NGN Voice Networks in India
2009-04-16 December 2008, by Jahangir Raina, from iLocus
NGN voice equipment has established itself as a carrier grade technology. Majority of the incumbent and other mainstream telecom carriers around the world have deployed NGN voice technology. India has also seen an appreciable activity in this regard during 2008. All seven major carriers have NGN voice projects underway. The motivations include the urgency to increase ARPU and the ability to cater to new subscriber and traffic demands. Carriers in India are deploying Class 4 NGN first. It is much easier to develop, upgrade or replace the trunk network as opposed to the access network since fewer services are involved and disrupted in the process. Nearly 14.9 million Class 4 NGN ports and 4.1 million Class 5 NGN lines have been commissioned for deployment in India thus far. The largest tender involves BSNL's Class 4 NGN tender for 6.4 million trunk ports. Majority of the BSNL trunk ports supply has been awarded to ZTE. ZTE is the leading vendor so far having market share of over 71% for all the Class 4 NGN trunk ports implemented thus far by carriers in India.
Evolution of Voice Networks
Move towards NGN voice networks
NGN voice made its mark in the international bypass first. Most of the long haul carriers deployed the technology in various countries around the world. As a natural extension to that, NGN voice penetrated the national long distance networks. The steady migration to NGN voice has reached a point where we have hundreds of billions of minutes being transported over long distance NGN voice networks each month. Nearly all incumbents and mainstream operators around the world are in the process of migrating from legacy to NGN networks. On the access side, consumer VoIP services are proving to be a major catalyst in convergence of services in form of triple play. When seen from a broader angle, triple play is only part of an even larger story where all services (voice, data, and video) will be unified across an all-IP network, independent of the access network.
Legacy TDM network equipment is reaching obsolescence and not fully covered by support and maintenance contracts. The ecosystem around voice switches has transitioned to IP. Therefore the motivations for NGN voice today are not necessarily just the advanced services and reduced OPEX but rather to move the network to the next stage and get rid of 20 year old TDM equipment. And, of course, the carriers are doing that with NGN equipment. Until a few years back, only small providers were deploying NGN voice. This allowed several small vendors to develop and enhance their technologies. Now that many have demonstrated that NGN voice is working well and can be used for carrier-grade deployment, and that it reduces OPEX, larger carriers have moved ahead with their network development plans. This holds true for BRIC countries too. China has obviously advanced much ahead with its NGN deployments. The NGN deployment in China started some four years ago. Brazil started around two years ago. India has seen an appreciable activity in this regard during 2007 and 2008. There are tenders floating all around. All seven major carriers have NGN projects underway.
Indian carriers deploy NGN voice solutions
There are several reasons why carriers in India have gone for NGN voice networks now as opposed to three or four years back. There has been a substantial growth in telecom subscribers in India over the last few years. Carriers in India have been busy signing up new subscribers. As such, they have been relatively less aggressive about offering new services. They obviously cannot risk their subscriber growth. That means minimum possible disruption to the services while putting in the new network. The reliability and maturity of NGN voice gear is therefore very important. Mature NGN voice technology has been around for only about three years now.
Telecom services sector has finally ramped up in India because the services have become affordable. Affordability, however, does not necessarily guarantee desirable ARPU. In fact ARPU in India is substantially lower compared to ARPUs found in other countries. While carriers in India have to cater for new subscribers and keep a positive cash flow going, they have to install appropriate infrastructure that lets them achieve those pointers and in addition help them shoot up that ARPU. ARPU can be increased by offering new services to high ARPU customers. That needs NGN equipment. IP brings the ability to develop new services a lot quicker than in the TDM environment.
Increasing ARPU is an issue on both the wireline as well as the wireless side. However the motivation for Indian carriers to deploy NGN is the increased volume of NLD traffic. NLD traffic has risen manifold over the last few years, driven mainly by increase in the number of wireless subscribers and reduced NLD tariffs. Replacement of legacy switches is also a motivation for former incumbents BSNL and MTNL. These two carriers have depreciated a significant proportion of their legacy switching infrastructure. At least about 10% of the switching equipment is reaching a point of obsolescence.
Carriers in India are looking to carry voice over the same old voice network using new NGN gear as well as offloading voice in packetized format on the new IP networks that they have built over the past few years. The IP network, developed in parallel, is predominantly carrying data traffic at present. Having experienced reliability of these new IP networks, carriers are now feeling confident in terms of adding voice in form of NGN voice on top of these new networks.
With the new IP networks, carriers in India have gone through the typical cycle of unleashing core bandwidth through optical core and now looking at efficient use of that capacity through advanced services and by offloading some of their voice traffic on to this new network. So all the ingredients are there to deploy NGN voice: all carriers have optical backbones now; all carriers have high capacity dark fibers; all carriers are deploying Ethernet MPLS core networks for reliable IP services; NLD traffic volume is increasing at a rapid rate; and finally a good proportion of the voice switches on circuit switched networks have been depreciated to a large extent.
Softswitch: The most mature PSTN transformation technology
Despite competing visions, Softswitch has evolved as the most mature PSTN transformation technology. There have been positive contributions and possible competition coming from SIP and IMS camps during various stages of NGN voice development over the last few years. Early version of SIP advocated intelligence to be pushed to the network edge, which meant that the core was effectively reduced to just transportation of traffic. In contrast, the Softswitch architecture embraces network centralization. Call control is handled by the Softswitch call agent, which coordinates activities among media gateways/servers, application and signaling servers. IMS decomposes those call control elements into various functional entities. However the intelligence remains at the core of the carrier networks giving them the requisite control over services and collections. Both IMS and SIP have had to adapt accordingly. The Softswitch architecture of centralized control has prevailed.
Softswitch architecture is especially relevant since it was built upon the premise of interworking IP and TDM networks. It is unlikely that PSTN will be decommissioned any time soon in India. As such, the Softswitch technology is likely to remain the technology of choice for carriers deploying NGN voice in the country. In fact, over 80% of mainstream carriers worldwide have selected Softswitch architecture to carry out the migration. During the period of 2005 and 2007, over 90 million lines of NGN Class 5 Softswitch, over 84 million lines of NGN Class 4 Softswitch, and over 116 million service provider media gateway ports were shipped worldwide for deployment in NGN voice networks of carriers.
Market Share Analysis and Projections
Carrier projects concluded or being implemented
There are an estimated 1.23 million Class 4 NGN ports that have already been installed as part of Class 4 NGN projects in India. ZTE has the lion share of the installation so far. Over 880,000 ZTE Class 4 NGN ports have been implemented as part of the such existing projects. That represents about 71.5% market share. The remaining is shared between NSN, Veraz and Alcatel-Lucent. NSN has 18.5% market share.
The market share of vendors in the NGN voice network projects concluded is given in Figure 1.
Projects in the pipeline
There are a further 13.742 million Class 4 NGN ports in pipeline to be deployed by carriers over the next few years. These relate to contracts where the vendors have already been selected (except in case of Vodafone's expansion project and Idea Cellular's pending contract decision). Out of these, ZTE again leads with over 4.04 million ports in the pipeline for the vendor. ZTE will have 29.4% share of the Class 4 NGN ports in the pipeline. This lead is followed by Alcatel-Lucent and Huawei at number two with 14.6% market share and NSN at number three with 14.4% market share (see Figure 2).
As mentioned in the previous sub-section, carriers in India have implemented around 1.23 million Class 4 NGN ports. Looking at their timeframe for implementing the projects for which the decisions have been made and vendors selected, it seems that the cumulative number of Class 4 NGN voice ports in carrier networks by the end of 2009 will be around 4.9 million. That is projected to grow to 18.9 million ports by 2012.