Ericsson Faces Switch Battle
The report – “Wireless Softswitching: The Next-Gen Mobile Core” – finds the Swedish company enjoying top spot in the mobile softswitch market, but facing a growing threat from its traditional network rivals.
At the core of every mobile network is a digital voice switch, known as a mobile switching center (MSC), which is charged with processing and forwarding voice calls. However, such circuit-switched voice technology is slowly reaching the end of its life, as mobile operators seek to address the demands of massive subscriber growth and huge increases in voice traffic. In its place are emerging layered softswitch architectures, based on an IP core network.
The mobile softswitch concept splits the classic MSC into two functional components: centralized MSC servers, which handle mobile call control, and media gateways (MGWs), which process user-plane traffic and are distributed towards the edge of the network (or wherever is most appropriate). In the GSM/UMTS world, this architecture is defined by the 3rd Generation Partnership Project (3GPP)’s Bearer Independent Circuit-Switched Core Network specifications (see this document for more details: TS 23.205 (PDF 1.2MB)).
There are many factors driving operators to adopt softswitching, but foremost is the conviction that it will be cheaper and more efficient for carriers to transport all traffic (voice, data, and internal operations) over a common IP core, instead of operating parallel voice and data networks. It offers a long-term strategic advantage to operators and vendors as they migrate to data services, likely to be deployed using IP multimedia subsystem (IMS) and service delivery platform (SDP) technologies (see IMS Guide and Carriers Buy Into SDPs).
Ericsson appears to have already carved out a leading position in the market. “In May 2005, Ericsson said it had more than 20 live mobile softswitch networks, with more than 100 MSC servers and 500 MGWs in operation,” notes report author Gabriel Brown. “To gauge the rate of progress: In January 2005, the vendor said it had 18 live networks, with a total of 30 MSC servers and 100 MGWs deployed. It appears then, that existing customers have become comfortable with the technology and have started to ramp up the volumes of their orders…. At a run rate of 80-100 MGWs a month over this period, Ericsson seems moderately ahead of its competitors.”
“There are several huge factors working in Ericsson’s favour in the mobile switching market: experience, scale, and relationships. These advantages are enhanced by the growing trends, especially among smaller operators, towards single-sourced core networks and the outsourcing of network operations to managed service providers.”
However, Brown warns that “like the top gun in a frontier town, everyone is out gunning for market leader Ericsson,” citing Alcatel (NYSE: ALA; Paris: CGEP:PA), Huawei Technologies Co. Ltd., Motorola Inc. (NYSE: MOT), Nokia Corp. (NYSE: NOK), and Nortel Networks Ltd. (NYSE/Toronto: NT) as strong contenders.
In particular, Alcatel and Motorola – historically weak in mobile core switching – have both made acquisitions to get their hands on MSC server technology and have won deals at T-Mobile USA and Vivo in Brazil, respectively (see Alcatel Lands Spatial for $250M, Motorola Eats Winphoria, and T-Mobile Picks Spatial Tech).
“Much of what we hear on the grapevine is likely intended to generate FUD (fear, uncertainty, doubt) around Ericsson’s strategy,” adds Brown.
— Justin Springham, Senior Editor, Europe, Unstrung
The report, Wireless Softswitching: The Next-Gen Mobile Core, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,350. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider