Mobile Core Wars
With unrelenting traffic growth, falling price per minute, and ambitious plans to win yet more business away from beleaguered wireline providers, mobile operators are looking hard at how to reduce the underlying costs of their networks in an effort to maintain profitability -- or at least, actively manage the inevitable long-term decline in profit margins.
And with voice services still representing around 80 percent or more of revenues across the wireless sector, operators are re-evaluating their voice switching infrastructure. Many have chosen to cap investment on the "classic" circuit-switched mobile switching centers (MSCs) that power today's voice core networks, and focus new money on cheaper, more efficient mobile softswitch architectures.
No matter where an operator is in the world -- the need for action is clear, finds the new Unstrung Insider report, Wireless Softswitching: Mobilizing IP. Consider these three examples:
Managing this dynamic of increasing traffic and lower prices is clearly a challenge that involves many aspects of operating a network and marketing services. In the core network specifically, it involves a transition from monolithic, circuit-switched MSCs interconnected by a mesh of TDM pipes to a distributed packet-switching architecture that separates the control plane from the user plane through the deployment of call servers -- known as MSC servers -- and media gateways.
This architecture, defined by 3rd Generation Partnership Project (3GPP) ’s (3GPP) Release 4 Bearer Independent Core Network (BICN) specifications (see: TS 23.205), is said to provide a range of operating efficiency benefits for the operator that derive from independent scaling of the user and control planes and the introduction of new, more powerful hardware. The pitch from network equipment providers is that these R4 products can lower transport costs; reduce power and floor space requirements; save on operations and maintenance personnel; and ultimately result in more streamlined networks with fewer high-value, complex pieces of equipment to support.
Based on operator interviews for the report, some of these benefits are gradually becoming apparent. From the operator side, the real benefit today, however, is that this new technology is driving substantially lower prices per port on new equipment, whether it be deployed in fast-growing GSM networks in emerging markets or in mature networks for combined 2G/3G core networks, as operators seek the most cost-effective migration to 3G systems.
But while it looks great on PowerPoint, the actual implementation of softswitch equipment in the mobile voice core is still fraught with challenges.
In many instances the business case is hard to justify, especially for mature Tier 1 operators in densely population areas such as Western Europe. There is a view that distributed switching over a packet core was devised at a time when leased lines were expensive, and now that transport prices have fallen, it's difficult to make a short-term return on investment case for a rip-and-replace strategy.
Some of the interfaces included in the standards are also still not well defined enough to enable true interoperability between equipment suppliers. Most significant is the proprietary nature of vendor implementations of the "Mc interface" between call server and media gateway, which means an operator cannot yet select an MSC server from Vendor A and a media gateway from Vendor B if that configuration best suited its needs.
Although the equipment suppliers would deny it, the technology itself is still immature and unfamiliar, with some operators (rightly or wrongly) concerned that it is not always as reliable as the circuit-switched MSCs it seeks to replace.
Despite these concerns, however, it's clear that mobile softswitching will ultimately be as disruptive to the mobile infrastructure market as the transition from circuit to packet architectures has been in the wireline voice equipment market. Already in 2005, capacity for tens of millions of subscribers was shipped and installed, and all signs point toward demand accelerating through 2006.
— Gabriel Brown, Chief Analyst, Unstrung Insider
The report, Wireless Softswitching: Mobilizing IP, 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.
And with voice services still representing around 80 percent or more of revenues across the wireless sector, operators are re-evaluating their voice switching infrastructure. Many have chosen to cap investment on the "classic" circuit-switched mobile switching centers (MSCs) that power today's voice core networks, and focus new money on cheaper, more efficient mobile softswitch architectures.
No matter where an operator is in the world -- the need for action is clear, finds the new Unstrung Insider report, Wireless Softswitching: Mobilizing IP. Consider these three examples:
- At Cingular Wireless , minutes of use per subscriber increased 17.8 percent between the fourth quarter of 2004 and the fourth quarter of 2005, yet, over the same period, average revenue per user (including data revenues) decreased by 1.3 percent.
- At Vodafone Germany , total minutes of use across the network increased 17.6 percent between the second quarter of 2004 and the fourth quarter of 2005. Unstrung Insider calculates that voice revenue declined by 1.2 percent.
- In India, according to research firm IHS iSuppli , price per mobile minute has fallen from a peak of around 50 cents per minute in 2003 to just 2 cents per minute at the end of 2005, even as subscriber growth has exploded by 47 percent in 2005 to reach approximately 75 million.
Managing this dynamic of increasing traffic and lower prices is clearly a challenge that involves many aspects of operating a network and marketing services. In the core network specifically, it involves a transition from monolithic, circuit-switched MSCs interconnected by a mesh of TDM pipes to a distributed packet-switching architecture that separates the control plane from the user plane through the deployment of call servers -- known as MSC servers -- and media gateways.
This architecture, defined by 3rd Generation Partnership Project (3GPP) ’s (3GPP) Release 4 Bearer Independent Core Network (BICN) specifications (see: TS 23.205), is said to provide a range of operating efficiency benefits for the operator that derive from independent scaling of the user and control planes and the introduction of new, more powerful hardware. The pitch from network equipment providers is that these R4 products can lower transport costs; reduce power and floor space requirements; save on operations and maintenance personnel; and ultimately result in more streamlined networks with fewer high-value, complex pieces of equipment to support.
Based on operator interviews for the report, some of these benefits are gradually becoming apparent. From the operator side, the real benefit today, however, is that this new technology is driving substantially lower prices per port on new equipment, whether it be deployed in fast-growing GSM networks in emerging markets or in mature networks for combined 2G/3G core networks, as operators seek the most cost-effective migration to 3G systems.
But while it looks great on PowerPoint, the actual implementation of softswitch equipment in the mobile voice core is still fraught with challenges.
In many instances the business case is hard to justify, especially for mature Tier 1 operators in densely population areas such as Western Europe. There is a view that distributed switching over a packet core was devised at a time when leased lines were expensive, and now that transport prices have fallen, it's difficult to make a short-term return on investment case for a rip-and-replace strategy.
Some of the interfaces included in the standards are also still not well defined enough to enable true interoperability between equipment suppliers. Most significant is the proprietary nature of vendor implementations of the "Mc interface" between call server and media gateway, which means an operator cannot yet select an MSC server from Vendor A and a media gateway from Vendor B if that configuration best suited its needs.
Although the equipment suppliers would deny it, the technology itself is still immature and unfamiliar, with some operators (rightly or wrongly) concerned that it is not always as reliable as the circuit-switched MSCs it seeks to replace.
Despite these concerns, however, it's clear that mobile softswitching will ultimately be as disruptive to the mobile infrastructure market as the transition from circuit to packet architectures has been in the wireline voice equipment market. Already in 2005, capacity for tens of millions of subscribers was shipped and installed, and all signs point toward demand accelerating through 2006.
— Gabriel Brown, Chief Analyst, Unstrung Insider
The report, Wireless Softswitching: Mobilizing IP, 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.
