|Asia-Pacific II 2005
|Maximizing the value of carrier-grade VoIP networks in Asia
|Dr Konstantin Nikashov
Dr Konstantin Nikashov is the CEO of MERA Systems. Konstantin joined MERA Group as the VP of Business development and built a 400-people strong off-shore programming lab, a pioneering private business in post-Soviet Russia, which engaged in software development for Nortel, Cisco Systems and others. A few years later he co-founded MERA Systems, a leading VoIP solutions vendor with over 350 deployments worldwide. Konstantin holds an MSEE and a PhD in Telecommunications.
In Asia, Voice over IP (VoIP) now generates 600 billion traffic minutes/year. Growth depends upon upgrading networks, using softswitches to efficiently handle IP traffic and new features. Residential VoIP growth is driven by voice call savings, but businesses will derive even greater benefits when IP Multimedia Subsystem (IMS) becomes commercially available. IMS integrates traditional and multimedia services in any combination using any access channel. IMS unites wireless and wireline, voice, text and images providing enhanced services via any transport network.
Voice over IP (VoIP) is gaining momentum in Asia, the world’s largest telecommunications market. VoIP traffic will reach 600 billion minutes, generating revenues of US$48 billion in 2006, predicts IBC Asia. The region already accounts for roughly one third of the global VoIP traffic, and this share will continue to grow spurred by the growing economy, deregulation and a sweeping technological surge. This implies that the number of carriers involved in VoIP will also continue to increase and that the business playground will get ever more competitive. Existing carriers, to compete and survive, keep looking for ways to drive down costs and create new revenue streams. To keep above the waterline in the sea of VoIP, carriers should observe two conditions. First, they must choose a viable business model and, second, power it with forefront technology. Wholesale switching and retail service delivery are the most common types of service provider businesses; each has its own benefits and pitfalls. Let us explore their implications for carriers in Asia and worldwide. Model one: VoIP wholesale switching The essence of this business model is traffic exchange, or peering, with other carriers. Initially, the key driver for this type of operation was toll bypass for long distance calling. As new players join the game, though, profit margins are getting thinner, and wholesalers have to constantly devise new, more efficient, ways to stand out in a crowd. One way is to join the hot trend of fixed-mobile convergence, which is already transforming the competitive landscape for VoIP players beyond recognition. Mobile operators partner with VoIP wholesalers to send their mobile long distance traffic over IP, now a very common partnership model for VoIP operators throughout the world. The goal is to reduce mobile roaming costs. Another luring trade for wholesalers is to become a Mobile Virtual Network operator and resell a mobile carrier’s services under its own brand, purchasing airtime at wholesale rates. In brief, convergence of the wireless and wireline domains opens new and exciting ways to serve the end user, thereby preserving viability of VoIP wholesaling. The underlying technology, the technology you rely on The VoIP wholesale model, including the fixed-mobile convergence scenario, is enabled by class four switching systems, softswitches and session controllers. Both terms are interchangeable, with the exception that softswitches may also provide VoIP-to-PSTN (Public Switched Telephone Network) connectivity. Softswitches ensure that every phone call reaches its destination by handling the call routing, network protection and access control. Softswitches have evolved into complex, end-to-end management systems that control the operations of the entire VoIP network. A mature, well designed, softswitch can and should be an instrument for driving costs down and margins up. These are the main features a softswitch should perform as a revenue-generating tool on a carrier-grade network. Perform intelligent VoIP routing to increase profits Dynamically, switching between routes to obtain the best cost-performance ratio can significantly improve call quality and raise profit margins by as much as 30 per cent, according to carriers’ testimonies. Furthermore, best-designed softswitches provide a real-time interface with billing systems, which store a wealth of up-to-date information related to routes, their prices and quality. Interaction with billing systems can significantly enhance the routing capability of a softswitch to enable Least Cost Routing (LCR), Quality of Service Routing (QoSR) and other traffic handling features. Enforce QoS and SLA policies to improve customer satisfaction Softswitches monitor QoS (Quality of Service) parameters across the VoIP network detect performance degradation and route calls to circumvent the network portions with unacceptable quality, thereby providing Service Level Agreement (SLA) assurance and delivering PSTN-like call quality. The ability to dynamically switch between routes with different performance levels allows application of differentiated QoS policies to different customer groups and enables creation of customer-driven, competitive service offerings. Ensure carrier-to-carrier and carrier-to-enterprise connectivity A quality softswitch allows service providers to interconnect with any carrier-grade or enterprise network, irrespective of the protocol or equipment type. Such inter-working capabilities are needed to ensure direct VoIP connectivity of carrier-grade equipment and enterprise IP PBXs, allowing for correct processing of vendor-specific telephony features and services. In a nutshell, the softswitch is a comprehensive network management solution that bridges ‘islands of VoIP’ into an integrated, truly next-generation communication structure. Simplify network structure for cost savings and ready scalability As a central traffic concentration point, the softswitch collects calls from multiple on-net and off-net gateways and gatekeepers. It provides a convenient substitution for back-to-back gateway topology, which delivers around 50 per cent capital expense savings and over 30 per cent in operation costs due to centralized network administration. When choosing a softswitch solution, make sure that the scalability path is well defined and does not involve uncontrollable growth of network costs and complexity. Keeping costs low is a critical requirement for any wholesale business and it is especially true for Voice over IP. Model two: value added services positioned for growth Simple cost savings was only the first, introductory, driver of VoIP. The true potential and the most profitable application of converged networks are in the many features and value added services delivered over IP. Even though VoIP in Asia-Pacific is to a large extent cost-driven, carriers are already turning their attention to service creation and enhanced applications that will keep customers loyal and increase Average Revenue per User (ARPU). To power next generation service delivery, carriers need a truly next generation technology that enables new services come to market quickly and cost-efficiently. There are a few basic points operators should consider when choosing a service platform: Make sure that the platform software is decoupled from hardware Traditional, old-generation service platforms are hardware based. It means that no new functionality can be added, upgrades are next to impossible, and interworking with other equipment is a tricky issue. Be sure to choose a VoIP-based, software solution that can be installed on standard hardware ready for enhancement and upgrades. Some of today’s best-of-breed service platforms enable carriers to easily add and remove services, or order tailored applications from a vendor, a process that can dramatically reduce time-to-market and allow carriers to quickly come up with very competitive offerings. The platform should support more than one type of service Bundling works well with carrier-grade equipment. Just as in any business, it is definitely an advantage if you can satisfy many of your customers’ telecom needs using a single platform, a winning strategy both in terms of capital costs reduction and the ease of operation. Deliver services that make a difference to your customers For residential users toll bypass remains a major compelling argument for VoIP adoption. Enterprises, in addition to cost reduction, want innovative and attractive services to maximize their business efficiency. IP based platforms support a wide variety of applications including automated call centres, unified messaging, presence management, video and web conferencing and many others. Furthermore, applications like IP Centrex, or central office exchange, create additional value for carriers and their customers. Telecom services available on a hosted basis are a viable alternative to privately-owned solutions. By outsourcing their telecom needs, enterprises can significantly reduce capital costs and IT headcount. Also, they will no longer need to maintain their ageing telecom equipment, since all the recent features come directly from their service providers. Asia already accounts for almost 30 per cent of the world’s IP Centrex lines. If marketed in an efficient manner, hosted services can make up a significant share in service provider revenues in Asia-Pacific countries. Another application that is gaining popularity with business users is the so-called Virtual Phone Number, a one-number communication service that combines all existing phone numbers into a single digital destination, which ensures that the subscriber can be reached at any location, any time. It does not matter where the subscriber is at the moment, or what kind of device the person is using – a mobile handset, a PSTN phone, an IP phone or any other endpoint. All calls are forwarded to the subscriber’s dedicated phone number. The Virtual Phone Number is a very promising service given the growing importance of teleworking and user mobility. The future of VoIP is enabled by IMS Carriers striving to increase revenues and reduce churn are watching a new wave of convergence technology called IP Multimedia Subsystem (IMS). IMS provides a new way to create easy to use, integrated bundles of traditional and multimedia services, including voice, text, pictures and video, in any combination and over any access channel. Push-to-talk, real-time video sharing, interactive gaming, instant messaging – these are just some of the possible applications of IMS. IMS aims to unite the wireless and wireline domains, making new enhanced services available to users irrespective of the transport network they are currently using. Even though there is no consensus about when IMS will be commercially deployable, the predictions range from late 2005 to 2009, the technology is likely to play a significant role in further development of IP communications. In other words, IMS is taking VoIP to the next level of fixed-mobile convergence described earlier in this article. The good news is: to deliver IMS capabilities carriers don’t have to discard their existing equipment. IMS is built around the IP technology and uses the SIP protocol in the core network. Furthermore, both softswitches and service platforms fit very well into this new framework. They are redeployed to support multiple applications. IMS is built around three horizontal layers, which to a certain extent resemble today’s VoIP network architecture: √ Connectivity layer: comprises routers and switches both for the backbone and the access network; √ Session control layer: allows endpoints to register with the network and setup sessions between them. For IMS, one of the critical requirements for these systems is the ability to control Quality of Service (QoS) and enable interworking between network devices. This is already implemented in today’s best-of-breed softswitches and session controllers; √ Application server layer: utilizes application and content servers to deliver various enhanced services. Some of today’s VoIP-based intelligent service platforms fit well into the IMS model as key service enablers. Naturally enough, there are still many technical issues to resolve before IMS becomes commercially deployable, such as interoperability and compliance with the requirements defined by the 3rd Generation Partnership Project, 3GPP, the creators of IMS. Analysts predict that, given the fast pace of telecom growth in Asia-Pacific, it will become the global showcase for convergence, and carriers from all over the world will look to the region for success stories and new competitive business models. It means that, starting today, carriers must deploy advanced VoIP technologies to prepare for a new, all-IP world full of unrivalled telecom opportunities.