Professional Documents
Culture Documents
MOBILE
EUROPE
ALSO INSIDE:
THE VOLTE STORY
of openness that lead to a new value chain that can actually benefit operators
HUAWEIS SDP
talks to Keith Dyer about operators SDP needs, and Huaweis ability to meet them
P34
Exclusive
FEMTOCELL MARKET
report inside
P36
P39
Contents
April/May 2010
How operators can develop and benefit from a new value chain
INSIGHT REPORT
INTRO: FEMTOCELLS MARKET @ CROSSROADS
A few years ago, widespread femtocell adoption formed the basis for a (not that funny) joke. But femtocells are now no laughing matter. Jarich introduces a college course with no exams.
15 16 18 20 21 22
The femtocell itself, and its place in the network. What is in a femtocell, and what else is required in its operation, management and deployment.
REGULARS
EDITORIAL
04 06
Keith Dyer guides you through Mobile Europes relaunch, and introduces the first of our Insight Reports.
DIARY
42
FEATURES
THE VOICE OVER LTE STORY
25
34 36
The GSMAs director of technology Dan Warren tells the inside story of the move to VoLTE
LEAD INTERVIEWS
HUAWEI
39
Huaweis Lance Lin on his companys award-winning position in the SDP market.
Mobile Europe | 3
Comment
editor: keith dyer
You will notice a few changes to Mobile Europe in this issue both to how we now look, and to the content of the magazine. Im very excited to announce, with this issue of Mobile Europe, a relaunch of our proposition. What you see is the result of a lot of work, consultation and plain old-fashioned hard thinking about what Mobile Europe should be. Back at the turn of 2009 and 2010 we carried out extensive reader research. We asked how you accessed and used Mobile Europe, across our online and print presence. We asked what it was you wanted to see the print issue achieve, and what sort of things you wanted to read in it. And we asked you if you even wanted to receive a print issue at all. Was it worth it, we asked you, still producing print issues in this instant, 24 hour, Twitterinformed media market? The first answer you gave us was yes, you still want to receive a printed issue. This was a completely overwhelming response up above 90% of those polled. So the question then became what is the print issue for given the current media landscape? You were kind enough to say that you like what we do already, but also honest enough to point out possible improvements. If a trend was obvious, it was that many of you asked us for more detailed analysis of a particular market, or geography, or service area. And this makes sense for a print product. Its a format that rewards depth. So, in an age when many publishers are shutting their print products, we have taken the bold but informed step of redoubling our commitment to the format, and to the European mobile market. First off, we are putting our own money where our intentions are. So for every issue of Mobile Europe we will commission, at our own expense, an independent report or piece of bespoke research from a leading analyst in a certain field. We call this series Mobile Europe Insight Report. This issues Insight Report is into the femtocell market. Through the rest of this year future In an age when many we will cover LTE, mobile money, backhaul publishers are shutting their and cloud services. Around these core reports we will programme a series of webinars, surveys, polls and operator interviews, as well as feature the industrys own opinion and thought leadership. We ask you to get involved in this programme, to drive Mobile Europe into becoming a truly valuable and lasting resource for the industry. You will see a redeveloped website also support these programmes. Further, our print issues will still offer you the pick of the best news, and our features will be even more focussed on operator business models and strategies. Again this is something you asked for. Id like to ask you to stay in touch with us after youve read this issue, so we can continue to give you, the European mobile industry, what you require and desire.
MOBILE
EUROPE
Editor: Keith Dyer keith.dyer@stjohnpatrick.com Direct tel: +44 (0) 203 007 0020 Web editor: Robert Riggs robert.riggs@stjohnpatrick.com Production Manager: Tania King Publisher: John Owen john.owen@stjohnpatrick.com Direct tel: +44 (0) 20 7933 8972 Publishing director: Chris Cooke ISSN: 1350 7362 Free Subscriptions Mobile Europe is a controlled circulation monthly magazine available free to selected personnel at the publishers discretion. If you wish to apply for regular free copies then please write to: Database Services St John Patrick Publishing Ltd PO Box 6009, Thatcham, Berkshire, RG19 4TT. Tel: +44 (0) 1635 879361 Email: mobileeurope@circdata.com or register free online at: www.mobileeurope.co.uk Paid Subscriptions Readers who fall outside the strict terms of control may purchase an annual subscription . UK 1 Year - 96. International 1 Year - 120. Subscription enquiries should be sent to: Saint John Patrick Publishers PO Box 6009, Thatcham, Berkshire RG19 4TT United Kingdom Tel: +44 (0)1635 879361 Fax: +44 (0) 1635 868594 Email: mobileeurope@circdata.com Web: wwwmobileeurope.co.uk
The views expressed in Mobile Europe are not necessarily those of the editor or the publisher. Mobile Europe is published by Saint John Patrick Publishers Ltd, 6 Laurence Pountney Hill, London EC4R 0BL.
4 | Mobile Europe
News
barcodes l mobile broadcast l briefs
I The GSA says 2,349 HSPA user devices have been launched by more than 230 suppliers, with 610 devices announced in the last 6 months alone. In the notebooks and netbooks segment, 432 products are equipped with HSPA embedded as standard or optional, and 10 HSPA-enabled e-book readers are launched. There are now almost 1,000 models of HSPA-enabled phones on the market, with smartphones being the key growth segment. I Mobile TeleSystems (MTS) has become the first Russian operator to outsource its network operations, in a deal with Nokia Siemens Networks. The company is aiming to simplify its overall network operations model, which is especially important with the rollout of 3G services for millions of subscribers in Russia's central region. I Mentum will acquire Ascom's network planing business. The business includes the products TEMS CellPlanner and TEMS LinkPlanner and is located in Kista, Sweden. The business currently employs 28 people and all employees are being given the opportunity to transfer with the business. I SFR, in collaboration with Nokia Siemens Networks, will be displaying the latest HSPA+ technology, with download speeds of up to 28 Mbps, on a live 3G network in a trial to be held in the city of Marseille. The trials follows the deployment of 14.4 Mbps for SFR in 2009.
I The Femto Forum has completed the first femtocell plugfest. The plugfest process, which extended over many months and culminated in a test event was organized in cooperation with ETSI and had vendor support from over twenty companies participating, including vendors of network equipment and femtocells as well as software and hardware components. The companies involved were Ablaze Wireless, Acme Packet, Airvana, Alcatel-Lucent Telecom, Alpha Networks, Askey Computer Corporation, C&S Microwave, Cisco Systems Inc, Contela, Continuous Computing, Genband, Huawei, IntelliNet Technologies, ip.access, Kineto Wireless, NEC, Node-H, Nokia Siemens Networks, picoChip, Technicolor, TRaC Global and Ubiquisys.
6 | Mobile Europe
News
OSS l smartphone stats l GPS
Operating companies in the Telenor group are demonstrating the pressing need for operators to get a grip on diverse operating systems, and consolidate their back office software and functions. Telenor Norway is consolidating diverse inventory and resource management systems onto a single next-gen platform from Telcordia. In Denmark, Telenor is using Ontology Systems to provide a single view, across nine different OSS, of the impact network changes will have on the customer and services. This need is also generating an opportunity for companies in the OSS space, as well as attracting attention from the network
equipment vendors themselves, all of whom have stepped up their services support capabilities. For Telcordia's Ray Bariso, the contract to provide operational support systems for Telenor's next generation network is proof that the company can "continue to compete and win on the global wireless stage". Telcordia is providing inventory and resource management software to Telenor as the operator continues to upgrade its 2G and 3G, and deploy 4G, networks using equipment from Starent and Huawei. Bariso, who is Executive Director, Operations Solutions, Telcordia, said that Telcordia's OSS would provide the basis for Telenor to drive increased operational efficiency throughout their business. "Operators need to address the operating expense gap they have and the only way to do that is to address their operational efficiency. On the back end that starts by having a core of service and resource inventory that all their other components rely on. Bariso said that Telcordia's systems would replace a "varied set" of inventory systems that the operator had built up over time. Telcordia is an existing supplier to the operator for its Application Server Platform and in service delivery, but this is a new customer for Telcordia on the OSS side.
Mobile Europe | 7
News
messaging l backhaul test l facebook telephony
Ixia has responded to the introduction of converged mobile backhaul networks, and the challenges facing operators of increased load on the backhaul, by introducing a new testing solution. Ixia now offers testing solutions for mobile backhaul protocols including IEEE 1588v2 and ITU-T Sync-Ebased time synchronisation standards. The explosive growth in the number of wireless subscribers using data-intensive smart phones has resulted in service providers rolling out wireless backhaul services over Carrier Ethernet and MPLS using IP as a cost-effective solution to accommodate increased bandwidth loads. TDM circuits provide ultra-high reliability, superior voice quality of service (QoS), and acutely accurate timing. Replacing TDM circuits with Ethernet technology requires attention to accurate timing - on the order of parts per million (ppm). The IEEE 1588v2 Precision Timing Protocol (PTP) and ITU-T Synchronous Ethernet (Sync-E) using Ethernet Synchronization Messaging Channel (ESMC) protocols address this issue. "The hurdle facing most mobile backhaul network operators is reproducing the stability and reliability of TDM on Ethernetbased services," said Bob Mandeville, president and founder of Iometrix. "Full end-to-end compliance testing of timing protocols such as 1588v2 - demonstrating reliability on par with TDM - is key for equipment manufacturers helping carriers to make the transition."
8 | Mobile Europe
femtocell l spam
Mobile Europe | 9
Advertorial PT
EVOLVING TO NEXT GENERATION SIGNALLING: THE COST BENEFITS AND COMPETITIVE ADVANTAGES
Comfone deploys flexible next-generation IP-based signaling solutions to advance the reach of their network.
QUESTION:
To stay competitive in todays business environment, Comfone faces the continuing challenge of expanding their reach to new operators. What do you see as some of the hurdles that operators face today as they look to reduce their roaming coverage costs?
Advanced signalling solutions enable efficient roaming from the smallest to the largest carriers.
ANSWER:
Operators expect a roaming service provider like Comfone to offer roaming solutions which enable them to increase their revenue as well as the effectiveness of their roaming business, while at the same time reducing their costs. They want expert know-how regarding all elements of roaming such as signalling and clearing, and, additionally, they need innovative solutions which anticipate their future challenges, as is the case with data roaming at the moment.
QUESTION:
As a leading provider of roaming, signalling and value added services; can you speak about the importance of providing your customers a variety of access options for their signalling needs?
ANSWER:
It is certainly very important to offer a variety of access options to a mobile operator. Based on their infrastructure and their technical requirements, they want a customised solution, one which fulfills their specific needs. With Comfone, mobile operators have the choice of Signalling Access over Public Internet, Signalling Access over private MPLS or via dedicated access with a leased line to one of Comfone's MeetMe-Point Telehouses. Signalling Access over Internet (SAoI), an innovative solution provided by Comfone, offers a quick and cost-effective access method to connect operators to Comfone's infrastructure. This freedom of choice is an important competitive edge for Comfone.
ANSWER:
One of Comfones primary goals is to offer its customers reliable, high quality services and solutions. In order to guarantee this, Comfone has enhanced its network to IP-based signalling infrastructure, by means of introducing SAoI and SIGTRAN. This step is a costeffective alternative to choosing traditionally more expensive circuit switched facilities. Lowering the infrastructure costs results in more competitive pricing for Comfone, which is also a benefit for our customers. The wide reach of the Internet also allows Comfone to extend its service offerings to a broader range of mobile operators from the smallest to largest operators and in some geographically remote locations.
QUESTION:
Can you elaborate on Comfones innovative signalling access offerings that allow mobile operators to take advantage of next-generation signalling Signalling Access over Internet (SAoI)?
QUESTION:
While Comfone has embraced a next-generation IPbased signalling infrastructure as a means to controlling transport costs, how is Comfone able to cost-effectively
10 | Mobile Europe
Advertorial PT
offer service to mobile operators who have not yet made the transition to IP signalling?
allowing us to minimise costs while guaranteeing our high standards of quality and service.
ANSWER:
This does not pose any difficulty because the Mediation Devices (MDs) positioned at both the mobile operators premises and at Comfone are simultaneously able to establish a transparent virtual SS7 link over IP. With this solution mobile operators are able to achieve the cost benefits from IP It is important to us to know that the Signalling without costly supplier we choose is experienced and upgrades to their equipment. can offer us the most cost-effective, The deployment is virtually plug-and-play with the comprehensive signalling technology mediation devices remaining available today. Therefore know-how and transparent in the network, with expertise are important criteria no Point Code and requiring no hands-on maintenance once configured by the technical engineers of Comfone.
QUESTION:
You have discussed the various technical products and solutions that enable your network, what else do you look for in a supplier of your technology?
ANSWER:
It is important to us to know that the supplier we choose is experienced and can offer us the most cost-effective, comprehensive signalling technology available today. Therefore know-how and expertise are important criteria. Additionally, we also look for a cooperative and smooth working relationship and appreciate reliability and flexibility when implementing technological solutions into our core network. In such crucial projects, we also expect excellent and quick customer support from our suppliers. We at Comfone pay the utmost attention to offering our customers superb customer service, and we therefore know how important individual customer care is for customers and how it helps to build and secure long-term relationships. For information on SEGway Signalling Solutions, visit www.pt.com
QUESTION:
Comfone offers signalling over the public internet. Given the requirement for a high quality connection and the criticality of signalling, what technology makes this possible?
PTs wide array of SEGway Signalling Solutions appeal to carriers of all types.
ANSWER:
The Mediation Devices installed at Comfone, PTs SEGway Solution, have been optimised to provide a reliable signalling link within impaired quality IP networks such as the public Internet or over satellite. Issues which can significantly impact a signalling link, such as latency, are mediated within the MD to ensure the connection remains stable. These devices are able to operate reliably in networks with delays of up to 700 ms. It is also important to mention that a firewall at either end of the connection protects the Mediation Device against possible attacks from the Internet. Mediation Devices are a proven and industry-accepted solution, and have been deployed by many of Comfones connected operators. Above all, this SEGway Solution fulfills our mediation requirements regarding signalling capabilities very well and supports our ongoing endeavours to further enhance our Signalling service,
Mobile Europe | 11
News
Customer support l mobile money l briefs
I Colibria has appointed Lars Myhrum as CEO with immediate effect. Myhrum, co-founder of Colibria and Chief Operations Officer since 2000, takes over the role from Keith Gibson who will continue on the board of Colibria. I Mobile Streams has signed a deal with ringback tone specialist Muzicall to distribute a range of its content through Muzicall's distribution channels in the UK, Switzerland, Portugal and The Netherlands. The ringback tones from Mobile Streams will be added to the existing channels that Muzicall operates for network operators in these countries. I Anritsu has said it is the first test equipment vendor in the world to achieve GCF-approved test case validations for both LTE RF and protocol conformance testing. At the GCF CAG#22 meeting in April Anritsu successfully gained GCF approval for 12 RF test cases for its ME7873L RF Conformance Test System
This impact on mobile operators is leading the industry to prioritise investment in solutions that give device management capabilities to front line customer care agents. This includes remote diagnostics, as well as the ability to carry out over the air fixes. The emphasis is on increasing what InnoPath calls "first call resolution", and also on freeing up higher tier support for genuinely complex issues. InnoPath says that three year savings from integrating device management at the customer care level at a Tier1 operator could amount to $575 million.
together with additional test cases for its ME7832L Protocol Conformance Test System. I JDSU has announced the successful close of its acquisition of the Network Solutions communications test business of Agilent. The acquisition includes the unit's LTE network verification and deployment products. JDSU announced its intent to acquire Agilent's Network Solutions business for $165 million in cash on February 11, 2010. "We welcome a great team to JDSU," said Tom Waechter, president and chief executive officer of JDSU.
In developing markets SMS driven money transfer services are the main driver, increasing at a rate of 30% per annum.
12 | Mobile Europe
MOBILE EUROPE
INSIGHT REPORT
Sponsored by:
INSIGHT REPORT
today and where it could be going. Think of it as a course touching on the basics, going deeper on those foundational topics, then following up with an exploration of what lies ahead in the near-term and a classic highereducation investigation into questions that may not have definitive answersall without the term papers, pop quizzes or late night studying.
ABOUT THE AUTHOR OF THIS INSIGHT REPORT: Peter Jarich is the Research Director and heads up the telecom networks practice at Current Analysis. He is responsible for managing the company's wireless infrastructure practice and specializes in CDMA2000, EV-DO, HSPA, LTE, WiMAX and femtocells. More specifically, he focuses on the competitive strategies driving these markets, weighing vendor roadmaps and product plans against operator demands.
????????
INSIGHT REPORT
particular, the femtocell benefits to endusers generally fall into four categories: coverage, capacity, preferential tariffs, and applications. I Coverage. Its often believed that in mature 2G and 3G markets, the issue of coverage has been solved. Unfortunately, this is somewhat of a fallacy. Yes, operators may have managed to cover most major and even minor population centers. But, a number of studies have suggested that wireless services are most often used in places where signals may be partly or wholly blocked - at home or at work. In areas where homes and office buildings are constructed from hard to penetrate materials (think concrete, stone, coated glass) the impact on wireless service can be particularly profound. Even where signals can get through, the fact that signal strength correlates with data performance highlights the importance of solid coverage on service experience. In other words, femtocells can deliver high-quality wireless services where they werent previously available.
END-USERS Tell your average subscriber that they could have their very own cellular base station right in their house and their first thought is likely to be, is that level of radiation healthy? After that, theyre bound to realize how much a femtocell will improve the way they use their wireless service. In
Work-life balance. (credit: Cisco IBSG Connected Life Market Watch 2009)
I Capacity. Voice services may dominate the revenues of most operators, but data services have gone undeniably mainstream, with operators continually competing on peak data rates and network performance. Dedicating an entire base station to the small set of users served by a femtocell (as few as four in a residential setting), then, results in per-user capacity and a user experience that simply cant be matched in the macro-cell networkassuming the broadband connection into the femtocell is fat enough to take advantage of its capacity. I Tariffs. In some cases, an operator may choose to incentivise the use of femtocells thanks to preferential tariffs. Voice calls from the femtocell might be discounted or free of charge, for an individual user or group of users. Data services might be free or discounted. Why would an operator offer these incentives? To encourage femtocell usage. Regardless, the benefit to customers (and their pocketbooks) is obvious. I Applications. In the case of special tariffs, an operator has chosen to make the femtocell more than a tool for simply improving a customers wireless coverage and capacity. They can carry the strategy forward by offering femtospecific applications applications that take advantage of the femtocells location and capacity. Examples include notification of when friends and family arrive at home, automatic content downloads when benefitting from the dedicated capacity of the femto, or mobile access into home multimedia content using the femtocell for interworking with the home network. If the applications are compelling enough, they should help to make the users life easier or
INSIGHT REPORT
Source: Cisco VNI Mobile, Informa Media and Telecoms, In-Stat, Gartner
improve their service experience. I Device Diversity. Improved wireless coverage and capacity can be delivered without a femtocell thanks to shortrange wireless technologies like WiFi either at home or in the office. By leveraging standard wireless technologies, however, femtocells allow users to keep their existing handsetsbe they smartphones, voiceonly devices, featurephones, etc. OPERATORS It would be nice to believe that operators have an interest in deploying femtocells strictly because of everything they promise end-users. Like any other commercial entity, however, operators are in the business of business IE, turning a profit. Not surprisingly, then, their interest in femtocells is based on more than altruism. I Traffic Offload. At one point, several years ago, operators were struggling to drive the use of mobile data services. Today, thanks in part to the availability of inexpensive smartphones, this struggle is over. The wild success of mobile broadband, however, has given rise to new problems as the capacity of networks is increasingly taxed both at
BENEFIT
the base station and in the backhaul network. Beyond (or, more likely, alongside) the deployment of new network capacity, femtocells can push the investment burden onto end-users particularly if they pay for the femtocell itself as well as its backhaul in the form of their broadband connection. Even if operator partially or fully subsidizes the device, the savings on site, power and backhaul costs can be substantial while the concentration of spectrum resources on a limited area helps to make the most of an operators assets and best support end-user mobile broadband demands. I Customer Acquisition & Retention. Leveraging in-home base stations to deliver improved coverage and capacity may be a less expensive option than accomplishing the same feat thanks to an extension of the macro-cell network. At the same time, if the result is a less burdened macro-cell network for other users and better coverage options for out of the way or signal-challenged locations, the operator is more likely to
keep its customers happy (IE, stop them from churning away) and may be able to pick up new customers previously out of its reach. I Usage Uptake. With operators looking for ways to keep the costs of providing mobile broadband services in check, you might think that they are no longer worried with driving data usage. Instead, this is still top of mind especially as operators look for limit the cost of mobile broadband services thanks to new usage policies (tiered tariffs, usage caps, bandwidth throttling). If femtocells and femtocell applications can costeffectively introduce users to data services and multimedia applications inside the home and office, the result could be increased usage, and increased revenues, elsewhere. Outside of data services, the availability of solid voice coverage could also push users to move on fixedmobile substitution, dropping their landline services in favor of mobile voice plans.
VALUE TO OPERATOR
VALUE TO END-USER
Coverage
Improved signal strength (service availability) indoors and in hard to reach areas. Better at-home service experience for data-intensive applications.
Leverage of femtocell capacity and location information to deliver converged services. Service cost savings... ...for an individual or group of users. NA
Customer acquisition and retention. CapEx/OpEx efficiencies (macro cell RAN). Additional voice/data uptake. Customer acquisition and retention. CapEx/OpEx efficiencies (macro cell RAN). Additional voice/data uptake.
Increased mass-market femtocell and mobile broadband service attractiveness. Increased mass-market femtocell attractiveness. CapEx/OpEx efficiencies from taking RF and backhaul traffic off macro network.
Capacity
Device Diversity
Allows operator to target its entire base of wireless users regardless of device type.
????????
INSIGHT REPORT
technologies as well as aspects of other network assets such as the radio network controller. Breaking the femtocell apart, then, all of this accomplished thanks to a variety of components. I Baseband Silicon essentially a 3GPP NodeB modem (3GPP2 in the case of CDMA2000 femtocells), with processing power determining the user and data rate capacity of the femtocell as well as its ability to support more complex technologies (HSPA vs. HSPA+ vs. LTE). I RF Silicon integrating with the femtocells baseband, the radio component of the femtocell defines the RF spectrum and channel bandwidth it operates in, power output and control, receive sensitivity, etc. I Software protocol stacks supporting femtocell operations, including: transport protocols, security (multiple flavors), network timing and synchronization, OA&M, autoconfiguration and interference mitigation aka, SON functionality. I Other Materials everything else in the box, grouped into active components (memory, timing/clock, GPS) and passive components (case, boards, antennas). FEMTOCELL VS. PICOCELL VS. SMALL CELLS If the most cited features of a femtocell are its size, capacity and promised coverage range, this begs a few questions. What is the difference between a femtocell and a picocell? What differentiates a femtocell from a very compact macro-cell base station the socalled small cells vendors are beginning to market? Unfortunately, there is no single answer. There are, instead, a number of different features and capabilities most commonly
cited as signatures of a femtocell, with a survey of vendors in the femtocell market focused on a handful. I Capacity. Aimed at residential usage, the capacity of a femtocell (say, four users) is going to be low compared with most picocells or compact macrocell offers. In an enterprise configuration, however, femtocell capacity can reach up to 32 users and HSPA+ data rates. I Cost. Manufactured in scale, vendors are already promising femtocell price points below the $100 mark something unlikely to be matched elsewhere. I Coverage. The most commonly cited differentiator, based on the notion that femtocells are designed to keep individual node coverage on a small scale. It can even be argued that most other differentiators are derived from coverage: costs thanks to power output; capacity thanks to the need to serve fewer people; self-organsation thanks to the added complexity facing high-power, broad coverage cells. I Self-Organization. Again, a key promise of femtocells is a self-organizing architecture which allows for the simple, non-interfering deployment of thousands (millions, ideally) of base stations in a given market. As SON techniques become a standard part of all LTE offers going forward, it may be more precise to focus on the self-install and plug-and-play capabilities of femtocells. I Integration Options. Whether or not all vendors acknowledge it, femtocells integrate into an operators core differently from other base stations: the Iuh standard was created specifically for femtocells and SIP out to the base station is not yet common (but used by WCDMA operators and a critical part of CDMA2000 femtocell standards).
INSIGHT REPORT
ENTERPRISE VS. RESIDENTIAL So, what about the enterprise? The market may be buzzing with the prospect of a 3G base station in every home, but the office is just as often subject to poor coverage combined with off-the-chart capacity demands. Recall our earlier chart: in many markets mobile Internet usage at work exceeds that of usage at home! Traditional solution for enterprise wireless may include distributed antenna systems (coverage) and picocells (coverage and capacity) but femtocells are positioned as another arrow in the operators quiver with residential units serving the small-office/home-office (SOHO) markets and higher capacity offers (8, 16, 32 users) targeted at larger enterprises. Coverage is obviously an issue for larger complexes. Here, a variety of distributed architectures promising handoff across femtocells within an enterprise are aimed at delivering
seamless, enterprise-wide coverage without the broad coverage usually associated with picocells. THE NETWORK BEYOND THE FEMTO When attempting to explain what I do for a living to friends, my wife often says that I write about the boxes at the bottom of cell towers. It works because most people dont know what exists in a cellular network beyond the base stations. Yet, in the same way traditional 2G and 3G networks require a core network behind the radio access network (RAN), femtocells alone arent sufficient for the delivery of femtocell services. From backhaul to billing to integration with an operators other wireless networks (including voice support), there are a myriad of network infrastructure components involved in a femtocell network launch. A few, however, stand out as critical and/or unique to the femto space.
I Femto Gateway. The Femtocell Gateway or Home NodeB Gateway, HNB-GW serves several purposes. Where traditional 3G Radio Network Controllers are designed to support thousands of base stations, the HNBGW aggregates femtocell traffic into an operators core network thanks to standard cellular standards (Iu-cs and Iu-ps). The connection between femtocells and the gateway can vary: early implementations focused on pseudo-proprietary implementations; the WCDMA market has standardised on the so-called Iu-h interface going forward; the 3GPP2 market has focused on SIP. I Security Gateway. Leveraging a subscribers broadband connection for backhaul, femtocell services rely on what operators often call, untrusted connectivity IE, a connection that the operator doesnt control on an end-toend basis. Security gateways, then, serve the purpose of tunneling femtocell traffic securely into the operators core. I Device Management. Integrated into an operators OSS/BSS infrastructure, femtocell device management solutions support remote provisioning, software updates, configuration, management and troubleshooting. The Broadband Forums TR-069 has been adopted as a standard management protocol based on its proven operators in the DSL world.
????????
INSIGHT REPORT
HOW TO EXPLAIN IT? First off, Google search results dont signify anything more than the number of times a term is used, definitely not the
Femtocells ACME Packet AirHop Airvana Airwalk Alcatel-Lucent Aricent Bitwave Continuous Computing Cisco Ericsson GENBAND Huawei Intellinet ip.access Kineto Lime Micro Mimo-on Mitsubishi NEC Node-H Nokia Siemens Percello picoChip Qualcomm
Source: Current Analysis
number of active femtocell vendors. Second, in a young market where there is money to be made and nobody can claim incumbency, its only natural for lots of companies to attach themselves to the opportunity. Finally, considering the broad array of products involved in the launch of a commercial femtocell service, it shouldnt be surprising that the market is already populated by dozens (if not thousands) of vendors. It also shouldnt be surprising that these vendors neatly fit into some clean categories tracking the various parts of a femtocell and femtocell network we identified earlier femtocells, femtocell silicon (RF and baseband), femtocell software, security and femtocell gateways along with femtoSoftware Security Integration
Controllers
Silicon
focused system integrators who pull these pieces together into a working solution. While far from exhaustive (and not even approaching 9,500), the follow table gives a view into 30 of the players most often associated with the space and what they do in it. As with any attempt to provide a quick industry snapshot, the preceding table comes with a few caveats and exceptions. Again, the table is not exhaustivetheres only so much you can capture in a snapshot. A broad set of other firms can lay claim to a position in the femtocell market either by producing femtocell access points (like the UKs HSL or Australias Juni), testing femtocell solutions, providing additional components and/or network integration support. Even, integration support stretches beyond the major wireless network vendors to include others whove shown an interest in femtos (e.g., Motorola) and even smaller vendors tasked with network deployments. At the same time, the list leaves out all of the vendors which stand to benefit from the parts of a femtocell network that arent even particularly femtocell specific. Think OSS/BSS suppliers. Think enclosure vendors who are engaged to help turn femtocells into solutions for outdoor coverage. Think transport and backhaul vendors tasked with growing network capacity into the core. Think service layer vendors focused on advanced, femtospecific applications or more basic applications such as basic voice. Perhaps the most important constituent of the femtocell market left out of our handy table is a potential manufacturer community that stretches from todays consumer electronics and home network vendors (e.g., 2Wire, D-Link, NETGEAR, Sagem) to contract manufacturers and Original Design Manufacturers (e.g., Gemtek, Quanta, SerComm). Why leave them out, then? While obviously important, consumer electronics makers have yet to substantially move the market forward and ODMs are essentially a necessary part of any consumerfacing technology.
INSIGHT REPORT
services, each additional service offers adds fuel to the argument that this truly is THE BREAKOUT YEAR for in-home (or, maybe, inoffice) base stations. And, with at least 10 commercial service offers in the market, the possibility that this may be THE year seems more likely than ever. Of course, just because 10 operators have moved forward on commercial femtocell
????????
INSIGHT REPORT
competitive pressures. Yet, just like todays femtocell service offers, the trials that have been launched are a mixed bag. Some, like KDDI are poised to turn into commercial momentum in the near term. Others, like JSC Ukrtelecom and Orascom, date back to 2007 questioning how eager these operators are to move on service launches. Some of the operators have even gone on record positioning femtocells as a tactical tool without mass market applications (TMobile) while others are being held back by regulatory issues (Chunghwa). Regardless, while brand new interest in femtocells is exciting, operators who have already launched services or trials hold the most promise for moving the market forward this year.
Vendors have continued to put femtocel applications on display at trade shows. Yet, with only one operator currently including them as a part of their service offer, it would seem that applications arent a major focus yet. So, why tag them as an important part of the femtoscape for 2010
APPLICATION DEVELOPMENT Last June, the Femto Forum launched a Special Interest Group (SIG) focused on what it titled, Services. More specifically, the Femto Services SIG is tasked with developing, a framework that will simplify the development and deployment of femtocell applications. The foundation of this framework will include a common application environment along with standard APIs
and interfaces enabling the creation of applications which are extensible beyond any one vendors product. And, to ensure that people actually care about and develop these applications, the SIG will also take on the requisite marketing responsibilities for driving an interest in (or, at least, awareness of) them. In tandem with the Femto Services SIG launch, the Forum sponsored Femtocell Applications Live at Avren Events Femtocells World Summit in London; 11 companies showed up to demonstrate their applications ranging from locationbased message delivery to podcast synching to mobile device theme changingall based on the bandwidth and presence information delivered by a a femtocell. Since then, vendors have continued to put femtocell applications on display at trade shows. Yet, with only one operator currently including them as a part of their service offer, it would seem that applications arent yet a major focus. So, why tag them as an important part of the femtoscape for 2010? Two reasons: technical progress and operator demands. Nearly a year after setting up the Services SIG, the Femto Forum has made significant progress at developing a framework to support applications. Working with vendors, it has classified the diverse femto application models: device hosted, femto hosted, HomeLAN hosted (think DLNA use cases), network hosted. On the device front, work with RCS and the GSMAs OneAPI promises to obviate the need for API work across every mobile OS. Plans for a femtocell development contest this June have been scrapped, but the rationale operator interest in moving at a measured pace and continued work with standardization is encouraging. It suggests that the industry is moving forward and that operators are beginning to pay attention,
INSIGHT REPORT
if only because network hosted femtocell applications (the initial interest) hold the promise of added revenue streams. To be fair, femtocell vendors themselves arent certain that 2010 is the year for applications. When queried as part of a survey we carried out in April, 45% of the respondents felt applications would become an integral part of service launches in the 12 to 18 month timeframe. 30% felt it would be somewhere between 18 to 24 months, and only 20% expect major momentum within the next 12 months. Including the executives and marketers driving strategy for major femtocell makers, femto and security gateway manufacturers, silicon suppliers and femtocell network integrators, you might think that this group would be optimistic rather than conservative around application timing. Regardless, even if it does take 24 months for femtocell applications to become more than a novelty, progress will need to begin this year. IUH & INTEROPERABILITY While operators may still be awaiting deeper insights into the state of femtocell application standards and development, they got some initial insights into core network integration standards this past March. Organized by the Femto Forum and ETSI, the markets first plugfest focused on femtocells was designed to test the interoperability of femtocells, femto access points and security gateways all based on vendor implementations of Iuh interfaces and IPsec/IKEv2 security protocols. More than 20 companies showed up to participate, including every major WCDMA femtocell manufacturer, femtocell integrator, Iuh-based femtocell gateway maker, and femtocell focused security gateway player. While vendors
arent allowed to announce how they performed in the testing, broad participation alone highlights the interest in making femtocell gateway interoperability a reality an interest that is 100% understandable given the way in which operators drove the creation of the Iuh standard to ensure scale and supplier diversity without having to painfully preintegrate every new femtocell vendor they hope to introduce into their network. And, while we may never know what happened at the Femto Forums recent plugfest, vendors believe that Iuh-based deployments will take place this year. Per our survey, none feel that deployments will take place within the next six months, but 70% feel they will begin within the next 12 months. Just as importantly, only 5% feel that it will take more than 18 months for Iuh to begin taking hold. Here, however, a word of caution is due. Iuh is often positioned as an important tool for enabling plug and play
interoperability between femtocells and gateways from diverse vendors. In this ideal world, operators would be able to simply add new femtocell vendors into their service offer without having to preintegrate against their Iuh-compliant femtocell gateways or their security gateways. Not surprisingly, vendors are much more divided on how long this will take. An optimistic 25% think well see this within 12 months. The biggest share (35%), however, think it will take between one to two years with 30% putting it at two to three years. Beyond Iuh, some of this delay must be attributed to a diversity of IPsec implementations and their impact on interoperability with security gateways. Residential vs. Enterprise We discussed it earlier, but its worth repeating that femtocells are not simply a residential coverage and capacity solution. They can just as well be deployed into the enterprise. This is a substantial opportunity when you consider that the concept of the enterprise is an incredibly diverse one including the small office, home office, retail venues (e.g., the corner coffee shop), warehouses, and even medium or large office complexesthink the hated cubicle farm. To be sure, larger deployments which stretch beyond the close-in range of a single femtocell might require multiple femtocells and coordination between them. Again, vendors have solutions for these deployments.
Mobile Europe Insight Report | 23
????????
INSIGHT REPORT
consumer femtocell offers. Regardless, innovation in the enterprise femtocell space over the past year was impressive with vendors introducing new solutions (Airvana, Alcatel-Lucent, SpiderCloud), adding femtocell-like deployment functionality into existing picocell offers (ip.access), and refining early enterprise offers in terms of added capacity and proving out femto-to-femto communications (Ubiquisys). At the same time, where operators have already launched consumer femtocell services,
many are expected to look to the enterprise as an extension or when sourcing second suppliers. MARKETING There is a very real reason Vodafones marketing campaign around the Sure Signal offer has received so much attention; this level of marketing and advertising is very rare. Just as importantly, the early success Vodafone has had in getting femtocells into the market suggests that the marketing scheme has paid off. In a market where operators routinely spend tens of millions of dollars to advertise a new mobile device, the value of marketing is clearly well known. It may not be able to turn a bad product into a good one, but marketing whether in the form of billboards and television spots, or attractive service and device pricing has a direct impact on sales. As operators, then, leveraged early commercial launches and trials to test the technical merits and capabilities of femtocells (including any potential negative impacts on the rest of their network), a general lack of marketing made sense; no operator wants millions of femtocell users on their network until they know that they can deliver a quality femtocell service experience without impacting the quality of their other (IE, non-femtocell) services. If 2010 marks the start of operator femtocell expansions, the growing importance of femtocell marketing will follow. The mix of marketing tactics will vary from market to market and operator to operator. The need for some level of marketing to get the message out, however, will be critical for any operator who wants to position femtocells as more than a niche solution for a select group of coverage and capacity challenged customers.
The rationale for targeting the enterprise is fairly straightforward. Deployment scale may pale in comparison to the residential opportunity, but businesses should be more willing to pay for solid wireless coverage and capacity based on ROI calculations flowing from increased productivity, happier customers, etc. Applications from integration with the office PBX to information pushes to customers still have a place, and if deployments into a less cost-sensitive enterprise market can help to drive scale and result in lower prices for a massmarket push, all the better. Despite the logic of the enterprise femtocell, we saw earlier that most deployments have focused on the consumer. In part, this isnt 100% accurate; any offer targeting the consumer market can easily address small office and home office demands. In part, you can blame it on equipment availability; most vendors focused their initial efforts on
24 | Mobile Europe Insight Report
If 2010 marks the start of operator femtocell expansions, the growing important of femtocell marketing will follow. The need for some level of marketing, however, will be critical for any operator who wants to position femtocells as more than a nich solution for a select group of customers.
INSIGHT REPORT
from the maker of their choice. And, just like WiFi, the hope is that femtocells will, ultimately, be produced by consumer electronics players like Femto Forum members 2Wire, NETGEAR or Ciscos Linksys. This is why vendors like picoChip and Continuous Computing have developed femtocell reference designs and Ubiquisys has chosen a strategy of licensing its software: to benefit from new players seeking to enter the market. But what, then, is the role for integrators and specialist femtocell makers? In our
A solid number of the vendors we talked with felt it would be 18 months or more before we saw widespread use of SIP either in the enterprise or home. This leaves the majority thinking well see it much sooner. Though vendors are ready to support SIP, the fact that standards for SIP integrations are still a year away suggests this is optimistic.
survey, when asked who will dominate femtocell manufacture, most respondents voted with integrators and original design manufacturers 35% for each group. To some extent, the market has already borne this out: Alcatel-Lucent may support Vodafones services, but the femtos are made by Sagem; Cisco may support AT&T, but its femtos are produced by an ODM based on ip.access designs. The real question is whether or not integrators will always be intimately involved in all phases of the deployment process. To the extent that femtocells leverage an operators spectrum and back-office assets, it would seem logical and not particularly surprising that only 20% of our respondents see consumer electronics players dominating femtocell manufacture in the long-term. I Technologies: 3G vs. 4G. Operators have only begun deploying LTE networks over the past six months. Long before that, however, vendors began talking up the potential of 4G femtocells as a way to augment initial coverage, deliver the capacity users will expect from 4G, and deal with the fact that 4G spectrum allocations are often in higher (propagation-impaired) frequencies. For all of these reasons, 75% of our survey respondents felt
????????
INSIGHT REPORT
residential femtocells would be a critical part of LTE deployments. 85% felt small cells other than femtocells would be critical. Yet, as much as people might be certain of the connection between femtocells and LTE, the timing around LTE femtocells going commercial is much less certain. Whats more, the small cell vs. femtocell responses highlight an ambiguity between femtocells and low-capacity macrocells that isnt likely to go away anytime soon. I Enterprise: Standards vs. Operator Demand. Operators might have good reasons for attacking the enterprise femtocell opportunity. Vendors may have made enterprise femtocells an R&D priority over the past year. Service launches in the enterprise, however, could be held back by two fundamental questions. How interested are operators in the enterprise and will a lack of standards for enterprise femtocell inter-connectivity impact their interest? Having broadly failed to succeed in delivering managed mobility services into the enterprise up until now, it can be argued that the space simply isnt as attractive as the home that operators dont have the will (or know-how, or channels) to move into the enterprise. Only time will tell if they can move beyond this history. From a standards perspective, the issue is whether or not operators will demand standards for the femtocell-to-femtocell coordination that allows a larger office complex to be covered by a network of limited-coverage access points. Based on the notion that a smaller enterprise may only need a single femtocell or that a single enterprise is unlikely to move beyond one or two femtocell vendors, our survey respondents answered with a resounding, no. 85% felt that a lack of standards
26 | Mobile Europe Insight Report
Dense deployments could see devices constantly attaching to and detaching from femtos that are not their own. Femto-aware handsets could work around this. How long it will take device makers to build in this support will depend on how aggressively operators push them.
wouldnt impact the market or that standards were coming soon enough. In the long-term, however, operator interest in standards cannot be underestimated, if only to support deployment efficiencies. I Devices: Femto-agnostic vs. Femtoaware. From the outset, an ability to work with all of an operators handsets and mobile devices was a (if not THE) major selling point for femtocells; it promised an ability to target the entire user base, not just those willing to buy WiFi-enabled phones. But, what if femtocells didnt really work with all handsets out of the box? What if handsets required specific upgrades or software to be optimized for use with a
femtocell? While todays femtocell services seem to be doing just fine without any handset modifications, the notion isnt that far-fetched. Dense deployments could see devices constantly attaching to and detaching from femtos that arent their own impacting battery life and femtocell performance. Femto-aware handsets could work around this. Macro-network RF issues could drive attach-detach issues at home. Femtoaware handsets could work around this, while simplifying hand-in from the macro network. Femto-hosted applications will obviously require device support. How long it will take device makers to build in this support will depend on how aggressively operators push them. Yet, without operator movement on this front, femtocell service experiences may be negatively impacted with an obvious effect on service uptake. I Services: Self-Selling vs. Customer Demands. Operators and vendors, alike, have long acknowledged that the femtocell market suffers from a difficult demand dynamic. Femtocells deliver a greater value to operators (in terms of OpEx and CapEx efficiencies) than they do for the majority of end-users (in terms of capacity and coverage enhancements). To fully execute on the opportunity, operators will need to either make femtocells more attractive or redouble their marketing efforts. Applications address the former. Advertising and attractive pricing (or giveaways) address the latter. The correct mix and how aggressively operators are willing to move on these fronts is the question.
SPONSORED INTERVIEW
Is enterprise adoption of femtocells likely to be significant? And are there any likely barriers to enterprise adoption of femtocell?
A successful global femtocell market is building as we enter 2010. Throughout 2010, the industry will see more and more operators deploying residential and enterprise femtocell networks. These will deliver the value-added services and real five-bar indoor coverage that is required to access capacity-intensive applications. To date, femtocells have been largely dedicated devices attached to existing access networks. As the market develops femtocells will be integrated into residential and business gateways as a standard feature. One of the main concerns of operators has been to understand the business case. As volumes increase the overall cost of femtocell is aligning with requirements, strengthening the business case for high-performance indoor coverage. Femtocell lends itself to the enterprise very well given the types of devices that are prolific in the enterprise (dongles, smart phones etc) and the high degree of concentration of employees with those devices in buildings. They also help the operator offload their macro network and give their high-value customers a better and more elegant mobile experience.
Anil Kohli
Our report questions whether SIP still has a role to play in femtocell integration. What are your views on standards adoption in this area?
Softbank deploy an end to-end IMS (IP Multimedia System) network which has a significant footprint in Japan. In Europe SIP as a standard has been slow to catch hold but with Skype accounting for 12 per cent of all global voice traffic it is inevitable that SIP will become a major part of any future mobile network delivering rich media and voice services.
Who will come to dominate femtocell manufacture? The integrators - such as NEC - or the consumer electronics manufacturers?
Integrators like NEC are uniquely positioned to deliver a broad range of applications and professional services to femtocell operators. Hardware vendors and integrators must differentiate by marketing their strengths in technology and expertise. As a result, operators are building closer relationships with their vendors that foster environments of co-development and mutual success.
NEC Femtocell
How important will femtocells be to LTE deployment? And how important will LTE be for the femtocell market?
We believe small cells and femtocells are the key to successful LTE deployment. Not only do they save on total cost of ownership, they also give mobile operators the control to roll out small-scale or wide-scale LTE networks according to capacity demand and with minimal planning requirements. NECs small cell LTE solution, the smallest all-in-one compact LTE base station is SON (Self-Organising Network) empowered. This allows an efficient, easier and faster deployment and a much lower operation cost than previous 2G and 3G deployments.
Is your feeling that consumers will come to demand femtocells, or that operators will have to work hard to push them out into the market?
There is going to be a mixture initially but the residential market will catch up as it always does with new technology like this. In time, the high level of reliable service delivered by femtocells will become the norm for indoor coverage. Eventually, the underlying user base will start to demand that level of enabled service everywhere they go.
Mobile Europe | 27
THOUGHT LEADERSHIP
DELIVERING CAPACITY
For continuity of existing mobile networks and reuse of legacy networks, a traditional operator approach to sustaining MBB services is through standard Macro Deployment. In this manner, capacity is added by: improving technologies, e.g. HSPA+/LTE, adding new or refarming existing spectrum, 2.6GHz/900, or introducing new sites. The later creates almost insurmountable difficulties when attempted in dense urban areas. Taking into account the indoor venues for the potential 500 times traffic increase in just five years, Huawei has introduced a multi cloud layer as part of the SingleRAN@Broad solution. In this scenario Femtocells are used to offload Macro networks, ensuring an enhanced MBB experience while making it expanded coverage affordable and ultimately, profitable. The ease of Huawei Femtocells installation combined with a fully proven commercial Plug & Play selfconfiguring solution; adapted portfolio; differentiated Home and Pico offerings supported through a shared infrastructure, together with a reduction of OPEX, energy and transport in particular, are now key drivers for Femtocells affording operators considerable cost advantage when compared with traditional Macro Network solutions This cost advantage increases exponentially with the amount of data to be carried. According to Huaweis calculations, Femtocells can offer at least a 50% reduction in the cost per Mb. Actual benefit will vary according to traffic, penetration and macro network
The ease of Huawei Femtocells installation combined with a fully proven commercial Plug & Play self-configuring solution; adapted portfolio; differentiated Home and Pico offerings supported through a shared infrastructure ... are now key drivers for Femtocells
28 | Mobile Europe
THOUGHT LEADERSHIP
status. Huawei has developed an in-house business case tool specifically to assist operators in understanding Femto benefits.
ENABLING GROWTH
With localized coverage reinforced by Femtocell locking features as well as Femtocell integration into Home/Enterprise network, it is now possible to enable growth by introducing news services through Femtocells such as automatic content synchronization, mobile advertisement based on location, mobile monitoring, PBX or VPN features,
readiness. Technical issues, such as interference with existing Macro Network, management interfaces, or Femto standard readiness; and business concerns, such as value with regards to WiFi, and overall costs, are among the top concerns. From a technical point of view, Huaweis uBro solution is completely ready for commercial deployment today. We have developed several proven effective tools and strategies to effectively resolve any potential Macro Network interference. These include Femto Pilot Power Auto-Management, Mobility Management, and UE Transmission Power Management. As demonstrated by our participation in the Femto Forum PlugFest, Huaweis uBro system is ready for 3GPP Iuh standards. Last but not least, in order to make sure that management interfaces are open and easily integrated with existing Back Office Support Systems (BOSS), Huaweis uBro management solution supports open protocols such as TR069 or SOAP. From a business point of view, Huawei is ready today to help operators better understand target market segments and Femtocell cost savings as highlighted previously in this article. In our view and with particular relevance for smartphones, since Femtocells support all 3G devices and simplify their utilization, Femtocells will coexist with WiFi and will target different utilization patterns.
IN SUMMARY
At the start of this new decade, after several years of study and technical development, Femtocells are finally becoming main stream. As of the date of this article, the industry has seen no less than ten commercial Femtocell services deployed, three of which have been expedited by Huawei. While mainly employed for coverage, Femtos also have the potential to become excellent tools for capacity absorption and enablers of new services and added revenue streams. With proven Fentocell solutions well in-hand, Huawei is completely ready to help operators expand mobile broadband coverage and enhance capacity growth.
Several other product mixes can be offered based on these basic components in order to simplify Femtocell installation and integration in different deployment environments.
READY TO MARKET
There are still many operators, analysis and other industry stakeholders who have doubts or questions regarding Femtocell technology and business case
Mobile Europe | 29
SPONSORED INTERVIEW
JIM TAVARES:
We are very excited about the market because we believe it leverages so many key capabilities we have as a company. First, there is the long tradition of Scientific Atlanta to deliver carrier-grade CPE into the home. And of course there is our position within network infrastructure - that has only been strengthened by the Starent acquisition. Femtocell plays to both segments, and our strength in both segments mean we have the potential to support massive growth in the mobile industry. Importantly, we believe we can provide the end-toend femtocell infrastructure as one company, from the radio front end to the back-end provisioning side. We've partnered with a best-in-class provider in ip.access to provide the RF piece, as that is not a traditional solution area for us. Of course, everyone tends to think about the radio side, but the provisioning side will impact as well. Unless consumer deployment of femtocells is zero touch then there's no way carriers can scale - and we have the experience to provide the whole integrated provisioning process.
KEITH DYER:
Does the adoption of the TR69 standard not address the management issue, putting femtocells onto the same footing as other in-home broadband access devices?
JIM TAVARES:
TR69 is really a framework there's a whole lot on top of that to implement if you want to really be zero touch. The standards are really nascent, so that leaves a lot of work to do as a vendor to make sure you can deliver a truly zero touch deployment approach scale. But I should add that I think the adoption of standards is of course positive, and both Cisco and Starent have been leaders in standardization. For example Cisco was an active member in the DSL Forum - now Broadband Forum - Working Group that developed TR-069.
KEITH DYER:
You mention deployment, but how important will ongoing management of femtocells be for carriers, once they have thousands of femtocells deployed?
JIM TAVARES:
I would mention two areas. The first is that as with any new service or technology, there's an education issue. WiFi took a while for consumers to understand what it really was and what it meant. So you've got a similar learning curve with femtocell for consumers, as well as your retail staff in stores or customer support agents on the phone. Another factor carriers need to be very clear about is that femtocell is challenging typical carrier business models. Carriers are used to subsidising CPE for marketing reasons - not in order to generate
30 | Mobile Europe
SPONSORED INTERVIEW
capex reductions by driving traffic off network. So the return on that subsidy is driven by different metrics from their usual model. That leads to another issue, which is that femtocell crosses classes of organisational structure within a carrier. It touches the operations team, marketing and monitoring and assurance, as well as customer service and retail. That's a new paradigm to get their head around. But I would also like to say that I actually think there has been great progress in many of these and other key areas. Most importantly, there is a clear supply chain forming - from chipset providers to radio software providers and end-to-end system providers. With any new supply chain it takes a while for every piece at every level to drop into place, and you will get inevitable interoperability issues, but there's been great progress.
KEITH DYER:
How about issues around price? There was a feeling that vendors would have to hit a certain price point in order for femtocell to be viable.
that traditional view of how to build network to support that lifestyle need is becoming a problem. In Europe, for example, UMTS is at 2.4GHz and home construction is often of cement and steel. So the RF propagation is not what it is in 2G. Another example is that the whole busy hour on a network is changing. It's moving back later into the evening, as people come home and then use their phone at We are very bullish for one simple reason. home to use high Most carriers are seeing geometric growth in bandwidth the wireless data on their networks. Because applications. That means people the physics isnt going to change, we think its are not getting the going to force carriers to look at smaller and experience they have smaller cells - with femtocells being the ideal come to expect and demand as the technology. So this isnt going to be niche. networks are not optimised to those times and locations. Usage is being driven into the home, and into different times of the day, and that's driving femtocell as an option to support that need.
JIM TAVARES:
I understand that this is a nascent market and not yet all that sophisticated, so price is something people can get their hands on initially. But over time, attention will turn to the benefits of being able to operate at large scale, with reliable, zero touch deployment. If I save $5 on a component in order to meet some arbitrary price point, but then have to spend $50 on support calls - then have I saved any money? I also think price is impacted by operators' own priorities around aesthetics, and physical integration. Some carriers are very interested in aesthetics, as this is an item that will be going into people's homes. Others are thinking about how to combine a WiFi access point and router with a femtocell. Every carrier is very different and you have to take that into account as well.
KEITH DYER:
So you are very positive about the future for femtocell?
JIM TAVARES:
We are very bullish for one simple reason. Most carriers are seeing geometric growth in terms of their wireless data on the network. They're seeing 100-200% growth annually, and if it keeps growing at that rate then the only way carriers can get more throughput is by adding cell sites. But if they take a more hierarchical approach then small cells can handle a lot of that traffic. So I think we will see macro for ubiquity and small sites for throughput; and because the physics isn't going to change, and carriers aren't going to acquire more spectrum, we think it's going to force carriers to look at smaller and smaller cell with femtocell being the ideal technology. So this isn't going to be niche - it's absolutely in line with carriers' spectrum reuse and cost reduction programmes. We are very excited and interested to see how much this evolves over time. We are already seeing some different business models and we think that's great. That's the true proof of it - let the market decide.
ABOUT JIM TAVARES: Jim Tavares has over 20 years experience in the mobility market, and has worked in a variety of product marketing and management roles, supporting IMS, VoIP, Security, and 3G/4G mobile internet infrastructure.
KEITH DYER:
Stepping away from operator concerns - what do you think will drive consumer adoption of femtocells?
JIM TAVARES:
I think it's simply a fact that wireless and mobility is so much more important than it was a few years ago to how people live their lives. What we're finding is
Mobile Europe | 31
Technology development
with GSM phones remain contactable all over the planet because more than 700 mobile operators in more than 200 countries and territories have all implemented voice services in a consistent manner.
34 | Mobile Europe
Technology development
But the emergence of these different solutions raised some uncomfortable questions. Wouldnt these migratory solutions end up being used for a long time? In the meantime, the cherished GSM principle of interoperability might be jeopardised. After considering such issues, 3GPP halted the CS over PS work.
3GPP began to define a circuit switched fall back (CSFB) approach as an interim' or migratory' solution, which operators could use until they were ready to adopt IMS. Unfortunately, this compromise also opened the door to other approaches and further fragmentation ensued. 3GPP also began to study a further interim or migratory approach, known as circuit-switched over packetswitched system (CS over PS). But the emergence of these different solutions raised some uncomfortable questions. Wouldn't these "migratory" solutions end up being used for a long time? (A mobile network needs to support a migratory solution as long as there are handsets in circulation that only support that solution.) In the meantime, the cherished GSM principle of interoperability might be jeopardised. Could a CSFB device roam on a CS over PS network, or vice versa? Could either roam on an IMS network? After considering such issues, 3GPP halted the CS over PS work. But soon afterwards the VoLGA Forum was established to continue the definition of CS over PS outside of 3GPP, and to support the provision of voice over LTE using the GAN (Generic Access Network) standard.
Dan Warren
interconnection and international roaming between LTE networks with the goal of completing that work by the first quarter of next year. The GSMA is also working with mobile operators to ensure that LTE spectrum is aligned internationally, as far as possible, and that the VoLTE solution will also be fully-compatible with voice services offered by fixedline operators. The VoLTE initiative has the backing of more than 40 organisations from across the mobile ecosystem, including many of the world's leading mobile operators, handset manufacturers and equipment vendors. The European mobile operators supporting the initiative include 3 Group, Deutsche Telekom/TMobile, mobilkom austria, Orange, Telecom Italia, Telefnica, Telenor, TeliaSonera and Vodafone. These operators recognise the importance of maintaining the high level of global interconnection and roaming inherent in today's 2G and 3G networks. Telefonica CTO Vicente San Miguel, for example, said in February that his company "strongly supports this initiative to drive a common voice and messaging solution for the mobile industry, as it is a key enabler for the success of LTE." With this level of support for VoLTE, the mobile industry should be able to ensure that the interoperability and global reach that characterises GSM-based voice services continues in an all-IP world. High-quality voice services that work everywhere are fundamental to the mobile industry's raison d'tre and we mustn't forget that.
Mobile Europe | 35
TWO KEY INSIGHTS We offer a couple of insights into two areas that must be at the forefront of an operators thinking as this new value-chain emerges (at the forefront of its thinking, yes, but also at the forefront of its planning, and its actions). First, options for the network operators cost model continue to change and must continue to be considered. Outsourcing and/or sharing of network services should make the prospect of adopting new infrastructure more palatable should help to control costs. But finding the most effective approach is not that simple. Second, the new value-chain sees the consumer placed right at the centre - at the centre and expecting more freedom, not shepherded or shielded by any one party and particularly not the network operator. Many expect that this central positioning of the consumer will be rewarded by a much greater amount of their spend being on, or through, the mobile platform. But how can the operator capture this value
36 | Mobile Europe
THE NEW COST MODEL The days when a business could compete based on its facilities its tangible infrastructure are gone. Infrastructure is not a direct revenue generator and is no longer a customer attractor. This comes as no surprise. The histories of the provision of many essential services electricity, gas, even roads have followed a similar path. What starts as a unique differentiator, an almost monopolistic asset, becomes as a result of both innovation and regulation a very costly component of a heavily service-centred industry. But infrastructure is an asset that can be shared. A variety of operating models have emerged to enable network operators to exploit, and drive greater efficiency out of, this infrastructure through sharing or outsourcing in one form or other. For a typical network operator, infrastructure and operations IT costs represent 45% of operating expense and 75% of capital expense. So the potential cost savings are sizeable. Its no surprise that network outsourcing and network sharing have become commonplace. But the decision about whether a network operator should outsource or not, and the appropriate outsourcing model it should employ, remains a complex one. From site-sharing to RAN sharing, through real-estate outsourcing to full operational service outsourcing, the spectrum of options demands careful, and ongoing analysis. The trick is to find balance across cost saving and risk whilst focusing on competitive positioning. There is no one-size-fits-all. Technology changes also impact outsourcing decisions.
The level of control exerted by mobile operators rankles with, and exasperates, the content providers [In] an environment not necessarily conducive to the introduction and mass-adoption of innovative mobile servicesoperators are, after all, mobile specialists and not content specialists
Level 1
Level 2
Level 3
Level 4
THIRD-PARTY APPLICATIONS?
core components (search, advertising, gaming) available through third parties. Revenue share
limited, or none. operator controlled
AFTER-MARKET APPLICATIONS?
WEB ACCESS?
walled garden
walled garden
full
full
The advent of the all-IP RAN, and the rise of the femtocell (and indeed the potential need for much smaller femtolike cells to meet future data-service-level requirements) are two examples here. Operators are looking to these technologies to drive down operating costs over all, and in particular to make the provision of higher quality datacentric services more cost-effective. In their infancy, should innovations like these be managed internally by the network operator, or can they be trusted to thirdparties to exploit them as much as possible? Novel infrastructure architectures encouraged by the all-IP RAN should make inter-changeability of infrastructure components more straightforward. Further, they should enable an easier translation of internetcentred content onto mobile infrastructure. But, once again, is this something that needs to be driven from the core service-offering of an operator, or can it be left to third-party service providers to manage? Once again, there is no rule book and no standard formula here. EMBRACE OPENNESS RAN sharing and network outsourcing make it possible for network operators to focus on the thing that they need to do best - the thing that demands their focus more than any other. Our second observation on focus for network operators in the new value chain is the need to be engaging, enchanting and to keep the customer. The need to keep happy customers is hardly an insight in itself, and certainly not something that arises as a novelty in a transforming value chain. But when we consider how customers expectations of the mobile network have changed - and they have changed much faster than the network operators ability to meet them we can see that a new approach is necessary. A new approach is both necessary and, we believe, possible. CONTROL As has been widely observed, network operators were traditionally afraid of the loss of control that new service models and open platforms might cause. This
USERGENERATED CONTENT?
none
none
none
none
yes
HAPPINESS LEVEL
none. frustration
hapiness
unbounded joy.
is the so-called dumb pipe threat the fear that a network operators value proposition might erode to being one of mere bit provision. The mid-1990s saw an explosion of fledgling Internet companies all born with free bit-provision underneath them. The network was an assumed, and essentially free, resource. The challenge for these new companies was to devise monetization models for any service offering or application that they might come up with to ride over that network. Mobile network operators, on the other hand, had a well tested monetization model from the outset. However, this model presumed, and indeed required, a great degree of control over the end customer. Control over applications, content, and delivery model. Today it is exactly this control which has been, and we believe must be, eroded for network operators to capture most value. Early ventures into openness, relinquishing the fist of control, resulted in frustration and, largely, failure. Open access meant walled gardens, operator-selected applications enabling third parties to have a relationship directly with the operator, but not with the customer. This lead to considerable frustration all round. As Juniper Research observed in 2008: the level of control exerted
Mobile Europe | 37
acknowledges the additional value that the network operator holds in the relationship with the customer through the information it holds - all manner of information about usage, address book, history, location, service level, all manner of second-order data about user behaviour. By opening up this information and providing a service delivery platform through which third parties can exploit and reach the customer with services built around it, network operators make themselves more attractive to third-party providers and customers alike. The fourth level entails the network operator identifying, capturing and exploiting the real value that they carry because of their unique relationship with the customer. Why would this help network operators succeed in capturing more value? And how does this help them to retain customers? First, note that opening up information of this kind will enable new services and applications to be developed. Network operators cant determine what will succeed a priori, nor should they try to. In an open world, the customer will be able to determine which are valuable and which arent. By opening service and application delivery up, and by augmenting application content with operator-derived data, the developers and customers themselves will determine whats valuable and whats not. Innovation is about creating an environment in which others can innovate, and sharing the reward with them. Second, only an open world of this kind will enable the customers themselves to create the value. Value is the stuff that customers leave behind. In a closed world there is little scope for customers to do this, but in an open world the options are much greater. Think of the value that Amazon holds through its 9 million book reviews and more than 200 million book ratings. All left by customers. So, too, the three billion photos that are hosted by Flickr. Given the chance, customers will create their own value, leave it behind, and be very likely to return to it. CONCLUSIONS As technology changes, regulatory pressure and customer expectation forces change across the value chain. We can be sure that things will not stand still. But with such an historically strong position, and the allimportant direct relationship with the customer, network operators can undoubtedly turn such change to their advantage. Controlling cost through judicious use of network sharing, and service outsourcing, must be consistent with a broader strategy. But when effective, the 45% operating costs of maintaining infrastructure can be kept in check. But the most valuable asset is the direct relationship with the customer, and as internet models have shown, openness is what will strengthen this relationship and create more value for operators and third-parties in the future. Being open in the service delivery model, and encouraging innovation by opening APIs, will attract both developers and customers and keep them hooked.
ABOUT THE AUTHOR Frazer Bennett is a Consultant in Communication and Electronic Systems, PA Consulting Group. www.paconsulting.com He can be contacted via tel +44 (0)1763 267492 or email: innovation@paconsulting.com
Sponsored Interview
LANCE LIN:
Yes, at Mobile World Congress this year in Barcelona we were honored with a very great award. We were selected as the best SDP. This was the first time for Huawei, and also the first time for a Chinese company to win this award. We take it as one of the biggest awards in the world so we are really proud of that. As for our position in SDP, first it is important for us to realize that the scope of SDP is wide, and the concept is a little bit more complicated than other solutions. So although there are some analyst statistics that place us as number two in the SDP market share, we really believe that in the telco market, and especially in the internet data market, we are number one. We have several leading operator references, including the deployment of a 13 country SDP for Telefonica Latam, and all the affiliations of America Movil in 17 countries. By the end of 2009, Huawei SDP has been selected by more than 120 operators worldwide, and in the oversea market we have already entered into deployments with three Tier One operators, Vodafone, Telefonica and America Movil, and in China we have two, China Mobile and China Unicom, all of this have proven that Huawei SDP is a leading business solution and really help operators to be successful.
Lance Lin
KD:
What are the areas of operation that your SDP solutions cover?
LL:
Huawei SDP focus on customers, very much. we partner with operators to design their service strategy, Advance Innovation Center, and with flexible business revenue share models. We have ONE-SDP framework, we see the different requirements from different operators in different markets, we realize different strategy in flexible combinations. We segment Huawei SDP into 3 major sub-solutions: First, SDP Openness, which focus on network exposure
and integration with mobile internet capabilities, buildup service ecosystem and bring with possibility of creating millions of mobile internet services. Secondly, SDP Media provides both in-house and 3rdparty content and media management, supporting indepth operation and bring with convergent experience of content and media services. Thirdly, SDP WebGate, specially designed for mobile internet and provide differentiate content and service charging, precise marketing, promote controllability of the mobile internet services. We also see another stream of requirements from international operators like Vodafone and Telefonica who are keen to carry our their global strategies and share resources and knowledge in successful
Mobile Europe | 39
Sponsored Interview
services among its subsidiaries, which is called multinational SDP solution. To make all this happen, an SDP developed as a concept from service open environment is needed, gateways like MMS and SMS gateways, so it has mainly been regarded as only related to and this is the key point that internet data services. But in our definition Huawei SDP focuses on and we believe that the SDP framework needs to addresses cover not only data but also voice and video. So, for example, we use our SDP framework to contain even IPTV service development. So this is our inventory: we cover voice, data and video. Also, if you look vertically within SDP then based on a number of network enablers and integration with IT networks, we can support a wide range of applications and solutions. We break this area of applications support into three areas - applications facing the individual, home and enterprise user. Above this applications enablement, there is also demand for integration and managed services, and we think all of this falls into the big concept of the SDP as well. Our service will cover them all, but what is also important is that we are open to partners. For example, we currently partner with Accenture within the services space, and for applications we also have our open community plan. We have over 300 partners which are already certified and are able to develop applications for our SDP. Additionally, through our co-operation with Telefonica in Latin America we have jointly authorized a host of other developers.
provisioning, so we are strong within all these kinds of business - covering both IT and CT. From the business perspective, the capability of our applications offering is another focus. SDP should not just about a technical platform, nowadays nobody would like to take so much risk to launch an unknown platform without seeing the future. End to end professional services and value chain cooperation are the necessary considerations for a SDP. As mentioned above, Huawei SDP is an end to end business solution taking in all the considerations of operators. It has been proven as a really helpful and successful solution for oeprators business transformation. This is also another reason we won the awards.
KD:
The GSMA award gives you enhanced presence in the market, do you think you already had good recognition in this market?
LL:
Yes, Huawei SDP has been quite successful in the past few years, which has been selected by more than 120 operators over 100 countries worldwide, including the 5biggest mobile operators, Vodafone, Telefonica, America Movil, China Mobile and China Unicom, and we have successful delivered the world-first and largest multinational SDP for Telefonica covering 13 countries in LATAM. These are all the good recognition in this market, and we believe that more and more presence will be in the near future.
KD:
Do you think this combination of the scope of your operations and your openness to partnership is key to your success with SDP, and in winning the GSMA award?
KD:
Operators are facing an increasingly competitive situation. What do you think is the best way operators can build out new services into the market?
LL:
According to Rob Conway, CEO of the Board, GSMA, Aremarkable 500 entries from across the global mobile ecosystem were submitted this year, all of an extremely high caliber, and the winners should be incredibly proud of their achievement. Huawei SDP is a real end to end business solution designed in advance technologies which enable the business success of operators that is the major reason why we could win this award. From the technical perspective, I believe that one of the key points for a SDP should be the integration capability with legacy network components. Covering both communications technology (CT) and the IT world. This is a core strength for us because I believe we are very strong in systems integration. Importantly, we have quite a broad product line covering almost all the common VAS components and products. For example in services we have SMS, MMS, and WAP gateways, as well as support for services such as ringback tones. Then in the IT sphere, we have strong capabilities in billing, CRM, mediation and
LL:
As terminal vendors and internet companies are also offering so many services and applications through their app stores there is a risk for the operator in controlling the value chain, so operators need to think of a business transformation from being a dumb-pipe to be a smart channel, cooperating with the whole ecosystem to facilitate open service innovation with a faster time to market and lower capex and opex. Sales of high end mobile phones are growing, so the demand for multimedia services or innovative services targeting high end terminals will increase. So operators need to do their service planning very carefully targeting different groups of end user segments. As operators need lot of cooperation from outside world, their network should be flexible enough to dynamically integrate new services. Operators need to expose their telecom capabilities, so that third parties or
40 | Mobile Europe
Sponsored Interview
online developer communities can bring their innovative mash up services. Operators are exploring all possible ways to increase their ARPU, but they also need to decrease the total cost of ownership in order to increase the margin of profit. They have to streamline their workflows and should reuse their capabilities on which they have already invested. Operators have started exploring new business models to provide both traditional and non-traditional services. Under the trend of all-IP evolution operators are planning for more convergent, personalized and differentiated experiences. First, convergent services around digital life will be further developed. For example, multi-screen digital media, covering PC, mobile, TV and digital frames etc, will be more popular and become a basic service. Quad-play connecting mobile voice and mobile broadband is coming into being. Social network user profiles will take on a more important role in future services. Secondly, contextaware services based on user behaviour will be more common: for example, a reminder service based on the users location and preferences. Promotions and advertising services would also be more targeted, giving users only what they really want without intruding on their privacy. To make all this happen, an open environment with a healthy ecosystem is needed, and this is the key point that Huawei SDP focuses on and addresses.
LL:
It really depends; theoretically, operators have a very unique ability to monetise the assets in the value chain; they have the strong customer base, they have charging facility, they have the public credit, so compared to other players in the value chain, like the terminal vendors, Internet providers etc, I believe this is the future, although I do believe this is not easy.
KD:
What makes Huawei different from other SDP providers in enabling operators to succeed in this market?
LL:
From the technical perspective, Huawei SDP offers a future-oriented open platform based on SOA architecture providing pre-built adaptors for prompt network integration; standard APIs and pre-developed templates for open service innovation; the ability to connect mass developers; an all-in-one portal for convergent presentation, and flexible business processes with BSS/OSS. Along with the platform, we also provide access to hundreds of ready-to-deploy consumer and enterprise services. From the business perspective, Huawei SDP offers a full range of professional service support from managed services, customisation, integration, to assistant operation and service consulting and planning. Working with more than 300 top-ranking global CP/SP partners, Huawei enhances the efficiency of VAS delivery more than tenfold, from five to six a year to more than 100. Thirdly, Huawei also provides SDP hosting centers with pre-integrated services from Huawei and third parties. Finally, Huawei SDP is a mature business solution that has been widely selected and commercial use by more than 120 operators in over 100 countries worldwide, including the worlds five largest mobile operators: Vodafone, Telefonica, America Movil, China Mobile and China Unicom.
KD:
For the operators that want to go down that transformational route, what are the things they need to do to allow them to compete?
LL:
Some of the operators are still waiting to see how the market status changes. But the big operators are considering how to change their networks to become smarter, and let more service developers join and to generate more revenue from new applications. For example the recent GSMA Wholesale Community Applications initiative has been designed to develop a common set of APIs to enable service developers to deploy services across multiple networks. This is the kind of approach the industry is forming. I think some Tier One operators want to catch not only wholesale revenues but to retain control of key applications that they may consider accord well to operators own core competencies. For example, operators have a closer relationship with their subscribers, and generate greater loyalty compared to internet providers. They also retain key sets of information related to useage, location, and network data. .
KD:
Are you a believer that operators really will be able to monetise those kinds of assets?
ABOUT LANCE LIN Mr Lin is the Vice President Huawei Software Company and is responsible for Huawei softwares global sales and marketing efforts. Prior to his current role, he was vice leader of global technical sales department within Huawei software from 2005 to 2008, and was director of software technical sales for Asia Pacific from 2001 to 2005. Mr. Lin joined Huawei Technologies in 1996. He graduated from Chongqing University in 1996 with a Masters degree in Software.
Mobile Europe | 41
THE PR TEAM MUST BE WONDERING WHAT THEY DID TO DESERVE THIS. OH DEAR.
The spring litigation season is upon us, and Nokia has backed up its playground chat with some upper cuts to the jaw of Apple, launching legal proceedings alleging patent infringements. In Wisconsin.
This is going to make Nokia about as popular in the US as Tiger Woods is in the locker rooms of the USGPA golf tour. Not that Apple has been getting things all its own way, of course, when it comes to PR. The small-scale, niche provider of vertically integrated music and games platforms has been letting some of the velvet glove fray from around the iron fist of its PR department. First off there was the mocked response from Apple to the fact that one of its developers lost a phone in a bar, and didnt get it back until pictures of it had been posted all over the internet by Gizmodo. It may not have been Apples fault that the police went into the blogger in questions apartment in strong arm fashion, but it still didnt look good. Then, Steve Jobs published an article on the Apple site telling the world why the company wont work with Adobes Flash.
Flash isnt open (Apple is, by the way, presumably in the way that open prisons are open), Adobe isnt open, and it doesnt even work very well. Not only that, but the CEO at Adobe is a bit lame, and doesnt even have a collection of 36 cashmere black polo necks. And now Nokia? Good heavens, the PR team must be wondering what they did to deserve this. Oh dear.
42 | Mobile Europe
DUBAI ARIS, 12:00 DON, 11:00 P ON IME: 10:00 L JUNE 2010 T M O N DAY 9 T H
CommProve
Globally more than 100% of profits are made from roaming and messaging. By doing real-time end to end analysis operators can quickly identify roaming revenue at risk or loss and quickly resolve the causes in a prioritized manner. Current roaming solutions are blunt tools that cannot provide real time analysis of the revenue impact of network issues. This is causing revenue leakage for many operators. Also, real time monitoring of interconnect links and outbound roamer statistics, the interconnect and roamer agreements can be managed effectively to dramatically minimize costs. Find out how real time end to end monitoring and analysis can maximise the capture and retention of inbound roamers, act directly on revenue impacting issues and drive revenues from your most valuable customers.
Moderator: Speakers:
For details of the European Communications Executive Webinar Series 2010, contact Justyn Gidley on +44 (0)207 933 8979