
on f
or n
ew
cust
omer
type
s
Classic TelcosCustomers for
connectivity
Upgraded Telcos
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 32
Business Migration Leaps
“staircase” for leading growing alternatives
Conventional voice and data services
+ Services of IN, VPN and Mobile
+ Internet and videoDistribution (triple play)
Extension for new services domains
Ext
ensi
on f
or n
ew
cust
omer
type
s
Classic Telcos
+ Customers fornew services
Customers for connectivity
Extended Telcos
Upgraded Telcos
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Business Migration Leaps
“staircase” for New Universal Telcos
+ e-applications, Hosting, CC and
Virtual Net
Conventional voice and data services
+ Services of IN, VPN and Mobile
+ Internet and videodistribution (triple play)
Extension for new services domains
Ext
ensi
on f
or n
ew
cust
omer
type
s
Classic Telcos
ISPs
ASPsNew Universal Telcos+ Customers for end applications
+ Customers fornew services
Customers for connectivity
Extended Telcos
Upgraded Telcos
Specific migration and timeframe to be optimized for the country context and regulatory conditions
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 34
Business Migration Leaps
Evolution of revenues with service domains
+ e-applications, Hosting, CC and
Virtual Net
Convergence strategy is fundamental to grow in a competitive environment
Conventional voice and data services
+ Services of IN, VPN and Mobile
+ Internet and videodistribution (triple play)
Time and Extension for new services domains
Rev
enue
leve
l(A
RP
U)
voice revenues IN and data
Video and multiservice
ASPs
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InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 35
Charging migration based on utilization Units and Market evolution
Two dimensional view for charging systems by Units & Market Intelligence: Avoid the “bandwidth crunch”
Chargingunits
Classic TelcosPSTN
MultiserviceNGN-IMS-RCS
High competition
+ Resource utilization
+ BW capacity
Time and distance
Triple playNGN-SSW
Upgraded TelcosPSTN + Data
+ BW capacity + event
OnlineChargingSystems
MultiserviceNGN-IMS
+ BW utilization
Market evolution
Predefinedregulated
Mix regulated and open
Package Open + flat
Usage Monetization
+ SLA
InternationalTelecommunicationUnionITU - Trends on Convergence - OGSChisinau, Moldova, October 2011 36
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 stepsand technologies with multiple services domains
• Take benefit of all economies of scale