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Research: IP Transformation
Research: IP Transformation
Research: IP Transformation
Research Report
IP Transformation
All IP Architectures, IMS, Mobile Backhaul, Mobile Softswitch, Session Border Controllers, and Core Gateways
Nadine Manjaro Senior Analyst Wireless Infrastructure Stuart Carlaw Vice President and Chief Research Officer
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IP Transformation
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Section 1.
EXECUTIVE SUMMARY
1.1
What Is IP Transformation?
IP transformation refers to the migration from a circuit-switched network to an all-IP network that is taking place in core, access, and backhaul networks. It also denotes the transformation of the service architecture to a common service layer. Transformation of the network to all-IP began in the core and various portions of the wireless network. Some operators have IP in the core or access network, or only at interconnection points. True transformation will occur when the end-to-end network is transformed to IP. The strong growth in 3G data traffic is driving network utilization to new capacity limits and choking the backhaul of at least one large US operators network. AT&T reported that its data traffic has increased by 5000% over the last three years. Operators with high data utilization will need to start the transformation in the backhaul network since this is typically the limiting factor. Most transformations will include a migration to Ethernet-based solutions. In the radio access network (RAN), the base stations will be equipped with Ethernet ports for connectivity to Ethernet over fiber or Ethernet over microwave backhaul. Operators are migrating their backhaul networks to Ethernet over fiber or Ethernet over microwave to support increased traffic on their networks. Ethernet is a low-cost solution that is widely deployed and through efforts of the Metro Ethernet Forum robust enough to be considered carrier grade and meet required QoS performance expectations. In general, IP transformation started in fixed-line networks over five years ago and is now evolving to the wireless networks. As wireless networks are developed further to offer mobile broadband services, operators are faced with the same bandwidth constraints that wireline operators once faced. Thus, operators are migrating their mobile networks to IP to simplify the architecture, reduce latency, lower costs, and improve network performance.
1.2
1.2.1
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In terms of service delivery, operators have long talked about deploying an IMS platform whereby services can be quickly added and removed without significant incremental costs. However, the transition to IMS has been a lot slower than predicted. Operators are reluctant to interfere with their mobile switching center (MSC) platforms. The MSC is the center of circuit-based services such as voice and SMS, which to date account for over 70% of most operators revenue. In addition, the MSC is tied to current billing systems and operators are reluctant to interfere with the operation of any of these systems. While IMS can theoretically help operators reach the next level of service delivery, they are reluctant to make the full transition to IMS. Part of the reason is that the initial deployment cost for IMS is typically high and most operators lack the business case to justify this cost. The lack of solid IMS products also contributes to operator reluctance to adopting IMS. Some operators have implemented IMS for one or a few services, but have not fully committed to IMS across all services. Another barrier to IMS has been the lack of IMS-capable devices. The completion of the Rich Communication Suite (RCS) standard in early 2009 and global support for the standard among GSM operators and several large device manufacturers such as Nokia, Samsung, LG, and Motorola will help to drive new life into IMS. In fact, Nokia is expected to have commercial terminals with RCS by 2010. In more recent developments, several leading operators and OEMs defined IMS as the standard to deliver voice and SMS over LTE. The participating operators include Verizon Wireless, Vodafone, Orange, Telefonica, and TeliaSonera, while the OEMs are Ericsson, Alcatel-Lucent, Samsung Electronics, Nokia, Nokia Siemens Networks, and Sony Ericsson. This development will definitely drive IMS deployments for those operators with LTE plans and no IMS network.
1.3
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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1.4
Chart 1.1
Base Station Deployments by Technology Generation, World Market, Forecast: 2009 to 2014
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
2G 3G
1,000,000
4G
500,000
0 2009
2010
2011
2012
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2014
(Source: ABI Research)
1.5
1.5.1
Backhaul Transformation
Transformation of the backhaul network to IP has already begun as mobile operators scramble to meet 3G capacity demands. The type of backhaul used will vary by region and network, but will most likely include Ethernet. Generally, Ethernet over fiber will be used in developed markets like parts of Asia, North America, and Western Europe. Ethernet over microwave is becoming the backhaul technology choice for greenfield operators like Clearwire and Digicel. Ethernet over copper will be used in regions like Eastern Europe in the form of ADSL2 or VDSL. Since 3GPP
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standards for UMTS specify ATM, some operators with large WCDMA or HSPA networks will continue to leverage pseudowire in the near term to encapsulate ATM. However, the longer-term solution is to migrate to Ethernet because pseudowire solutions add delay and overhead due to encapsulation requirements and are also limited in terms of bandwidth. Global backhaul distribution in 2009 is as follows: Copper T1 accounts for 39% of all backhaul Microwave accounts for 37% of backhaul Ethernet over fiber accounts for 12% Ethernet over copper accounts for about 9%
In North America, T1 is still the most common type of backhaul used due the low cost of T1s compared to similar technologies in other regions, strong QoS, and high availability. T1s also enable bundling for higher capacity. However, they become less feasible as backhaul capacity requirements increase, thus requiring more than seven T1s. As a result, operators are looking to higher-capacity solutions such as Ethernet as an alternative. Backhaul distribution in 2009 in North America is as follows: T1s account for 47% of deployed backhaul Ethernet over fiber accounts for 19% Microwave accounts for 14% Ethernet over copper accounts for 12%
Operators like Verizon Wireless and T-Mobile are aggressively upgrading their backhaul solutions to Ethernet over fiber. Verizon Wireless plans to upgrade over 90% of its cell sites during the next three years. In Asia, fiber is largely deployed in the major telecom markets, such as Japan, Korea, and China. Japan and Korea are densely populated with smaller geographic footprints; thus, it is more cost-effective to deploy fiber. China has also deployed a lot of fiber, though there is more PDH fiber than Ethernet over fiber. Since fiber is already deployed in these regions, it is easier to upgrade the backhaul compared to in the United States. In India, microwave accounts for about 80% of backhaul due to faster deployment speed and lower costs versus competing technologies. In Europe, microwave is the primary technology used in Western Europe (72%) while copper-based solutions are more common in Eastern Europe (32%). The cost for an E1, which is the European equivalent of a T1, is higher than in the United States due to government-regulated pricing. As a result, operators have looked for different options. Eastern Europe has a broader distribution of backhaul technologies without a heavy focus in any one area. Latin America also uses a combination of copper T1s and microwave backhaul. Copper is the most common solution used. In Africa and the Middle East, microwave is the more commonly used backhaul because of the time to market issues and expenses associated with copper. Additionally, copper deployments are more subject to theft due to the black market opportunity for copper.
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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Chart 1.2 shows the number of new base stations connected by Ethernet fiber. Asia-Pacific leads and will continue to lead in new Ethernet over fiber opportunities, followed by Western Europe and North America. The Asia-Pacific region has a large installed base of SDH fiber due to fiber to the home deployments in countries like Japan and Korea. China has a large installed base of PDH fiber. Most deployments in these regions will just need an upgrade from SDH or PDH fiber to Ethernet over fiber.
Chart 1.2 New Ethernet over Fiber Opportunities, World Market, Forecast: 2008 to 2014
120000
100000
80000
60000
1.5.2
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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Chart 1.3 shows the global revenue opportunity for session border controllers by region. Western Europe leads the market in 2009, followed by the Asia-Pacific region.
Chart 1.3 Session Border Controller Mobile Networks Revenue, World Market, Forecast: 2009 to 2014
140,000,000 Western Europe Asia-Pacific 120,000,000 South America 100,000,000 Revenue ($) Africa Middle East Eastern Europe North America
80,000,000
60,000,000
40,000,000
20,000,000
0 2009
2010
2011
2012
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(Source: ABI Research)
1.5.3
Media Gateways/Softswitches
Most media gateways and softswitches are sold to fixed network operators. While mobile operators are implementing these elements, adoption may be curtailed by the migration to IMS, which provides wider-scale support for multiple products. Most of the RAN vendors, such as Ericsson, Alcatel-Lucent, and ZTE, also provide softswitches. Ericsson is the self-proclaimed leader in mobile softswitch installation and reportedly serves more than 50% of GSM/WCDMA subscribers globally. Each vendor is a leader in its own market. For example, 98% of ZTEs softswitch/media gateway ports are sold in China. Most of Alcatel-Lucents ports are sold in former Lucents home market, the United States. Western Europe is the strongest market for mobile softswitches with 2009 revenue estimated at $1.8 billion. North America is second with revenue of $1.37 billion, followed by Asia-Pacific at $1.18 billion. 3G is aligned with mobile softswitch deployments, and these regions have the highest 3G penetration rates.
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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2,750,000,000 2,500,000,000 2,250,000,000 2,000,000,000 Revenue ($) 1,750,000,000 1,500,000,000 1,250,000,000 1,000,000,000 750,000,000 500,000,000 250,000,000 0 2008 2009 2010 2011 2012 2013 Asia Pacific Africa 2014
Chart 1.4
1.5.4
IMS
IMS is necessary in any IP transformation discussion since it is the most likely solution for migrating subscriber management and managing voice and SMS traffic, signaling, and several other required features in a packet domain. In addition, IMS will be critical to providing converged service offerings for those operators with more than one network. Ericsson is the leader in overall contract wins with over sixty-nine commercial contracts to date. Alcatel-Lucent follows with forty full IMS contracts and sixty IMS contracts tied to application servers. Nokia Siemens Networks is in third place with thirty full IMS contracts and multiple trials. ABI Research estimates mobile IMS revenue of $8.4 billion in 2009, and this figure will grow to $17.3 billion by 2014. LTE deployments and fixed mobile convergence will be the two biggest drivers for IMS deployments. Asia-Pacific will lead in IMS revenue, followed by Latin America and North America. In Asia-Pacific, demand will be driven by 3G and 4G deployments, while in Latin America IMS is and will be driven by converged network services. North American IMS deployments were once tied to push-to-talk, video share, and converged services. Now 4G will drive additional IMS deployments in the region. IMS revenue includes revenue for call session control function (CSCF) servers, home subscriber servers (HSS), and common application servers used for VoIP. Application servers do vary depending on operator and services deployed, but these are the most commonly deployed elements. For example, AT&T is using IMS for its video share service so the company would use the baseline elements including the CSCF, HSS and video share application servers.
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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4,500,000,000 4,000,000,000 3,500,000,000 3,000,000,000 Revenue ($) 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0 Western Eastern Europe Europe AsiaPacific North South America America Middle East Africa
Chart 1.5
Chart 1.6
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1.6
Conclusion
IP transformation has different meanings to different companies. In the scope of this research, it refers to transforming the network from TDM, ATM, and different legacy architectures to an IP or packet domain. Mobile network transformation to IP has already started and will continue to expand over the next five years as operators seek ways to minimize operational and capital expenditure while increasing network capacity. Network traffic is growing by 12% per month, according to leading network infrastructure vendor Ericsson, while AT&T reported that the iPhone uses thirty times the amount of traffic as a regular cellphone. The general industry consensus is that data traffic is growing much faster than expected. Revenue growth is also increasing, but not enough to offset the cost of meeting traffic demand. Operators are seeking means of reducing the cost to deliver each bit of data. It has been proven in the wireline industry that IP provides high data delivery at a much lower cost than alternative technologies. As mobile traffic grows and network usage becomes more like wireline networks, operators are looking to a solution similar to that used in wireline networks and IP is that solution. The transition to IP is not without cost. In terms of backhaul, operators typically purchase T1s through five- to seven-year agreements and may have to pay a penalty to transition to Ethernet over fiber. Many operators will do a flash cut to Ethernet over fiber during the maintenance window once the solution is in place. Others will gradually migrate traffic from the T1s to Ethernet. If the operator is the anchor tenant, it will also typically share the cost to deploy the fiber, which can cost $10,000 to $50,000 per mile depending on the location. Note also that IP transformation requires new equipment, which means an increase in CAPEX during the transformation and a boost in OPEX during the cut-over period. In addition, engineers require IP training to manage and operate the new equipment, and there is always the potential for outages during the transition. However, operators will work with skilled vendor technicians and their own staff to mitigate risks. Vendors like Alcatel-Lucent and Ericsson have proven step-by-step processes to transition operators networks and have handled hundreds of transformation projects.
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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Section 2.
IP TRANSFORMATION STRATEGIC RECOMMENDATIONS
2.1
Overview
IP transformation relates to how to optimize the performance and design of the wireless network to reduce costs and improve an operators ability to monetize the network. It requires the following: The use of IP multimedia subsystems (IMS) elements to manage and bill for subscriber sessions High-performance routers to transport data Session border controllers to convert traffic from TDM to IP at interconnection points In-line functions such as deep packet inspection (DPI) to monitor network traffic and implement dynamic or static rules
In the backhaul, IP transformation refers to the migration from TDM-based solutions to primarily high-capacity carrier Ethernet solutions over fiber or microwave. When operators upgrade RANs to meet growing traffic demand, they upgrade the backhaul to prevent bottlenecks in the network. Ethernet over fiber or microwave has become the solution of choice for several Tier One operators, including Verizon Wireless and Vodafone. Services will be transformed as operators move from traditional Internet access and voice calls to richer communications and less consumer-centric services. New services will include but are not limited to the following: Expansion of e-health services with remote monitoring, diagnostic, and imaging capabilities Machine-to-machine communications Digital signage Mobile advertising In-vehicle video and audio services Personalized services combining location, preferences, presence, and address book information
Operators business models will also transform as they reach out to a wider ecosystem for new service ideas through new entities like ng Connect, Verizon Wireless LTE Innovation Center, and the Joint Innovation Lab established by Vodafone, China Mobile, Verizon Wireless, Softbank, and others. In addition, changes in business models may require vendors to absorb some of the development costs and participate in revenue-sharing to reduce operators risks. Over time, the roles of equipment vendors, software and content partners, and integrators will evolve and become more interwoven into the management and running of the operators networks. Operators will choose vendors with expertise in managing and administering multi-vendor, multi-technology networks, which will lead to more cooperation and coordination among vendors.
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2.2
2.2.1
Strategic Recommendations
Operators should look to retire legacy base station equipment with TDM and ATM interfaces to standardize their networks. This will diminish the need for the multi-technology backhaul solutions, thus reducing operational costs. Standardizing on a multi-technology platform also reduces the number of network elements, which will cut operational costs further. Newer base stations are being developed to support multiple radio access technologies, especially when deployed in the same frequency band. Operators can migrate legacy base station traffic to the new converged platform via card additions, which will reduce long-term operational costs, backhaul costs, and power consumption. Most vendors already have multi-technology base station offerings, but they need to ensure that the offerings are more than marketing hype. Self-optimized networks, which can sense suboptimal performance for individual subscribers and self-correct to improve user experience, will be a tremendous help to operators in reducing deployment time, costs, and radio planning requirements. Most vendors only have baseline SON support; consequently, they need to extend this capability.Self-optimized networks will be a true differentiator.
2.3
Core Networks
Although it is evolving to similar features as the fixed network core, the mobile network core still has to maintain mobility management and handoff. The mobile network core is migrating from a hierarchical network to a flat architecture that minimizes delays and reduces the number of network elements. Included in the 3G core are the radio network controller (RNC), serving GPRS support node (SGSN), and GPRS gateway support node (GGSN). In this architecture, data traffic and control traffic traverse the SGSN and the GGSN from the RNC. As part of the transition of the core network to a flat IP architecture, the RNC is incorporated into the base station and data traffic goes directly to the GGSN (bypassing the SGSN). The SGSN is replaced by the Mobility Management Entity (MME), which only manages control traffic. As operators move from UMTS/HSPA or CDMA to LTE, one of the main areas of change is the IP core. The core network will be optimized to accommodate higher processing capabilities, less network elements, and the in-line functions required for subscriber-level management, as well as evolved billing options for LTE. In the evolved packet core (EPC), there is a distinct separation of signaling and data traffic. This results in the elimination of the RNC and a reduction in the number of MMEs because the MME is solely responsible for signaling while the PDN gateway and serving gateway manage data traffic.
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Chart 2.1 shows ABI Researchs projections for LTE gateways. Since the P-gateway and S-gateway can be combined into one element depending on operator preferences, they will be shown in the forecast as one element. Estimates indicate that only 361 PDN and serving gateways have been deployed in 2009. Operators are ramping up to roll out LTE in 2010. The majority of the gateways deployed during this time will be in trial networks, with the exception of Verizon Wireless, NTT DoCoMo, TeliaSonera, Tele2, and a few others. By 2011, many Tier One operators will begin deployments or preparation for commercial deployment, which will increase the number of gateways to 5,695 units. Western Europe and Asia-Pacific will lead the way in LTE deployments. Initial deployments will be centralized as operators deploy macro networks to provide hotspot-like coverage in the major cities. However, the number of gateways deployed will rise over time as the number of LTE network deployments increases and operators deploy more distributed architectures to meet capacity and coverage demands. By 2014, LTE gateway shipments will grow to over 41,736 shipped annually.
Chart 2.1 LTE Gateway Shipments, World Market, Forecast: 2009 to 2014
18,000 16,000 14,000 Number of Units Shipped 12,000 10,000 8,000 6,000 4,000 2,000 0 2009 Western Europe Asia-Pacific South America Africa Eastern Europe North America Middle East
2010
2011
2012
2013
2014
(Source: ABI Research)
2.3.1
Strategic Recommendations
Operators should look for core solutions that have been developed for the higher processing required for LTE. Some vendor solutions have been marginally updated with MME or serving gateway software, but are not optimized to meet next-generation network requirements. Gateway products should be designed with multi-threaded processing technologies and the latest chipset processing technologies, such as 35 nm processing, to serve increasing data traffic demand. Equipment vendors need to ensure that their solutions have the latest processing technologies and are scalable to evolve with changing traffic demands. The solutions should also be flexible to meet centralized deployments in early networks and decentralized deployments in more distributed
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networks due to larger serving areas or operators deployment strategies. In addition, core network elements should include in-line functions such as security features and DPI to help operators optimize network performance. Mobile networks will soon face security issues similar to the wireline network. Vendors that plan ahead to address these concerns will have an advantage.
2.4
IP Backhaul
In developed countries where 3G is widely deployed, the backhaul network will experience the biggest transformation as smartphones and data cards proliferate, significantly increasing network traffic. In countries like the United States, Japan, and Sweden, where are operators have spectrum and defined LTE plans, operators are upgrading their backhaul networks as the first step in upgrading to a 4G network. Even operators without fully defined 4G plans, such as T-Mobile USA, are upgrading their backhaul network (T-Mobile USA is upgrading its backhaul to Ethernet over fiber). Most of these operators are migrating to Ethernet-based backhaul either over microwave or fiber. The primary reason for using Ethernet is that it is now carrier grade, widely available, and low cost. In two of the markets studied (China and the United States), the average cost for an Ethernet over fiber solution is approximately $80 per Mb. This figure includes the cost to deploy the fiber. Yet, one has to be mindful that labor costs vary from region to region, which will impact the cost per Mb. Clearwire declares that the average cost per link for its Ethernet over microwave is in the $10 per Mb range; however, this does not include the cost to deploy the equipment. In Europe, operators will look to leverage their DSL networks to provide Ethernet over copper solutions. Improvements in bonded copper solutions such as VDSL2 and ADSL2 have enabled higher-capacity links.
2.4.1
Strategic Recommendations
The backhaul can no longer be the bottleneck in the network. Although T1s may still be needed to support synchronization and some real-time services such as voice, higher-capacity backhaul is a requirement even in emerging markets. Operators deploying high-capacity data networks must start with the backhaul; if they do not do so, they are wasting their spectrum investment. While fiber is the ideal solution, it will not be available everywhere and is cost-prohibitive in less populated markets. Operators should ensure that the backhaul solution is scalable and robust enough to meet both their short-term and long-term needs. Microwave technologies have improved enough to make them viable, low-cost backhaul options. Vendors have implemented dynamic bandwidth via adaptive modulation. This solution enables the use of a lower modulation scheme with lower capacity to accommodate for rain fade. As a result, operators can set a minimum capacity level acceptable for meeting traffic demand during poor weather conditions. The issue with this solution is that most implementations do not use the dynamic capability; rather, they fix the modulation to a specific level. Future improvements should include true dynamic modulations and higher-capacity solutions since operators are seeking Gigabit Ethernet with guaranteed minimum bandwidth. While microwave is being deployed by some greenfield operators and established operators in developed and emerging markets, most North American operators will only consider microwave for sites greater than 2 miles from the central office or wireline facilities. Thus, continuing improvements in microwave solutions are critical to ensuring more operator support, especially in developed markets.
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2.5
2.5.1
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2.5.1.1
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VoLGA
VoLGA is an initiative by T-Mobile Germany and several equipment vendors (Kineto, Motorola, Ericsson, Huawei, Alcatel-Lucent, T-Mobile, ZTE, Nortel, Starent, and LG Electronics) to support voice over LTE networks. This solution will enable the transparent delivery of traditional circuit-switched services such as voice, SMS, and VMS over LTE without IMS deployment. The overall objective is to enable GSM/UMTS operators to reuse existing equipment to deliver circuit-based services over LTE and reduce costs.
Tel.
SMS
VMS
Pres.
Share
Circuit Services
GANC
WAP
MMS
IMS
A/Iu-CS
Packet Services
BSC
RNC
EPC
GERAN
UTRAN
LTE
(Source: Kineto Wireless)
The proposed architecture will require a client on the devices and gateway (VAN-C) deployed in the LTE network (in or behind the EPC). The gateway will connect legacy R4 switches to the EPC via the 3GPP Generic Access Network (GAN) standard. Circuit-based services like voice, SMS, and VMS will be encapsulated in packets to traverse the LTE network. This will not require any changes to the MSC and operational systems. The advantage of the proposed solution is that it will minimize the number of elements required to deploy VoIP over LTE. Additionally, the architecture will enable the handoff of circuit-based services between GSM/UMTS and LTE networks. Thus, operators with legacy networks will be able to migrate portions of their network to LTE while still supporting legacy services in rural and suburban areas. The architecture will also facilitate roaming between LTE and GSM/UMTS networks. 2.5.1.2
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2.5.1.3
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2.5.2
Strategic Recommendations
Operators and vendors should work toward a standardized solution for next-generation services. History shows that mass market adoption requires standardization. SMS did not take off until there was full interoperability across platforms and networks. IMS is defined by the 3GPP as the standard services platform and is also standardized across cable, wireline, and wireless networks. As a result, operators and vendors should embrace IMS as the common service architecture platform.
2.6
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Another change in the business model is that operators are now looking to their infrastructure partners to assist in new product and services development. Vendor partners will share the cost of developing new services, but will also share revenue from the new services. An example of such a partnership is Verizon Wireless Joint Innovation Lab, which is being co-developed with the companys LTE vendors, Alcatel-Lucent and Ericsson.
2.6.1
Strategic Recommendations
Operators need to expand beyond traditional business models to recoup their investment in 4G technologies. In developed markets like North America, Japan, and Europe, competition has forced an erosion in data and voice revenue. Operators need to evolve their business plans from flat-rate pricing, bundling, and subsidized contract models to a more open model whereby customers with unlocked devices can access an operator network easily and with simplified billing. Improvements in network speeds, latency, and device processing capabilities open new opportunities for expansion into other vertical markets beyond healthcare monitoring, smart metering, and machine-to-machine communications. Operators need to invest more in researching and developing new, non-traditional business models. While partnerships with equipment vendors are important, stronger partnerships with chipset vendors and their ecosystem will be more helpful in terms of service innovation. Chipset-level focus will remove some of the device limitations, thus resulting in more non-traditional solutions. Several vendors are pushing unified subscriber database solutions for personalized service offerings. This approach is a great start in evolving services, but more definition around specific services is needed. Vendors like Alcatel-Lucent conduct their own end-user studies to determine the types of services that customers are willing to purchase. However, further work is needed on leveraging this information to create new services.
2.7
Conclusion
IP transformation impacts several areas of the network, thus requiring operators to take a well-planned approach to transforming their networks. Operators will begin the transformation in areas of the network that are critical to improving network performance, such as the backhaul. They will work to consolidate all wireless technologies deployed in their networks into a single backhaul solution. As a result, they will leverage high-capacity, Ethernet-based solutions with pseudowire to support legacy 3G requirements such as ATM. Operators will also transform the RAN by deploying new base stations with Ethernet interfaces. The core network will evolve based on the elements defined in the standards. Technologies like LTE require flat IP architecture, which combines existing functions with other elements to simplify the architecture and reduce delays. The 3GPP standards also define requirements for the new elements. Operators are more reluctant to change elements in the network that are critical to overall performance, such as the mobile switching center (MSC). The MSC is tied to Prepaid, billing, and call control; consequently, operators are hesitant to make any changes without understanding the impact. A thorough transformation plan will include a detailed analysis of each element impacted and potential issues, as well as workaround solutions. Operators will need vendor partners to help define and implement the transformation process.
2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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Section 3.
DRIVERS AND INHIBITORS FOR IP TRANSFORMATION
3.1
Drivers
The primary driver for IP transformation is cost. Network utilization and capacity are increasing while revenue remains relatively flat. In the voice-centric network, utilization was tied to revenue and there was a direct correlation between the two. Now utilization is increasing steadily, but operators cannot charge consumers for the cost to meet growing capacity demand due to competition and market pressures. As a result, operators are focused on reducing network costs. IP and Ethernet are fairly low-cost solutions that have been optimized for the wireline network. As the wireless network becomes more like the wireline network, especially at the core, operators are looking to leverage the proven, low-cost solutions used for wireline networks. Network capacity is another driver for the transformation to an all-IP network. As wireless technologies improved, operators began selling data cards and USB dongles. The use of these devices simulates utilization on the wireline network. Lower-capacity networks like EDGE/GPRS replicate dial-up networks while 3.5G networks like HSPA imitate utilization on always-on DSL or cable networks. The primary differences between these networks are capacity and latency. When users employ data cards in a similar fashion as wireline connections, operators face capacity limitation issues. Since spectrum is a scarce resource, operators cannot throw bandwidth at the problem as they did in the wireline world. Network capacity is limited by channel bandwidth, which in turn is limited by spectrum availability and the technology used. It is also restricted by the backhaul technology and capacity used to connect the base stations to the core network. Legacy technologies like GSM are limited to 200 KHz for channel bandwidth, CDMA2000 is limited to 1.25 MHz, and WCDMA is limited to 5 MHz channel bandwidth. Newer technologies such as WiMAX and LTE enable the more efficient use of spectrum by eliminating waste caused by the guard bands used between smaller channel sizes and increasing the number of bits per hertz. WiMAX and LTE use larger channel bandwidths such as 10 MHz and 20 MHz, thus significantly increasing network capacity. These technologies also require the transformation to a flat IP core, which reduces overall network latency.
3.1.1
Device Migration
Traditional wireless devices were handsets focused on voice communications. Newer devices are more data-centric, with QWERTY keyboards to simulate PC-like usage, Internet access, e-mail capability, and more multimedia-centric usage. End users are connecting to the network with more devices than ever. New devices include: Netbooks USB dongles Ultra mobile PCs iPhone eBooks Mobile Internet devices Handheld gaming devices
All of these new devices need a means to connect to the Internet and thus require an IP address.
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Operators will need new business models to monetize the use of off-portal content. Today, many services are offered in silo, which is more costly to grow and maintain. Consequently, operators are migrating to a centralized service platform that enables them the quickly evaluate and deploy new services without incurring high incremental costs. An IP-based service platform enables sharing across multiple access networks.
3.1.3
Cost Reduction
Data revenue is not increasing on par with bandwidth utilization, as was the case with voice traffic. As a result, operators are looking for a way to reduce costs. The migration to IP will lower costs since IP networks are already widely deployed by fixed operators, resulting in reduced costs due to economies of scale. Flat IP architecture lowers costs by minimizing the number of network elements. In addition, IP platforms are widely available in off-the-shelf configurations. Most OEMs focus on software developments for gateways and core infrastructure products. They are then able to purchase ATCA chassis or Sun servers with the configurations that most closely meet their needs. ATCA products are standardized and can easily be scaled as needed. Centralized service architecture also helps to reduce costs since systems and platforms can be shared across access networks and different services. Operators do not have to purchase a discrete set of network elements for each application developed.
3.1.4
Data Bandwidth
Mobile networks are expected to be on par with wireline network speeds. Wireline broadband networks provide the baseline for consumer expectations of always-on services. These expectations will drive the wireless core to be comparable with wireline networks. The challenge with wireless networks is that the air interface is limited and customers are mobile. One potential solution to increase network capacity is to deploy a more distributed network with smaller cell sites and more in-building solutions. However, the smaller cell site will require high-capacity backhaul. This means that operators will have to deploy more distributed services and backhaul architectures, which can be very costly. Femtocells may solve some of the backhaul issues since the traffic is routed off the wireless network onto the wireline infrastructure at each site. Yet, femtocells present a different set of challenges, such as how to manage interference with the macro networks overall management of radio resources. The common theme across the industry is that data traffic is growing exponentially, thereby increasing operator costs. At the same time, data revenue is relatively flat, as indicated in Chart 3.1. The United States is the only country where data revenue is increasing at a relatively steady rate though not enough to keep pace with data utilization.
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60,000 USA Germany 50,000 France Japan Italy India China UK
Chart 3.1
Data Service Revenue, Countries with Strong Data Growth, Forecast: 2008 to 2014
Revenue ($ Billions)
40,000
30,000
20,000
10,000
0 2008
2009
2010
2011
2012
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2014
(Source: ABI Research)
3.1.5
4G Network Migration
The migration toward 4G or OFDMA-based networks will be the strongest driver for IP transformation. 4G, unlike 2G and 3G technologies, does not include a circuit-switched component. The circuit-switched component is not as efficient as the packet-switched network because it establishes a dedicated path between the communicating end points, which is more wasteful. In contrast, the packet-switched network routes each packet independently and reassembles them at the termination points for optimal use of the network resources. 4G networks will begin with the evolved packet core, which is all-IP. Since 4G is one of the primary drivers for IP transformation, the regions that are the first to adopt 4G technologies will be the earliest adopters of end-to-end IP networks. Such regions include North America, parts of Asia (Japan and Korea), and Western Europe. The migration to 4G is also aligned with the release of much needed spectrum resources. Countries that release new spectrum will be the earlier adopters. The migration to 4G or OFDM networks started with mobile WiMAX (802.16e) and LTE deployments. Mobile WiMAX deployments started in 2008 and will continue over the next several years. LTE deployments will start in late 2009 and continue over the next ten years or so with improved versions on the 3GPP Release 8 standards. Once operators begin to convert their networks to all-IP, the trend toward all IP will continue.
3.2
Inhibitors
Cost is a major inhibitor to IP transformation. While operators can save money over the long run by upgrading to all-IP networks, there are still costs associated with the upgrade. New equipment is needed and business cases are typically linked to revenue not cost savings. Many of the legacy systems are still operational and are tied into complex billing schemes. Given all of the unknowns, operators are reluctant to invest in transitioning their networks.
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Section 4.
WHY IP TRANSFORMATION?
4.1
Service Evolution
Services will transform to become more personalized. They will also shift from the traditional consumer-centric services to vertical applications such as e-health or telemedicine, remote meter reading, automotive services, and machine-to-machine communications. Meanwhile, traditional services will be enhanced by faster data rates, lower latency, and improved QoS. Service transformation will also lead to changes in business models as operators move toward more open networks, devices, and applications. Operators will leverage third-party services and rely less on their own internal development teams. They will also have to rely less on subsidy and contracts and more on strong products and services to retain customers. Operators are now collaborating with vendors and a larger ecosystem to develop new applications and services. As a result, OEMs will share some of the risks and revenue of the new services. The completion of the Rich Communication Suite (RCS) standards will further enhance service delivery. RCS enables richer communications by enhancing and integrating multiple features that already exist. Some of these features include the integration of location-based services, enhanced address book video share, multimedia messaging, file sharing, and Presence.
4.1.1
Service Brokering
3GPP Release 8 provides enhancements to IMS that improve service brokering. New features include: Improvement in application server support to prevent termination of primary session when there is an application server error Explicit sequence of services can be invoked in the application server The user device can trigger the service delivery process Identity of the original called party is retained through multiple service activations to prevent operator policy violations
4.2
4.2.1
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Otherwise, if served first, those users with poor channel quality would have high error rates based on the past algorithm, which used the average channel condition to determine modulation and coding schemes. Release 5 (HSDPA) also introduced higher order modulation (16 QAM), thereby increasing the peak data rates. Release 5 of the 3GPP standards also moved Hybrid Automatic Repeat Request (H-ARQ), which enables the retransmission of dropped or corrupted packets, from the RNC to the base station. This shift resulted in an improvement in base station latency. Due to the combination of an 80% reduction in response time, moving the intelligence to the edge of the network, and adaptive modulation, the performance of HSDPA is significantly better than that of WCDMA. HSDPA demonstrates a seven times improvement in data rate and an 80% reduction in response time compared to WCDMA. Release 6 (HSUPA) balanced overall performance by providing improvements in the uplink. Such progress is essential for real-time services such as VoIP and video chat, which require more synchronous transmission.
4.2.2
3.9G Evolution
The transformation of the RAN will focus on 3.9G or 4G base stations and smaller form factor base stations such as picocells and femtocells. LTE base stations will have more intelligence than traditional base stations since the RNC function will now be incorporated into the base station. In addition, the introduction of the X2 interface will enable direct communications between base stations, which was not possible in predecessor 3GPP technologies. There will also be some transfer of data during handoff between LTE base stations without the data traversing the core network. While pico and femtocells will be critical in enabling operators to offer higher data rates in smaller cell sizes, they will present unique challenges. IP transformation will be required for management of these elements. Operators are concerned about how best to manage large numbers of femtocells. IP capabilities will enable operators to automatically detect when new femtocells or picocells join or leave the network, help in troubleshooting these elements, and support the self-optimization feature of LTE networks. Remote radio heads also mark a transformation to more intelligence at the top of the tower. In the past, operators were reluctant to place electronics at the top of the tower for fear of failure, which would result in costly tower climbs. Now operators are looking to remote radio heads to increase deployment flexibility. Remote radio heads enable the deployment of the radio away from the base band unit.
4.3
Backhaul Evolution
The primary evolution taking place is in the backhaul. As operators migrate to 4G technologies or solidify their 3G networks to deal with the increase in 3G traffic, they are turning to Ethernet-based solutions in the backhaul. The main solutions will be Ethernet over fiber or Ethernet-based microwave solutions. Operators with mostly 2G networks will use pseudowire solutions to aggregate TDM and ATM traffic onto Ethernet backhaul. However, due to the high growth in 3G traffic, pseudowire solutions will no longer be a good option. Most backhaul solutions will leverage Layer 2 solutions such as switched Ethernet while Layer 3 functions will occur chiefly in the network core. Ethernet is the technology used in the wireline network to manage bursty IP traffic. It is a proven, low-cost technology that is widely available. Over time, operators and vendors have worked through issues to improve the reliability and performance of Ethernet solutions. As
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operators migrate to 3G and now 4G, they are evolving their backhaul networks to an all-IP architecture by leveraging Ethernet. 3G and 4G traffic are more bursty than typical voice and SMS traffic and have higher peak-to-average requirements. Ethernet was developed to handle this type of traffic. As mentioned, it is widely available and provides higher-capacity solutions at lower cost than most other technologies. In the past, operators were reluctant to use Ethernet due to its connection-less state (less reliable) and inadequate synchronization support. Yet, improvements in synchronization technologies and the standardization of Ethernet solutions have optimized the technology for backhaul. Today, Ethernet solutions are optimized to provide predictability, QoS support, security, reliability, and reductions in overall delay. Standardization efforts in groups like the Metro Ethernet Forum (MEF) are improving the key features of Ethernet and establishing a strong ecosystem for Ethernet-based solutions. Chart 4.1 shows the number of base stations connected via Ethernet over fiber. ABI Research estimates the number of base stations connected by fiber in 2009 is approximately 582,700. This number will grow to 1.1 million by 2014. Most of the growth in Ethernet over fiber backhaul will be attributed to LTE deployments. However, countries like China, Japan, and South Korea already have a large installed base of fiber and will evolve their solutions to Ethernet over fiber. Operators in markets like North America with large TDM bases are also migrating to Ethernet over fiber to meet growing traffic demand.
Chart 4.1 Ethernet over Fiber Base Stations, World Market, Forecast: 2008 to 2014
500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 2008 Western Europe Asia-Pacific South America Eastern Europe North America MEA
2009
2010
2011
2012
2013
2014
(Source: ABI Research)
Ethernet over microwave solutions provide the benefits of using Ethernet without the cost of deploying fiber and the time to install fiber, which can take six to nine months. Today, microwave over Ethernet is primarily used by greenfield operators or as a fill-in solution for those operators deploying Ethernet over fiber. Clearwire is an example of an operator that uses Ethernet over microwave for 90% of its backhaul network. The operator uses microwave backhaul with Ethernet switches to form a ring architecture that provides SONET-like resiliency in case of
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failure. This ring architecture provides resiliency to ensure four nines (99.99%) backhaul availability. Each cell site is connected via two microwave links, with Ethernet switching connecting the links. Clearwire recently selected DragonWave as its microwave provider. Enhancements in microwave backhaul include a built-in Ethernet switch to enable ring-like architecture for redundant routing options in case of failure.
4.4
Mobile Core
The evolution of the mobile network to an all-IP core began with 3GPP Release 5, which introduced IMS, then continued with Release 6 through Release 8. In Release 7, one-tunnel architecture was introduced to flatten the network. Flattening the network reduces the latency in the network by minimizing the number of hops that the traffic traverses. It also leads to a more decentralized core network architecture. Additionally, the one-tunnel architecture prepares the network for evolved packet core migration. In the evolved packet core, the RNC function is incorporated into the base station and the MME. A lot of the focus has been on operators migrating their 3G or 3.5G networks to 4G. However, there are operators that are trying to get the most out of their 3G networks while meeting increasing capacity demand. These operators are looking for a means of leveraging their current networks to meet growing demand. Telstra is one such operator, and it is operating an HSPA network optimized for coverage and capacity. The network has been upgraded to support a peak data rate of 21 Mbps in the downlink and 11.5 Mbps in the uplink.
4.4.1
Quality of Service
Jitter is inherent in IP networks, and it degrades voice quality. This is an issue that needs to be addressed. Jitter occurs when IP packets arrive at the destination at irregular intervals, thus causing disorder and intermittence in the voice stream and resulting in poor voice quality. Some solutions include the use of jitter buffers in the media gateway to gather voice packets, reduce jitter, and rectify packet order.
4.4.2
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Session border controllers are used in the delivery of IP-based voice and data services. For the most part, they are employed to enable real-time traffic sessions (VoIP and other real-time services) to traverse network address translation (NAT) boundaries and firewalls. They perform this function by incorporating signaling control elements to process different signaling protocols. More specifically, session border controllers are used at network interconnection points to convert TDM traffic to IP and vice versa, secure subscriber access, enable interoperability between different end points, and service infrastructure elements and networks. As the core transforms to IP, more session border controllers will be needed to control admission, balance IP transport, and meet service level agreements. Session border controllers also help in meeting lawful intercept requirements, government priority services, and emergency services requirements. Primary functions include: Security Manages subscriber access and interconnect points at peering borders; prevents denial of service (DoS) attacks and protects subscriber session privacy Enables interoperability between different types of networks and devices Assures session capacity and quality Optimizes session routing to minimize costs Enables compliance with various government agencies such as emergency services, lawful intercepts, and government emergency telecommunication services
One of the leaders in this space, Acme Packet, provides Net-Net session border controllers. The company has sold over 8,000 units since 2002, a figure that indicates the relatively low-volume opportunity for these elements. Overall volume is expected to increase as operators are forced to transition to IPv6 due to the lack of address space in IPv4. Typical costs for session border controllers are in the low $200,000 range, but can be as high as $800,000 depending on the number of sessions supported. Session border controllers are used in carrier-to-carrier peering, carrier-to-enterprise access, and carrier-to-residential access. Today, most session border controllers are sold to fixed network operators. Only about 15% to 20% are sold to mobile operators. However, the number is expected to rise as mobile operators move to 4G and IP-based architecture.
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Note that the forecast provided in this study reflects the mobile opportunity for session border controllers and not the overall market opportunity, which covers fixed and enterprise networks. In 2009, North America leads in terms of the market for session border controllers; Western Europe and then Asia-Pacific are next. These positions are primarily tied to the fact that the United States is one of the strongest markets for data, followed by the Asia-Pacific region (Japan and South Korea), and Western Europe.
Chart 4.2 Session Border Controllers, World Market, Forecast: 2009 to 2014
4,000 3,500 3,000 Western Europe Asia-Pacific South America Africa Eastern Europe North America Middle East
Number of Units
2010
2011
2012
2013
2014
(Source: ABI Research)
In 2009, North America and Western Europe account for over 57% of session borders shipped. By 2014, Asia-Pacific and North America will comprise approximately 56% of session border shipments while Western Europe will account for 22.9% of new session border controllers. The completion of the RCS standards, which extend IMS to devices, will have a positive effect on the session border controller market. LTE deployments in these regions will also boost the market as networks migrate to all-IP and more real-time services are delivered over LTE networks.
4.4.4
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As a result, CDMA operators migrating to 4G have to enable interworking between their current CDMA networks and LTE or WiMAX networks. The Evolved High Rate Packet Data (eHRPD) gateway was developed to replace the Packet Data Serving Node or (PDSN). EHRPD will act as a serving gateway to connect LTE and EV-DO networks. This platform will be critical for companies like Verizon Wireless and other CDMA operators migrating to LTE. Since LTE will be deployed in hotspot-like locations initially before it is widely available, operators will need strong interworking between both networks. EHRPD enables seamless handover between EV-DO networks and LTE, which will be essential for real-time applications such as voice and other low-latency applications. ABI Researchs forecast indicates that the number of LTE base stations deployed as CDMA overlay will begin with approximately 4,200 units in 2009 and grow to over 118,660 by 2014. The majority of the growth will result from North America, where operators like Verizon Wireless, MetroPCS, Telus, Bell Mobility, and others are upgrading their CDMA networks to LTE. Asia-Pacific will be second as operators such as KDDI in Japan and CDMA operators in Korea upgrade to LTE. Chart 4.3 shows the global trend for CDMA base station migrations to LTE.
Chart 4.3 LTE Base Stations Deployed in CDMA Networks, World Market, Forecast: 2009 to 2014
60,000 Western Europe Asia-Pacific 40,000 South America Africa 30,000 Eastern Europe North America Middle East
50,000
20,000
10,000
0 2009
2010
2011
2012
2013
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(Source: ABI Research)
4.4.5
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LTE architecture requires a Mobility Management Entity (MME) and the packet data node, or P-gateway, which makes up the evolved packet core. These elements differ from their 3G counterparts in that they require a lot more processing power. In the EPC, there is more of a separation of roles; the MME focuses on control layer functions while the P-gateway manages the actual data traffic. The role of the radio network controller is incorporated into the eNodeB and the MME, which reduces the number of elements in the EPC.
4.4.6
HSPA Networks
As the first mobile cellular network to deliver VoIP capabilities, HSPA leads the way to true IP. The 3GPP Release 7 standard includes enhancements to IMS and true QoS capabilities to support voice. Continuous packet continuity (CPC) is one feature that enhances voice support by reducing uplink interference. It enables discontinuous uplink transmission and discontinuous downlink reception. CPC allows the modem to be turned off during a period of inactivity, thereby reducing the power consumption of VoIP devices. Operators will probably defer voice support on HSPA networks since it will require IMS or other elements. In addition, UMTS networks already support circuit-switched voice and packet data simultaneously, which reduces the urgency for 3GPP operators to move to VoIP. It is within the 3G network where true mobile IP transformation begins. OEMs have already introduced base stations with software-defined radios and core network elements on ATCA chassis to standardize and simplify the core network platforms. HSPA Evolved begins the transformation to a flat IP core with direct tunnel architecture. This architecture provides a direct path for user data between the RNC and the GGSN, while the SGSN focuses solely on control functions. For packet-based services, there is an optional architecture whereby the RNC is incorporated in the NodeB. Both architectures reduce the number of elements in the network, thus resulting in lower costs and less transmission delay.
4.4.7
The EPC spurs the migration to an all-IP core network and flat network architecture. It also causes an overall reduction in the number of network elements since the radio network controller (RNC) function is mostly integrated into the eNodeB; some functions are on the MME and the data plane functions are on the S-GW.
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More specifically, the EPC provides connectivity from the operators base stations to the Internet, as well as connectivity between LTE, legacy 3GPP networks, and non-3GPP networks. EPC elements are separated into control plane functions and data plane functions. These elements include the MME, the S-GW, the P-GW, and the PCRF. Their functions are as follows: The MME is a control plane element that manages signaling and control, mobility, end-user equipment, gateway selection, and security parameters. The PCRF element is also a control plane element, and it enables service data flow detection, policy enforcement, and flow-based charging. The S-GW is a data plane element that terminates the interface from the eNodeB, provides a local mobility anchor for inter-eNodeB handovers, and routes data traffic to the P-GW. The P-GW is also a data plane element that routes data traffic from the S-GW to the Internet or external packet networks.
Elements that provide control plane functions can be combined onto one platform, and likewise for data plane elements. The S-GW and the P-GW can be combined on a common hardware platform and remain logically separated by the S5 interface, or they can be deployed on separate physical hardware. Actual deployments will depend on an operators requirements for distributed or centralized architecture and vendor implementation. Deployment configuration will also depend on the size of the operators network and coverage area. Operators may choose to separate the elements to minimize network latency since low latency is critical for mobility. Equipment scalability is also important. Function-specific devices enable higher scalability without impacting other function performance. Operators like Verizon Wireless prefer a more distributed architecture whereby each element is located near the traffic origin. The P-GW will need to process large amounts of data quickly for a large number of subscribers while the S-GW will need to quickly process base station signaling and provide feedback. In general, the EPC provides a unified platform with the following features: Common policy and charging control Unified user data management Tightly coupled mobility management Converged gateway for multiple access technologies Common service control and service creation environment
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2G RNC 3G SGSN
HSS
PCRF
IP Services
(IMS, PSS, )
Trusted Non-3GPP
S2a
S5
4.4.8
The primary function of the WiMAX Access Service Network (ASN) gateway is to aggregate subscriber traffic and control traffic from the base station. In addition, the ASN gateway provides radio resource management, mobility management, Layer 3 connectivity for devices, and WiMAX network discovery based on user preference. It also communicates with the AAA, home agent, and DHCP servers. The WiMAX forum supports three ASN architectures, including: flat, hierarchical, and centralized.
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The centralized architecture, or profile C, is the most commonly deployed architecture. In profile C, the base station handles radio resource control and radio resource management. The mapping of base stations to the ASN gateway depends on the type of applications being supported. In voice applications, the ASN typically supports up to five base stations while a purely data-centric network can support up to thirty base stations. Chart 4.4 depicts the growth rate for WiMAX gateways. ABI Research forecasts that the net additions of new WiMAX gateways will peak in 2009 then decrease over the next five years. This is largely due to the strong impact of the Asia-Pacific market. During late 2008 into 2009, the certification of 2.5 GHz and 3.5 GHz products was completed, which resulted in a stronger deployment rate. In 2009 to 2010, WiMAX operators will build out their networks, after which they will focus on growing their subscriber base. WiMAX will continue to grow in all markets. However, the rate of growth will be slower due to the availability of LTE, which will be more cost-competitive because of economies of scale. Note that WiMAX ASN gateways are designed with software and a common off-the-shelf (COTS) platform, which lowers overall costs.
Chart 4.4 WiMAX Gateway Net Additions, World Market, Forecast: 2009 to 2014
16000 14000 12000 10000 8000 6000 4000 2000 0 2009 2010 2011 2012 2013 2014
(Source: ABI Research)
Western Europe Eastern Europe Asia-Pacific North America South America Middle East Africa
4.5
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Operators such as Sprint in the United States and Softbank in Japan are using IMS to deploy pushto-talk, presence, and group list management services. In addition, operators are leveraging IMS for mobile VoIP over HSPA networks. This solution was first demonstrated in 2007. In the core network, IMS will be used to implement the common service layer, QoS, and call control. HSUPA was the first cellular technology to provide the bidirectional data rate required to support voice over IP over cellular. Large operators are more likely to migrate to IMS-based solutions while smaller operators will seek alternative solutions due to the cost and complexity of IMS.
4.5.1
IMS Development
In Release 7, the 3GPP defined IMS to be open to non-cellular technologies. It was at this juncture that other 3GPP partners developing IMS standards for fixed-line networks decided to collaborate and shift all IMS development to the 3GPP to simplify IMS solutions and make them standard across all networks. IMS work that was being done by ETSI, TISPAN, and CableLabs will now be done by the 3GPP. This move will simplify the migration to fixed mobile convergence (FMC) by unifying IMS across all access technologies. 3GPP Release 8 was the first release with the common IMS standard. In mobile networks, IMS is essential for enabling some of the features that were inherent in circuit-switched networks. These features include traffic prioritization, end-to-end QoS, and the delivery of real-time services. In addition, IMS enables a platform for other real-time non-traditional services. IMS combined with RCS facilitates end-to-end IMS-supported applications. Feature improvements to IMS that are essential for wide-scale acceptance include: security enhancements for home networking, number portability, service customization, and improvements in service brokering. Recently, a group of mobile operators and Tier One OEMs agreed on a One Voice Profile for LTE based on IMS standard. This decision will increase IMS deployments in conjunction with LTE. LTE deployments will begin in late 2009 into 2010. The One Voice Profile is supported by AT&T, Verizon Wireless, Vodafone, Telefonica, TeliaSonera, Orange, Alcatel-Lucent, Ericsson, Nokia, Nokia Siemens Networks, Sony Ericsson, and Samsung. Based on ABI Researchs forecast and interviews conducted for this study, IMS adoption in mobile networks is gaining traction starting in 2009 and will accelerate with LTE deployments. The IMS penetration rate will grow to over 40% in North America and roughly 20% in markets like Eastern Europe, Asia-Pacific, and South America. Advanced data services and LTE will be the primary drivers for IMS implementations in North America.
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0.40 0.35 0.30 0.25 0.20
North America Western Europe Eastern Europe Asia-Pacific
Chart 4.5
0.00
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Section 5.
IP TRANSFORMATION STRATEGIES
5.1
5.1.1
Greenfield Operators
Clearwire
In the case of greenfield operators such as Clearwire, the network is designed to be IP-enabled at the onset so no transformation is necessary. Transformation elements are primarily required at the network interconnection points where Clearwire passes traffic to the Internet or to another operator. This is where network elements such as session border controllers are needed. In terms of backhaul, Clearwire uses an Ethernet-based microwave solution. Microwave links are connected via Ethernet switches in a ring architecture to provide SONET-like resiliency. Metro Ethernet rings are deployed in each market. Base stations are connected to Ethernet switches for transport back to the core network. This architecture will evolve in the future to leverage fiber in the core ring architecture with microwave in the last mile. While the company is evaluating IMS as an option for delivering voice and multimedia products, it has not publicly announced its direction. Clearwire does not see IMS as essential for SIP-based VoIP, but may use IMS to interconnect with other carriers and centralize service distribution.
5.2
5.2.1
Mobile Operators
AT&T
AT&T currently deploys an HSPA network at 7.2 Mbps with plans to upgrade to LTE by 2011 while still optimizing its HSPA network. The operator has had exclusive rights with Apple to distribute the iPhone and was one of the first operators to sell the device. AT&T has experienced tremendous success with this device, selling over 9 million units over the last three years. In addition, the operator has been doubling its quarterly sales of laptop data cards. The combined success of these two products has been both a blessing and a curse. In 2008, AT&T reported mobile data services revenue of $10.58 billion. Yet, both devices have caused traffic on the operators network to grow over 5000% over the last three years, as reported by AT&Ts chief technology officer. As a result of the increased traffic, AT&T had to quickly devise a strategy to upgrade its backhaul network to alleviate the strong traffic growth. The operator is upgrading the backhaul network using a combination of technologies such as Ethernet over microwave, Ethernet over fiber, and Ethernet over copper. AT&T has a large deployed base of fiber to support its U-verse video service and will be able to leverage some of this fiber to support backhaul (though this has not been publicly stated by AT&T). AT&T has also deployed IMS to support its video chat service and is said to be a major proponent of IMS. It is unclear how successful this service is since the operator does not publicly announce subscriber numbers. Still, AT&T is expected to expand its IMS to other services.
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NTT DoCoMo also has an HSPA network deployed at 21 Mbps and will be one of the first operators (along with Verizon Wireless) to deploy LTE. The operator is known for being a global leader in mobile data services, as well as extremely innovative in terms of early technology acceptance and deployment. NTT DoCoMo has also deployed IMS for push-to-talk (PTT) and video chat services and will leverage IMS in its LTE deployment in 2010.
5.2.3
Telstra
Telstra is cited throughout the industry as an innovator due to its early adoption of HSPA Evolved. The operator was one of the first to deploy HSPA at 21 Mbps. It has over 828,000 mobile broadband users. However, Telstra has no plans to deploy LTE in the near future; rather, it aims to maximize utilization of its HSPA network.
5.2.4
Verizon Wireless
Verizon Wireless is one of the leading operators in regard to transforming its end-to-end network to all-IP. It is also one of the most aggressive in terms of migrating its backhaul network to IP. Verizon Wireless began upgrading its backhaul network from T1s to Ethernet over fiber five years ago according to the operator. As Verizon Wireless migrated from ATM to Ethernet, it still used copper T1s to transport its backhaul traffic in most markets. It is now in the process of migrating all of its backhaul traffic to Ethernet over fiber, but will use microwave where fiber is not available or where it is cost-prohibitive. As a result of this migration, Verizon Wireless CDMA and LTE networks leverage Ethernet over fiber backhaul in some markets. The operator plans to have fiber to 90% of its territory cell sites by 2014. Verizon Wireless will rely on fiber from Verizon Partners where available and use other carriers in markets like Las Vegas where it does not have its own solution. Cable companies and LECs are the primary alternate backhaul providers for Verizon Wireless. In terms of leased solutions, the operator prefers to work with large partners with solid financial standings. The primary requirements for Verizon Wireless backhaul include an Ethernet-based solution with high availability and minimal jitter (deviation in timing, phase, amplitude, or width of the signal pulse). This solution also has to have SONET-like reliability, which usually relates to synchronous, redundant networks.
5.2.5
Vodafone
Vodafone is a multinational operator ranking number two globally with over 289 million mobile subscribers. The operator has operations in over twenty-five markets, including Europe, Africa, Asia, and North America. It currently has HSPA deployed in some of its networks with plans to upgrade to LTE once the technology becomes more stabilized. Vodafone has about 48% ownership in Verizon Wireless and 3% ownership in China Mobile. Both of these operators plan to deploy LTE. Verizon Wireless will be first to market, launching FDD LTE in 2010, and China Mobile will look to launch TDD LTE in the 2011 timeframe. All three operators have been jointly testing the technology.
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5.3
5.3.1
Equipment Vendors
Acme Packet
Acme Packet is one of the leading providers of session border controllers. The companys product portfolio includes: session border controllers, session routing proxies, and a multi-service security gateway. Products are sold to enterprise customers, government agencies, and small and large service providers. Acme Packet offers four hardware platforms, a blade solution, and software-only solutions for partners that wish to integrate Acme Packet products into their platforms. Acme Packet supports three approaches for delivering voice over LTE: VoLGA, MSC VoIP, and IMS/pure SIP. The Net-Net Security Gateway, designed for FMC and femtocell applications, is an element in the VoLGA. The company also advocates SIP based approaches to LTE voice including transition options like MSC VOIP, and IMS, for which it sells session border controllers. Along with its partner Mavenir Systems, Acme Packet supports a MSC VoIP solution that is architecturally similar to the NSN NVS/FastTrack Solution, but is MSC independent. Acme Packet had 2008 revenue of approximately $116 million and projected 2009 revenue of $134 million. Over 50% of the companys sales are through channel partners, with OEMs and integrators accounting for 50% to 60% of revenue. Acme Packet currently has about seventy-five channel partners. OEM channel partners include Alcatel-Lucent, Nokia Siemens Networks, and Ericsson. For the first half of 2009, Alcatel-Lucent accounted for 25% of revenue while NSN accounted for 18% of revenue. Sales to mobile operators accounted for 15% to 20% of 2008 revenue while sales to enterprise customers comprised 10% to 20% of revenue. Acme Packets session border controller (SBC) product line includes the following elements:
Net-Net 2600: Integrated SBC optimized for enterprise and contact centers. Net-Net 3800: Integrated SBC optimized for smaller enterprise, government agencies, small service providers, and smaller sites within larger organization. Supports up to 500 sessions. Net-Net 4000: Most widely deployed carrier-class platform. One rack unit form factor that includes all three functions: session border controller, session routing proxy, and multi-service security gateway. Supports up to 32,000 sessions. Net-Net 9200: Latest platform that supports transcoding and transrating for a wide selection of wireless and wireline codecs. Provides the highest level performance and availability for service providers and large enterprises. Supports up to 128,000 sessions. Net-Net OS E: Software-only, integrated SBC for third-party servers. Net-Net 4500 ATCA Blade: This blade can be integrated into the ATCA chassis of Acme Packets partners. The blade supports all three features (session border controller, session routing proxy, and multi-service security gateway). It is built on the .NET operating system and supports up to 64,000 sessions.
Acme Packet sells directly to operators, but also leverages partners such as Ericsson, Nokia Siemens Networks, and Alcatel-Lucent for wider distribution. The company has over 700 service provider customers.
5.3.2
Alcatel-Lucent
Alcatel-Lucent recently announced its EPC solution. The company is leveraging its 7750 service router platform to provide PDN and S-GW functions. This platform is widely deployed, with over 30,000 units in service. The 7750 has been optimized to support 4G with the ability to support up to 100 Gbps of throughput per slot. Additional features include per subscriber, per session control, QoS, and policy enforcement. The PDN function is supported via a card add (Mobile
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Gateway Integrated Service Module, or MG-ISM) to the 7750 platform. New features supported by the card include DPI and IPv4/IPv6 functions. All solutions are designed to support both centralized and distributed architectures. Alcatel-Lucents packet core solution and backhaul products leverage the same operating system, which enables tighter end-to-end integration. The company also provides element management through its 5620 Service Aware Manager (SAM). This platform can be used to manage the 7750 service router, Alcatel-Lucents eNodeB, and META backhaul products. In addition, the 5620 SAM can scale to support up to 50,000 network elements. Alcatel-Lucent will provide MME and PCRF via software add to its in-house ATCA platform, which is widely deployed in 3G networks. Each functional element will be deployed on separate platforms. The ATCA platform also enables MME pooling to improve resiliency and scaling performance. Processing boards are hot-swappable in the event of failure. The companys EPC products support hierarchical QoS, which means they can manage traffic and QoS on several levels, including per flow, per subscriber, and per session queuing. This capability enables the optimized use of network resources and the proper prioritization of traffic. Alcatel-Lucent is the leading CDMA vendor. As such, it has developed an eHRPD solution to assist operators in transitioning their networks from CDMA to LTE. The solution includes software upgrades to existing CDMA network elements, such as the base station, PDSN, RNC, and HLR. In order to support CDMA 1x voice until LTE VoIP is ready, operators will need to upgrade the CDMA MSC and EV-DO RNC via a software upgrade. The company also provides media gateway products, the 7549 wireless media gateway, which simplifies the transition to all-IP. It supports both TDM to IP for PSTN support and IP to IP for peering. The company has over 200 next-generation mobile network customers. In addition, Alcatel-Lucent offers a complete set of IMS products, including the 5060 IP Call Server and the 5450 IP Session Controller. The IP Session Controller (IPSC) supports both 3GPP and 3GPP2 call session control functions. Functions supported include: serving call session control function, interrogating call session control, proxy call session control, and break-out gateway call session control function. The IPSC can manage SIP sessions for voice, video, or data and can be deployed in either centralized or distributed architecture. The IP Call Server can be used to support small IMS deployments requiring class 5 functions or a combination of call control functions. Alcatel-Lucent largely coined the term IP transformation and has over forty IP transformation projects to date. IP transformation customers include MTNL (India) for 3G and IMS-based services.
5.3.3
Cisco
Cisco is the leading vendor in network routing and security for wireline networks. The company is leveraging this expertise to provide gateway functions for the wireless network core. Cisco purchased P-Cube, a deep packet inspection provider, and has integrated P-Cubes DPI solution into its routers. The company is leveraging its 7600 and ASR platforms to provide gateway routing functions as operators move away from TDM and ATM to IP. Cisco also provides backhaul products such as the ME3400 for Carrier Ethernet solution. The company leverages a blade platform model whereby a Service Application Module for IP (SAMI) is added to existing routers to introduce new features and increase processing power. The SAMI blade has six PowerPC processors and supports subscriber management features as well as intelligent service gateway functions. The 7600 with SAMI blade architecture can support up to 600,000 subscribers on a single platform.
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One example of a feature added to a SAMI blade is Ciscos Deep Packet Inspection feature. Using DPI on a blade enables deployment deep into the network. Platform-specific solutions can be placed in the network where needed to supplement the lighter capabilities of the blade. The benefit of the blade solution is that it enables integration where needed without requiring additional network elements. Operators are able to evaluate certain network features without installing dedicated platforms for those features. The challenge with Ciscos blade solution is that it is not well suited for wide-scale deployment; network operators typically prefer platforms. Blade solutions do not scale as well and are usually designed to handle smaller amounts of traffic. Ciscos recent gateway wins include the Clearwire WiMAX gateway contract. Nevertheless, the challenge with Ciscos platform is that the gateways were built as routers and then repurposed for the wireless network. The wireless network has unique challenges related to mobility and handoffs. A platform that was not designed with this in mind may not be as efficient as one designed with mobility management from the onset. Ciscos recent acquisition of Starent Network will solve this issue since Starent has a comprehensive gateway product line.
5.3.4
Ericsson
Ericssons EPC has a two-pronged approach to providing EPC elements. The first approach is to reuse existing GGSNs by upgrading the software to support S-GWs or PDNs. (Juniper has provided some of Ericssons deployed GGSN products.) The second approach is to use new equipment based on Redbacks SmartEdge platform, which is a router-based platform. Moreover, the MME function can be supported via a software upgrade to the Serving GPRS Support Node (SGSN). Ericsson provides mobile softswitch products, media gateways, IMS, and MSC servers. The company was first to the market with its softswitch products in 2003. Today, Ericssons products are deployed in over 240 networks serving 2.2 billion subscribers. The company has also developed innovative solutions such as MSC pooling and clustered blade solution for its gateway solutions.
5.3.5
Genband
Genband provides multiple products used in IP transformation, including: softswitches, security gateways, session border controllers, and signaling controllers. Genband products are deployed in Tier One operator networks throughout the world. The company provides media gateway products to work with the distributed MSC solutions. Its session border controllers are used mostly for interconnection to other providers networks.
5.3.6
Huawei
Huawei provides a Unified Gateway platform for the EPC. This platform is based on open, scalable architecture. The MME platform can support the SGSN and access gateway on the same node. Additionally, the P-GW node can support the S-GW, ASN (Access Service Network) gateway, PDSN, and GGSN gateway function. The physical architecture can be distributed with a centralized policy server. In-line services include DPI and service-aware features. The policy server is the PCRF, which enables flexible content control, flow-based charging, bandwidth control, online charging, policy control, and service reporting. Huaweis IP transformation customers include KPN Netherlands and Saudi Telecom.
5.3.7
Motorola
Motorola partners with Starent for its gateway products, but developed its own IMS platform and is currently developing its own MME. The company has a line of softswitches that combines the MSC and the VoIP gateway solution on a standard API platform. Overall, Motorola does not seem to be as strong as its competitors in this space.
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NEC leverages an ATCA platform with its middleware software to deliver the MME, S-GW, and P-GW functions. The company also provides a compact EPC node that combines the MME, PDN, and S-GW functions in one piece of hardware. All of the EPC elements and eNodeBs are managed under a single rack unit management platform, the OMC.
5.3.9
5.3.10
Packet Data Serving Node/Foreign Agent (PDSN/FA) for CDMA 1x, EV-DO Rev 0, and EV-DO Rev A packet core networks: This element performs multimedia session establishment and termination, accounting, and traffic routing. It also provides redirection to the subscriber home network. Gateway GPRS Support Node (GGSN): This element performs a similar role to the PDSN, except it is used in the packet core of the GSM/GPRS and WCDMA/HSPA networks. Home Agent (HA): This is the element in the subscribers home network that ensures that the subscriber is reachable via the home address even when it is attached to other networks.
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Session Control Manager: This element enables integrated multimedia services such as VoIP and IPTV. It serves as a SIP proxy and registrar. In addition, it manages VoIP routing, accounting, mobility, registration, and authentication. Access Service Network (ASN) Gateway: This is an element in the WiMAX network that performs multimedia session establishment and termination. It is similar to the PDSN and GGSN in other networks described above. Service GPRS Support Node (SGSN): This is an element in GSM/GRPS and WCDMA/HSPA networks that tracks the location of a mobile device on a network and routes the traffic to that location. Security Gateway: This element enables interworking between various wireless networks and WLANs. The gateway also terminates tunnels between the different networks. Moreover, it manages session aggregation and termination for Wi-Fi networks and femtocells. Internet Protocol Service Gateway (IPSG): This element supports enhanced charging and billing, content filtering, and intelligent packet control. It sits behind the other gateways in the packet core.
Starent develops software for each of the elements mentioned above, including the new LTE EPC elements such as the PDN gateway (P-GW), serving gateway (S-GW), and MME. The company also provides in-line services on the packet core with integrated DPI and policy enforcement for services such as peer-to-peer detection, enhanced content charging, intelligent traffic control, firewall, and content filtering. These in-line services are significant since operators typically have to purchase separate elements to provide these functions. The addition of in-line services reduces the number of elements in the networks, simplifies network configuration and accounting and billing, and supports policy enforcement. Starent was recently acquired by Cisco Systems for $2.9 billion in an all-cash transaction. The acquisition will help Cisco gain access to the potentially lucrative 4G ecosystem. Cisco has been a leader in IP networking, but has not been a significant player in the wireless infrastructure market. The acquisition of Starent will provide Cisco with a considerable wireless customer base and strong product line to compete for future 4G core businesses. Starent has been selected by Verizon Wireless and Telenor for LTE core equipment and Cox Cable for CDMA then LTE deployment. Other customers include Sprint Nextel, Vodafone, and China Telecom. However, the acquisition could be a negative for Starents products if Cisco does not market or promote the product line well. Cisco has acquired other companies in the past that basically disappeared after the acquisition. Examples include P-Cubes DPI solution and Navinis WiMAX products.
5.3.11
WiChorus
WiChorus provides four hardware platforms in various sizes (SC26, SC100, SC600, and SC1400). Each platform can be customized via software to provide SGSN, GGSN, MME, PDN gateway, ASN, or CSN gateway functions. The hardware is equipped with IPP cards, which have dedicated accelerators for key functions such as QoS, deep packet inspection (DPI), switching, encryption, compression, and other control functions. WiChorus hardware is fully distributed since each IPP card has a switch fabric and processor versus the centralized switch fabric and processor used in legacy routers. Some of the benefits of the distributed architecture include improved scalability, redundancy, QoS, and increased active subscriber density. WiChorus hardware also includes in-line functions. The in-line functions enable network optimization capabilities by providing visibility into the rest of the network (e.g., the backhaul). This allows the operator to pinpoint bottlenecks in the network. The solution also enables
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hierarchical flow control and compression. The compression is done at the line rate to minimize network impact. Network monitoring capabilities provide direct feedback from the base station for dynamic policy control. WiChorus was recently selected by Clearwire to provide IP core elements for Clearwires all-IP WiMAX core network. This was a huge win for WiChorus since it is a relatively new player in a market with strong competitors like Motorola, Samsung, Alcatel-Lucent, and others. The company was recently acquired by Tellabs for $165 million following a similar acquisition of Starent by Cisco Systems for $2.9 billion. These acquisitions are important because they provide entrance to the mobile networking market, which has long been dominated by Tier One vendors such as Ericsson, Nokia Siemens Networks, and Alcatel-Lucent.
5.4
5.4.1
5.4.2
Losers
Juniper Networks has failed to capitalize on the wireless migration to IP. The company is strong in IP routing and security, but has not made significant inroads into the wireless market. Over time, wireless will become the primary means of accessing the Internet. Consequently, those companies that miss the opportunity may be risking their long-term viability. Juniper has not made any aggressive moves into this space. Ericsson has been using Junipers equipment for 2G and 3G cores, but now the company will leverage its Redback SmartEdge platform for LTE core. This will relegate Junipers equipment to legacy networks. Motorola is also a loser since the company does not have its own evolved packet core products; it has been reselling Starents solution. In addition, Motorolas only LTE win is due to its incumbency in KDDIs CDMA network. The company seems to be fading into the background. Meanwhile, Ericsson, Huawei, Alcatel-Lucent, and NSN are going after bigger market share more aggressively.
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Section 6.
FORECAST METHODOLOGY
ABI Research conducts primary research by interviewing a wide range of participants throughout the wireless infrastructure ecosystem. For technologies like LTE where there is no historical data, we leverage the Bass forecasting model to develop baseline forecasts for base stations and subscribers. In addition, ABI Research tracks wireless infrastructure contracts on an ongoing basis and leverages this information in developing and validating projected data. Forecast numbers are also validated through direct communications with mobile operators and OEMs. Subscriber data were used to develop the forecast models in this report relating to network elements such as session border controllers and other session-based elements. Base station data were employed as a baseline for the gateway forecasts since there is an average mapping of each type of gateway to a number of base stations. A detailed description of the subscriber and base station forecast methodologies is provided below since both were used as the foundation for the forecasts provided in this research report.
6.1
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6.2
6.2.1
Key Assumptions Landmass (km ), population size, rural/urban landmass ratio, rural/urban population ratio, number of 2G & 3G licensees, BTS performance indicators Each country divided into 1) Wilderness; 2) Rural; 3) Urban (LD and HD)
BTS Forecasts
6.2.1.1
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6.2.1.2
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Urban/Capacity-Constrained Calculations
These calculations are less dependent on addressing open area coverage requirements; instead, they are derived according to the need to meet subscriber demand for unoccupied mobile communications channels. If the available channels are fully occupied, customer dissatisfaction grows. Therefore, in a capacity-constrained environment, the number of base stations required is a function of the following: The number of subscribers in that geographic location The amount of traffic (either voice or data) generated at the busiest time of the day
6.2.2
Variable population densities: Estimates were generated for the percentage of the population living in high-density and low-density population environments. It was then possible to take into account the deployment of higher-capacity base stations in more congested areas within the model. Multi-sectored BTS: Base station sectorization was considered to enhance the overall capacity of a base station. Individual operator characteristics: Operator-specific network optimization factors were generated to reflect each operators aggressiveness of deployment, as operators differ significantly in their attitudes toward rolling out both geographical and capacity-based coverage. Active-to-passive caller ratio: In urban environments, operators need to plan the capacity of their networks for the peak busy-hour scenario. Analysts, however, are often not privy to detailed traffic distribution data belonging to the operator, and therefore have to work with the total number of subscribers on the network as the starting point. Single-band and dual-band networks: Dual-band startup dates were analyzed. For example, a number of European GSM 900 operators were awarded the GSM 1800 spectrum. Depending on the location within the country, additional GSM 1800 base stations may or may not be required.
6.2.3
3G Networks
Due to the unique characteristics of 3G (primarily because it is IP-orientated and does not rely on spectrum reuse like GSM), a very different approach was required compared to forecasting the GSM environment. For 3G equipment, ABI Research also considered the following:
2 GHz RF propagation characteristics: For rural environments, the propagation characteristics of the 3G spectrum band and the geophysical challenges were seen as the major limiting factors upon a base stations range (estimated to be 7 km on average). Rollouts: 3G operators were forecast to roll out rural coverage by ABI Research, but at a much slower rate than that witnessed for GSM 1800 or GSM 900. The size of 3G spectrum blocks: 3G relies on spectrum carriers that are significantly larger (5 MHz wide) than those for GSM (200 KHz wide). Some operators can take advantage of greater levels of licensed spectrum. On average, 15 MHz of duplex bandwidth and 5 MHz of unpaired spectrum were assumed.
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The size of the cell (the larger its size, the smaller the bit rate achieved). The corresponding bit rate for a low-density urban environment was assumed to be 860 Kbps per carrier frequency block, where the typical cell size was a radius of approximately 3 km. For a high-density urban environment, the figure was assumed to be 1.5 Mbps (equating to a 1.2 km radius). The capacity of the 3G base station was extrapolated to reflect new capacity-enhancing technologies, such as HSDPA and HSUPA.
6.2.4.1
6.2.4.2
6.3
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Section 7.
IMPORTANT DEFINITIONS
7.1
Antenna: Transmits and receives the radio signs to/from the transceiver Power Amplifier (PA): Amplifies the signal from the TRX for transmission through the antenna Combiner: Allows for multiple digital data streams to be combined into one signal Duplexer: Combines two or more signals into a common channel to improve transmission efficiency Transceiver (TRX): Generates and processes the reception of radio signals Baseband Receiver Unit: Sets up the frequency hopping in signals, as well as the digital signal processor (DSP) Cabinet: Provides a secure and weatherproof shelter for the base stations electronics Antenna Mast: Supports the elevation of antennas; the height of the antenna depends on whether the base station is a macro, micro, or pico deployment Backup Batteries: In the event of a power cut, the backup batteries cut over and maintain communications; in the event of a long-term power cut, the backup batteries perform a managed shutdown of the base station Monitoring System: Monitors the status of various parts of the base station and communicates the information to the operations & maintenance (O&M) command center Control Function: Software-based; controls and manages the functioning of the base station, guided where necessary by the O&M command center Base Station Foundations: Especially for macro base stations, the site needs to be prepared for base station installation; this may include installing a concrete base for the cabinet and anchor placements for the antenna mast
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Figure 7.1 Base Station Location Site with Separate GSM and WCDMA Poles (Two Different Operators)
7.2
7.3
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New Build & Upgrade base stations represent either entirely new deployments or upgrades. Thus, a new base station has been deployed on a virgin site or the old 2G equipment has been ripped out and multi-mode 2G-3G equipment has been installed. Like for Like replacement base station net additions refer to existing base station equipment that has been replaced by base station equipment consisting of similar functionality. The rationale for the switch is typically improved signal propagation characteristics, reduced OPEX, or a smaller footprint on site. In summary, net additions in base stations represents the total new base stations added in a specified year and therefore does not include base stations already deployed.
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Section 8.
COMPANY DIRECTORY
Alcatel-Lucent (France) www.alcatel-lucent.com Acme Packet www.acmepacket.com AT&T www.att.com Bell Canada (Canada) www.bell.ca China Telecom (China) http://en.chinatelecom.com.cn Cisco Systems, Inc www.cisco.com Cox Communications, Inc www.cox.com Ericsson (Sweden) www.ericsson.com France Telecom/Orange (France) www.francetelecom.com Genband www.genband.com Huawei Technologies Co, Ltd (China) www.huawei.com Motorola Inc www.motorola.com NEC Corp (Japan) www.nec.com Nokia Siemens Networks (Finland) www.nokiasiemensnetworks.com
Nortel Networks (Canada) www.nortel.com NTT Communications Corp (Japan) www.ntt.com NTT DoCoMo (Japan) www.nttdocomo.com Rohde & Schwarz (Germany) www.rohde-schwarz.com/us/ Tektronix www.tek.com Telefnica SA (Spain) www.telefonica.com TeliaSonera (Sweden) www.teliasonera.com Telstra Corp Ltd (Australia) http://telstra.com.au Telus Corp (Canada) www.telus.com T-Mobile (Germany) www.t-mobile.net Verizon Communications www.verizon.com Vodafone (United Kingdom) www.vodafone.com WiChorus www.wichorus.com
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Section 9.
ACRONYMS
1xRTT 2G 3G 3GPP 3GPP2 4G AAA ADSL API ASN ATCA ATM BSS BTS CAGR CAPEX CCCF CDMA COTS CPC CPRI CS CSCF
Single-Carrier Radio Transmission Technology Second Generation Third-Generation Mobile Technology (www.umtsworld.com) Third-Generation Partnership Project (www.3gpp.org) Third-Generation Partnership Project 2 (www.3gpp2.org) Fourth Generation Access, Authentication, Authorization (www.billingworld.com) Asymmetric Digital Subscriber Line Application Programming Interface Access Service Network Advanced Telecom Computing Architecture Asynchronous Transfer Mode Base Station System Base Transceiver Station Compound Annual Growth Rate Capital Expenditure Call Continuity Control Function Code Division Multiple Access (www.cdg.org) Commercial Off-the-Shelf Continuous Packet Continuity Common Public Radio Interface Circuit-Switched Call Session Control Function (part of IMS standard)
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Call Session Control Platforms (Cisco) Connectivity Service Network Dynamic Host Configuration Protocol Denial of Service Deep Packet Inspection Digital Subscriber Line Digital Signal Processor European Basic Multiplex Rate (30 voice channels; 2.048 Mbps) Enhanced Data for GSM Evolution Evolved High Rate Packet Data Evolved Packet Core European Telecommunications Standards Institute (www.etsi.org) Evolved UMTS Terrestrial Radio Access Network Evolution Data Only (optimized version of CDMA2000) Federal Communications Commission (www.fcc.org) Frequency Division Duplex Fixed Mobile Convergence Generic Access Node or Network (www.thefmca.co.uk) Generic Access Node Controller Gigabits per Second GSM/Edge Radio Access Network GPRS Gateway Support Node Gigahertz (thousands of MHz) General Packet Radio System Global Positioning System Global System for Mobility (www.gsmworld.com)
CSCP CSN DHCP DoS DPI DSL DSP E1 EDGE eHRPD EPC ETSI E-UTRAN EV-DO FCC FDD FMC GAN GANC Gbps GERAN GGSN GHz GPRS GPS GSM
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Home Agent Hybrid Automatic-Repeat-Request High Density Home Location Register High-Speed Downlink Packet Access High-Speed Packet Access High-Speed Packet Access Plus Home Subscriber Server (www.apertio.com) High-Speed Uplink Packet Access (data access protocol for mobile phone networks) Interrogating Call Session Control Function Internet Engineering Task Force (www.ietf.org) IP Multimedia Subsystem (www.3gpp2.org) Internet Protocol IP Session Controller (Alcatel-Lucent) Internet Protocol Service Gateway Internet Protocol Television Internet Protocol Version 4 IP Version 6 (www.ietf.org) Kilobits per Second Kilohertz (1,000 Hertz) Square Kilometer Low Density Local Exchange Carrier Long Term Evolution Media Access Control
I-CSCF IETF IMS IP IPSC IPSG IPTV IPv4 IPv6 Kbps KHz km2 LD LEC LTE MAC
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Megabyte Megabit Megabits per Second Multimedia Communications Server Mobile Evolution Transport Architecture Mobile Gateway Integrated Service Module Megahertz (million Hertz) Mobility Management Entity Millisecond Mobile Switching Center (www.gsmworld.com) Network Address Translation Nanometer Nokia Siemens Networks Nokia Siemens Networks' Mobile VoIP Server Operations & Maintenance Original Equipment Manufacturer Orthogonal (or Optical) Frequency Division Multiplexing Orthogonal Frequency Division Multiple Access Operation & Maintenance Center Operating Expenditure or Expenses Operating System Operational Support System Power Amplifier Policy Agent Personal Computer Peripheral Component Interconnect Express
MB Mb Mbps MCS META MG-ISM MHz MME ms MSC NAT nm NSN NVS O&M OEM OFDM OFDMA OMC OPEX OS OSS PA PA PC PCIe
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Policy and Charging Rules Function Policy Control Server Proxy Call Session Control Function Plesiochronous Digital Hierarchy Packet Data Node Packet Data Serving Node/Foreign Agent PDN Gateway PDN Gateway Packet-Switched Public-Switched Telephone Network Push-to-Talk Quadrature Amplitude Modulation Quality of Service Research & Development Radio Access Network Rich Communication Suite Radio Frequency Radio Network Controller Service Aware Manager (Alcatel-Lucent) Service Application Module for IP (Cisco) Session Border Controller Session Call Continuity Serving Call Session Control Function Synchronous Digital Hierarchy Serving Gateway Serving GPRS Support Node
PCRF PCS P-CSCF PDH PDN PDSN/FA P-gateway P-GW PS PSTN PTT QAM QoS R&D RAN RCS RF RNC SAM SAMI SBC SCC S-CSCF SDH S-gateway SGSN
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Serving Gateway Session Initiation Protocol (www.sipforum.org) Short Message Service Self-Optimized Network Synchronous Optical Network Serving GPRS Support Node T-Carrier 1 (digital transmission line; 1.544 Mbps, 24 voice channels) Total Access Communication System Time Division Duplex (Wireless) Time Division Multiplex Texas Instruments Telecommunications and Internet Converged Services and Protocols for Advanced Networking Transceiver Television United Kingdom Ultra Mobile Broadband Ultra Mobile PC Universal Mobile Telecommunications System (www.itu.org) United States Universal Serial Bus UMTS Terrestrial Radio Access Network VoLGA Access Network-Controller Very High Bitrate Digital Subscriber Line Voice Messaging System
S-GW SIP SMS SON SONET SSGN T1 TACS TDD TDM TI TISPAN
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Voice over IP Voice over LTE via Generic Access Wireless Application Protocol Wideband Code Division Multiple Access Wireless Fidelity Wireless Microwave Access Wireless Local Area Network
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Table of Contents
Section 1. ........................................................................................................................... 2 Executive Summary..................................................................................................... 2 1.1 What Is IP Transformation? ................................................................................................. 2 1.2 Mobile Operator Perspective................................................................................................. 2 1.2.1 Challenges of All-IP Mobile Networks .............................................................................. 2 1.2.2 IMS Impact ......................................................................................................................... 3 1.3 OEMs May Finally See Return from IMS Investments...................................................... 3 1.4 Global Market Forecast......................................................................................................... 4 1.5 Scope of the Study ................................................................................................................. 4 1.5.1 Backhaul Transformation .................................................................................................. 4 1.5.2 Session Border Controllers ................................................................................................ 6 1.5.3 Media Gateways/Softswitches ........................................................................................... 7 1.5.4 IMS ...................................................................................................................................... 8 1.6 Conclusion............................................................................................................................ 10 Section 2. ......................................................................................................................... 11 IP Transformation Strategic Recommendations............................................. 11 2.1 Overview .............................................................................................................................. 11 2.2 Radio Access Network (RAN).............................................................................................. 12 2.2.1 Strategic Recommendations ............................................................................................ 12 2.3 Core Networks ..................................................................................................................... 12 2.3.1 Strategic Recommendations ............................................................................................ 13 2.4 IP Backhaul ......................................................................................................................... 14 2.4.1 Strategic Recommendations ............................................................................................ 14 2.5 Service Architecture Evolution........................................................................................... 15 2.5.1 IP Multimedia Subsystems (IMS) ................................................................................... 15 2.5.1.1 VoLGA ............................................................................................................................ 16 2.5.1.2 Nokia Siemens Networks NVS Solution ..................................................................... 16 2.5.1.3 One Voice Profile ........................................................................................................... 17 2.5.2 Strategic Recommendations ............................................................................................ 17 2.6 Business Model Evolution................................................................................................... 17 2.6.1 Strategic Recommendations ............................................................................................ 18 2.7 Conclusion............................................................................................................................ 18 Section 3. ......................................................................................................................... 19 Drivers and Inhibitors for IP Transformation.................................................... 19 3.1 Drivers.................................................................................................................................. 19 3.1.1 Device Migration .............................................................................................................. 19 3.1.2 Services and Business Models ......................................................................................... 20 3.1.3 Cost Reduction .................................................................................................................. 20 3.1.4 Data Bandwidth ............................................................................................................... 20 3.1.5 4G Network Migration ..................................................................................................... 21 3.2 Inhibitors.............................................................................................................................. 21 Section 4. ......................................................................................................................... 22 Why IP Transformation? .......................................................................................... 22 4.1 Service Evolution................................................................................................................. 22
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4.1.1 Service Brokering ............................................................................................................. 22 4.2 Radio Access Network (RAN) Evolution ............................................................................ 22 4.2.1 3.5G Evolution .................................................................................................................. 22 4.2.2 3.9G Evolution .................................................................................................................. 23 4.3 Backhaul Evolution ............................................................................................................. 23 4.4 Mobile Core .......................................................................................................................... 25 4.4.1 Quality of Service ............................................................................................................. 25 4.4.2 Mobile Softswitches/Media Gateways ............................................................................. 25 4.4.3 Session Border Controllers .............................................................................................. 26 4.4.4 CDMA EV-DO Networks.................................................................................................. 27 4.4.5 WCDMA Networks SGSN and GGSN.......................................................................... 28 4.4.6 HSPA Networks................................................................................................................ 29 4.4.7 LTE Network Evolution ................................................................................................... 29 4.4.8 WiMAX Network Evolution ............................................................................................. 31 4.5 IP Multimedia Subsystem (IMS) Implications for IP Transformation ............................ 32 4.5.1 IMS Development ............................................................................................................. 33
Section 5. ......................................................................................................................... 35 IP Transformation Strategies ................................................................................. 35 5.1 Greenfield Operators........................................................................................................... 35 5.1.1 Clearwire........................................................................................................................... 35 5.2 Mobile Operators ................................................................................................................. 35 5.2.1 AT&T ................................................................................................................................. 35 5.2.2 NTT DoCoMo .................................................................................................................... 36 5.2.3 Telstra ............................................................................................................................... 36 5.2.4 Verizon Wireless ............................................................................................................... 36 5.2.5 Vodafone............................................................................................................................ 36 5.3 Equipment Vendors............................................................................................................. 37 5.3.1 Acme Packet...................................................................................................................... 37 5.3.2 Alcatel-Lucent................................................................................................................... 37 5.3.3 Cisco .................................................................................................................................. 38 5.3.4 Ericsson ............................................................................................................................. 39 5.3.5 Genband ............................................................................................................................ 39 5.3.6 Huawei .............................................................................................................................. 39 5.3.7 Motorola ............................................................................................................................ 39 5.3.8 NEC ................................................................................................................................... 40 5.3.9 Nokia Siemens Networks................................................................................................. 40 5.3.10 Starent Networks (now with Cisco)............................................................................... 40 5.3.11 WiChorus ........................................................................................................................ 41 5.4 Winners and Losers............................................................................................................. 42 5.4.1 Winners ............................................................................................................................. 42 5.4.2 Losers ................................................................................................................................ 42 Section 6. ......................................................................................................................... 43 Forecast Methodology............................................................................................... 43 6.1 Outline of ABI Researchs Subscriber Forecast Methodology .......................................... 43 6.2 Base Station Forecast Methodology ................................................................................... 44 6.2.1 Base Station Forecast....................................................................................................... 44 6.2.1.1 Rural Coverage Calculations ........................................................................................ 44 6.2.1.2 Urban/Capacity-Constrained Calculations.................................................................. 45
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6.2.2 Analog and GSM Networks.............................................................................................. 45 6.2.3 3G Networks ..................................................................................................................... 45 6.2.4 3G BTS Capacity .............................................................................................................. 46 6.2.4.1 Network Suitability for GSM-WCDMA Co-Location .................................................. 46 6.2.4.2 Average Data Load per End User ................................................................................ 46 6.3 Core Network Forecast Methodology ................................................................................. 46
Section 7. ......................................................................................................................... 47 Important Definitions ............................................................................................... 47 7.1 What Constitutes a Base Station?...................................................................................... 47 7.2 Base Station Accumulative Total ....................................................................................... 48 7.3 Net Additions in Base Stations........................................................................................... 48 Section 8. ......................................................................................................................... 50 Company Directory ................................................................................................... 50 Section 9. ......................................................................................................................... 51 Acronyms...................................................................................................................... 51 Sources and Methodology ........................................................................................ 62 Notes.............................................................................................................................. 62
Please be aware that an Excel worksheet containing all market forecasts accompanies this document. When downloading this report as a PDF from the ABI Research Web site, please check to see if the Excel worksheet is also available for download. If you have any questions regarding this, please contact our client relations department.
TABLES
Table 1-1. Session Border Controller Mobile Networks Revenue, World Market, Forecast: 2009 to 2014 Table 1-2. Mobile Softswitch Revenue, World Market, Forecast: 2008 to 2014 Table 1-3. Mobile IMS Revenue, World Market, Forecast: 2008 to 2014 Table 2-1. LTE Gateway Shipments, World Market, Forecast: 2009 to 2014 Table 3-1. Data Service Revenue, Countries with Strong Data Growth, Forecast: 2008 to 2014 Table 4-1. Session Border Controllers, World Market, Forecast: 2009 to 2014 Table 4-2. LTE Base Stations Deployed in CDMA Networks, World Market, Forecast: 2009 to 2014 Table 4-3. WiMAX Gateway Net Additions, World Market, Forecast: 2009 to 2014 Table 4-4. IMS Penetration Rate, World Market, Forecast: 2008 to 2014 Table A-1. Session Border Controller Mobile Networks (Net Additions), World Market, Forecast: 2009 to 2014 Table A-2. Session Border Controller Total Market( Net Additions), World Market, Forecast: 2009 to 2014 Table A-3. MME and Serving Gateways, World Market, Forecast: 2009 to 2014 Table A-4. Media Gateways (Net Additions), World Market, Forecast: 2009 to 2014 Table A-5. ASN and CSN Gateways , World Market, Forecast: 2009 to 2014 Table A-6. SGSNs and GGSNs (Accumulated Total), World Market, Forecast: 2009 to 2014
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Table A-7. Total Traffic Through the Mobile Core, World Market, Forecast: 2009 to 2014 Table A-8. IMS Upgrade Capital Expenditure Estimates, World Market, Forecast: 2009 to 2014 Table A-9. Carrier IMS Capital Expenditure, World Market, Forecast: 2009 to 2014 Table A-10. OSS/BSS Deployments, World Market, Forecast: 2009 to 2014 Table A-11. Session Border Controller (Mobile Market) Revenue, World Market, Forecast: 2009 to 2014 Table A-12. Mobile Softswitch Revenue, Middle East and Africa, Forecast: 2008 to 2014
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SOURCES AND METHODOLOGY
An analyst was assigned to coordinate and prepare this Research Report. Research and query specialists helped lay the data and information groundwork for the analyst, who also developed a focused interview strategy. ABI Research teams follow a meticulous process when examining each market area under study. The three basic steps in that process are: information collection, information organization, and information analysis. The key element in ABI Researchs information collection process is developing primary sources, that is, talking to executives, engineers, and marketing professionals associated with a particular industry. It is from these conversations that market conditions and trends begin to emerge, free from media hype. Analysts use secondary sources as well, including industry periodicals, trade group reports, government and private databases, corporate financial reports, industry directories, and other resources. Analysts conclusions take several forms. The text addresses hard data and well-defined trends and is supported by forecast tables and charts. The text also addresses issues and trends that are difficult to quantify and present in neat, tabular form. Lying at the margins of an industry, they are often precursors of the next technology wave.
NOTES
CAGR refers to compound average annual growth rate, using the formula: CAGR = (End Year Value Start Year Value)(1/steps) 1. CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter timeframes may be given as well. Figures are based on the best estimates available at the time of calculation. Annual revenues, shipments, and sales are based on end-of-year figures unless otherwise noted. All values are expressed in year 2009 US dollars unless otherwise noted. Percentages may not add up to 100 due to rounding.
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2010 ABI Research abiresearch.com The material contained herein is for the individual use of the purchasing Licensee and may not be distributed to any other person or entity by such Licensee including, without limitation, to persons within the same corporate or other entity as such Licensee, without the express written permission of Licensor.
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