Meeting Customer Expectations with Converged Services

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1 Meeting Customer Expectations with Converged Services Today, the telecommunications world is clearly separated into two worlds: the world of fixed line and the world of mobile communication. Each has different business models, different networks optimally tailored for their specific purposes, different organisations, and partly different services. The separation was reasonable in times of steady and strong market growth for each respective domain. The falling average revenue per user (ARPU) for voice services and high churn rates are exerting tremendous pressures on both fixed and mobile operators as they increasingly compete for the same subscriber and service revenues. Fixed-mobile convergence (FMC) is seen as one of the key areas for incumbent operators to differentiate themselves in the face of increased competition from emerging voice-over-ip (VoIP) offerings and furthermore to cope with churn. Four different interpretations for convergence between fixed and mobile operators can be identified in the market: marketing and sales convergence for example, generating the same bill for fixed and mobile subscription; network convergence for example, common network infrastructure and operations; service and application convergence for example, offering presence-based instant messaging (IM) over fixed and mobile networks; and device convergence for example, dual-mode phones. This paper gives an introduction to different interpretations of convergence, focuses on service and applications convergence and converged services, provides examples for converged services, takes a look at end-users desires, and highlights technologies, such as the IP multimedia subsystem (IMS) and the ETSI/TISPAN architecture. Author Siemens AG Tel: European Telecommunications Standards Institute (ETSI)/Telecommunications and Internet converged Services and Protocols for Advanced Networking (TISPAN) What is Fixed-Mobile Convergence (FMC)? Overview Fixed-mobile convergence (FMC) is currently seen as one of the most important strategic issues in the telecommunication industry. There are however many different interpretations of the term FMC. This section sheds some light on it. The term FMC is not new. Some years ago it illustrated the idea of having a combo switch which would provide access and voice services to both fixed and mobile subscribers. But for many reasons, the discussion of which is out of the scope of this paper, this idea did not succeed. With today s end-user desires, together with the common business needs of fixed and mobile network operators to reduce costs and at the same time increase revenues and with the introduction of new common technological concepts for mobile and fixed networks, like packet-switching and Internet protocol (IP), the FMC discussions came back to the spotlight. We currently observe a movement of fixed operators to diversify their business into the mobile area and mobile operators to expand into the fixed-line area driven by wireless local area networks (WLANs). Operators are trying to achieve as many synergies as reasonable between the fixed and mobile world. Synergies can be primarily seen on the revenue side, but also on the cost side. Nowadays, the fixed and mobile carriers are seeking for differentiation in the advent of increasing competition. As stated, there are many different interpretations of FMC. These are illustrated in Figure 1. The different interpretations observed in the market are service convergence, network convergence, terminal convergence and marketing and sales convergence. In the following, these will be described in more detail with examples for each type of convergence. Marketing and sales convergence In its simplest form, FMC can be interpreted as a joint branding and possibly bundling of fixed and mobile services. Examples for marketing and sales conver- 103

2 Figure 1 Interpretations of convergence Marketing and Sales Convergence combined branding, combined tariffs, service bundling) Service Convergence common services platform, single voic , network-based address book) Fixed-Mobile Convergence Terminal Convergence dual-mode handset) gence can be found with the O 2 s Genion home-zone product originally targeting the residential market and now extended to the business market. Also, Deutsche Telecom offering its fixed network voice and data as well as mobile services at T-Punkt shops could be an example for this type of convergence. Service convergence Service convergence is defined as the same service offering for fixed and mobile services and with this making the services ubiquitously available. The term converged services is often used for this type of service offerings. Examples are, for example, enabling services such as presence and network-based address book (NAB) or services such as IM/chat, push services, and converged Centrex that are offered via fixed and mobile access. These services will be further evaluated. Terminal convergence The term terminal convergence is defined as one device used for fixed and mobile communications. Such a device is called a dual-mode phone. A dual-mode phone supports both TDM voice with GSM/ CDMA/EDGE and VoIP over WLAN. ABI research predicts 1 that there will be 50 million or about 7% of all handsets shipped by BT launched its Bluephone concept with BT Fusion on 16 June Network convergence The term network convergence is defined as common infrastructure for fixed and mobile network operation. Examples for network convergence are deploying the same application server for fixed and mobile networks, managing fixed and mobile networks with the same operations support system (OSS) or deploying a common network control. Network and service convergence are especially addressed within ETSI/TISPAN, which will be described in the following. Network Convergence converged technology, common IP core network, common operation and maintenance) Technologies Behind FMC Drivers in standardisation Among the key drivers in standardisation are mainly the named Fixed-Mobile Convergence Alliance (FMCA), the unlicensed mobile access (UMA) and especially ETSI/TISPAN. Whereas the FMCA and UMA address mainly device convergence, ETSI/TISPAN focuses more on network and service convergence. The following describes these three groups. FMCA In addition to announcing its Bluephone concept, a concept for a dual-mode phone, BT founded the Fixed-Mobile Convergence Alliance (FMCA) in July 2004 with six of the world s leading telecommunication members. One of the key objectives is to present a common message to the telecommunication equipment vendor community regarding the development of standards-based terminal and infrastructure equipment. The goals also include concept development, sharing experiences in different markets as well as developing new convergence products and services (Siemens Carrier World 2004). This alliance is closely aligned with the UMA standardisation. UMA Unlicensed mobile access (UMA) technology provides access to GSM and GPRS mobile Figure 2 UMA technology BTS WAP GERAN BSC Unlicensed Wireless Network UNC services over unlicensed spectrum technologies, including WLAN or Bluetooth. By deploying UMA technology, service providers can enable subscribers to roam and handover between cellular networks and public and private unlicensed wireless networks using dual-mode mobile handsets. With UMA, subscribers receive a consistent user experience for their mobile voice and data services as they transition between networks. Figure 2 demonstrates briefly how UMA works. A subscriber with an UMA-enabled dual-mode handset moves within the range of an UMA network controller (UNC). With this UMA controller, the user can access GSM voice and GPRS data services over the unlicensed wireless access. Once a user moves out of the range of the UNC, the UNC and handset facilitate a roaming back to the licensed GSM/GPRS network (www.umatechnology.org). Also a handover without disruption of service is possible between the licensed and unlicensed network. IP multimedia subsystem (IMS) as part of ETSI/TISPAN The 3rd Partnership Project (3GPP), established in December 1998, is composed of telecommunications equipment vendors, services operators and other standardisation bodies. These parties have agreed to cooperate for the production of a complete set of globally applicable technical specifications for a third-generation mobile system based on the evolved GSM core networks and the radio access technologies supported by 3GPP partners. Part of the 3GPP Release 5 architecture is the IP multimedia subsystem (IMS). The IMS builds the basis for the ETSI/TISPAN architecture, as it reuses the IMS as the basis for the control and delivery of realtime conversational services (-based control). The 3GPP IMS architecture is extended in ETSI/TISPAN to support additional access network types, such as xdsl and WLAN. Mobile Core Network 104

3 Figure 3 ETSI/TISPAN FMC standardisation The TISPAN NGN functional architecture comprises a service layer and an IPbased transport layer. Figure 3 shows the relationships of ETSI/TISPAN to other standardisation groups. ETSI/TISPAN has the goal of taking existing standards, enhancing these if necessary and developing an overall converged architecture for both fixed and mobile networks. The first draft of ETSI/TISPAN standardisation is expected to be ready by quarter 4 of To go into details regarding the ETSI/ TISPAN architecture is out of scope of this paper. However, a simplified architecture diagram is shown in Figure 4. The architecture is basically a packet-switched (PS) overlay to the current circuit-switched (CS) domain. All applications and services are offered over a session control layer, which consists of IMS components, to IP-based clients. The most important IMS components are the call session control function (CSCF), media gateway control function (MGCF), and a central database within the home subscriber server (HSS). The IP-based clients can be connected via fixed-network access such as DSL, or via mobile-network access such as WLAN and 2, 2.5 or 3G radio access. The UMA-based FMC solution as described in the previous section can be combined with the ETSI/TISPAN-based solution, as it provides an alternative to the access; however, different UMA-based handsets will be used. Converged Services Introduction to converged services Converged services are defined as services that are available to the end-user over fixed and mobile networks with the same user experience. In other words, services which are ubiquitously available to the end-user. The main advantages of these converged services are that they provide a seamless user DSL Forum IEEE WiMAX Access MPLS Forum ETSI/TISPAN MPLS, IP, RTP, DiffServ, etc. ITU-T NGN Focus Group IETF IMS SG13:GII, JRG SG11: protocols SG16: H.248, multimedia SSG: IMT GPP PING, SIMPLE Security: EAP, IPsec DiffServ Figure 4 Simplified ETSI/TISPAN architecture Applications and Enabling Applications Presence Messaging Session Control HSS Access and Devices Fixed IP Clients CPE PS Domain (IP) Location CSCF Voice Mobile IP Clients experience to the end-user. On the other hand, they provide for improved return on assets (RoA) on infrastructure for the operator as they are offered horizontally over all packetbased access networks and a common control infrastructure as described in the previous section. With this they require less capital expenditures (CAPEX) and operational expenditures (OPEX) than traditional vertically offered services. Furthermore, the promise of Legacy Interworking MGCF OMA CS Domain (TDM) SS7 MGW PSTN PLMN converged services is that they will lead to higher average revenues per user (ARPUs), as they are offered with the same look and feel over different network access and can be used with various devices which leads to an ease of use and increased usage of these services. Examples for converged services Table 1 categorises converged services into four groups: fun and recreation, private Table 1 Converged services categories Service Categories Fun and Private Business Life Recreation Communication Communication Management Sub Categories Entertainment Messaging IP Centrex Personal organiser Capturing life Multimedia Messaging Personal advisor Telephony Play Community services Collaboration and Information services Conferencing Service Examples Chess now Push to talk Videoconferencing Network-based address book Football online Instant messaging Voice conferencing Network-based calendar Document sharing 105

4 Figure 5 End-user segmentation communication, business communication, and life management. In order to demonstrate the benefits of converged services, we will describe the network-based address book (NAB) in more detail. The NAB is a fundamental product enabling telecom operators to increase ARPU by making personal data available always consistent and up-to-date on any device in any network. The user has one interface to maintain personal contacts. The data is synchronised via a standardised interface such as SynchML, also used by the Open Mobile Alliance (OMA). The NAB answers end-users needs to copy and secure their personal data in case they get a new mobile phone, their mobile phone breaks or is lost. It furthermore answers the need to synchronise contact data for the various devices and services such as between computer, mobile phone, and fixed phone. Market research 2 has shown, that end-users would pay up-to 2.50/month for a NAB. End-User Expectations and Service Attractiveness End-user segmentation A representative study for Germany and Italy was conducted in November 2004 (Siemens 2004) and 1001 end-users were interviewed via computer-assisted telephone interviews (CATI) within Germany and Italy, respectively. The results of Involvement (Degree of personal relevance of mobile services to customers) High Low Progressives (4%) Business Users (14%) Basic (20%) Cognitive: functional/epistemic/situational Source: Siemens Research, 2004 this survey are briefly presented in the following. Figure 5 shows the end-user market segmented into six different market segments according to their different needs. The segments consumer mainstreamers, consumer basic communicators, consumer mobile generation, business users, consumer young socials, and consumer progressives have different needs and desires within the direction of relevance of the use of mobile services and the degree of Mainstreamers (37%) Motivation Western Europe Mobile (15%) Young Socials (10%) Affective: social/emotional different motivation which has been grouped from cognitive to affective. The various segments and sought benefits are further demonstrated in Table 2. The characteristics such as average age, time on the move and needs have been listed in Table 2. The customer expectations can be concluded from the different needs. Overall, end-users expect to save costs for basic services such as voice, while they are only willing to pay for new services if a service provides a clear value to them. Table 2 Segmentation, characteristics and needs Segment Business Progressive Mobile Mainstreamer Young Social Basic Segment size 14% 4% 15% 37% 10% 20% Average age 42.6 years 36.6 years 33.1 years 37.8 years 21.7 years 61.1 years Education n.a. High Mid-high Mid-low Medium Low Working status Employees, Employees Employees, Employees, Students, Retired, self-employed students retired employees employees Annual household income ( ) Time on the 4.8 h/week 5.0 h/week 7.0 h/week 3.8 h/week 8.1 h/week 3.2 h/week move Leisure time n.a. Listening to music, Active: Sports, Sports, TV, Very active: Outdoor activities, activities surfing the Internet, TV/movies, reading... Sports, TV/ TV, reading, shopping, dancing, dancing, music, movies, dancing, taking care of TV... Internet... music,... children Needs Ubiquitous use Always being Personalisation. Convenience, Lower costs, Availability, of resources, always informed, efficient new services, one availability independence, convenience being informed, and effective device for all personalised effective and communication services, new efficient services communication 106

5 Table 3 Service category attractiveness to end-user segments Segment Business Progressive Mobile Mainstreamer Young Social Basic Fun and Low Highly Highly Medium Highly Low recreation attractiveness attractive attractive attractiveness attractive attractiveness Private Low Highly Highly Medium Highly Medium communication attractiveness attractive attractive attractiveness attractive attractiveness Business Highly Low Low Low Low Low Communication attractive attractiveness attractiveness attractiveness attractiveness attractiveness Life Low Highly Highly Medium Low Medium Management attractiveness attractive attractive attractiveness attractiveness attrractiveness In the next section, these needs are mapped to the service examples described and the service attractiveness to each segment is determined. Attractiveness As demonstrated in Table 3, the attractiveness to use particular services is different for every end-user segment. The business services apply to business users only. Here the different businesses and particular services could be further distinguished. For the progressive user, with the need to always be informed and to communicate as efficiently and effectively as possible, communication-based services such as messaging and video telephony and life management are highly attractive. Furthermore, fun and recreation services such as video on demand (VoD), personalised TV, and audio on demand (AoD) are highly attractive. End-users in the mobile generation segment have the need to have services available wherever they are and to personalise services. They are also interested in the latest information and do not want to miss anything. Therefore, life management is highly interesting to them. Also communication-based services such as presence-based IM and fun-and-recreation services are highly interesting to them. The young social group are especially interested in entertainment, games, and community-based communication services such as chat. Abbreviations 3GPP 3rd Partnership Project ARPU Average revenue per user AoD Audio on demand CAPEX Capital expenditures CATI Computer-assisted telephone interviews CDMA Code division multiple access CPE Customer premises equipment CS Circuit switched CSCF Call session control function DSL Digital subscriber line EDGE Enhanced data rate for global evolution The least interesting subjects for converged services are the mainstreamers and basic communicators. The mainstreamers are followers and should be addressed with new services once services have proven to be successful in other segments. Conclusions This paper has described fixed-mobile convergence from various perspectives. In summary, FMC addresses some of the key challenges for fixed and mobile network operators: to offer attractive services to endusers that generate new revenues and to provide a sustainable competitive advantage to end-users in order to cope with churn. Converged services are very attractive to the different end-user segments, as they are ubiquitously available and provide the same user experience. With this, they fulfil the end-user desires for simplification and seamless availability of services. References 1 ABI Research. Enterprise to drive dual mode cellular/voice over Wi-Fi Handsets. 22 April Zelos Research ETSI European Telecommunications Standards Institute FMC Fixed-mobile convergence FMCA Fixed-Mobile Convergence Alliance GSM Global system for mobile communication HSS Home subscriber server IM Instant messaging IMS IP multimedia subsystem MGCF Media gateway control function NAB Network-based address book OMA Open Mobile Alliance OPEX Operational expenditure OSS Operations support system PoC Push-to-talk over cellular Biography Siemens AG joined Siemens AG in 1998 on a two-year Siemens Graduate Programme where he undertook activities in system test for broadband ATM and IP products in Munich, Germany, and Kanata, Canada. Following positions in Latin American sales in Munich and Buenos Aires, Argentina, he joined the Next Network Group in Boca Raton, USA, as business manager for the RBOC and IXC market. He returned to Munich in 2002 functioning as Senior Business Development Consultant for next-generation applications. Since September 2004, he has been acting as a senior project manager for fixed mobile convergence projects for major European incumbents. He received his degrees in Computer Engineering from the University of Paderborn, Germany, and the University of Waterloo, Canada, and is currently pursuing a Master of Business Administration (MBA) at Henley Management College, UK. PS Packet switched RoA Return on assets Session initiation protocol TISPAN Telecommunications and Internet converged Services and Protocols for Advanced Networking TDM Time division multiplexing UMA Unlicenced mobile access UNC UMA network controller UMTS Universal mobile telecommunications system VoD Video on demand VoIP Voice over Internet protocol WLAN Wireless local area network 107

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