Fixed-Mobile Convergence. White Paper

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1 Fixed-Mobile Convergence White Paper

2 02/16 Fixed-Mobile Convergence Contents 03 Abstract 04 Executive summary 05 Convergence, it s happening now 06 Operators plan for FMC 07 Device convergence 08 Service convergence 09 Network convergence 11 Smooth transitions to converged networks 13 Services for operators 14 Conclusions

3 Abstract Fixed-Mobile Convergence is one of the most eagerly anticipated changes in communication and services provision for end-users, and poses unique challenges for operators and service providers. Here we consider Fixed Mobile Convergence from three perspectives: device convergence, service convergence and network convergence. This is a convenient way to examine and define the differing but related needs of network operators, MVNOs and service providers and those of their users. This paper looks at the trends and rationale behind convergence as well as the devices, networks, functionality and software that will be used to access new services. Throughout, our underlying focus is on how operators can make the step-by-step transition to Fixed-Mobile Convergence, while decreasing complexity in their networks, finding effective strategies to launch new services, benefit from cost effective end-to-end solutions and differentiate their offering in a highly competitive marketplace.

4 04/16 Fixed-Mobile Convergence Executive summary One of the most visible outcomes of Fixed-Mobile Convergence (FMC) is its convenience and simplicity for consumers and business users, giving them highly featured, lower cost communications. End-user appetite for reduced costs and high quality, reliable and enabling services makes customer retention one of the hardest fought battlegrounds. Trends in different regions and countries are different, but on a global level operators are facing increasing competition and declining prices for voice traffic, fixed lines and fixed minutes. At the same time, mobile voice traffic is growing rapidly and substituting that of voice traffic over fixed lines. Endusers now expect high quality with reliable mobility and are using the Internet more as the penetration of broadband grows rapidly. Now, Voice over IP (VoIP) is starting to substitute PSTN. Meanwhile, key enabling technologies, such as smart phones, wireline and wireless broadband and IMS for seamless service over different access types are readily available. Combined, this means that operators are looking for long-term evolutionary strategies towards converged, access-agnostic networks, with service integration and interoperability across domains and devices. Successful FMC requires convergence in three areas, devices, services and networks Device convergence brings diverse functionality together in a single Three key opportunities for operators To decrease complexity in their network and in so doing benefit from CAPEX and OPEX savings To launch services rapidly and efficiently and differentiate their offering to meet end-user needs device, for example a phone with a camera, FM radio, TV, Internet browser and MP3 player. Device convergence then works together with network convergence to provide connectivity to services using the access technology most suitable at a particular location or moment in time. Service convergence enables the delivery of services seamlessly and transparently to the user over any network. Concurrent delivery of all major media types voice, data and video/tv, over fixed lines, has been around for some time as Triple Play. But FMC adds mobility to the mix (Quadruple Play) and allows the same services to be used with different devices and through different access networks, while users are on the move. It is enduser demand for mobile access of services that traditionally have only been available in the fixed domain that has become one of the main business drivers of FMC growth. Finding ways to deliver this without increasing complexity, greater network management and still benefit from CAPEX and OPEX savings is a major challenge for the operator community. Operators are taking advantage of end-toend solutions that ensure costefficient operation. Converged core networks, operations support systems, business support systems and service machinery to enable savings in service development, deployment and network operations and maintenance. With FMC, operators can utilize the converged core network, share transport across IP networks, and employ the same solutions for all access networks using common service creation based on IMS for both fixed and mobile environments. Delivering what the market wants has to be fulfilled if network operators are going to enjoy longterm profitability and launch new services to meet end-user demands, attract new customers and retain the existing customer base. The basis of the FMC opportunity for operators is real time applications such as Voice over IP (VoIP) using IMS, or Video services. The variety of services coming from other service providers and a myriad of user-created content and services, now available on the web provides the potential for increased up-sell. The gains for both the business and consumer sectors, is clearly too large to ignore. Operators must now evaluate the options, define their business objectives and create carefully constructed strategies for Fixed- Mobile Convergence. To take advantage of end-to-end solutions that ensure operational efficiencies

5 Convergence, it s happening now More than ever, the way we communicate is blurring the boundaries between the business and personal sides of our lives making possible the emergence of new lifestyles. This is a trend that started with the launch of the very first mobile phones, allowing users greater freedom and flexible communication possibilities. But the current state of mobile telephony is only part of the story. Developments such as broadband in the home, for example, facilitating access to corporate resources using IP-VPNs give users the opportunity and flexibility to work when and from wherever they wish. Now end-users are looking for the services that will let them take both their personal and office life with them, with the benefit of access from just one device, while on the move. With Voice over IP offering apparently free telephony, and with voice, video and internet services available on multiple devices via a single broadband connection, operators, service providers, content owners and device manufacturers are all now re-thinking the fundamentals of their business models. At the same time, they have to cope with the continuing rise of mobility usage, which in the voice domain is already overtaking fixed-line usage. As mobile data rates edge closer to those enjoyed by fixed broadband users, the race is on to deliver a cost-efficient, seamless, multimedia experience anywhere, any time, on any device the customer may choose. For new multimedia services, the combination of IP and SIP* allows different sessions now to be established over any IP network or combination of networks, thereby giving users the perception that there is just one, single network. This represents network unification rather than physical convergence, but is a key development in that it enables greater usage of multimedia services. Service convergence is also starting to generate new revenue streams, examples include, SMSs sent between mobile and instant messaging users, or video calls made between fixed and mobile devices, Presence services, surveillance, services, blogging and many more. Multimedia and multimodal services take convergence to new levels. However, the fact remains that voice is still the optimal way of communicating in most cases. Making voice services more convenient to use is just as important as the addition of new functionality. But equal to the end-users Convergence trends As competition grows and markets mature, traditional telephony revenues and margins inevitably decline. perception of greater simplicity is the complexity of delivery for operators against the background of a fiercely competitive market. Fixed, mobile, cable and hybrid operators are competing not only with traditional players but with ISPs, content providers and new, agile entrepreneurs who can identify and exploit profitable niche markets. Faced with these challenges and horizontalization of their businesses, they need to re-evaluate their options, define new business objectives and pursue a carefully constructed Fixed-Mobile Convergence strategy. * Session Initiation Protocol, an IETF standard, one of the leading signaling protocols for Voice over IP Broadband access is enabling not only low-cost IP telephony, but a wide range of new applications such as video calling, video on demand (VoD) and IPTV. The traditional Telco model is no longer viable long term and, at best, is under massive external pressures from agile ISPs, cable operators offering voice over cable and entrepreneurs who can see easy profits to be made. Bandwidth has become a commodity and this has led to the dynamic advent of xvnos, virtual network operators that operate in the fixed (FVNO), mobile (MVNO) domains or in both as hybrid operators.

6 06/16 Fixed-Mobile Convergence Operators plan for FMC FMC demands long range strategies from operators and investment decisions that will reshape not only their networks, but their future success. They must develop and enhance their ability to create and implement new services in very short timescales and offer the market a comprehensive portfolio of new services in line with the market s demands. Without Fixed- Mobile Convergence, operators will not be able to match the needs of a communications-centric economy. The drivers for FMC are already here. The technologies are in place. DSL, cable and IP technology are widely used. SIP has been implemented to make service initiation for different services easier. And content is stored and transferred in digital formats. Fixed clients can be SIP phones supporting features for IP PBXs for the Enterprise/SOHO users, SIP soft clients running on PCs or laptops or standard analog telephones. Analog black phones can be connected to a DSL or cable modem with appropriate adapters, or by existing 2 wire POTS connections using standardized access machinery specified by TISPAN. Service convergence is facilitated by IMS, defined by 3GPP and adopted by TISPAN and CableLabs, allowing different services, such as Presence, VoIP and interactive gaming to share common components. IMS lets operators create a dynamic service environment and introduce new customized services, quickly and economically, independent of the access network. FMC means a transformation of business for the operator in a broad sense, but not necessarily disruption or huge technology leaps. Operators can evolve towards an All IP Network based on their existing assets and strategies. They can start with network modernization with fixed soft switches or Release 4 based architecture and then add new services such as VoIP by introducing a VoIP server in their network. IMS can be implemented to give a cost-efficient service architecture. Operators can also select the order in which they prefer to proceed with these different steps. Smart phones already support these technologies and have a feature set that enables the use of rich content and advanced services. Smart phones also enable the consumption of media and the creation of personal content with their large, high quality displays, high resolution cameras, MP3 players, FM radios and other advanced features. PCs are easily upgraded to support new services too, simply by installing new applications and now even set-top boxes allow the installation of new software based features. Convergence trends Apart from regulatory constraints, there is nothing to stop a mobile operator, for example, from becoming an FVNO that offers DSL services or even a fixed voice service provider without owning a broadband access network. Equally, FNOs or cable operators can expand their service bundles via IMS or take an MVNO stance to provide VCC or joint services for mobile devices, for example. The Internet is loaded with services offered by service providers competing with operators and may provide good partnering opportunities. There is now a myriad of user created content and services in the Internet that can also be enabled, either to create traffic revenue for operators or ideas that operators are already adopting and offering themselves.

7 Device convergence Most of the devices we use for communication are constrained in their functionality or limited by the network they access. Typically, a device is only used in the main for a single purpose and the support for its other functions is limited. PSTN phones, low end mobile phones and set-top boxes are good examples. Consumers use these devices for a single purpose. When they change tasks they change device and access network. This means service islands, which lead to mis-matched user experiences from different public and private networks. What s needed are unifying devices that can access services in a similar and easy way. Consumers want the quality of fixed services with the flexibility of mobile and convergence lets this happen, by allowing service access through the most suitable access network, and by letting consumers choose the best device for the service. In many cases that device will be a smart phone, but it could just as easily be a PC or laptop with VoIP software or converged fixed clients who can share IM, presence etc with mobile devices, a fixed VoIP phone or even a TV with a set-top box. Smart phones are serious contenders for voice-plusmultimedia services in a truly mobile environment. Multiple radio interfaces provide access over circuit and packet-switched networks (cellular, WLAN etc) and SIP allows services and applications to traverse different IP networks. Mobile phone development has been rapid in the last decade and new models take increasing advantage of new technologies. They incorporate the enhanced color displays and high quality imaging features needed to support service consumption and the creation of own content. Plus the exponential growth of memory capacity and processing power means that smart phones can now replicate the applications currently employed in notebook PCs and PDAs.

8 08/16 Fixed-Mobile Convergence Service convergence The mobility model has become me-centric, with my phone book, my contact information, my agenda, my messages, my availability and preferred communication method, my Internet, my pictures and video clips (received and shared), my personal and business , my wall-paper, my music and so on. Multimedia services, such as Presence, Push-to-talk, messaging, interactive applications, data or video sharing plus streaming, browsing and downloading, are being delivered over fixed and mobile packet networks. To launch new services and applications quickly, operators can use IMS to eliminate the complexity of different service platforms in the network. Standards based Service Delivery Framework (SDF) provides comprehensive lifecycle management, making the launch of new services and applications quicker and easier to integrate and operate; delivering solutions more speedily to market and reducing the total cost of ownership. In effect the operator can provision and the end-user quickly and conveniently self-provision the new services. VoIP and Instant Messaging are two developments that helped kick-start service convergence. VoIP has had Application community support Service creation & evaluation Ideas Ideas Validation Prototypes Operator Bus.Case Developer Program End-User Evaluation Launch Commercialization Modify Project From idea evaluation to successful launch with Nokia Siemens Networks Responding to markets quickly will improve customer lifetime value (CLTV) Scale Innovate Create Launch Grow Cultivate Ramp down Services The right according business to your own and differentiation technical strategy framework Lower Period of profits And ensure rapid service discovery and take-up Shorten Capture the mass market quickly to establish the offering and build revenue Maximize service profitability and create long-term business value Expand Period of profits At the right time with minimum disruption = Cost of serving customer base = Revenues from users Time/customer lifecycles Studies of European operators show that lengthening end-user contract times by one year translates into a 22% increase in CLTV and 6.3% increase in EBITDA Customer lifetime value (CLTV) = ARPU (annual) * Expected lifetime in years * EBITDA % a seismic impact on telephony within enterprises and, as the penetration of broadband access increases, so does the availability of this transport mechanism within the home. Users also benefit from personalized VoIP, including same number, same contacts and the same supplementary services like call barring, call waiting, ring back tones, one voice mail, option for one postpaid bill or prepaid account, etc. through any access network. IP DSLAMs are letting operators offer both DSL access and traditional two-wire POTS connections using a SIP client in the DSLAM. This development and others like fixed VoIP phones, Analog Telephony Adapters (ATA) and fixed soft switches place fixed line operators in an excellent position. They can offer multimedia services via DSL and attractive tariffs for analog POTS connected to an IP network, thereby maintaining existing services where required and evolving the core network to an IP-based solution. Smart phones, on the other hand, have WLAN interfaces so they can access fixed broadband networks. This allows the mobile phone to be used as an IP phone and users to continue employing their personalized services at home, or via WLANs, connected to DSL, in hot spots or offices. Convergence in this case enables a practical combination of cellular and fixed broadband access. The user experience doesn t change: the same voice and multimedia services are used in the same way. Fixed to Mobile Substitution and fixed VoIP are gradually replacing PSTN voice telephony. Multimedia services are being delivered over fixed and mobile packet networks Operators must now decide on the kinds of services they wish to provide by themselves or by partners, to whom and in which regions. And what they might offer is no longer limited to traditional telecom services only, but perhaps entry into new businesses such as surveillance solutions as an example.

9 Network convergence Network convergence simplifies the end-user experience and dissolves the barriers and complexities that separate today s network islands. The same services are available across all networks and, in an ideal world, appear and perform in exactly the same way, making usage easy, transparent and intuitive. From an operator s perspective, the goal of network convergence is to migrate today s separate PSTN, PLMN, backbone and IP networks to a fully converged network that supports any access technology. The full evolution includes a costeffective migration to an All-IP network using IMS as the unifying platform, allowing all new services to be accessed in a standard and consistent manner. Advancing in this evolution will be the key to an operator s ability to reduce OPEX and CAPEX, and increasing competitiveness and profitability. Many locations, such as homes, enterprises and public places already have access networks available (xdsl, WLAN, cable etc.). When operators launch new services such as video streaming or hosted they can take advantage of these existing networks, extending service access to more potential subscribers. In turn this will mean launching services to new market segments for new revenue opportunities. With multiple access networks operators can attract existing and new customers with an enhanced convergence service portfolio using unified billing. A converged core network is the key enabler for converged networks. Multi-access to a common, converged core network enables cost optimization for both mobile and hybrid operators. Re-use of existing access network infrastructure and integration with the service infrastructure results in both OPEX and CAPEX savings. And multi-access enables operators to introduce end-to-end quadruple-play services to new customers. Native IP access IP-based access connection using the SIP protocol between the device and the converged core network so called Native IP access allows voice, video and other multimedia applications over any access network. Native IP access supports a wide variety of applications in different devices, including mobile handsets, PC clients and SIP desktop phones. POTS phones too, can also be supported, via a connection to an SIP-capable DSLAM or analog terminal adapter (ATA). Native IP access architecture allows the introduction of new rich IP multimedia services through IMS functionality, such as video streaming, media push, video calls,

10 10/16 Fixed-Mobile Convergence and various other SIP enabled applications, furthering revenue streams for operators. Unlicensed Mobile Access Unlicensed Mobile Access (UMA) provides complementary access to existing GSM/GPRS/EDGE services over WLAN (802.11). UMA is defined by the UMA Consortium (www. umatechnology.org) and Generic Access to the A/Gb interface specifications defined by the 3GPP. By deploying UMA technology, service providers allow users roaming and handover between cellular networks and public and private WLAN sites using multi-radio (GSM/WLAN) mobile handsets via a UMA client. Femtocells provide operators with a better means of controlling the traffic generated at home and reduce customer churn by encouraging fixed to mobile substitution and attractive home tariffs. As new access methods are emerging and threatening the cellular operators revenue from home traffic (WLAN, VoIP), femtocell will be an important weapon in the battle for the home In WCDMA HSPA, femtocell not only provides the home user with higher bit rates but off-loads the macro network, potentially leading to cost savings in the overall network investment Femto access An Access Point Base Station or femtocell is a stand-alone unit typically deployed in hot-spots, inbuilding or in the home. Femtocells are scalable, multi-channel, two-way communication devices extending a typical base station by incorporating all of the major components of the telecommunications infrastructure. Application of VoIP allows voice and data services in the same way as a normal base station, but with the deployment simplicity of a WiFi access point. An important enabler of the femtocell concept is the rapid proliferation of DSL or cable based broadband access which is used as the backhaul solution. While the femtocell concept could be applied to any cellular technology, the industry is mainly focused on 3G femtocell.

11 Smooth transitions to converged networks Convergence trends Mobile phone penetration is expected to reach 4 billion users by the end of Combine this with the growth of VoIP over fixed broadband and there is clear demand for a converged and unified service experience. The market for business services and applications generates high-margin traffic, has far less churn, and it is set to grow massively. Many businesses have already converged local area networks and IP PBXs to gain cost and productivity benefits from IP telephony. They are now forcing network operators to implement more cost-effective, hosted voice services, such as IP Centrex. Interactively, mobile and IPTV services are becoming a reality with over 100 operators having launched mobile TV services offering different kinds of live TV channel packages and on-demand video. A further 100 fixed telecom operators globally provide IPTV services. There are a number of requirements for the successful evolution of Fixed- Mobile Convergence. The solution must support the introduction of IP multimedia services that can be delivered to a variety of terminals Delivery must be cost effective and employ complementary access technologies It must reduce operating costs while allowing traditional services and applications to be retained All aspects including business strategy, existing assets and country specific drivers, must be considered when defining FMC strategy and customer optimized solutions. The evolution can be done step-by-step and the steps can vary depending on the strategy. A first step in implementing the solution could be to optimize the circuit-switched core to improve the delivery of regular voice services by introducing softswitch architecture as specified by TISPAN and 3GPP. This separates the call control and user traffic into separate network elements softswitch and Media Gateway supporting common IP backbone, and providing significant OPEX and CAPEX savings. Next, there is the introduction of VoIP services for consumers and enterprises, followed by enhancement of the packet core network to allow rapid deployment of new value-added IP multimedia services in the most cost-effective manner. FMC solution overview Mobile Centrex Presence OSS BSS Provisioning Cellular IP Centrex Broadband FMC solution overview Messaging Rel-4 Interactive gaming Cable NGIN Push To Talk IMS Service control IP Fixed and mobile access The final goal is migration to an All-IP network, with single, IPbased service machinery, using common components and servicespecific extensions to reduce the cost of service development and subsequent implementation. This is best achieved using the converged core network, and common IMS for fixed and mobile as the service delivery engine. The resultant converged network is then optimized in three ways. To ensure efficient delivery of convenient, easy-to-use services To facilitate ease of interworking with business partners and other networks To effectively manage the operator s day-to-day operations and business Rich messaging Content sharing SDP NGN PSTN Video sharing Chat Business partners Internet Corporate Voice

12 12/16 Fixed-Mobile Convergence OSS and BSS Operations Support Systems (OSS) and Business Support Systems (BSS) are moving from organizational silos into a common, centralized environment, so that different accesses, domains and services are all under one management umbrella. Reporting OSS & BSS Charging Configuring OSS & BSS Future management systems will consist of a common adaptation layer, with the common platforms and applications grouped together according to the most relevant operator processes. Moving towards an environment where services can be managed almost independently from the underlying network. The transition from the current OSS and BSS to the converged environment should be made in steps, carefully evaluating an operator s needs and processes and protecting existing investments. Monitoring Planning Security & System Mgmt. All-in-one Adaption Optimising Service Management Subscription Management

13 Services for operators Services play a key role in the implementation of FMC solutions towards a complete, end-to-end FMC reality. Services bond the different building blocks of a successful FMC solution together. The services portfolio should include: Business consulting to define customer challenges, help operators analyze the business benefits of FMC, and find new convergent end-user services to meet the needs of both consumers and business users Services for the planning and operational phases, including network optimization, pre-launch optimization of the network, service modeling, network design and operations support Telecom implementation providing project management, customer logistics and implementation services Systems integration offering multi-vendor network solutions, developing convergent end-user services together with operators Care services Hosting of new convergent enduser services, such as IMS, PoC and location-based services Service Development services also need to cover phases of the development process: Managed Services for larger scale projects, such as managing traffic migration from PSTN to IMS Competence development to ensure that personnel have the skills to operate the network effectively and to offer an integrated approach that identifies where learning is required, delivering the right learning solution to the right people at the right time, while reflecting the business needs

14 14/16 Fixed-Mobile Convergence Conclusions The long-term profitability of fixed and mobile businesses is predicated on the delivery of a wide range of user-centric services that can be selfprovisioned and personalized. To do this the industry must provide a simple and convenient user experience combined with complementary access and cost effective solutions. These are the key drivers behind FMC. When these criteria are met, we can start to realize the full potential of new communications technology. There is broad agreement within the industry on standards based initiatives such as IMS and the need for fast service creation and deployment. Use of these services must be intuitive and deliver a unified user experience across the different fixed and mobile access networks. Success in the emerging FMC environment will be determined by user acceptance, not networking technology, although IP, VoIP and SIP are important enablers. The value that Nokia Siemens Networks can bring is clear. Nokia Siemens Networks provides a customer optimized end-to-end solution, complete with business and technology consulting, deployment services, and hosting and other managed services. This is done by working closely with operators and service providers to meet their goals. Nokia Siemens Networks combined breadth includes the most comprehensive offering of mobile and fixed soft switching, cable solutions, applications and IMS based solutions. We are in a communications-centric era. This equates to a huge market for smarter, tailored services and an unprecedented opportunity for network operators and service providers. We have the technology to create and deploy virtually any service for which there is an appetite. However, the size of the market, combined with factors such as broadband access and locationagnostic delivery, allows new players entry, resulting in new business models and the arrival of xvnos. The convergence requirement from users is simple convenient quadruple play access to personalized voice, data and video/ TV services, supported by mobility over any access network. From the operators and the service providers perspective, the challenge is to meet this requirement with long-term profitable business.

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16 Nokia Siemens Networks Corporation P.O. Box 1 FI NOKIA SIEMENS NETWORKS Finland Visiting address: Karaportti 3, ESPOO, Finland Switchboard (Finland) Switchboard (Germany) Copyright 2007 Nokia Siemens Networks. All rights reserved.

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