The early hype for mobile tv may now have died away, but Kamil Grajski is certain that successful mobile broadcast is on its way

The mobile TV hype is over.  Aggressive projections regarding consumer adoption, and revenue (whether via advertising or subscription) have not come to pass.  Chief among the more creative aspirations was that by the opening ceremonies for the 2008 Summer Olympics, aided by a European Commission sponsored DVB-H technology mandate, the European Union would be well along the road to rapid adoption of mobile TV and mobile broadcast services. Worse, news has emerged in recent days that due in part to lack of mobile network operator engagement, the Mobile 3.0 consortium that had won a license in Germany with plans to use DVB-H for its mobile TV service may be on the verge of collapse.  In parallel, it was announced last week that Norwegian broadcasters NRK, TV 2 and MTG had banded together to launch a free-to-air T-DMB-based mobile TV service.

All of this is not to pick exclusively on DVB-H.  Not at all.

The reality is that there are challenges aplenty across the whole mobile TV technology spectrum.  For example, operators in Korea have launched services using the T-DMB standard, which sports more than sixty device-types and more than 8M subscribers. But even with that size of audience, advertising revenue is running behind expectations. In the USA, which recently managed to air a live, dedicated mobile TV Olympics coverage channel via FLO-powered AT&T and Verizon services, uptake of mobile TV has been slower than many expected.  Qualcomm's CEO Paul Jacobs, who's company supports the FLO broadcast standard as well as other technologies, has publicly expressed a desire to see greater mobile network operator marketing and promotion of mobile TV services.

But despite the march of seemingly apparent bad news, the underlying trends for mobile TV still register strong positives.  In a word, the hype is gone merely to be replaced by the harsh realities of establishing a new global consumer mass market medium. Although TV is seen as a mature medium, transferring the broadcast model that appears on cable, satellite and terrestrial networks is a massive undertaking. Despite some early teething troubles mobile broadcast TV has launched commercially in a number of closely followed markets around the world including Japan, Korea, Europe (Italy) and the United States.  Other on-air or planned launches include Austria, Finland, Netherlands, among several others. So the commitment from operators and the industry is there.

So what has been learned so far?  For those operators that launched with a free-to-air model (and lots of devices), such as in Japan and Korea, initial consumer adoption is not the major issue - the services are in fact proving extremely popular.  What remains unclear is revenue and profitability growth, as operators try to move consumers over to the more lucrative subscription channels that feature premium content.  Conversely, operators that launched with only a pay-TV model have seen adoption as the greater issue. And even then, long term revenue and profitability growth are yet to be fully tested.

In Europe, 3 Italy, which was first to market with a mobile DVB/H-powered pay TV service, recently announced the addition of a free-to-air bouquet as a way of boosting adoption.  Similarly, MediaFLO USA has added a free-to-air promotional channel aimed at giving consumers an easy way to sample and subscribe.  Thus, in response to market realities, the launched mobile broadcast market is implementing and testing the proposition that a hybrid free-to-air and pay-TV model may be optimal to drive adoption and fuel business growth.

Looking at forthcoming deployments, the medium- and long-term trends remain positive.  In the medium-term, the realization that capacity (spectral efficiency) is pivotal to broadcast TV's success has seen a review of the different technologies on offer. Capacity is important for two reasons: firstly, the ability to deliver more channels over the same service means that operators can deliver a greater mix of paid and free content as they seek to drive uptake. Secondly, the capacity has an effect on the amount of spectrum needed to deliver TV services. This is of critical importance in Europe, where there is much greater pressure on the amount of spectrum available from country to country. This is one of the advantages of the FLO air interface, as it supports ~1.5X-2X the number of video channels as any other mobile broadcast technology.  Such capacity gives excellent flexibility in adjusting bandwidth between free-to-air and subscription-based programming.

For example, while it is early to define it as a widespread trend, we've observed regulators (France and the UAE among others) implement must-carry free-to-air requirements on mobile broadcast licensees.  The number of such free-to-air channels varies, but can be as high as 5-10 channels.  MediaFLO operating in an 8MHz channel can deliver 30+ channels streaming video (25+ frames per second; QVGA; AAC+ stereo audio).  Thus a 10 channel free-to-air requirement still leaves up to 20 channels to power a subscription-based service, or other allocation to include such services as multimedia file delivery (Clipcast), IP datacast services and mobile interactive TV.

Also in the medium term we can expect action to result from recently concluded spectrum auctions, including those in the United States and the United Kingdom.

Two key long-term trends signal continued positive momentum.  First, mobile broadcast related regulatory consultations have recently concluded or are in progress in India, Singapore, Taiwan, Ireland and the United Arab Emirates.  In Europe there is steady progress relating to the Digital Dividend and spectrum harmonization primarily via the CEPT ECC Task Group 4 operating under mandate from the European Commission.  Second, 3G-based mobile TV continues to build momentum.  In key high-growth markets, such as throughout the Middle East and North Africa, 3G-based mobile TV has created spirited competition between operators.

Ultimately, as 3G-based mobile TV and related services drive adoption and simultaneous use grows, the low-cost bearer economics of mobile broadcast in general and capacity performance of MediaFLO in particular will drive adoption.

Back to today.  While the mobile industry still works out the details of how best to create a robust mobile TV business, consumers are still getting to grips with even basic multimedia content. But there is optimism in the air: as people get used to browsing the web and consuming video and music on their mobile devices, they set the stage for TV and other richer content in the future. So despite the death of all the early hype, it's certainly a question of ‘when' and not ‘if' for mobile broadcast TV. Nobody said that changing habits was easy, but done right the effect can be amazing. Just ask Apple; not for what it has achieved for itself, but rather for the catalytic effect the iPhone has had on the whole industry. The work we do today prepares the ground for the services we enjoy tomorrow.

Kamil Grajski is President of the FLO Forum

In the face of continued threats to mobile communications from such factors as message-borne spyware, malicious messages and invasive spam texts, education is the next key step to fighting for mobile security explains Jay Seaton

In May this year, IMS research released data stating that in 2012, 900 million users will be accessing banking and payment services through their mobile phones.  This enormous figure reflects the evolution of consumer activity from the high street bank, through to the PC and on to the smart phone, and yet there is little to no education for users on the risks involved in accessing banking data through their mobile phone.  So while the last few years have focused on educating the public about banking, shopping and online activity through their PC's, the mobile phone is a new arena where operators need to step up and educate users on protecting their personal data on the go. 

Many consumers assume that operators pre-load security functionality on to handsets, and when purchasing a mobile phone, consumers are offered insurance for loss or theft of the handset, but not in relation to mobile security. Indeed, McAfee's 2008 Mobile Security report identified that 72 per cent of mobile users were concerned about the level of security services for their mobile phones, which shows that it is still a topic that remains less prominent, but just as prevalent, as PC security.  With the advancements of the mobile phone, come the additional tasks of protecting information stored and accessed via the device.

While the meaning of "security" hasn't changed much over time, its context has evolved at a frightening pace, with more and more risks making themselves ever present in consumers' everyday lives.  Prominently reported in the news, there have been several stories already this year of confidential information being accessed and taken out of the workplace through employee's devices.  Indeed, a recent survey by Decipher Inc found that "70 per cent (of those questioned) said they access what they consider to be sensitive data on their smartphone in order to work outside the office." While the mobile phone is not a new arena for security threats, it is still hugely overshadowed by the traditional areas of threats to home, work and personal computers.  With record numbers of spam hitting consumers' mobiles on an hourly basis, it's time to shift the focus from the online world to the personal realm of mobile communication.

For consumers the mobile phone has opened up a world of new possibilities. Mobile subscribers can now use their mobile phone for a host of activities -- be it paying or accessing bank details, purchasing cinema and concert tickets, travelling around cities or accessing social networking sites such as Facebook. All these tools are aimed at making consumers' lives easier to work while on the move.  However, with all the progress that has been made, there is still very little information available for the mobile user in protecting against the same dangers that would be second nature to them whilst working on a PC.

So what areas are mobile users most at risk from? 

Unwanted SMS
One of the most prevalent security risks for mobile users, and one universally recognised now is unwanted SMS - most users would recognise unwanted advertising, or in worse scenarios, unwanted and malicious messages.  With an estimated 72 per cent of all mobile phone subscribers worldwide being active users of SMS, each is at risk from several forms of SMS abuse, from unwanted advertising, denial-of-service (DOS) attacks in the form of SMS flooding or scam messages encouraging subscribers to make premium rate calls. 

Spam Text
Global SMS spam levels continue to rise at a frightening pace.  In March this year, China saw an unprecedented influx of spam messages with 200 million China Mobile subscribers hit.  What makes it easy for spammers is the low price of SMS, meaning users can be targeted outside their own country.  However with mobile marketing becoming ever more popular, Application-to-Person (A2P) SMS is gradually becoming more and more common as advertisers aim to reach audiences through different channels.

Messaging-borne spyware and malware 
Spyware and malware are one of the most malicious formats of mobile threats.  Users can be targeted through a message containing a URL or web link, which once clicked, downloads a virus or application with a hidden piece of code to the handset.  The most common strain of Trojan targets the user's address book, which then infects all contacts with the same virus and the pattern, repeats itself.  Small businesses in particular are at risk as they are more likely to be using smart phones with unsecured email clients.  Additionally, the arbitrators of the Trojans use fake mobile accounts that cannot be billed to a single operator, meaning there is a huge volume of messaging traffic that no one is paying for which makes them very hard to trace.

MMS threats
Despite currently being less prominent than SMS in attacking mobile users, malicious MMS messages are a threat for users with Bluetooth.  The virus once installed on a device, can replicate itself through the Bluetooth application again, through the address book on the phone.  The user is then charged for the huge volume of messaging that has taken place unbeknownst to the user, as well as draining the battery of the phone.  However, MMS threats can be more easily controlled through disabling the Bluetooth function when not in use.

So what can consumers do to prevent these threats?  First, more education is required from the operators and network providers - 55 per cent of users expect mobile operators to preload mobile security functionality to all handsets, and with PC security readily available, the lack of knowledge for mobile user's means assumptions are made by users because information is not readily available.  With planning already well under way for London's 2012 Olympic Games, its important to ensure security on all levels is in place - mobile security needs to be a key part of this.Second, the mobile operators need to heed their advice and deploy mobile security tools and services to ensure their subscribers are protected. For under 18s and other vulnerable users, a mobile operator can empower parents to control who can contact their children, and the types of content they are willing to receive. This can be done through content controls which allow parents to prevent children from accessing inappropriate web and WAP sites; receiving unwanted and unsolicited messages such as phishing attempts, bullying and harassment, pornographic images by MMS; or subscription to unwanted premium rate messaging services.

For corporate organisations, operators can not only provide subscribers with the means to enforce corporate usage policies (ensuring Mobile Data compliance to existing LAN Acceptable Use Policies) but can also extend this capability from Internet access to embrace messaging and safeguard users from spam, phishing and virus attacks, while also protecting the operator's network.

However it is not only the end users who need protecting. The mobile operators' networks are also affected by SMS fraud leading to revenue loss between operators. Studies of operator traffic show that typically one to two per cent of all traffic carried may be spoofed or faked, which for the large messaging volumes carried, result in direct costs.

Growing mobile messaging and data revenues depends upon the growth of accessible mobile content. However without controls, users are potentially subject to harassment, unsolicited messaging, inappropriate content and fraud. Unless addressed, these concerns will inhibit the growth of mobile phone penetration in new segments, and the usage of messaging and data. Without the ability to preserve privacy through managing content and access, a user has one choice - suffer or switch off the service.

Jay Seaton is Chief Marketing Officer at Airwide Solutions

Martin Creaner sets the scene for the TM Forum's Management World Orlando, against the background of the massive changes taking place within the communications, entertainment and information marketplace

We've all heard the saying "May you live in interesting times." I think that adage applies very nicely to the telecommunications industry. If you've blinked at all in the past 20 years, you'll have missed some striking changes that have seen the shift from traditional telcos leading the way, to the importance of cable providers, and now increasingly to the rise of Internet and new media companies.

These are certainly interesting times to be a telecom observer, but if you're entrenched in the industry it can be downright head-spinning to keep up with who's in the market, what kinds of services are being offered, how they are being billed and if customers are truly happy.

Sometimes it may feel as if you're operating in a vacuum, but that mentality is going by the wayside as communications providers and others in the industry are realizing that to hang onto the market share they have, or to build their customer base, they can't go it alone anymore.

Established telcos are feeling the heat as they struggle to get their costs down, get their revenues up and keep their customers happy. And they are expected to do all of this while fending off the ever-encroaching competition.

At TM Forum, our core membership has been these traditional telecom operators, so we're experiencing the massive industry changes right alongside these established players. Historically, our organization was really the central meeting point for the telcos, and soon thereafter the vendors that supply products to these companies started joining up. Then year after year, we kept growing and adding new areas of focus, including targeting cable providers and their suppliers as members.

But in today's new world order of entertainment and information coming at you 24 hours a day, 7 days a week, these providers know full well they cannot be all things to all people all of the time. They are going to have to partner with content providers, content aggregators and other new entrants to the telecom value chain or risk falling by the wayside and being looked at as simply commodity bit carriers.

The nice linear value chain that we've known and loved for years in telecom has developed twists and turns along the way as more of these new entrants to the market insert themselves into the service delivery process.

From our perspective at TM Forum, we have to think of these new players not only as potential members of our organization but also as viable contributors when it comes to developing standards and processes for creating and delivering next-generation services.

This paradigm shift from telcos as the communications power brokers to the rise of cable providers in the past 25 years, and now the entrance of new players on the scene means a lot of questions, confusion and general scrutiny on the entire communications service delivery value chain.

TM Forum's flagship event this November is all about addressing not only the broadening and expansion of the telecom value chain, but also what needs to happen behind the scenes to ensure services that customers really want are being created, that these new services are being delivered to customers with the agreed quality of service and availability, and that the services are actually providing new sources of revenue for providers. In that vein, for the first time we're offering a tri-summit format that places equal emphasis on what we see as the cornerstones for the telecom industry today. Rather than having a single, monolithic conference, we're going to shine the spotlight on the areas we think will be important over the next several years.

The Transformation Summit will address the challenges facing the mainstream telcos and cable players who have been working diligently to drive costs out of their back office and are now looking at instituting a bigger-picture transformation to ensure their future success. So rather than just focusing on the importance of cost-cutting, we'll also look at opening up opportunities for revenue enhancement across these organizations.

This summit will feature presentations on our core frameworks including TM Forum's Business Process Framework (eTOM) , our Information Framework (SID) and our Application Framework (TAM). These are the central building blocks for anyone who wants to travel down the transformation route.

The Revenue Management and Customer Experience Summit will showcase what TM Forum has been doing in this space in the past few years, which includes the absorption of the Global Billing Association (now our Revenue Management Initiative) and IPDR.org (now TM Forum's Cable Initiative). Instead of being just the organization for the standardization of OSS, we've expanded our horizon with a focus on BSS as well, including hot topics such as billing, charging, rating, revenue assurance and how to proactively manage the customer experience.

The Digital Commerce and Advertising Summit is really all about convergence and represents the latest broadening of scope within TM Forum. We see digital commerce as where revenue growth opportunities will come from in the next five to ten years,

This summit will focus on how telecom, cable, advertising and media/entertainment are coming together in new and interesting ways. We'll try to answer questions like how is advertising going to facilitate to new revenue models in the digital world and how do you create service delivery capabilities to deliver this new content in an effective and efficient way.

In addition to these ground-breaking summits, Management World Orlando will also feature world-class keynote addresses by executives from Rogers Communications, Credit Suisse and Deutsche Telekom; 18 introductory and intermediate training courses on topics such as NGOSS, Service Delivery Framework, Next-Generation Billing and Monetizing Content; and of course an expo featuring the leading companies in the industry.

We'll also be highlighting a number of real-world demonstrations of proven and implemented technical frameworks and business solutions in Forumville, your one-stop shop to see market-ready deployments, to experience the convergence of communications, media and entertainment, cable and other sectors, and to talk to visionary TM Forum members and their partners.

Forumville includes Content Encounter, which will feature more than 20 companies showcasing end-to-end solutions for the digital marketplace. You'll see everything from the content lifecycle, advertising-based business models, advanced services creation and delivery, revenue assurance and much more.

Within Forumville you'll also find our Catalyst Showcase, which is TM Forum's technology proving ground for innovative projects. These projects will have a broad technical appeal to show attendees but will also highlight how they can deliver real business benefits and positively impact the bottom line.

Catalyst Projects that will be featured at Management World Orlando include Global Information Mobility, Harmony Phase 3, Enhanced eBonding and Targeted Advertising through Enriched Subscriber Information. In addition, we'll be looking closely at several focus areas, including E2E Service Quality Management.

Management World is really a reflection of where TM Forum has come from, where we are today and where we are going in the future. We want to take our telco base, build on that without leaving anything or anyone behind and get a few steps ahead to help everyone be more competitive in the new marketplace.
We hope you'll come along for the journey to Orlando!

Management World Orlando, 17-20 November 2008, Orlando, Florida
Martin Creaner is President of the TM Forum

There is a natural symbiosis between IPTV and advertising, argues Tony Hart.  He looks at what it might mean for telcos

When it comes to IPTV, two of the biggest challenges facing service providers are a) how to generate revenue and secure some kind of return-on-investment; and b), how does IPTV differentiate itself in markets where it is competing against other TV delivery platforms?   This is why more and more industry players are turning the spotlight on the role of advertising across IPTV networks.   In return, the flexible nature of IPTV promises to breathe new life into tired old TV advertising formats and help to halt the declining TV ad revenue in some Western markets.

Targeted advertising... addressable advertising.... personalised advertising... call it what you will, but this new approach to TV advertising could help to give consumers a more relevant experience, while at the same time helping to attract advertisers to this new delivery medium and generating revenue for the service providers involved.   Nor is this just hot air: in the past year, operators in Europe have already conducted addressable advertising campaigns across terrestrial TV channels, with further campaigns planned.

Annelise Berendt, of industry analyst firm Ovum, has previously gone on record saying:  "The IPTV platform offers advertisers the best of both worlds.  It offers the immersive and proven impact of traditional television with the added benefits of being able to enhance it with interactivity.  It also offers the addressability and accountability of advertising in the Internet world, enabling the targeting of individual homes, personalized advertising and measurement of an advertisement's impact."

Before we delve further into what addressable advertising is all about, let's be clear about the definition of IPTV being used here.  In this article, we are talking about IPTV in the sense of TV delivered across a private IP network to a subscriber's broadband access point, to then be viewed on a television set.  This kind of IPTV -already being delivered by the likes of BT, Orange France Telecom and Telefonica - is not about web TV (or Internet TV as some people call it), which unlike IPTV, cannot guarantee the quality of service that viewers associate with TV. 

There will be some overlap between IPTV and web TV (such as being able to access Web pages from a TV screen, associated with a specific TV programme).  Furthermore,  the growth of Web TV has changed the way we consume video-based video for ever,  meaning that the viewer is in charge of ‘when and where'. It is even possible to interact with content via social websites.

At the moment, many consumers in early markets typically receive IPTV services as part of a package, rather than actively demanding the technology.  After all, consumers are generally only interested in the content, not the delivery mechanism.  However, this is not enough, particularly for operators competing with traditional terrestrial, cable and satellite.  As Ashley Highfield, Director, Future Media & Technology, BBC has said on the corporation's web site: "The winners will be the IPTV aggregators who offer truly complementary, differentiated services to those which people can find on their TVs...what IP-delivered TV should be about are the things that traditional television struggles at: amplification,  global distribution, rediscovery engagement, collaboration, innovation and navigation." With IPTV, service providers have massive opportunity to provide integrated services, more personalised content and user-generated content are all possibilities.

In addition, advertising on IPTV has the potential to be dramatically different to the ‘traditional' TV experience.  IPTV enables content to be targeted according to different factors, the first of which is geography. Because of the bi-directional nature of IP, it also becomes possible to discover viewing behaviour in ‘real time' without the consumer having to give away any potentially sensitive personal data. In this way the service provider can tell whether the IP address associated with a particular device is consistently watching a genre of programmes.  This information can be used not only to offer certain kinds of content, but also to help service providers to offer advertisers a means through which to deliver more relevant advertising.

For instance, a household that is clearly a regular consumer of holiday programmes - but never watches any children's TV - could be targeted to receive ads about holidays but de-selected to see any ads aimed at families.  Furthermore, if consumers also ‘opt in' to provide additional information themselves, then profiling of ads could become even more detailed. 
This tailored approach has advantages all round. It excludes the danger of advertisers falling into a ‘spray and pray' approach to TV advertising.   ‘Frequency capping' can be used to ensure that a viewer only sees an ad a certain number of times, or to create serialised ads where viewers see ‘episodes' in sequence.  The same brand ad could have different sequences depending on the viewer (for instance, city hatchback car with one message for young people, then a different message and visuals for an older audience).  In this way, viewers are less likely to skip ads, even when using PVRs.  Research from Nielsen has shown that while viewers do skip or fast-forward ads, ad-skipping habits vary according to the show or whether the programme is watched live or later.  When watching Survival: China, just under 20 per cent of the 5.16 million ‘live' viewers ad-skipped, while of the 6.51 million who recorded and watched the programme up to three days later, 5.23 million did not ad-skip.

As far as IPTV operators are concerned, these new, more engaging formats can help to attract the advertisers who are becoming increasingly disillusioned with the return-on-investment from TV advertising.  Addressable advertising means less wastage, which apart from being more cost-effective for big brand advertisers, also brings TV promotion within the grasp of a whole new pool of businesses who would have previously found TV too unfocused and expensive.  Finally, the data of viewing habits of different IP addresses can be used to create the basis for more sophisticated measurement tools.   Moreover, the same ad avail (or timeslot) can be targeted to different viewers and most importantly, sold to different advertisers, making this a highly attractive business model for broadcasters.

Of course, the viewers themselves also benefit from seeing more relevant and hopefully more enjoyable advertising.  If consumers are presented with more relevant advertising then they are more likely to accept its presence outside of traditional TV.  This in turn makes advertising a more valuable revenue stream for service providers. For example, many mobile TV services are expected to be loss leaders and offered to consumers for free.  If the operators behind mobile TV can hope to recoup some of their investment through advertising, then their business cases are in better shape.

Some IPTV operators, broadcasters and advertising agencies have already been exploring addressable advertising opportunities.  The world's first targeted TV advertising campaign over IPTV took place in late 2007, involving UK broadcaster Channel 4, the UK IPTV network Inuk, media agency Mediacom and Packet Vision.  Using an ad from an existing financial sector client, the campaign ran daily on Channel 4 for two weeks.  It specifically targeted at university students across the UK so that during the same 40 seconds in which the ad spot ran, students saw an ad from a different brand to the rest of the general viewing population.  The targeting was made possible by installing Packet Vision's IPTV advertising solution, the PV1000 (which involves services, software and hardware, including a single rack mounted unit in the telco's network, providing splicing, routing, ad insertion and management features) within the Inuk Freewire service, an IPTV network that provides triple play services to universities across the UK.  

Rhys Mclachlan, Head of Broadcasting Implementation at Mediacom said at the time: "We've delivered a pure targeted campaign for a client through television advertising on terrestrial broadcasting for the first time.  Packet Vision offers an opportunity for advertisers wanting to reach a specific demographic without screening copy to viewers who fall outside of the intended audience.  We also see advertisers with restricted budgets using this service on a regional basis for the delivery of cost-effective campaigns."

Another example in the summer of 2008 involved Channel 4 via Inuk again, but this time using Dollond & Aitchison, one of the UK's leading eyewear providers and its agency Arena BLM.   Arena BLM was keen to exploit the targeting potential of IPTV for its client.  It booked a campaign which features a D&A lifeguard saving a woman who is drowning in a sea of glasses, to run on Channel 4 and to be seen only by students.  Caroline Binfield, Business Director of Television at Arena BLM said, "This innovative technology allows our client to target niche and highly relevant audiences, which will drive improved efficiency of the advertising campaign."

These early experiences are just the beginning.  To earn its place, IPTV cannot just be yet another ‘me too' delivery vehicle: it has to offer something different, as well as make money for its stakeholders.  Addressable advertising could be the key to making IPTV a truly profitable medium.

Tony Hart is Business Development Manager with Packet Vision

How can operators best manage and monetise the capacity demands of Internet TV?  Jonathon Gordon takes a look

There has been much controversy over who should foot the bill for over-the-top Internet TV services such as the BBC iPlayer, ITV's catch-up TV and Channel 4oD, as well as non-broadcaster user-generated content channels such as YouTube and Joost. The rise in popularity of these bandwidth-intensive services seems to know no bounds. According to Ofcom online viewing has doubled over the past year from 1.57 million to 2.96 million, with one in nine UK homes, for instance, now tuning in via their PC. Our viewing habits are changing and we now demand that footage be available to view, perhaps repeatedly, anytime, anywhere. This trend is even seeing PVRs (personal video recorders) and home media centres equipped with Internet connectivity. In such numbers video services consume vast amounts of broadband capacity. So much so that there is a real danger of their popularity threatening the deployment of next generation networks.

Why? Because the way these services are monetised means there is little payback for the operator. Research from Telco 2.0 looking at the impact of the BBC's iPlayer on UK ISP Plusnet found that costs have gone up 200 per cent, from 6.1p to 18.3p per user, because the ISP needs to buy more capacity but is seeing no additional revenue. And it's not just the operator who gets the short end of the straw. Users are also being short changed given that three hours viewing of Joost, a P2P video service devised by the same founders as Skype, would use up the 1GB monthly allowance awarded to most subscribers. Content providers too have a vested interest in how this content is delivered. Poor delivery means their service may alienate viewers. Internet TV content is highly susceptible to latency, delay and jitter caused by fluctuating contention rates and the emergence of high definition footage, which can consume up to 75Mb per minute when streaming at 10Mbps, is likely to further exacerbate the problem.

So should the service provider, content provider or end user foot the bill? At the moment, the jury is out on what new business models will emerge. Traditionally, a linear model has seen consumers pay for access to content and distributors paying the content provider with additional revenue generated from advertising. The operator is left out of the equation based on the assumption that the fee users pay for their broadband connection will cover consumption. In reality there is little correlation between content and the cost of delivery. iTunes, for example, charges a dollar per MP3 download and around five dollars for a movie even though the latter is 100 times greater in size. Clearly operators can't charge a corresponding amount for Internet video yet at the other extreme, user-generated content is available for free. There has to be a middle ground.

Internet TV consumption monopolises resources and should the current situation continue unabated some argue that the operator will be unable to cope with operational expenditure ruling out network upgrades and stymying technological advancement. New business models, therefore, have to emerge. Perhaps the ISP will partner with legitimate content providers, or they may decide to steer clear of any content-related activity altogether, choosing to act as an access-only conduit but with payment reflecting the level of access. Regardless of the model that evolves, there is an imperative for the content chain and access provider to work more closely together to ensure Quality of Experience (QoE) for the user.

Content owners use Content Delivery Networks (CDNs), which sometimes use P2P file sharing technologies, to distribute content. P2P is valuable in improving QoE because this distributed storage and retrieval mechanism improves speed, minimises the load on servers and is a cheap and scalable means of distribution. These systems can be used to help operators prevent congestion. In return, the operator can assist the content owner by using caching technology to prevent service degradation.

Caching provides an ideal opportunity for the operator to add value. It works by storing popular content in close proximity to the user, allowing the operator to ensure content is delivered effectively while also meeting the needs of many users at once. But caching should only be seen as part of the solution because it tends to focus on specific traffic types rather than addressing traffic volume as a whole. What's more, as more content is made available, viewing is likely to fragment, making it more difficult to store the most popular content on the cache and improve the QoE.

The operator needs to be able to factor in off-net issues and the total bandwidth available, requiring caching to be supplemented by another technology capable of traffic management. Deep Packet Inspection (DPI) service optimisation is the ideal partner as this technology is capable of peering into the traffic stream to determine the signature of applications whilst also monitoring bandwidth consumption. It's a versatile technology as the operator can use it to passively monitor the network and capacity consumption or to take more assertive action. For instance, the operator could decide to prioritise video applications across the network, allowing the operator to guarantee Quality of Service (QoS) on this type of traffic. It's easy to see that this type of guaranteed service would appeal to Internet viewers allowing the operator to market this service or simply use it as a differentiator.

Network operators who favour the proactive approach can use DPI to establish network congestion policies. These allocate bandwidth according to the traffic category, either boosting or limiting the capacity. Traffic can be prioritised according to its content and congestion managed according to these categories. As a consequence, the operator can better utilise network resources, conserving bandwidth and postponing the need for frequent network upgrades. If the DPI device is subscriber aware, it can take into account any subscriber SLAs and compare these with the application categories dictated in the traffic management policy. DPI devices, which are both content and subscriber aware, can inform the creation of tiered service packages and be used to tweak these should usage patterns alter.

When used in league with caching, DPI traffic management can prioritise the passage of specified traffic across the network, reducing the delays associated with multimedia content buffering. When the subscriber requests content this communication is recognised by a blade housed on the DPI device in real time and the request is redirected to the caching engine. If the content is already housed on the cache, it is streamed directly to the subscriber from the caching via the DPI device. Alternatively, the cache can retrieve the content over the Internet, whether it is housed on CDN servers or P2P nodes, a request again routed through the DPI device. Regardless of the source, all content is managed by the DPI traffic management system to prevent congestion. DPI is also capable of prioritising this traffic and, if used with a service gateway functionality, can also subject it to filtering. The Service Gateway essentially allows the DPI device to interface with value added systems that provide security control or url filtering in order to carry out different rule sets. A Service Gateway DPI device unifies the operator's billing, subscriber management and provisioning systems, acting as a central point of management and one-stop shop that combines data to assess service utilisation. In an Internet TV context, it can carry out pre-processing or post-processing of the content flow, allowing it to perform harmful content filtering, for example.

As well as governing the network, a DPI traffic management solution can also be used as a customer-facing tool. It is able to set quotas for individual subscribers without showing a bias towards any one particular content provider. Quota Management can be used to differentiate between video traffic, VoIP traffic and web traffic, using volume usage quotas to provision and enforce customised service plans. The DPI device collects information and allocates usage per subscriber, meters actual service consumption, and adjusts QoS according to content, volume and time elapsed, or any combination of these parameters. When the allocated quota is reached, the operator can choose to redirect the customer to a portal where they can "refuel" their quota or change their service plan. Quota Management ensure the user's access to high quality content is protected and allows the operator to manage bandwidth resources.

In essence, DPI traffic management finally makes the operator part of the Internet TV value chain. A unified, open platform DPI traffic management device with Service Gateway and video caching capabilities optimises network resources and prioritises traffic according to the nature of the content. As a consequence, Internet TV traffic is retrieved and delivered in as timely and conservatively a way as possible while also allowing new subscriber-led service plans to be developed.

For the viewer, timing is everything. Uninterrupted access will become as necessary to the survival and proliferation of Internet TV as always-on broadband has been to the web. So operators need to turn on, tune-in or drop out.

Jonathon Gordon is Director of Marketing, Allot Communications, and can be contacted via

Only a few years ago startups such as Skype and VoiceBuster gave the telecom industry a real scare by allowing people to make telephone calls over the Internet free of charge. They forced telecom operators to cannibalize their traditional voice revenues with VoIP services. It was one of the reasons for the telcos to start investing in IPTV.  Now there is a new threat for the telcos in the form of Internet TV. Will new players again traumatize the telecom industry by undermining the telcos nascent IPTV services, asks Rob van den Dam

Many telecom operators are investing in digital content in the hope of offsetting the fall in fixed-voice revenues. They focus primarily on offering television and video services, in particular IPTV; many of them see this as a necessity to combat the trend of losing subscribers to cable companies, which are increasingly offering VoIP as part of triple-play bundles.

But new Internet developments again pose a threat to telecom operators. The Internet has already caused a transformation in the telecom industry in the domain of communication services, where new players such as Skype have forced telecom companies to offer VoIP at substantially lower prices than they previously offered for traditional voice services over the fixed network. And now, the Internet enables Internet-TV start-ups to become a threat for the telcos nascent IPTV-services. Today Internet video is still delivered in rather low quality via sites like YouTube. In spite of grainy images and the small window format, however, these sites have been successful in attracting millions of viewers on a regular basis. And as broadband becomes faster and available to a broader public, they will be able to offer professional video services with a continually improving image quality, in this way providing an alternative for IPTV.

IPTV is a system where video content is transmitted in the form of IP-data packages over a closed secure network. The infrastructure is configured such that viewers can only receive the IPTV provider's own TV-channels. IPTV focuses primarily on the TV-set in the living room, generally a wide-screen TV with high image quality. A Set Top Box (STP) is required to receive the signal. IPTV telecom operators are very uniquely placed to enhance the television experience:

  • They can augment their IPTV-offerings with a wide variety of voice and data services.
  • They are well placed to combine IPTV on the TV with the other screens: the PC and the mobile.
  • They also have a lot of information about the viewer that they can use to deliver personalised content and advertising.
  • And last, but certainly not least, they are able to guarantee a qualitative high end-to-end television experience.

Currently most IPTV-services are based on subscriptions and a Video-on-Demand charge.
Up to now, many IPTV operators have focused on offering the same services - the same TV-channels and type of content - that their competitors, usually the cable companies, offer. But some telcos have taken it further. For example, Belgacom in Belgium is competing primarily on exclusive sports content. Other operators rather compete on offering ease-of-use. For example, by offering an Electronic Programme Guide (EPG) that allows individual users in the household to set up their own TV-guide with their own favourite programs and settings. These operators are taking optimum advantage of the possibilities that IPTV offers with regard to personalization and interactivity. There are numerous ways to compete, and each IPTV provider has his own strategy.

Internet TV has the "look and feel" of IPTV, but is delivered over the open public Internet, and is delivered "over the top" (OTT) of existing networks, actually getting a free ride. Internet TV is usually delivered to the PC or another device connected to the Internet, using peer-to-peer technology. Internet TV offers the OTT providers the following advantages:

  • They do not have to invest in distribution networks because they use the telecom and cable companies' networks.
  • They offer the same type of interactivity and viewing capabilities as IPTV.
  • They have a global coverage.

However in contrast to IPTV:

  • There are still issues with the video quality, though it is continually improving.
  • Users really need some technical know-how to use it properly.

Internet TV is not a controlled environment. There are no guarantees regarding accessibility, availability and reliability. There is no control over who is allowed to watch which programs and under what circumstances, such as related to distribution rights in different countries.
Internet TV providers offer programs for free; revenue is preliminary based on advertising. Obviously, Internet TV is still in the embryonic phase. There are a number of players who are attempting to create a market for themselves. Joost is the most well-known. Joost is coming from the developers of the music-sharing program Kazaa and the VoIP-service Skype, developments which has severely traumatized the music recording industry and telecom sector, respectively. Joost only distributes professionally-made content, and sharing advertising revenue with the content providers. While Joost is focusing on a large public, Babelgum focuses on specific target groups by offering niche content via a large selection of theme-channels. Hulu, the online video project from Newscorp and NBC/Universal has begun its offering to the US-public early 2008. Other providers include Narrowstep and JumpTV.
Variations on Internet TV include BBC's iPlayer and Apple TV. iPlayer is an on-demand TV-service enabling users to view BBC-programs via Internet. Apple TV uses an STB that makes it possible to stream digital information from any computer with iTunes to a widescreen high-definition TV-set. This enables viewers to transmit videos, TV-programs, music, YouTube videos and other Internet material from the computer to their TV-set, or to save them on the STB hard disk. And if it is up to Microsoft, users will soon be able to connect their TV to a Windows Media Centre PC or an Xbox 360 using Microsoft's Media Centre Services to get their daily diet of TV-programs.

All together, more than enough threat for the telcos who have spent large amounts of money building and launching their own IPTV-services. They are understandably worried, that OTT providers will ultimately capture all the value that video-over-IP promises. In that case, they would be left with nothing to offer but the so-called ‘dumb pipe'.
Clashes appear to be unavoidable. IPTV and OTT providers will certainly be confronting one another in the domain of distribution and advertising.

In terms of the first point, the OTT providers shift the distribution problem to the owners of the networks. IPTV providers invest heavily in upgrading their networks for their own IPTV-services; now they must handle the OTT traffic as well, which means additional investments. In fact, incumbent telecom companies face the unique dilemma that as they increase their broadband capacity, they make it easier for OTT providers to deliver the quality-of-service that is required for professional TV-broadcasting. Of course, that will not be acceptable for the telecom companies. They can respond in different ways:

  • Filter the OTT-traffic, possibly block specific traffic, and offer higher distribution priority and quality to parties who are willing to pay (more). However, throttling OTT-traffic controversially violates the so-called net-neutrality principles, i.e. blocking other parties' traffic to give their own services precedence. This could lead to intervention by government regulators.
  • Find a way to insert themselves into the relationships between the OTT provider and their customers, and make agreements regarding the charge-through of the distribution costs, either to the OTT provider or its customers.
  • Open its IPTV-platform to OTT-content by making services from OTT suppliers available as separate IPTV-channels. This would allow the operators to bring in extra revenue.

In terms of the second point, the advertising, ultimately it all revolves around the advertising relationships and the possibilities the Internet offers for more efficient targeting. Internet television is currently paid entirely by advertising. IPTV advertising will also become increasingly important for telcos to fund their content, as customers do not expect to pay for all content. In 2007, IBM's Institute for Business Value conducted a consumer survey to evaluate changes in consumers' media behaviour. A number of questions were related to advertising; the results indicated that in all the countries involved the majority of those surveyed were willing to view advertising before or after a good quality, free video broadcast.
In the battle for advertising funds both parties offer good possibilities for efficient and effective advertising, better than the traditional TV providers. But the telcos seem to have the best assets; assets that advertisers really value. First of all, with their network capabilities telcos are able to better control where the ads go to and to track advertising effectiveness. Telcos collect vast quantities of customer data, which they can use to develop profiles of their subscribers, including viewing patterns and perhaps shopping habits. They can combine these customer insights with their ability to identify the location of individual users and offer highly targeted, localised promotions. Integrated telcos can even combine data collected from fixed, wireless and other networks. They are well placed to enable the advertising experience practically anywhere, on any device and at any time.
Over the short term, Internet TV does not represent a real threat to the IPTV providers. IPTV has a clear possibility to establish a strong position in this market before the problems regarding image quality and the ease-of-use of Internet TV are resolved. But after that, the situation may change. In particular when Internet TV moves to the TV-screen, Internet TV can pose a bigger threat for IPTV.

It is all about getting Internet video onto the TV-screen. The Apple TV initiative mentioned earlier illustrates this. More and more manufacturers of consumer electronics are working on developments for equipping TV-sets with possibilities that make Internet access possible. Sony, as an example, is working on rolling out a network adapter for showing web clips on its HDTV's. It is only a question of time until the access to Internet is a standard feature built into the TV-set. This is an essential milestone from the perspective of the consumer that makes things a lot easier for him.
On the other hand, a partnership between IPTV and OTT suppliers is not unlikely:

  • Telcos can make OTT-content available as part of their IPTV-services
  • OTT providers can profit from the IPTV providers' "walled garden" that gives them a better guarantee in terms of quality, control over the distribution, and feedback with regard to volumes, viewing times and viewer behaviour.
  • Telcos can use the OTT-channel to collect additional customer data regarding consumers' viewing habits for improving targeted advertising.

In fact, we are already seeing this type of initiatives. Some telecom companies are bringing the Internet TV players into their own IPTV-environment, such as Verizon with YouTube and BT with Podshow. They offer, as it were, an extension of their closed IPTV environment. Many providers will offer their own Internet TV in parallel to this, possibly geared to other customer segments, optimally utilizing brand recognition, relations and distribution of content across both channels. BT Vision, with its IPTV-platform and web portal with a download archive for on-demand content and the purchase of physical DVDs, is one example of this.

OTT Internet TV is currently seen as a marginal threat for the IPTV providers. But as bandwidth and QoS will become less of an issue, the OTT providers will increasingly develop into mature TV suppliers of online live HD programming. Joost, Hulu, Babelgum and others are most likely just the top of the iceberg. More of these types of companies will emerge. They will get funding and then fight for customers and advertisers. In the end, it will come down to finding a solid business model. At the same time,  IPTV will mature, finding the right ways and approaches to be successful. Probably there is room for both IPTV and Internet TV, each addressing a particular consumer segment, and the possibility for some sort of partnership is certainly there.

Rob van den Dam is European telecom leader of the IBM Institute for Business Value and can be contacted via: rob_vandendam@nl.ibm.com

At heart all healthy businesses are trying to do the same thing, says David Ollerhead

Linguists today think that all languages have the same purpose and deep structure. Basically linguists believe that all languages are at heart doing the same thing. This appears to be true of healthy businesses too.

All healthy businesses have the same purpose: to grow and maximise profitability within the markets in which they are operating. There's plenty of practical empirical evidence to suggest that healthy businesses also have a great deal in common in their structures and the way they organise their activities.

Management skills, after all, are widely regarded as transferable between different vertical sectors. Senior executives tend to be recruited (or appointed to Boards) based on their success in roles where it is their positive impact on a particular organisation that matters rather than the sector in which the organisation operates. This suggests that healthy businesses have in common organic things which good managers can consistently nurture and develop, whatever the nature of the vertical sector where the business operates.
Similarly, university and business school courses focus on management skills in a general sense. ‘Serial entrepreneurs' are, by definition, fabled for their expertise at forming, growing and then selling businesses in a wide variety of sectors. Indeed, the very existence of management consultants who are geared to consulting in any sector where managers need assistance or guidance is perhaps the most decisive evidence of all that ‘management skill' is a tangible, discrete and specific thing which is basically sector-independent.

Further evidence that healthy businesses are all doing much the same thing is found in how brands operate. Major brands positively exult in their ability to win a presence in markets that on the face of it are disparate but in practice tend to become linked when a brand successfully establishes a loyal, enthusiastic, customer base.

Taking two examples, the Virgin brand (including music, travel, publishing, communications, financial services and soft drinks) has come to be associated with fun, youthfulness, value for money and Richard Branson, while the Saga brand (including travel, publishing, financial services) is seen by many adherents as signifying reliability, good quality, and a square deal for the over-50s. Brand-loyal customers willing to buy from more than one and very possibly all the different businesses under one particular brand obviously feel that the brand is more important than what's being sold.

The science of linguistics that originated the idea of, deep down, all languages being the same, is a fascinating science, but ultimately simply an academic pursuit. Business, on the other hand, powers the world's wealth and is the source for most people of their income and economic security. Big-picture conclusions about business and how it works consequently have massive implications for all of us.

The route to growing and maximising profit is to sell more products or services to more customers, given that neither the business nor its customers will want there to be any negative changes in the quality of the products or services being delivered. Equally importantly, in the case of a service, the business will not want customers to be over-serviced, which will increase the quality of what is being supplied but make supplying it much less profitable. The organisation will also want to sell more things to more customers without disproportionately increasing the time taken to supply what is being sold.

For healthy businesses, a melodious and useful mantra is: ‘Revenue is vanity, profit is sanity, cash-flow is key'. Chasing revenue for its own sake makes no sense if the revenue does not come accompanied by a healthy profit and a correspondingly healthy and positive cash-flow.  Above all, it makes no sense for a business to succeed in its aim of selling more products or services to more customers unless the business can do so without disproportionately increasing the cost of supplying what is being sold. Similarly, the business will want to avoid disproportionately reducing the prices of what is being sold. Selling more things to more customers by slashing the price (such as through a ‘buy one get one free' offer) can easily reduce profit and so be self-defeating.

Within the constraints of these qualifications a healthy business's aims are clear. All healthy businesses are trying to sell more things to more customers without:

  • compromising the need for the business to supply products and services to the required (rather than excessive) level of quality
  • incurring costs that make supplying the products and services unprofitable
  • reducing prices to a level where supplying the product or service becomes unprofitable.

So, how does a healthy business achieve these vital objectives?  Ultimately, the very nature of what a healthy business actually is suggests there can only be one answer to this question. The only way for a business to sell more products and services to more customers is to have a total focus on its customers. The fact that this answer, baldly stated, sounds straightforward does not make it any easier to achieve, or lessen its importance.
The first challenge in achieving this vital customer focus is knowing who your customers are, which includes your existing customers (i.e. the ones you've won already) and also your potential customers (i.e. the ones you could win.)

The second challenge is knowing what your existing and potential customers need, at least in the context of what you are able to sell to them. This challenge may well be more difficult than knowing who your existing and potential customers actually are, but mastering this second challenge is vital to your success, because until you truly understand what your customers need, it is always possible that:

  • you might be offering customers things that they don't actually want, or that not enough customers want
  • you might be focusing on irrelevant issues (eg cost-discounting things customers don't really want) instead of getting to grips with finding out what customers do want
  • you might start improving areas of your business that have no ultimate effect on customers and the improvement of which will therefore not lead to you selling more things to more customers.

The third challenge, once you know what your customers do want from you, is to work out how you can meet these needs by profitably producing goods and services as efficiently as possible.

The fourth challenge is the need to commit yourself to ensuring that your responses to the first three challenges are subjected to a continual state of interrogation that involves making sure your responses are undergoing a continual state of improvement.
The four challenges are fairly easily stated but by no means easy to meet. They involve, above all, establishing and maintaining a focus on your customers rather than on internal matters at the business or on your own personal concerns. But businesses that really do rise to the challenges - businesses that become, in effect, experts at focusing on customer needs - can enjoy prodigious success.

Once you do know who your customers are and what they want from you, one particularly potent way to ensure that your business is really focused around their needs and meeting those needs with maximum efficiency, is to look hard at your business's processes.
In business, a process is a series of steps that produces a specified deliverable to meet a customer need.  This definition is precise: the steps of the activity must actually meet customer needs (or, for organisations that have several processes, the needs of different customers) successfully. A series of steps that doesn't meet customer needs can't properly be regarded as a process, or at least not an effective one.

Whatever the precise nature of the process or processes a business carries out, the very fact that process is actually defined in terms of delivering a benefit to customers leaves no doubt that a business's process or processes lie not only at the heart of the business but are the heart of the business.

And make no mistake: all good businesses will have a healthy heart whose pumping creates maximum profit for you, and maximum satisfaction for your customers.

David Ollerhead is head of consulting within the Professional Services Group at Airwave Solutions Limited, and can be contacted at david.ollerhead@airwavesolutions.co.uk



In this issue, guest commentator Axel Pawlik, CEO of Regional Internet Registry RIPE NCC, discusses the vital role of IPv6 in the continued development of the Internet

The Internet industry is running out of IPv4 addresses. At some point, probably about three years from now, IANA (the Internet Assigned Numbers Authority), the body responsible for the top-level distribution of IP addresses, will hand out the last unallocated IPv4 addresses. The exact ramifications of this are currently the subject of much discussion and debate, but it is clear that IPv6, the new generation of IP protocol, is vital to the continued growth and development of the Internet. Ensuring that IPv6 is efficiently and effectively deployed is therefore the major challenge facing the Internet today.

As the IPv4 exhaustion date approaches, IP addressing is a global concern. Already, 180 of the 256 IPv4 address blocks of "/8" have been allocated, and of the remaining 76, 35 are reserved for the Internet Engineering Taskforce (IETF). The remaining 41 blocks are held by the IANA for future allocation to the Regional Internet Registries (RIRs). The RIRs, in turn, distribute addresses to ISPs and other users in their respective regions.

The original plan was that as the Internet grew and the IPv4 address pool was depleted, the new protocol, IPv6, would be deployed. According to this plan, the deployment of IPv6 would be complete long before the last IPv4 address was allocated.

This has not happened, and IPv6 deployment activity has, up to this point, been minimal. This is now a real problem, because the transition to IPv6 will now have to take place in that grey area beyond the exhaustion of the IPv4 address pool. Therefore, as the Internet continues to grow, network operators will have to "dual stack", or run both IPv4 and IPv6 simultaneously.

The pace of Internet growth, however, may pose problems for this plan. The RIRs currently allocate approximately 268 million unique addresses every year. This is even as the use of NAT (Network Address Translation, a technology that allow many devices to use the same address) increases. If there are no IPv4 addresses for new users, how will new networks be able to implement dual stack?

Looking at the data collected by the five RIRs, there are some encouraging signs. But when we compare the amount of IPv6 that is actually being routed on the Internet to the amount of routed IPv4 address space, that optimism begins to seem a little misplaced. There are simply not many IPv6 addresses currently on the Internet.

During 2007 and the early part of 2008, however, there has been a significant rise in IPv6 uptake. This is certainly a cause for increased optimism, but the fact remains that, with only three years until the exhaustion of the IPv4 address pool, a dual stack Internet is inevitable, and IT Directors are going to have to be creative.

Ultimately, the RIRs urge that the widespread deployment of IPv6 be made a high priority by all stakeholders.

Governments are key players in Internet growth and we urge them to play their part in the deployment of IPv6, and in particular to lead by example in making content available over the IPv6 Internet.

When business leaders make firm decisions to deploy IPv6, the process is fairly straightforward. Staff must be trained, management tools need to be enhanced, routers and operating systems need to be updated, and IPv6-enabled versions of applications need to be deployed. All of these steps, however, will take time and money.

The RIRs have well established, open and widely supported mechanisms for Internet resource management and we are confident that our Policy Development Process meets and will continue to meet the needs of all Internet stakeholders through the period of IPv4 exhaustion and IPv6 deployment. The immediate challenge lies in making content available via IPv6, and in using the processes and mechanisms already available to ensure that service providers and content providers build adequate experience and expertise to continue to grow and develop the Internet.

The telecoms industry varies wildly in its predictions for FMC uptake in the next four years. What they all agree on, though, is that users will be numerous and it will save companies money. Pierre-Alexandre Fuhrmann explains how businesses can get to grips with this emerging technology

Industry watchers' estimates vary wildly as to the penetration of fixed-mobile convergence (FMC) in the coming years but they all agree - FMC is set to grow. Fast. One of the main drivers in 2008 is the emergence of dual mode handsets and widespread availability of wireless (WiFi) networks. The consensus also agrees that a converged telephony environment will save businesses money. So, when faced with this new emerging technology, how can IT managers and CFOs alike make sense of fixed-mobile convergence?
According to some estimates, there will be some 435 million mobile Session Initiation Protocol (SIP) users in 2012 whereas some analysts say there will be 18 million FMC subscribers by 2011. When it comes to call savings, Aberdeen Group estimates business users will save an average of $150 per user per year - for businesses of all sizes this is a significant amount.

As flexible, mobile and remote working begins to take a cultural hold on our society, IT and telecoms managers need to work out how FMC can give their businesses further competitive edge.

The UK enjoys some of the highest wireless Internet coverage in Europe. And for travelling business executives the opportunity to make calls by connecting to wireless networks is an attractive prospect for companies looking to reduce the cost of international calls. Wireless networks are now commonplace in airports, hotels, coffee shops and, increasingly, public areas.

Fixed Mobile Convergence means different things to different people so let's take a step back and break it down. Fixed communications comprise companies' telephone systems or private branch exchanges (PBXs), including analogue or digital ISDN exchange lines, and increasingly SIP trunks, and internal extensions.
At the same time, mobile communications can comprise your mobile handsets and their various calling plans.

Fixed Mobile Convergence focuses on taking the benefits of both of these communications streams and using the best bits to provide the most workable and cost effective system.
FMC solutions integrate fixed and mobile networks, providing communications services to mobile workers regardless of their location, access technology, and device, increasing employee productivity and decrease cost in an open standard-based environment.
FMC works in the same way as a hybrid car switches from electricity in low-speed urban areas but uses petrol power when on the motorway. When within range of a wireless network, dual mode phones can switch to WiFi and use IP telephony, moving back onto cellular access when out of WiFi coverage.

One of the major features at Mobile World Congress this February was FMC and in particular visitors felt that wireless providers could communicate their FMC offerings more effectively. But it's not just the mobile operators that IT managers can turn to when implementing FMC.
It is not difficult to FMC-enable a traditional telephony system, and even less so one which already uses an internet protocol (IP) private branch exchange (PBX). The IP PBX can incorporate the new wave of mobiles that combine GSM/3G, WiFi and SIP.
SIP is the de facto open standard allowing products from different manufacturers to be connected together, so a mobile device like the Nokia E Series can be connected to an IP PBX, such as the Aastra IntelliGate, MX-ONE and NeXspan.

Using WiFi, which is ubiquitous in business today, and Voice over IP (VoIP) the mobile device can switch from the GSM/3G network to the IP PBX's fixed network for incoming and most importantly outgoing calls.

Recent surveys show that most employees with a mobile use this as their primary phone, even when in the office, so enabling the IP PBX to ‘take over' the calls could dramatically reduce communication overheads.

The best thing IT managers can do is to read up about FMC, talk to their telephony supplier or service provider and take it from there. It is not a complex process to migrate to a converged environment, so don't believe any scare stories that say otherwise. It is the natural next step in business communications.

SIP, the open standard for IP telephony, will further enable the development of FMC, and we at Aastra believe that SIP will prevent businesses from being marooned on an island of IP. Growing demand and availability of innovative solutions based on SIP will see the transition to ‘IP Telephony 2.0' phase of internet telephony, enabling businesses to choose SIP-based universal terminals and SIP trunks to manage their external calls at a lower cost.
We strongly believe that innovation comes increasingly from the consumer markets, because of the volume effect, and especially in the mobility area. So it is important to be as open as possible to integrate these new upcoming innovations.
Moving away from proprietary solutions companies will be able to reap the benefits of open standards technologies for enterprise communications.
Your rivals are looking at FMC - if they've not got a system in place already. They will benefit from reduced communications costs, improved staff productivity as they can now deal with their emails on the road, and even better staff morale.

Convergence is happening and it's going to provide incredible efficiency and cost benefits to your organisation. According to ABI Research within the next two years mobile networks will emerge with an all-IP architecture and will deliver multimedia services as well as VoIP.
So come on and be a part of it, the technology is ready so there's no better time to migrate to fixed-mobile convergence and steal a march on your competitors.

Case Study - Procter & Gamble
While Aastra provides fixed-mobile converged technologies, this just forms part of a wider mobile working portfolio. Many blue chip customers, such as Procter & Gamble, are using Aastra's mobile technology to operate more efficiently using remote working.
Procter & Gamble is a recognised leader in the consumer products industry, with more than 135,000 employees in 80 countries worldwide. Its brand portfolio includes the likes of Duracell, Gillette, Pantene, Ariel and Lenor.

The company's Swedish operation identified the need for a more efficient mobilised communications system, especially to enable more remote working. Many employees had three different contact numbers, depending on their location and, although 60 per cent of employees had a company handset, many had to carry two or more phones.
Added to this, Procter & Gamble staff's phones were not integrated into the telephony system, often making them difficult to reach and placing a burden on the switchboard.
The challenge was to increase mobility and simplify the system, while maintaining security. Procter & Gamble's IT service provider Hewlett-Packard recommended Aastra's One Phone framework. This system includes a mobile phone for each member of staff connected to Procter & Gamble's communications infrastructure and converges fixed and mobile lines, enabling employees to be accessible anywhere and at anytime, using a single number.
The company saw immediate results. Since implementation, a significant amount of time has been saved each day, call quality has increased and users find it much easier to maintain contact. The fact that each member of staff has one phone and a single contact number vastly simplifies communications while improving productivity and cost-efficiency.
Håkan Berggren, Information and Decision Solutions Manager for Procter & Gamble Nordic, says: "The mobility solution has enabled us to save 20 minutes per day, when you consider this is per employee it represents significant savings, both in time and costs."

Pierre-Alexandre Fuhrmann is VP Products & Solutions for Aastra

GSM operators today are faced with an increasingly daunting task: how to manage the financial and data clearing settlement of multiple roaming agreements. In addition to having to deal with an estimated 200 to 300 roaming partners each, they must all comply with complicated industry-wide standards and regulations for invoicing, data record format, settlement and more.  Eugene Bergen Henegouwen proposes a solution

According to the GSM Association website, its 700 mobile operator members across 218 countries and territories now serve more than 2.5 billion customers. This means an almost unfathomable amount of mobile traffic must be documented and accounted for each day, hour and minute. And with about 500,000 new GSM connections being made globally every hour, this complexity is only going to intensify for the world's operators. Now add more market growth factors, including the proliferation of non-voice services, particularly SMS and MMS, and price reductions for users. All will lead to increased traffic.
The implications to operators are staggering.

Fortunately, they do not have to go it alone, as there are a number of clearing house specialists who have the expertise, experience and knowledge of the GSM wireless and banking industries and their multifaceted rules. This experience is especially important when it comes to financial clearing, an area where billions in Euros and other currencies are at stake.

Financial settlement of multiple roaming agreements is a complex and costly process for any operator to undertake autonomously. As more and more subscribers roam outside their home country borders to a wider range of countries, operators must collect and settle communications-related charges in a wide variety of currencies. Also, as imagined, the cost for highly qualified personnel and the systems required to manage this process is great, and the need for accuracy is imperative.

The best alternative is to make use of a high-quality, fully automated financial clearing house (FCH) to manage receivables and payables. On one side of the house, the FCH proactively collects customers' receivables. Obviously, the sooner this happens, the better, and this should be executed within about 40 days. On the other side is payables. An FCH manages foreign exchanges and all bank costs, ensuring that this part of the process is timely and accurate.

Revenue assurance, profitability and cost savings - all key components in today's competitive environment - also result from utilizing an FCH. First, the need for expensive personnel and an expensive in-house clearing system is eliminated. Second, a fully automated FCH provides operational efficiency while eliminating the risk of human error. A good FCH also improves debt management through proactive debt collection, allocation of funds and a clear audit trail.

A variety of FCHs are available for operators today, and operators must be sure the one chosen is fully functional. For example, the system should be able to take care of all types of traffic that may cross an operator's network, including GSM voice traffic, messaging (SMS and MMS, including interworking) and data (3G, GRPS and WLAN) transactions. Having a system that supports CDMA/TDMA clearing is important, as well, given that actually, subscribers worldwide do not want to be constrained in the network they use on their travels. The FCH should also integrate into the operator's accounting system for easier reconciliation and management of ledgers, and it should eliminate banking fees while ensuring competitive foreign exchange rates. Just as importantly, an operator must have access to its information via online reporting 24 hours a day.

At the end of the day, GSM operators need help most with reducing the risk while improving their return via a service that provides clearing and settlement for all of a GSM operator's international traffic. The invoicing and collection services available through an FCH should aim to simplify an operator's settlement processes with each of its roaming partners for all billing records exchanged during an invoicing period. This includes receivables from all partners who sent roamers into the operators' network, and payables to all partners where the operator's subscribers utilize a service. All settlement functions are consolidated, with the FCH acting on the operator's behalf. The operator simply funds its account, and the FCH settles with all of its roaming partners - removing the complexity involved with the current bilateral settlement process that is becoming prohibitively costly and way too time consuming as the number of partners increases.

Roaming, especially international roaming, is a significant part of operator revenues. However, before any exchange of money can even take place via an FCH, an operator must first have billing data detailing its roaming voice and data sessions. This data is essential for accurate invoicing and settlement. For an operator who has hundreds of roaming partners, the process of exchanging billing data is extremely complicated and tremendously expensive to undertake on its own.

Using a third-party data clearing house (DCH) is typically the option of choice for operators who want to ensure this critical part of their business is handled correctly. A DCH handles the exchange of billing data with an operator's roaming partners. Whether the visited or home operator, the DCH provides a single point of contact for the exchange of roamer billing records. This results in streamlined processing of roamer billing data and a single source of information regarding roaming customers as well as a way for the operator to calculate its financial position with roaming partners. And in an ideal world, the DCH should provide the operator with ­­a number of features, including the ability to process vital and sensitive operator interactions regardless of technology type, billing format or signaling standard.
The advantages of using an independent DCH are much the same as for a FCH: revenue assurance, compliance with industry standard regardless of roaming partner, cost savings and operational efficiency. With all these benefits, it makes perfect sense for an operator to look outside itself for a DCH provider.

As the wireless industry continues to mature, operators are showing a preference for clearing services from a single source that can provide both data and financial solutions in the global marketplace. The key advantages for an operator of having a single provider for its DCH and FCH are both operational and practical. On the operational side, the operator can be certain that all billing data and supporting reporting is fully integrated between the DCH and FCH, eliminating risks of data leakage and ensuring full transparency across the entire clearing process from file processing through to final settlement. On the practical side, the operator benefits from one account manager, one contract and an end-to-end commitment from the clearing house to the customer.

Ultimately, operators are provided with the convenience and cost savings associated with bundled services, and they benefit from the critical relationships needed to ensure data and reporting integrity required for financial clearing and settlement. To give you some idea of the level of processing we are already seeing, I can reveal that the Syniverse FCH generates and receives more than 18,000 invoices and settles over 8,000 roaming partner positions. As this trend continues, FCH providers will benefit from an upturn in their business from operators who have made the decision to outsource their requirements rather than trying to run this side of their operations in-house, as traditionally been the case.

It's a dynamic industry at the moment, and this is causing suppliers to augment their capabilities to keep abreast with the demands. For example, Syniverse acquired at the end of 2007 the wireless data and financial clearing business of Billing Services Group Limited (BSG). As a result, our current and future customers are provided with the convenience and cost savings associated with bundled services, and they also benefit from the critical relationships needed to ensure data and reporting integrity required for financial clearing and settlement.

Also, during any period of change and consolidation, it's important that independence is maintained when it comes to verifying and validating the source data provided by the DCH. This data should still be subject to the same stringent quality checks that are applied to all other DCHs, even if they are run by suppliers. And they also should be fully able to provide financial clearing services for operators who have already established a relationship with other data clearing houses (DCH).

I think it's this transparent approach and attention to detail that will show operators that the time is right for them to consider outsourcing their FCH and DCH operation in order to achieve cost benefits and efficiencies. If they do, it will benefit them and also the suppliers who work hard to provide a trusted source for their important - and sensitive - clearing operations.

Eugene Bergen Henegouwen is Executive Vice President, Syniverse, EMEA

Mobile operators must tackle the transition to next-generation Ethernet if they are to successfully meet consumer demands for new services, argues Vinay Rathore

Mobile operators are in a period of fundamental transition, as consumers increasingly demand access to personal high-bandwidth services while on the move. The growth of 3G data services, mobile broadband and the availability of powerful new mobile devices such as the Apple iPhone are placing significant strain on mobile networks and operators are investing in additional capacity to support this bandwidth explosion.

However, the operational costs associated with traditional mobile backhaul (defined as the access portion of the network transporting traffic between the mobile base station and gateways to the packet network and voice switched network) are increasing faster than the revenue generated by new data services.  Until recently, most network operators have been trying to add backhaul capacity primarily by leasing additional TDM-based E1 circuits at a high cost. Worldwide, TDM backhaul accounts for 20 to 40 per cent of mobile network Operating Expense (OPEX). All this is untenable in a competitive market of shrinking average revenue per user (ARPU).

The challenge facing mobile operators is how to increase network bandwidth, both in terms of capacity and speed, while reducing the total cost of running the network and growing top line services revenue.

In the UK, for example, demand for mobile Internet services is increasing while the adoption of mobile broadband is heating up competition among fixed and mobile operators. Approximately one in eight UK consumers have either replaced their fixed-line Internet connection with a mobile alternative or chosen a mobile broadband service from the outset according to research published by YouGov. Similarly, Ofcom's latest Communications Market Report (August 08) found that two million people have already used mobile broadband via a dongle, 3G datacard or similar device, with sales reaching 133,000 from 69,000 between February and June this year alone.

In addition, a recent report from Neilson mobile highlighted that the UK has the second highest number of active mobile Internet users in the world (12.9 per cent), second only to the US. Furthermore, the availability of powerful new mobile devices such as the 3G iPhone are driving mobile Internet usage by promising consumers easier access to mobile business, personal and entertainment services.  For example, 37 per cent of iPhone users watch video, 82 per cent access the Internet, 17 per cent stream music and 76 per cent send email on their phones according to Neilson Mobile.

Operators have been quick to capitalise on people's desire to access and download content off the Internet on their mobile phone, launching a suite of new services. A recent independent survey (June 2008) conducted on behalf of Quickplay, found that two in five people in the UK had already watched TV and video content on their mobile phone, with many now regularly using such services. 18 per cent of those that had tried a Mobile TV and video service watch on a weekly basis.

However, while mobile operators are continuously upgrading their wireless networks to support this bandwidth explosion, it's not just about adding capacity. In fact, network quality is the most important driver of satisfaction with the mobile Internet, accounting for 79 per cent of overall satisfaction according to Nielsen Mobile.

These trends highlight the need for mobile operators to invest in next-generation network infrastructure to accommodate increasing bandwidth demand and deliver a high quality user-experience while maintaining profitability.

Current networks were designed to transport voice traffic over Time Division Multiplex (TDM) networks with E1 circuits to provide backhaul transport from the base station to the network controller, and over SONET/SDH networks for voice traffic from the controller to a Mobile Switching Center (MSC). With the advent of 2.5 G mobile networks and the data services thereby enabled, the backhaul network has evolved to accommodate increased data traffic by including Frame Relay, ATM and IP, but in large part this data still travels over TDM circuits utilizing ATM/IMA.

The current TDM-based backhaul network is being overwhelmed by the rapid increase in bandwidth demand with the introduction of 3G (HSPA, EV-DO) and 4G (LTE, UMB, and WiMax) data services. For example, to ensure all users have access to Mobile TV services, the network must be scalable to support thousands of multi-cast video streams such as broadcast TV as well as uni-cast streams like You Tube.

As a result, mobile operators must reduce the cost-per-bit of data transport in the backhaul network while continuing to ensure voice quality, maintain carrier-grade Operations, Administrations, and Maintenance (OAM), and provide circuit-like resilience.

Carriers can take advantage of advanced Ethernet technology as a solution to challenges in the mobile backhaul network and reduce the dependency on E1 leased lines, and expensive SDH infrastructure. Carrier Ethernet is far more economical as it lowers the cost-per-bit and operational expenses while offering carrier-class management and Quality of Service with the right attributes. High-performance Carrier Ethernet solutions offer larger pipes - essentially, more bandwidth - to meet end-user bandwidth requirements while lowering the overall infrastructure cost and ensuring high quality of service. Using Ethernet, operators can scale network more easily to meet the demands of mobile services and applications without scaling costs. By building an Ethernet mobile backhaul, operators can burst up to the full speed and use the same circuit to carry different types of traffic. While there is still some concern regarding carrying time-sensitive traffic such as voice over Ethernet, the industry is working toward resolving this issue in multiple ways including developing TDM over Ethernet standards.

However, while advanced Ethernet technology provides a solution to backhaul problems, the backhaul network does not operate in isolation. To work efficiently and leverage Operational Expense (OPEX) advantages, the mobile core network must also evolve as the access network migrates to Ethernet. Building a Carrier Ethernet network infrastructure using standards defined by the Metro Ethernet Forum provides operators with long-term, low-cost strategy to replace their existing SDH infrastructure while maintaining carrier-class reliability.
However, as carriers have invested heavily in their current mobile networks, they cannot afford to simply tear out and replace current legacy radio infrastructure. It is crucial that their mobile backhaul and core network strategy still supports legacy traffic and service while allowing them to gradually transition to next-generation infrastructure that are more scalable and economical.

There is no ‘one size fits all' approach to building out an Ethernet backhaul network.  Each tower has different requirements based on available infrastructure, bandwidth requirements, and geography.  Most Ethernet backhaul networks will be a hybrid of fibre, microwave and copper.  In addition, it is likely that operators will lease portions of their network and own portions in order to balance CAPEX and OPEX budgets.  Additionally, operators will need to support TDM, ATM and Ethernet networks during the transition phase.  With all of these varied requirements, operators must seek out vendors that supply a comprehensive Ethernet portfolio that can be gradually applied as the network demands evolve.
Fixed telecom operators are already benefiting from the migration from TDM-centric to next generation Ethernet centric networks. Mobile operators must manage this aggressive transition to next-generation Ethernet to maximise the investment in existing mobile and network infrastructures while maintaining a quality of service that minimises subscriber churn.

Vinay Rathore is Director of Product Marketing, EMEA, Ciena

Francois Mazoudier argues that fixed-mobile convergence is not the be all and end all in the evolution of telecoms

The term Fixed Mobile Convergence (FMC) has captured the minds of businesses across the telecoms industry, with many players believing that its growing presence is causing a communications revolution. To date, the term has attracted a great deal of attention across the world, with anybody who is anybody in the telecoms space talking about FMC. However, in reality, is FMC all just ‘hype' and, if so, what are the alternative communications solutions out there?

By converging fixed and mobile communication, FMC provides a synergistic combination of technologies, enabling all-in-one communication systems that allow voice to switch between networks on an ad-hoc basis using a single mobile device. However, as these solutions start to impact the telecommunications ecosystem, do FMC players really believe it is the best answer for businesses that are looking to adopt the latest communications models? Or are the telecoms vendors and operators making a last ditch attempt to breathe life back into their ever-decreasing profit margins by stamping a larger footprint into the office environment in the name of FMC?

Until now, mobility was designed as an extension to this office-based hardware telephony system, perceived as a luxury that was too expensive to handle all business calls. With the universal adoption of mobile phones, it is now the fixed-to-mobile element that is complex and expensive, with calls to mobile phones the main form of voice communication over traditional fixed-line handsets. So why not go all mobile?

In today's busy offices the majority of workers still have to juggle a desk-based phone and mobile device, a situation that is not only inconvenient but also costly for businesses that support and cover the costs of both phones. As mobility increases, and more staff work outside the traditional office environment, employees are forced to give out and use multiple phone numbers. As FMC gives users a single dual handset that can be used anywhere at anytime it seems like the perfect solution to this issue. However, away from the hype, integrating mobile and fixed-line networks is a complex matter and there is a far simpler single handset solution already on the market - the mobile phone itself!

It does not have to be expensive to introduce an all mobile telephony solution into a business environment, all the necessary hardware is already supplied and paid for as employees' already have mobile devices - no other hardware is needed. Calls made to the office number are handled exactly as they would on an ordinary telephone system, directed to the user's mobile phone over a GSM network of choice, rather than over a complicated office fixed-line telephony network to a desk-based phone. This makes them reliable and cost effective, particularly compared to the FMC solution.  

True mobility enables employees to be contacted on just one number whether they are in the office or not. All mobile solutions enable this unprecedented access without compromising on the features users require from their desk phone. This new level of access allows business workers to stay in contact with colleagues and customers with ease; they never miss an important call again.

The simple-to-use system can be provisioned and activated instantly via the web and takes ten minutes to set up. Put bluntly, an all mobile solution eradicates all the complexity of a fixed-line, and therefore an FMC solution, as there is no need for hardware, techies, long-term contracts and expensive upgrades. Handover between fixed and mobile is inherent - because it is all mobile.

All mobile phone solutions have the potential to dismiss the FMC ‘hype' in the same way that network-enabled voicemail ended the office hardware business when it was launched back in the 90's.  Back then each office had a tape recorder in the reception and this hardware eventually became superseded by network-enabled voicemail. Today there is an all mobile system that can supersede the office PBX, turning the business telephony industry (selling mostly hardware) into a service industry.

In addition, an all mobile system solves the problems found by all companies today when buying/changing phone systems: complexity, high upfront costs, hidden ongoing costs, high dependency on technical specialists, costly ongoing upgrades and, most importantly, expensive monthly bills as their employees are increasingly mobile and incoming calls are redirected to them at full mobile rates. 

Despite the fact that FMC has existed as a concept for over ten years, its penetration is likely to be as little as 8.8 per cent of the total business subscriber base by 2012 (according to Informa) and it remains to be seen if businesses will want to replace existing infrastructure, when you look behind the complex scenes of FMC. It is far easier to achieve mobility without such high level infrastructure investment.

I am not saying that FMC won't take off on a large scale or even change the way we communicate. It probably will, but by using an all mobile phone solution we can change the very nature of office communication without the need for the fixed-line.

FMC is really about the move to mobile where everyone's phone is wireless. Therefore let's stop talking about FMC and instead talk about accelerating such a move.
Francois Mazoudier is CEO at GoHello

We've been hearing a great deal about ‘converged', ‘21st Century' and ‘next generation' networks, and what they will mean for business.  But what does it all actually mean in terms of technology? Peter Thompson takes a look

Next generation networks, while promising great strides for business, happen to entail - in terms of technology - a radical shift from circuit switching, where fixed resources are allocated to a session (such as a telephone call) for as long as it lasts - regardless of whether they are actually being used at any particular moment - to packet switching, which allocates transmission resources for only as long as it takes to forward the next packet. This is more efficient, since most sources of packets only generate them occasionally (though sometimes in bursts). Equally important is the inherent flexibility of packet switching to cope with variations in demand, and hence to support a wide range of different applications and services. While several packet switching standards have been used, the clear favorite is IP (Internetworking Protocol), which is the basis of an ever-expanding web of enterprise and service provider networks that link together to form the Internet.

For the enterprise, shifting to a converged all-IP network translates into immediate productivity gains through integration of different functions - now available in easy-to-use Unified Communications packages - and medium-term cost savings from toll bypass and consolidation of network infrastructure.

If this all sounds a bit too good to be true, then it should. Allowing streams of packets from different applications to share resources in a free-for-all makes the network simple and cheap but causes the service each application gets to be extremely variable. Whenever packets turn up faster than a network link can forward them, queues form (called congestion), causing packets to be delayed, and buffers may overflow causing some packets to be lost. Traditional data applications such as email transfer don't mind this too much, but new real-time services such as IP telephony are very intolerant of such behavior.
The upshot of all this is that despite all its benefits, a converged packet network can't be considered a reliable substitute for a circuit-switched one without having something in place to ensure that it provides an appropriate quality of service (QoS) for all critical (and particularly real-time) applications. This means giving each application enough bandwidth, and keeping packet loss and end-to-end delay within bounds. Loss and delay can only get worse as a stream of packets crosses a network, so it makes sense to think in terms of allocating an end-to-end budget for these parameters across different network segments. Different parts of the network can then attempt to meet their budgets using a variety of methods.

A technique used in the high-bandwidth and high-connectivity core of a network is to control the routes that streams of packets take so as to avoid congestion almost entirely.
MPLS, with its traffic engineering extensions, is a standardized way to do this, but there are also proprietary mechanisms that some of the IXCs use that work well enough for them to carry billions of call minutes annually over converged IP networks using VoIP.
Move towards the edge of the network, however, and the number of alternate routes diminishes. The capacity of the individual links also goes down, making occasional congestion much harder to avoid. At the level of an individual WAN access link it becomes almost inevitable, so packets will often be queued up to cross it. Delivering QoS then becomes a matter of managing this queuing process to assure service for critical packet flows even when the link is saturated. This can be very tricky when several different applications are all ‘critical' but have wildly different throughput requirements and sensitivities to packet loss and delay. This problem is a major drag on the uptake of converged networks, causing them to be widely regarded as ‘complicated' and ‘difficult', when they ought to be making life easier.

One reason that the available QoS mechanisms don't help as much as they might is that they fail to take account of the intrinsic interaction between the different QoS parameters, or rather between the resource competitions that affect them. At a congestion point, packet streams compete for the outgoing link bandwidth, and since having more traffic than capacity is the definition of congestion in the first place, a lot of ‘QoS' implementations focus on managing this one competition, i.e. they provide a way to allocate bandwidth. However this isn't the only limited resource, as queued packets have to be stored somewhere, and any buffer can only hold so many; consequently there is another competition between the streams, for access to this buffer, which determines their packet loss rate.

Finally there is the limitation that, however fast the network link, it only sends one packet at a time, and so there is a third competition to be selected for transmission from the buffer, which determines queuing delay. These three competitions are interlinked; for example increasing the amount of buffering to reduce packet loss results in more packets being queued up to send and hence increases average delay. Even assuming a series of QoS mechanisms can be combined to manage all three of these competitions, the behind-the-scenes interactions between them will sabotage every attempt to deliver precise and reproducible QoS. In practice, the effect of this is that reasonable QoS can only be achieved by leaving substantial headroom, resulting in very inefficient use of the link, which can become a high price to pay for a solution that was supposed to save money!

Predictable multi-service QoS
Fortunately a new generation of QoS solutions is emerging, that manage the key resource competitions at a network contention point using a single, general mechanism rather than a handful of special-purpose ones. This not only controls the intrinsic interactions but even allows trade-offs between different packet streams, for example giving a voice stream lower delay and a control stream lower loss within the same overall bandwidth. By starting from a multi-service perspective, multiple critical applications can all be prioritized appropriately without any risk of one dominating and destroying the performance of the others. Embracing the inherently statistical nature of packet-based communications makes the resulting QoS both predictable, eliminating surprises when the network device is configured, and efficient; up to 90 per cent of a link's capacity can be used for packet streams requiring QoS, with the rest filled with best-effort traffic.

Applying this technology at severe contention points, such as the WAN access link, enables the biggest potential losses of QoS for critical applications to be controlled. This makes the QoS ‘budget' for the rest of the network achievable using established techniques such as route control and bandwidth over-provisioning.

For the business, this QoS technology is most useful for managing the WAN access link to the rest of the network. Combining it with session awareness, NAT/Firewall/router functions and the ability to convert legacy applications such as conventional telephony to converged applications such as SIP VoIP produces a new class of device called a Multi-service Business Gateway (MSBG). Such a device can either be managed by a service provider delivering managed services or by a business buying simple connectivity services from a provider. It also provides a convenient point to provide QoS assurance such as VoIP quality measurement to ensure that SLAs are not breached. Overall it is an enabler for reliable, converged, packet-based services, allowing the full potential of 21st Century networks to be realized. We are only just beginning to see the changes this will bring to both business processes and everyday life.

Peter Thompson is Chief Scientist at U4EA Technologies and can be contacted at peter.thompson@u4eatech.com

Next generation access ("NGA") networks are slowly being rolled out in a range of European, American and Asia-Pacific countries. Even BT, that had until recently been reluctant to commit to NGA investments, announced a five year £1.5 billion plan to roll out fibre based NGA infrastructure to replace parts of the legacy copper network. The target architecture chosen will initially deliver services with speeds of between 40 Mb/s (for existing lines) and 100 Mb/s (some new builds) with the potential for speeds up to 1,000 Mb/s in the future. It is anticipated that the NGA will be rolled out to 10 million UK households by 2012. Similar plans have been announced in a number of other European countries.

Most operators, however, have stated, like BT, that such investment plans were conditional on a "supportive and enduring regulatory environment". What does this mean? What are the regulatory options available? To what extent will these impact the competitive dynamics of the market and end users?

The regulation of NGA investment raises a number of important regulatory issues. While not regulating wholesale access to these new infrastructures may have a positive impact on investment it would also creates significant barriers to entry for third party providers and may therefore result in a less competitive environment. Existing operators using unbundled copper loops may, for example, see their investments stranded as new fibre based networks are being rolled out. This could translate into less choice and higher prices for end users. At the other end of the spectrum an aggressive regulatory regime mandating cost based wholesale access to all may stifle investment and result in suboptimal outcomes for all stakeholders.

Operators, regulators and Governments worldwide are currently grappling with these questions. Regulatory measures that are being considered include:

Permanent and temporary forbearance - this entails placing no regulatory requirement on NGA operators, either for a period of time or permanently. The US approach is to forbear from regulation of fibre access and this seems to have stimulated NGA investment from operators such as Verizon. The German Government proposed a regulatory holiday for Deutsche Telekom along the same lines as the US, but was subsequently criticised by the EC and had to withdraw its proposals following the threat of legal action.

Cost based access - the regulator determines access prices for NGA based on the cost of providing access. A number of cost modelling approaches could be used for this including long run incremental cost ("LRIC") commonly used in the telecommunication sector or the Regulatory Asset Base ("RAB") approach often used for the regulation of utilities.
Retail minus - the regulator determines the access prices on the basis of the retail price charged by the incumbent operator less the costs avoided by not having to retail the service. This can be thought of as a "no margin squeeze" rule, which prevents a discrepancy between the wholesale access charge from the integrated company to competing service providers and the retail broadband price from the integrated company.

Anchor product regulation - in addition to providing access to all wholesale products on a retail minus and equivalent basis, the wholesale operator also provides an "anchor" product, a service they already provide, which they then continue to supply at the same price. For example, if the current copper network is capable of providing a 5 Mb/s broadband service, then the anchor NGA product would also be a 5 Mb/s broadband service and the integrated company would be required to provide it at the current service price.
Geographic market regulation - this is a variant on the forbearance approach. The regulator may forbear from regulating acces where there are competing NGA operators.
Each approach has its own advantages and disadvantages that will need to be considered carefully in the context of domestic market characteristics.

Another major difficulty, from a regulatory viewpoint, is the specification of the NGA products that should be regulated. Traditional solutions such as the leasing of the copper pair to third parties (a process known as "unbundling") are often difficult to implement -for both technical and economic reasons- with fibre networks.  Regulators may therefore want to regulate other products such as access to unused fibre, or even ducts to ensure that competition is not harmed.

The challenge for regulators will be to develop a regulatory approach that provides incentives for efficient and timely investment in NGA as well as regulatory visibility for stakeholders.

Benoit Reillier is a Director and European head of the telecommunications and media practice of global economics advisory firm LECG.  The views expressed in this column are his own.



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