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NGN CHALLENGES - Evolution not Revolution
Jonathan Bell explains how operators can make ageing Intelligent Network 
infrastructure flexible for both the markets of today and of tomorrow
All industries are future-focused and the telecoms industry is no exception. Next generation services such as IPTV and mobile VoIP have been the talk of the industry for a number of years. However, it is important that service providers do not get distracted from their core revenue drivers. In Western Europe these are undoubtedly voice and messaging. In 2007, 95 per cent of mobile telephony revenues (?29.5 of a total arpu of ?30.4) came from person-to-person (P2P) voice and messaging. Although most analysts predict that messaging and voice revenues will decrease, the latest estimates predict that revenue share will stay above 80 per cent for the next five years, still representing substantial revenues for the operator.
In order to make the most of revenue opportunities, a major focus of the industry should be on the best ways to innovate within existing person-to-person communication services. Introducing a well-targeted variation of an existing service generally leads to much higher acceptance and adoption than launching completely new, unproven services.
However, this innovation is only happening to a limited extent. Despite the technology being available to enhance these services, the telecoms model that has stood for the last 20 years has not really changed. Globally, operators are still providing standardised, homogenised, utilitarian voice and messaging services, effectively providing access and connectivity only.
With increased competition and regulatory changes - particularly in roaming, telephony prices are falling and margins are shrinking. The spectre of telecoms companies becoming bit-pipe providers in a commodity market is already here. If operators do not take action now, established markets will begin to slip away and the opportunity to develop an existing, semi-captive market will be missed.
There is a great deal of opportunity for operators to extend their services beyond the same limited voice and messaging product set, and focusing innovation on these services makes sound business sense. Value-added features such as presence or visual voicemail extends already popular services and does not require the conceptual leap that something like mobile TV does, making them easier to sell.
But if the technology is available and the market is ready, why have operators not explored these avenues more comprehensively? The reason lies in the construction of the Intelligent Network (IN) platforms that mobile networks use.
The IN authorises and controls connectivity, metering and charging for calls and data sessions. This is an exacting and complex task requiring low latency as the IN sits in the call signalling path. In order to achieve this with exceptional reliability and with an enormous volume of concurrent activities, IN platforms were engineered - 10 to 20 years ago - as tightly integrated stacks of software and hardware. For the same reasons, the telecommunications services that they host are streamlined, so that they are relatively simple and standardised, utilitarian services.
Today's IN platforms were conceived and designed in a different era, one where there were significantly fewer telecommunications services and networking technologies. Each line of IN code has to be crafted and the service logic and interdependencies tested by a small number of highly skilled IN engineering staff. Software engineering has also moved on in the interim. Modern software engineering approaches design systems as separate, horizontal layers that provide services to the other layers, which are decoupled from each other. This helps to provide a "safe" runtime environment that isolates the behaviour of the application code from the platform and other applications or services.
IN platforms are expensive in themselves and represent a substantial Opex investment for the operator. Excessive ‘spare' capacity is therefore undesirable, it translates into dead weight in terms of assets and most operators organise their IN capacity to limit this. The result is that many operators are working at full capacity, further limiting their ability to roll out new services.
Further exacerbating the situation is the evolutionary rather than revolutionary approach that operators have taken to their networks. As new technologies have become available, mobile telephony services have been added to and modified, resulting in a disparate array of equipment and IN platforms that do not readily communicate with each other.
As a consequence, the level of expertise needed to adapt the IN is very high and such engineering is expensive. This acts a real barrier to service innovation - operators need to be almost 100 per cent certain that a new service will deliver before they can even embark upon a trial - a level of certainty which is rarely possible and often means that valuable opportunities are often missed. Indeed, the high cost of service creation and the long lead times associated with getting a service developed often invalidate the tentative business case for new services, before they can be explored and trialled.
The IMS (IP multi-media subsystem) architecture, the future blueprint of mobile networks, is expected to solve a lot of these issues. The network will have an all-IP core, which is intended to reduce costs and enable the creation of new services on a uniform platform. In particular, the IMS Session Initiation Protocol (SIP) Application Server concept is designed to facilitate service innovation and eliminate the rigidities of today's IN platforms.
However, IMS is a costly infrastructure investment and rollout, so operators are reluctant to make a full migration without immediate service requirements. Today, nearly all mobile subscribers are on the SS7 circuit-switched TDM network and all the applications and services they value are based upon this technology. Making the business case for service innovation based on a strategy of IMS rollout and mass subscriber migration to IMS is extremely challenging.
The problem remains that the core business areas of person-to-person communication - chiefly voice and messaging currently - are under fierce price pressure and all operators are providing their customers with the same, standardised, utilitarian services. If everyone is selling the same thing, then the only way you can differentiate is on price or customer service. Premier customer service and low price are in direct conflict.
There is therefore a strong case to be made for service innovation in the core person-to-person communications. Targeted services that are designed to meet the specific needs of a segmented customer base, rather than "one-size-fits-all, pile them high, sell them cheap".
At the same time of course, operators need to progress towards the long-term goal of creating a core mobile network based on the 3GPP IMS architecture. The modern operator is stuck between a rock and a hard place. Innovating existing services is a painful process and abandoning their existing infrastructure would be too great a loss of assets.
There is a way through woods, however. Just as IN was added to augment the telecommunications switch, allowing extra capabilities to be added to the network without requiring significant changes to the switch. It is also possible to augment the capabilities of the IN platform which telecoms operators are so dependent upon, and which ironically are also at the heart of their inability to innovate in their core services. IN augmentation, rather than replacement, maintains the IN benefit and overcomes inflexibilities.
Chaining in the service layer enables the operator to configure subscriber-specific service logic for session or call routing and new service integration, effectively providing the flexibility promised by IMS, but on today's TDM networks. IN augmentation results in fast and cost-effective service introduction. Providing the ability to launch, refine, enhance and (if appropriate) withdraw services and variations, including integration with an online charging system for real-time pricing.
The inter-network multi-protocol gateway capabilities bring further benefits. By providing cross-network access, operators can migrate subscribers to IMS without the need to have a full service portfolio available in the IMS domain. The additional benefits the vast majority of their subscribers can access the new services provided on the IMS network.
Operators need to respond to market pressures now, using the strength of their two highest revenue-generating services (voice and messaging) to uncover new revenue generating opportunities. This will enable them to differentiate now, providing services that are sticky and reduce subscriber churn, and to charge a premium for services that meet the specific needs of individual customers. For an industry that is characterised by long term investment and comparatively slow ROI, IN augmentation holds a great deal of appeal. With promiscuous customers and competition from outside the sector, can operators really afford not to explore this?
Jonathan Bell is VP Product Marketing for OpenCloud
http://www.opencloud.com
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