Business case for NGN. Arunabha Mukhopadhyay IIM Lucknow

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1 Business case for NGN Arunabha Mukhopadhyay IIM Lucknow

2 Convergence

3 Telecommunication environment IP based converged environment Next generation converged environment Single purpose networks PSTN, cellular, broadcast Narrowband Vertical silos Network-service link Operators control services to end users Multi-purpose networks IP network (providing voice, video and mobile services) Broadband Destroys compartmentalisation Traditional boundaries between industry segments (e.g., telephony, cable TV, broadcasting, wireless) are blurring Need to re-think market definitions (product definition and geographic boundaries definition) New services and content developed independently of the network Increased consumer control

4 NGN Services

5 Services growing offers from access platforms, video services applications : digital terrestrial, IPTV, HDTV, VOD Disruptive applications : Joost3 or Sling box4 the concept of social value of terrestrial broadcasting may become weaker, impact of these new services remains to be assessed.

6 Bundled services Bundling refers to the sale of a number of services combined in a single price package, usually excluding the possibility that customers can obtain a single service without taking or paying for the other services in the bundle. help generate economies for the supplier through, reduction in : service marketing charges, customer acquisition costs, billing charges, etc. For the client bundling often has the advantage in that prices are lower compared to having to subscribe to each service individually, however customers may not want all the services offered in a bundle..

7 Bundled services A client who does not want IPTV services may be obliged to pay for these services when subscribing to certain triple play bundles. At the same time a bundle, while nominally offering a better price than purchasing the same services separately, is also difficult to assess when trying to compare prices across a range of different offers. A service provider may also use a service in the bundle to crosssubsidise other services using this to obtain an unfair market advantage. Bundling may also make it difficult for regulators to define markets, assess market power, and therefore understand whether or not dominance exists in a given market.

8 NGN

9 NGN packet based network able to provide services including telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service related functions are independent from underlying transportrelated technologies.

10 NGN packet based network able to provide services including telecommunication services and able to make use of multiple broadband, QoS-enabled transport technologies and in which service related functions are independent from underlying transport-related technologies. NGN offers access by users to different service providers, and supports generalized mobility which will allow consistent and ubiquitous provision of services to users.

11 NGN

12 Future

13 PSTN and PSDN networks

14 NGN drivers

15 NGN drivers Economic Drivers Techno Drivers Social Drivers Erosion of fixed line voice call revenues. Competitive pressure from new entrants in high-margin sectors of the market (longdistance, international) and from vertically integrated operators (triple-play bundles). Saturation of both Fixed and mobile telephone services Obsolescence of legacy networks, plus cost and complexity of managing multiple legacy networks. Lower capital and operational expenses. Increased centralization of routing, switching and transmission, lower transmission costs over optical networks. IP-based networks enable the provision of cheaper VoIP services as a replacement for PSTN voice services. Demand for innovative, high bandwidth, services (HDTV, VoIP, etc). Demand for more targeted or personalized content (on demand multimedia services, mobility)., Demand for increased interactivity: possibility to interact actively with the service, growing interest for user-created content.

16 NGN drivers Economic Drivers Techno Drivers Social Drivers Retain and expand users base, lower customer churn IP-based networks enable the provision of a wider range of services, and allow bundling of services (triple and quadruple play). Demand for evolved and more flexible forms of communications, including instant messaging, video-conferencing, P2P, etc. Ability to expand into new market segments Evolution and convergence of terminal equipment. Business demand for integrated services, in particular in case of multi-national structures, which need to link different national branches, guaranteeing a flexible and secure access to centralized resources and intelligence. Possibility of ladder of investment, i.e. a phased approach for investment, initially targeting more densely populated areas, and then gradually expanding in other areas

17 I-centric Biz -models

18 I centric b-model

19 API s

20 Garden Biz models

21 Public Garden SP : connectivity pipe between consumers and CP. Consumer access CP s website using SP s network infrastructure. CP s number: extremely large. CP s : CANNOT guarantee hi QoE. QoE is lo for video if network congested, CP s : payment to be made independently consumers wary of purchase of online content : fear of potential fraud. Service Enabling Platform[SP] (Content Provider[CP]) Network Customer

22 Public Garden CP : no long -term CRM CP: payment authentication +verification cumbersome. CP: cannot conduct targeted mkting SP: unattractive business model. SP revenue : flat connection fee independent of b/w consumption. b/w consumption is a cost driver, SP : no control on network costs. CPs using SP s infra to generate business without compensating SP for associated cost. Service Enabling Platform[SP] (Content Provider[CP]) Network Customer

23 Walled Garden Consumer have limited access to content. Content is licensed by SP from the CP SP offers customer service pack SP : content layout, authentication, royalty tracking and reporting, billing, and QoS Consumer s risk associated with payments reduced SP : ensures QoE end-to-end network path. SP : ensures presentation of content Limitation :consumers restricted in choice of content Content Provider[CP] Service Enabling Platform[SP ] Network Customer

24 Walled Garden CP, focus on core business, SP : Distribution + billing + customer support + QoS. SP center point of the value chain. CP s revenue flows through SP s books. SP and CP revenue sharing model. SP undertakes large activity SP :resource consumption for content aggregation, layout, Content Provider[CP] Service Enabling Platform[SP ] Network Customer maintenance and support.

25 The Gated Garden Model SP establishes toll gate for CP. CPs revenue share with SP. SP : QoS, authentication, billing etc. Horizontal platform features of walled garden model, maintains a B2B interface with CPs, who are responsible for content SP focuses on the network and user experience. Content Provider[CP] Service Enabling Platform[SP ] Network Customer

26 The Gated Garden Model FastWeb, Italian CLEC, focuses on delivery network +billing systems own subsidiary company, manages various CP, and shares in their revenue stream. NTTDoCoMo i-mode service : CPs tmanage their content while tying into DoCoMo s billing systems. NTT DoCoMo relies on a revenue sharing model with their CP to eliminate the operational burdens of content management. Content Provider[CP] Games Pay TV BroadcastTV Wholesale Platform[SP ] Network Customer VOD Music

27 NGN value chain

28 Broadband value chain

29 Broadband value chain

30 Alcatel Openmedia Suite

31 Business model for NGN networks

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