Moving Toward the VoLTE Era

Transcription

1 and present: Moving Toward the VoLTE Era Whitepaper Published Fourth Quarter, 2012 Version 1.0 IGR W. Hwy 71 Suite 350 PMB 341 Austin TX 78738

2 Table of Contents Executive Summary... 1 Figure A: VoLTE Strengths & Threats... 1 Methodology... 2 Voice over LTE... 3 What is VoLTE?...3 What is the Status of VoLTE in the Market?... 3 What is the Current State of Standards Related to VoLTE?... 4 Table 1: Key VoLTE Technology Issues... 4 Who are the Players in VoLTE?... 5 Table 2: VoLTE Mobile Operators... 5 Table 3: VoLTE Equipment Vendors... 5 VoLTE s Strengths and Weaknesses...6 Figure 1: VoLTE SWOT Analysis... 6 How VoLTE may impact current technology...7 Table 4: Key Weaknesses / Threats of VoLTE... 7 Deploying VoLTE... 7 Table 5: Potential Deployment Options for Mobile Operators... 8 What is the Outlook for VoLTE?... 9 Table 6: U.S. Mobile Operator VoLTE Deployment Plans... 9 Prognosis for the Next 12 to 24 Months Prognosis for the Next 24 to 48 Months Conclusion About IGR Disclaimer This research is provided as a member benefit for the exclusive use of members of PCIA The Wireless Infrastructure Association. It is made available by a partnership between PCIA and igr. 1

3 Executive Summary This report provides a brief overview of VoLTE and its potential impact on the U.S. cellular market. VoLTE is similar to Voice over Internet Protocol (VoIP) with the primary differentiator being that VoLTE provides a mobile component to the Session Initiation Protocol (SIP). VoLTE is very important to LTE operators because this technology enables them to eventually terminate their legacy, circuit-switched voice 2G/3G network infrastructure in favor of consolidating voice traffic on the LTE network platform. This significantly lowers voice infrastructure costs and improves voice quality and the overall customer experience. Figure A: VoLTE Strengths & Threats Eliminate CDMA for voice Improved voice quality via IP VoLTE cheaper than VoIP Significant cost savings vs. voice over CDMA and data over LTE Save battery life on mobile devices Leverage LTE technology Must minimize any potential service interruptions Minimize Roaming revenues loss Must have fallback plan in event of VoLTE failures OTT products (Skype and Yahoo VoIP) are free Increase in short-term costs to support multiple networks Complex network management In the years ahead, VoLTE promises to energize both mobile operators and vendors. Customers will be in a position to avail themselves of many new products and services. This will enable mobile operators to transition the customer base from legacy voice solution to a new platform that supports both VoLTE and many new multimedia products and services. 1

4 Methodology This report provides an overview of VoLTE and its potential impact on the U.S. cellular market. The information presented in this report originates from IGR s primary and secondary research. Definitions of industry terminology can be found in the Definitions section towards the end of this report. 2

5 Voice over LTE What is VoLTE? LTE is a promising new network technology that dramatically impacts mobile operators, vendors and mobile end users. With mobile data volumes rising and traditional voice revenues declining, mobile operators are reluctant to further invest in legacy (circuit-switched) networks to improve the voice experience. As LTE networks roll out in a much broader way this year (2012), VoLTE is quickly becoming perceived as a new killer application particularly from the mobile operator s perspective since a shift to IMS-/IP-based voice will help mobile operators transition its 2G/3G licensed spectrum to 4G LTE. However, the path to VoLTE will be challenging to all parties. VoLTE is similar to Voice over Internet Protocol (VoIP) with the primary differentiator being that VoLTE provides a mobile component to the Session Initiation Protocol (SIP). SIP is an Internet Engineering Task Force (IETF) signaling protocol that controls voice, messaging, presence, file transfer, gaming and video sessions over Internet Protocol (IP). SIP is accepted by the 3GPP standards body as the standard for IP Multimedia Services (IMS). The advent of LTE and VoLTE has been readily accepted by mobile operators and the 3GPP is working to finalize VoLTE-related standards by What is the Status of VoLTE in the Market? Although VoLTE networks are being planned and deployed around the world today, most are in the midst of system, acceptance, interoperability and market testing and are not commercially available. igr believes that the majority of VoLTE end users (in the U.S.) are likely to be friendly users during the remainder of 2012 and early igr believes that it will not be until early 2014 that VoLTE will be commercially available on a wide basis in the U.S. market. igr does believe it likely that some U.S. operators may move more rapidly to VoLTE in order to make more efficient use of their spectrum position. Mobile operators must insure that there is a sound strategy for deployment, following the testing period, as there are a number of significant technical issues that must be resolved in order to attain complete commercial viability. Verizon Wireless (VZW) has publicly stated that although they have a nationwide LTE network built and running, they are in no hurry to bring VoLTE to market. AT&T has made similar public statements. Mobile operators must develop and implement a transition plan for connecting their LTE networks with their own 2G/3G circuit-switched voice networks and other carriers LTE 3

6 networks in order to mitigate loss of customers and revenue. Also, the lingering problem of call-handoff and roaming among the disparate networks is a major issue and must be solved. What is the Current State of Standards Related to VoLTE? The GSMA-sponsored VoLTE standard began in The purpose of this standard was to establish a global process for delivering voice and messaging services over LTE networks. This standard defines 3GPP IP Multimedia Services (IMS) specifications to address new voice and messaging functionality, new APIs, including LTE roaming and network interconnection interfaces, and an air interface between the end-user smartphone and the LTE network. The evolving VoLTE standard is intended to deal with a number of technology issues including those outlined below in the following table. Table 1: Key VoLTE Technology Issues Issue Uniform VoLTE Platform Interconnection API Roaming API Messaging API Overview Support for many new LTE devices that are built, in advance, to a single standard to avoid incompatibilities and customizations LTE deployments vary widely, depending on the vendors used Must define network interconnection API for call handoff between 2G/3G networks and LTE Standardize Quality of Service (QoS) between operators Must determine Roaming API between mobile operators Support both packet switched and circuitswitched networks Need robust APIs to support messaging between LTE networks and between LTE and circuit-switched networks. These APIs will support customer mobility between diverse LTE coverage areas and non-lte coverage areas. igr believes that there will be a series of interoperability issues as vendors rush to get solutions to the market, in advance of the 2014 release of the new 3GPP standard. To ensure compatibility, the GSMA has adopted the One Voice Initiative for VoLTE, which is backed by as many as 40 business entities that support IMS. One Voice participants are assured of having standard support for voice messaging, call waiting, call hold, call forwarding, call barring, presence, video, etc., in a multiple network provider ecosystem. This initiative is helping to drive the VoLTE standard. 4

7 Who are the Players in VoLTE? There are a number of entrants to the VoLTE market, most notably Verizon Wireless, MetroPCS and AT&T in the U.S., and South Korea Telecom in Asia. South Korea Telecom recently announced the launch of their VoLTE service. In the U.S. on August 7, 2012, MetroPCS announced the launched of its VoLTE service. The carrier stated that while the first market was Dallas, TX, and the first VoLTE-capable handset was the Android-based LG Connect 4G, more devices and markets would roll out throughout the latter part of igr also believes that systems integrators will eventually be significant players in this space because of the need for independent LTE expertise. The following tables represents a partial list of initial mobile operators and firms that provide VoLTE solutions. Table 2: VoLTE Mobile Operators Operators AT&T China Mobile Clearwire MetroPCS (live network launched) Motorola SK Telecom (live network launched) LG Uplus (South Korea) Sprint T-Mobile VZW Table 3: VoLTE Equipment Vendors Vendors Acme Packet Huawei Sony Alcatel-Lucent Kineto Wireless Starent (Cisco) Broadsoft Mavenir TranSwitch Ditech Networks Nokia Siemens Networks Qualcomm Ericsson Samsung ZTE igr believes that there will be many new entrants to this market over the next several years. It is also likely that there will also be some interesting partnerships, mergers, and acquisitions in this space. 5

8 VoLTE s Strengths and Weaknesses The various strengths, weaknesses, opportunities, and threats related to VoLTE are depicted in the following figure. This SWOT analysis is from the perspective of the mobile operator evaluating VoLTE. Note that while over-the-top (OTT) VoIP services such as Skype and others are free, igr believes it likely that they will coexist with the carriers IMS-based VoLTE. The key differentiators for the mobile operators will likely be higherquality and, perhaps, guaranteed quality of service (QoS) for their VoLTE offerings. Carriers will also be able to offer in-call handoff to legacy networks and to other LTE networks. One of the key limitations of OTT solutions is that they (currently) only permit voice and video calling between their own clients (Skype to Skype; Google Chat to Google Chat, etc.). As noted above, however, mobile operators must ensure that they can hand VoLTE calls off to their wireless competitors e.g., Verizon Wireless must be able to terminate an AT&T-originated VoLTE call. Figure 1: VoLTE SWOT Analysis Strengths Eliminate 2G/3G for voice (eventually) Improved voice quality via IP VoLTE cheaper than VoIP Significant cost savings vs. voice over CDMA/UMTS and data over LTE Save battery life on mobile devices Leverage LTE Weaknesses Must solve interconnectivity issue with non-lte networks Must solve interconnectivity with other LTE networks Must develop solution for VoLTE roaming Availability of new equipment (network & terminal) Call handoff between VoLTE and 2G/3G Experience with live LTE is limited VoLTE Opportunities Compete more actively against OTT voice (Skype, etc.) Develop new rate plans and services Repurpose legacy spectrum Improve customer QoS Leverage LTE Threats Minimize any potential service interruptions Minimize roaming revenue loss Fallback plan / capability in event of VoLTE failure OTT Voice is free (but with drawbacks) Increase in short-term costs to support multiple networks 6

9 Mobile operators and vendors have disparate business practices and deployment methodologies and 3GPP standards interpretation can vary from vendor to vendor. This issue is perhaps the most glaring weakness and threat to VoLTE. How VoLTE may impact current technology Some of the major weaknesses and threats noted above are examined in the following table. Table 4: Key Weaknesses / Threats of VoLTE Key Issue Call hand-off to CDMA networks Call hand-off to 2G/3G networks Call hand-off to other LTE networks Current smartphones incompatible with VoLTE Overview Verizon states they will not support this; other operators chose not to comment at this time Need SRVCC to hand an in-progress call off from LTE to a circuit-switched network as LTE is not ubiquitous for several years. SRVCC = Single Radio Voice Call Continuity LTE deployments are not homogeneous and there are nuances between equipment vendors; some operators may not support another s VoLTE VoLTE handsets must have improved battery life and fast processors; must also support front/rear facing cameras; VoLTE calls must resemble VoIP calls in simplicity. Also, not many LTE handsets on the market at the time of this writing. 4Q12 may see that change. Deploying VoLTE There are a number of options available to transition to VoLTE, but end-users will challenge the mobile operators because of free peer-to-peer services like Skype. igr believes that the mobile operators will have to offer very enticing rate plan in order to move end-users from VoIP to VoLTE. igr anticipates that the mobile operators may initially block these free peer-to-peer services. That said, mobile operators may choose to simply replace circuit-switched mobile voice with VoLTE but then charge for additional, rich communication options that leverage VoLTE. Video calling between compatible handsets is one possibility. The following table illustrates several potential alternatives for mobile operator consideration. 7

10 Table 5: Potential Deployment Options for Mobile Operators Alternative How it Works Pros/Cons Circuit Switched Fallback (CSFB) Requires dual mode 2G/3G and LTE handsets, switch upgrades Qualcomm has stated that CSFB widely deployed; future VoLTE needs SRVCC to ensure seamless voice. Voice over LTE General Access (VoLGA) Uses GSM signaling over IP to connect to 2G/3G network Interim solution that appears to be favored by some vendors; operators do not have to wait for VoLTE Gateway Solutions Existing MSC would have SIP interface to IMS Interim solution where MSC appears to be IMS server IMS VoLTE endorsed by 3GPP SIP-based voice over LTE RAN is the standard Of the alternatives discussed above, igr s opinion is that the interim Gateway Solution is a viable alternative that best enables the transition to VoLTE. This alternative mitigates considerable risk for the mobile operator in lieu of a forced migration strategy to VoLTE. 8

11 What is the Outlook for VoLTE? igr expects the road to VoLTE to be quite bumpy for both mobile operators and VoLTE vendors. The sales cycle for vendors will be long and the deployment time for mobile operators will be prolonged. VoLTE is very important to LTE operators because this technology enables them to eventually terminate their legacy 2G/3G network infrastructure in favor of consolidating voice traffic on the LTE network platform. This significantly lowers voice infrastructure costs and improves voice quality and the overall customer experience. igr believes that the next four years will be characterized by continued investments in commercializing VoLTE. Although legacy voice will continue to survive during this period and beyond, it will also begin to wane as the transition to new technology continues. On one hand, the mobile operators claim they are rushing to get LTE to the market, but on the other hand, igr believes that they must proceed cautiously because the wireless industry is very unforgiving to service aberrations. The following table depicts some mobile operator and vendor plans to introduce VoLTE in the U.S. Note that at the time of this writing SK Telecom (in South Korea) had just launched its own VoLTE service called HD Voice. So, VoLTE is a present reality and this SK Telecom deployment will undoubtedly be watched closely. Table 6: U.S. Mobile Operator VoLTE Deployment Plans Carrier Possible Deployment Timeframe AT&T Mobility 2013 Verizon Wireless Late 2012 Metro PCS Launched, early August 2012 Sprint Q Clearwire 2013 T-Mobile

12 Prognosis for the Next 12 to 24 Months igr believes that this 12 to 24 month period will be chaotic. Mobile operators such as AT&T Mobility, Verizon Wireless, T-Mobile, Sprint, Clearwire, and China Telecom have all stated their intention to launch LTE networks in Many of the aforementioned mobile operators are already testing VoLTE networks that were deployed in And, as mentioned earlier, both MetroPCS in the U.S. and SK Telekom both launched VoLTE services in mid-3q12. Nokia-Siemens Networks, Alcatel-Lucent, Huawei, and Ericsson are all hard at work building LTE networks in the U.S. and around the world. The intent of LTE and IMS is to enable the transition from circuit switched networks to all IP core networks, which igr believes will take at least a decade to complete. igr believes that mobile operators will launch commercial service in Upon completion of comprehensive network trials and testing, mobile operators will thus be well positioned to begin to complete the transition of legacy customers to the new all-ip platform in Prognosis for the Next 24 to 48 Months This period is characterized by the commercial acceptance of VoLTE and the launch and maturation of a myriad of many new IP-based solutions. igr projects that VoLTE revenues will be between $1.5 and $3 billion by The outlook for the next 24 to 48 months is therefore very promising. This is with the caveat that the interconnectivity and roaming issues are resolved in igr expects that most large mobile operators will have commercial deployments in the next three years. This is driven by the large mobile operator goal of the phasing out of 2G and 3G networks. As AT&T Wireless has stated recently, it intends to sunset its 2G network by year-end It is expected that the majority of 3G networks will be migrated to 4G LTE by

13 Conclusion In some ways, the next four years are analogous to the early days of cellular in the late 1980s. As was the case in that period, mobile operators struggled with the issue of interconnectivity and roaming. This resulted in the emergence of third party clearinghouses and other firms that provided solutions to these problems. Fortunately, today we have the benefits of that experience and improved standards and a strong group of vendors that should ameliorate that transition. In the years ahead, VoLTE promises to energize both mobile operators and vendors. Customers will be in a position to avail themselves of many new products and services. This will enable mobile operators to transition the customer base from legacy voice solution to a new platform that supports both VoLTE and many new multimedia products and services. 11

14 About IGR Disclaimer IGR is a market strategy consultancy focused on the wireless and mobile communications industry. Founded by Iain Gillott, one of the wireless industry s leading analysts, we research and analyze the impact new wireless and mobile technologies will have on the industry, on vendors competitive positioning, and on our clients strategic business plans. Our clients typically include service providers, equipment vendors, mobile Internet software providers, wireless ASPs, mobile commerce vendors, and billing, provisioning, and back office solution providers. We offer a range of services to help companies improve their position in the marketplace, clearly define their future direction, and, ultimately, improve their bottom line. Note that Iain Gillott currently serves as an independent director for Wmode, Inc. A more complete profile of the company can be found at - inc.com/. The opinions expressed in this white paper are those of IGR and do not reflect the opinions of the companies or organizations referenced in this paper. All research was conducted exclusively and independently by IGR. 12