Evaluation of New Approaches to the Evolved Packet Core: Elisa Case Study

BUYER CASE STUDY Evaluation of New Approaches to the Evolved Packet Core: Elisa Case Study John Byrne Nav Chander IDC OPINION Global Headquarters: 5 Speen Street Framingham, MA 01701 USA P.508.872.8200 F.508.935.4015 www.idc.com With mobile operators all facing a common future which includes a move away from legacy architectures to a flat all-ip architecture investment decisions regarding the mobile packet core are arguably as important if not more important than decisions around radio equipment. As is shown by Elisa's recent experience, optimal, forward-looking approaches to the mobile packet core should provide the following: A strong focus on a platform and architecture that can provide high performance and flexibility and a focus on "future proof" operation that can adjust to changes in network traffic, including not just an increase in mobile data volume but a massive increase in signaling load, support of LTE and legacy networks, and the requirement to manage new types of traffic such as M2M coming onto the network A "partnership" approach in which equipment vendors can provide not only the feeds and speeds but a solution approach and strong supporting services to ensure a smooth transition to LTE and evolved packet core (EPC) A clear vision and strategy for the role of IP networking, software-defined network (SDN), and network virtualization technology solutions for the mobile packet core IN THIS BUYER CASE STUDY This IDC Buyer Case Study examines the experience of Finnish operator Elisa Oyj (Elisa) in selecting Juniper Networks' (Juniper's) Mobile Packet Core packet core solution. This Buyer Case Study, based on interviews with both Elisa and Juniper, provides details on some of the criteria for Elisa in selecting an evolved packet core (EPC) vendor as well as the testing and trialing process embarked on by Elisa. Juniper had previously been a supplier of equipment for Elisa's fixed network but not in the mobile network, requiring a lengthy process to confirm that the solution is able to deliver to expectations. This Buyer Case Study also provides guidance on some of the challenges that operators face in moving to an all-ip environment and some of the factors mobile operators should consider in adopting mobile core solutions that can scale to address the challenges in the next 10 years. Filing Information: June 2013, IDC #241131, Volume: 1 Wireless Network Infrastructure: Buyer Case Study

SITUATION OVERVIEW Organization Overview Elisa is a Finnish telecommunications and ICT service company serving 4.5 million mobile customers (including 3.9 million in Finland and 566,000 in Estonia). The company also has nearly 1 million fixed customers in Finland, offering a variety of services including telephone, broadband, and IPTV. The company offers both fixed/broadband and mobile services and has established a position as Finland's largest mobile operator, slightly ahead of number 2 TeliaSonera, which has 3.3 million mobile customers. Within its mobile operations, Elisa has been a leader, transmitting the world's first GSM phone call and launching the first commercial GSM service in 1991. Elisa was also the first operator to launch UMTS in the 900MHz band in 2007 and the first to offer 4G speeds in Finland for commercial use in 2011. Elisa's leadership extends into LTE. The company had launched 4G speeds utilizing LTE and HSDPA+ dual-carrier technologies in addition to the 3G technologies in over 200 locations by the end of 2012. After earning a reputation for strong 3G/HSPA coverage and capacity, Elisa began its upgrade to LTE in the 1.8GHz and 2.6GHz spectrum bands in 2010 using radio gear from Nokia Siemens, beginning in the country's largest city, Helsinki. By May 2013, Elisa expanded its LTE network to 57 cities and continues to expand in available spectrum bands beyond urban centers. Elisa has reported a significant spike in the number of smartphones and tablets on its mobile network. By the end of 2012, smartphones represented more than 87% of all phones sold. Moreover, the type of smartphones being purchased is also changing as customers increasingly swap older Symbian-based smartphones with newer Android, Apple, and Windows Phone devices, and the company began selling LTE smartphones in late 2012. The new generation of devices is helping drive continued growth in data revenue, which increased to 41% of total revenue in the first quarter of 2013. Challenges and Solution Elisa joins a host of operators moving toward LTE. As of April 2013, there were a total of 163 LTE networks in operation in 114 countries according to the Global mobile Suppliers Association (GSA). Based on operator reports, GSA expects about 200 250 networks to be commercially launched in 87 countries by the end of 2013. This represents a marked increase from prior expectations, meaning operators are moving toward LTE in all geographies. Still, despite the increasing number of network commitments, the pace of deployment of LTE varies, and in Europe, 3G technologies, chiefly HSPA and HSPA+, continue to do the bulk of the heavy lifting. This is certainly the case with Elisa, which continues to rely on its HSPA+ network to carry most of its mobile data traffic, having just begun to sell LTE-equipped smartphones in late 2012. Elisa faced the requirement of needing to support a variety of network architectures, including legacy circuit-switched 2G and 3G networks alongside its growing LTE network, allowing the operator to seamlessly migrate to an all-ip architecture while simultaneously supporting prior technologies. Moreover, Elisa required a solution that would enable a common platform to accommodate traffic across the company's mobile and fixed networks. Enter the evolved packet core. 2 #241131 2013 IDC

In IDC's view, the move to LTE radio architecture represents one element in a holistic approach to network architecture that extends IP end to end across the network. As operators look to medium- and long-term plans that include an upgrade to LTE, they are beginning to consider optimal strategies around core investment and, specifically, the EPC. Early "growing pains" within the EPC have resulted in a number of LTE network outages as operators come to terms with the need to devote sufficient consideration to EPC as LTE is rolled out. In interviews with IDC, Elisa's EVP of Production Timo Katajisto cited several requirements in choosing the evolved packet core solution, including: Established IP/MPLS networking credentials and a strong architectural focus that would ensure network scalability as mobile data traffic continues to grow (Juniper's Mobile Packet Core solution promises support for 8 million simultaneous sessions, or 48,000 sessions per second.) Improved management of data plane and control plane (signaling) traffic Integration between Elisa's mobile and fixed networks, including the company's significant portfolio of datacenters Seamless backward compatibility to support 2G and 3G mobile network traffic Strong QoS capabilities for example, unlike in markets such as the United States where mobile data customers automatically get LTE service where available, Elisa offers a variety of plans that vary in price depending on the networks accessed and speeds offered (Elisa offers six separate rate plans that range from as low as 8.05 per month for 1Mbps uplink/1mbps downlink service to 34.90 per month for "Supreme 4G" LTE service offering 100Mbps uplink/10mbps downlink service. Thus far, uptake on the premium plan has been limited, while the company's "Premium 4G" 50Mbps LTE service has begun to see uptake; as new services and form factors develop to take advantage of the higher speeds and lower latency on LTE, Elisa expects to see the higher-end plans continue to grow in popularity.) A well-articulated product strategy to deliver software-defined networks and Network Functions Virtualization (NFV) capabilities, with a clear road map that will enable Elisa to adopt network virtualization within various network elements over the next 10 years The ability to reduce capex for mobile packet core by consolidating the mobile control gateway, mobile broadband gateway, service delivery gateway, and policy manager functions into one EPC platform The ability to act as a "business partner" rather than just an equipment provider In making the decision of how to deploy EPC, Elisa faced a key decision point in terms of the future direction of its core network. Having worked with Juniper for years on the fixed side of the house, Elisa was familiar with Juniper's strong IP/MPLS networking credentials. However, Juniper's Mobile Packet Core architecture was untested. As a result, Elisa underwent a multiyear process of testing and proving Juniper's Mobile 2013 IDC #241131 3

Packet Core platform. This included a heavy dose of consultation for Juniper to understand Elisa's existing solutions and requirements. To be extra cautious, Elisa deployed Juniper's solution in three separate network elements to provide N+2 redundancy. The operator decided this was necessary to ensure that Juniper's strong performance claims for Elisa's new product could be proven in actual network conditions and to avoid any possible "hiccups" during the implementation. Elisa ran traffic over Juniper's platform for more than a year before making a firm commitment. Elisa deployed Juniper's Mobile Packet Core architecture, which runs on Juniper's MX 3D Universal Edge Router. The MX 3D product has been significantly upgraded in recent years, including in September 2011 and again in October 2012, with the introduction of the high-capacity MX2010 and MX2020 products. The Mobile Packet Core platform supports SGSN, GGSN, policy manager, and mobile control gateway integrated into a single MX 3D platform. Elisa will also leverage Juniper's vapp engine architecture, which supports Juniper's virtual mobile control gateway, allowing Elisa to add or remove MME capacity in minutes and enable simpler provisioning and future service chaining to accelerate future mobile service delivery. All of this is supported by Juniper's Junos operating system, which includes the Mobile Broadband Gateway and Mobile Control Gateway, enabling simultaneous support of LTE and legacy mobile networks on a single platform. Juniper supported the deployment with a strong portfolio of supporting solutions to support testing, training, and seamless integration with Elisa's network and billing apparatus. Results In February 2013, Elisa announced plans to deploy Juniper Networks' Mobile Packet Core solution. While Elisa had been a long-standing customer of Juniper within the fixed network for core routers, IP/MPLS gear, firewalls, and the like, Juniper had previously not been a customer for mobility gear. As a result, the decision to rely on Juniper's Mobile Packet Core solution for mobile packet core represents a significant expansion of the relationship between Elisa and Juniper. Elisa deployed Juniper's Mobile Packet Core architecture, which runs on Juniper's MX 3D Universal Edge Router. The MX 3D product has been significantly upgraded in recent years, including in September 2011 and again in October 2012, with the introduction of the high-capacity MX2010 and MX2020 products. The mobile packet core platform is supported by Juniper's Junos operating system, which includes the Mobile Broadband Gateway and Mobile Control Gateway, enabling simultaneous support of LTE and legacy mobile networks on a single platform and supporting future scaling requirements for Elisa's mobile network. According to Elisa, the company was able to reduce the number of network elements needed and thus make significant capex and opex savings by utilizing the mobile packet core platform. Juniper supported the deployment with a strong portfolio of supporting solutions to support testing, training, and seamless integration with Elisa's network and billing apparatus. 4 #241131 2013 IDC

ESSENTIAL GUIDANCE The move toward LTE being seen in all regions is driving a whole new set of decisions to be considered as operators consider next-gen mobile packet strategies: The move toward LTE brings with it a change in how mobile core networks will be built and maintained. As networks move inexorably toward all IP, purchasing decisions related to the core are increasingly decoupled from decisions on radio technology evolution. As such, operators face significantly different criteria in making EPC investments. Operators need to invest in core solutions that can enable them to prepare not just for the challenges they face today but that have the scalability and flexibility to accommodate the even more complicated mobile data environment coming in the next 10 years. In IDC's view, the combination of LTE and EPC should be regarded as the new "platform" to prepare operators for future development. Failure to accompany LTE deployment with a future-proof approach to core, backhaul, security, and other requirements is likely to lead to a suboptimal experience for end users and could ultimately require operators to spend more money down the road to address network choke points that could have been avoided in the first place. IDC believes that software-defined network and large-scale network virtualization are two important and related telecom industry technology transformations that will have a sustained impact on today's network operators. The combination of these two complementary industry initiatives will drive the product strategies of the existing network infrastructure hardware and software vendors to become more software centric and programmable and to embrace open standards. The ability to build hyperscalable networked datacenters will be generated over time by a number of service providers, including Elisa, which has a significant investment in datacenter capabilities for its enterprise customers. Within the mobile core, network operators must embrace new disruptive software platforms that help lower opex and capex as well as speed time to market and create new revenue opportunities. Network virtualization product architectures are available now from leading IP and Ethernet networking vendors, including Juniper, which released the industry's first virtual Mobile Control Gateway in 2013, an important first step in delivering a more comprehensive virtualized mobile packet core solution. Elisa can focus on those vendors that have a track record of delivering best-in-class IP/MPLS networking solutions and open and programmable software platforms and that can rapidly integrate new network virtualization technologies from SDN, OpenFlow, OpenStack, and NFV developments as well. It is also important for operators like Elisa eyeing the future evolution of network virtualization within the network core; it will be essential for Elisa to partner with the vendors most equipped to provide a comprehensive long-term vision and, as importantly, the ability to support this vision with a strong portfolio of hardware, software, and services. 2013 IDC #241131 5

LEARN MORE Related Research Alcatel-Lucent Launches SDN Spin-In Nuage Networks to Target Software- Defined Data Centers and Software-Defined VPNs (IDC #lcus24056413, April 2013) Worldwide Service Provider Router 4Q12 and Full Year 2012 Market Share Update (IDC #240093, March 2013) Will New SDN and Network Virtualization Technology Impact Telecom Networks? (IDC #239399, February 2013) IDC MarketScape: Worldwide LTE Radio Infrastructure 2013 Vendor Analysis (IDC #239518, February 2013) Worldwide Cellular Infrastructure 2012 2016 Forecast Update (IDC #238068, December 2012) IDC's Worldwide Semiconductor Core Technology Taxonomy, 2012: Mobile Infrastructure (IDC #237726, November 2012) Exploring the Effect of Explosive Video Growth on Carrier Infrastructure and Business Models (IDC #235433, June 2012) Worldwide Cellular Infrastructure 2012 2016 Forecast: While HSPA+ Will Continue to Drive Future Cellular Spending, Operators Embrace LTE (IDC #234704, May 2012) NextGen Mobile Architectures: Solving the Congestion Dilemma #DR2012_T4_JB, March 2012) (IDC Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or Web rights. Copyright 2013 IDC. Reproduction is forbidden unless authorized. All rights reserved. 6 #241131 2013 IDC