Telcos, Vendors Battle Over Gateway

MADRID – Broadband World Forum Europe – Some of the world's biggest telecom operators have identified a new triple-play battleground: the home gateway that sits between the network and the customer's home, through which they hope to deliver a broad range of IP-based multimedia services.

But they're facing an almighty struggle with equipment firms to get what they want, when they want it, and at the price they want it.

The carriers want sophisticated devices that can perform multiple functions beyond the capabilities of today's residential gateways, and so have become involved in a new industry body, the Home Gateway Initiative (HGI).

The HGI, formed in December 2004 by a group of nine operators -- eight European incumbents and Japanese giant NTT Communications Corp. -- now has 56 members, a mix of service providers, chip vendors, and equipment manufacturers. (See Motive Joins Home Gateway Initiative.)

The service provider members include BT Group plc (NYSE: BT; London: BTA), Deutsche Telekom AG (NYSE: DT), France Telecom SA (NYSE: FTE), Telecom Italia SpA (NYSE: TI), and Spain's Telefónica SA.

That's a heavyweight brigade of carriers, which shows how seriously they are taking this issue. Graham Finnie, senior analyst at Heavy Reading, says the home gateways issue "has been one of the major themes at this week's event, and that's because these products are extremely strategic to service providers because of their importance in delivering a whole new range of services. But it's a very complex issue, and the specifications the HGI has in mind could be difficult to deliver at an acceptable price point."

That pricing issue is set to be a major pain point. The industry group will shortly deliver a broad set of home gateway specifications to the vendors of next-generation residential customer premises equipment. That wish list of capabilities will include support for fixed, mobile, and wireless LAN services, as well as security features, device management, and QOS, to name but a few.

Currently, says Telecom Italia project manager Paolo Pastorino, who is also the HGI's CTO and chief business officer, "all major operators providing triple-play services are having to work with non-standardized gateways." He says the products currently available are too complex for the average user to use, do not help deliver guaranteed levels of service, and can't keep up with the current rapid changes in technology.

The HGI's carrier members believe that gateways meeting those specifications will help them efficiently deliver multimedia services over a broadband connection. And Pastorino says they want these gateways to be available at between €50 ($60) and €70 ($84) per unit.

That price, however, is causing consternation even among the HGI's own vendors members. Vaughn Armstrong, marketing director at gateway provider Westell Ltd., says "our engineering guy came back from last week's HGI meeting and estimated that to build a product to the expected specifications would cost about €1,000 [$1,200]."

The HGI's specifications will be issued internally for discussion within the next few weeks, says Pastorino, and the first full set will be sent to HGI members before the end of the year. They'll then be distributed externally in the first quarter of 2006.

— Ray Le Maistre, International News Editor, Light Reading

mrblobby 12/5/2012 | 2:58:40 AM
re: Telcos, Vendors Battle Over Gateway This debate is meaningless without the specs; what are they? They don't seem to be available from the HGI's website.

The white paper that is available there does not seem to impose too expensive a hardware platform; a Soekris SBC (Gé¼150) running Linux or FreeBSD (Gé¼0) and a DSL modem (Gé¼30) might do it.
digits 12/5/2012 | 2:58:40 AM
re: Telcos, Vendors Battle Over Gateway From the Gé¼50 to Gé¼70 price point the carriers want and the Gé¼1,000 that at least one vendor believes the HGI-speccded gateway will cost is a MASSIVE disparity, unless you wait 10 years.

What will have to give? The HGI on price, the HGI on the depth of its specifications, or the vendors?
paolo.franzoi 12/5/2012 | 2:58:39 AM
re: Telcos, Vendors Battle Over Gateway
The basic issue is that the HGI will have to go away.

Too may cooks lead to products that have too many features to cover too many products. Think of a very small God Box.

I think the telcos are beginning to discover that these new low cost high performance networks are actually high performance networks.

So, it is the specs that have to give. The vendors can't give. The Price is required to make the business case.

jayja 12/5/2012 | 2:58:37 AM
re: Telcos, Vendors Battle Over Gateway ... they are betting on the same response as FTTP at Verizon. Set specifications as close to standards as possible and count on at least one vendor buying the business with kamikazee pricing, whether that vendor has a product or not.
wwatts 12/5/2012 | 2:58:31 AM
re: Telcos, Vendors Battle Over Gateway One more thing. Each service provider are going to have to purchase 1M+ boxes a year to get anywhere near the price points I mentioned in the previous post. You have to deploy like you mean it to get an economical home box.
wwatts 12/5/2012 | 2:58:31 AM
re: Telcos, Vendors Battle Over Gateway RLM writes:

"From the Gé¼50 to Gé¼70 price point the carriers want and the Gé¼1,000 that at least one vendor believes the HGI-speccded gateway will cost is a MASSIVE disparity, unless you wait 10 years.

What will have to give? The HGI on price, the HGI on the depth of its specifications, or the vendors?"

All 3. The HGI is going to have to raise its price point (1.5x to 2x depending on whether the interface to the service provider is copper or fiber), the HGI is going to have to reduce its specs especially on multiple interface requirements where the cost can't integrated via silicon or software, the vendors are going to have to produce a product that can be sold for Gé¼140 or less (Gé¼100 if it's a copper interface to the service provider) or it won't be economical for mass deployment.

Sure some vendor may jump at the potential business and make a low ball bid, but service providers are going to find it tough to deploy with a bankrupt vendor who can't afford to fix their bugs.
ymchu 12/5/2012 | 2:58:28 AM
re: Telcos, Vendors Battle Over Gateway Why don't you imaging there is a full function x86 computer being the gateway? How much is it? $500 or $400? Then you transfer to a RISC platform. This is not practical or this is a way to think.
gottappp 12/5/2012 | 2:58:21 AM
re: Telcos, Vendors Battle Over Gateway Pick 2.
stephencooke 12/5/2012 | 2:55:46 AM
re: Telcos, Vendors Battle Over Gateway One thing that seems to be lacking is that a totally new business model is necessary to make the HGI realizable.

This is no longer in the realm of consumer pays for the box and takes it with them when they leave (as various carriers will undoubtedly use different suppliers, which leads to different standards non-compliances, etc.). As standards evolve there will be many significant issues that have to be dealt with that will vary from carrier to carrier. So it seems that, once again, we find ourselves in the mode of CPE demarcation (ie: the network demarcation point is the new gateway which, for cost reasons, is likely to be inside the residence).

So, the carrier now has to own the CPE. If we now throw in the MS business model of replace every 2 years while increasing memory and processing power...this gets ridiculous very quickly.

This makes the already expensive network upgrade scenario (eg: FTTx) totally obscene. Costs have to be more like telecom equipment than computing equipment. The MS model doesn't fly. The small 'God box' actually makes sense, particularly if it can last for more than 5 years in the network. The question of initial first cost and installation still has to be addressed. If the carriers can 'break the box' and do a cost-sharing venture with local utilities (read: Automatic Meter Reading - AMR) such that the gateway stays with the residence, not the consumer. There is winning all around.

The keys here include:
- expandibility for future services offerings,
- wireless interface so that the optional features/services can be added only where necessary
- increase reliability for the individual consumer (ie: multiple communications paths to the network)
- high bandwidth using existing cabling infrastructure
- communications security (ie: firewall/VPN)
- etc.

This is not a new individua product offering but a whole new communications network architecture at every level. As such, credit will be dispensed to those who can minimize the pain...

stephencooke 12/5/2012 | 2:54:06 AM
re: Telcos, Vendors Battle Over Gateway Does anyone know what the minimum bandwidth to these gateways is assumed (eg: 4MB/s, 8MB/s, etc)? Also, what are the planned physical interfaces (RJ11, WiMax, WiFi, etc.)?


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