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TECH TALK: Next-Generation Networks: Services and Business Models

August 2nd, 2005 · No Comments

by Ninad Mehta

You can divide the traditional voice telephony world into two large buckets: The developed countries characterized by high tele-density and the developing countries characterized by low tele-density. For the high tele-density countries, the number of fixed lines have been either stagnant or declining at an accelerated pace for last five years. This decline can be attributed to several factors, including the customer dropping the 2nd line for dial-up Internet, migrating from fixed to Cellular completely (cutting the chord), migrating to Voice over BB using the cable operator, migrating to VoBB using VNO such as Vonage, Skype or others. This erosion has two impacts: The revenue is staying more or less flat due to the limited number of services being offered on the traditional voice/data lines AND the costs of operating broadband networks is going up as more traffic migrates from fixed wireline to mobile and broadband. When the SP in a developed country has a fully depreciated network, there will be some level of natural migration to the next generation networks but due to various regulatory constraints, we havent seen massive investments going into building these new broadband networks like USA. In countries like Japan, South Korea and some Scandinavian nations, it is the government policy that enables the massive infrastructure investments for NGN.

The traditional business models that have worked for years are now breaking down. These SPs need to somehow increase their revenue and the solution they have found is in building NGN using the IMS framework. IMS promises the convergence of wireless and wireline networks and services. The SPs will be able to move up the value chain by offering a lot more than just raw bandwidth. In fact, the SPs who choose to stay on their current networks risk the possibility of being just bit pipe providers on whose networks, other application service providers can ride.

New business models will emerge based on new capabilities built around the IMS framework. In the past, the SP provided service bundles where network access & transport, call features and applications were all bundled together as part of a service. For example, your telephone company provided you with basic telephony (dialtone), calling features (caller ID, 3-way calling, speed dialing, etc.) and applications such as network voice mail. But, there are a lot of new, innovative and life enhancing applications that we have not even conceived yet. How will we get these services delivered? One option is for the SP to develop these applications and provide it over time. But this is a very slow approach. Another approach is IN based, which seemed to be the nirvana back in the mid 80s. With the applications, endpoints, access networks and core networks all converging, it makes a lot of logical sense for the SP to use IMS as the framework for service delivery. IMS enables a distributed ecosystem where application developers, application service providers and network providers can all come together.

IMS enables new applications and services in consumer as well as enterprise space. For Consumer Applications & Services will use Presence and Location information servers for real-time service enhancements. Enterprise Services Fixed/Mobile convergence will enable an employee to have full PBX functionality available on his personal cellphone. This would include abilities such as abbreviated dialing, employee directory access and the traditional PBX features like call park, call forwarding on busy, etc.

Going back to our classification between low and high tele-density countries, low tele-density countries are mostly developing countries of the world where the primary government objective is to increase tele-density at the lowest costs. For these countries, the markets may not be fully ready for adopting the next generation services. Yet, it makes a lot of sense to invest in the next generation infrastructure that will enable these services in the near future.

Tomorrow, we will discuss some of the options available to us for building the next generation service delivery architectures.

Tomorrow: Building It Out

[Ninad Mehta works at Lucent in New Jersey. The views expressed in this column are his own.]


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