Scale and scaleability

Operators need to be able to test end to end in an LTE environment, drilling deep into complex information, whilst also keeping control of a manageable number of KPIs, Paul Gowans tells Keith Dyer

KEITH DYER:

Paul, what are the key concerns of your operator customers around LTE strategy at the moment?

PAUL GOWANS:
Well, first off, I think the important thing to remember is that although you hear a lot about the technical challenges of LTE, the whole debate needs to take place in the context of the commercial challenges that all operators are facing. There’s a lot said about the gap between the exploding usage of data, and the revenues operators will see from that. But with the number of Smartphones set to grow from perhaps 300 million now, to 1 billion in five years then that problem’s not about to go away. Operators know they need a new business model to cope with that, and that is why LTE, with its focus on reduced cost per bit, is so important in addressing that.

The whole drive to LTE infrastructure is that it is intended to deliver an 80% reduction in cost per bit compared to 3G, and 50% over HSPA. But allied to that, operators know that they will see service complexity and the volume of data rise. The balance operators need to strike is in between  the needs to service the growth in data usage, with the need to reduce costs both on the network and in delivering service complexity.

KEITH DYER:
As operators address that balance, what stage are they at now in addressing LTE?

PAUL GOWANS:
If you were to look at this from our perspective of the test lifecycle, then at the moment carriers are committed to early stage tests in pre-deployment. This involves looking at real live interoperability testing and pre-deployment testing, prior to moving to live and end to end assurance testing. We are seeing the network equipment vendors testing in their labs, and the following stage  is to see service providers go through their trial deployments – which also means doing their pre-deployment and interoperability testing.

Next we will see operators move to RAN optimisation, including ensuring they have hand-offs between LTE, 3G, HSPA and 2G networks.

From a JDSU perspective, as I said, we are seeing a lot of our experience being brought to bear in that pre-deployment testing, helping carriers to see how they can make sure that this technology is going to work for them.

KEITH DYER:
What are the key testing issues likely to confront operators as they move through that lifecycle?

PAUL GOWANS:
A key issue is that the old lifecycle of test, optimise, deliver, is going to be squeezed, by competitive and cost requirements, into a much shorter time frame. LTE will be rolled out in a lot shorter timescale. So from that perspective there is going to be a lot of expectation that the technology will be ready, and already operating optimally.

I think that one other issue that is likely to arise is that although the architecture in LTE moves to that flat, IP model, that could create a problem for operators in terms of visibility into services. Operators need to know what their critical connections are, what guarantees they have made to users on the end of that pipe and what’s going on within it. The complexity of the service environment means that operators need to try and look into the pipe, and pull out per-service data when that’s much more difficult to do.

They will also be faced with the need to do this in an end to end manner, from the core, across the backhaul, and into the radio access network.

So the test and monitoring questions will move away from where to  what to monitor, and how to monitor end to end, and what to do with the vast volumes of data that are going to be created.

We already have a customer that generates 20 billion records a day, before any LTE deployment. That’s a daunting volume, and one that’s only going to go up.

KEITH DYER:
How can operators balance the need to measure end to end, with being able to cope with such increased volumes of data?

PAUL GOWANS:
This is really an area where the industry is moving on, and will continue to. Operators and carriers will need to move to a one-to-many technique. It’s not just about grabbing data, but about doing something intelligent with it, sharing it to lots of different applications – to revenue assurance, roaming management, which ever business function needs access to that data.

This will really mean that the focus moves from the attention that is currently paid to a host of KPIs. The industry went down the path of saying we want everything delivered and measured in terms of KPIs. And they ended up with hundreds of KPIs that most service providers didn’t really need. The marginal benefit of extracting so much information was not right, and the cost of getting it was quite high. Additionally, that information wasn’t processed in a way that allowed service providers to do anything meaningful with those KPIs.

What we’ve been involved in as operators look at this changing business model is to ask what’s really important to the network and to what’s needed to manage the networks? If you developed a dashboard with perhaps those five essential KPIs, then what would they be?

We are working with a major Tier One service provider to manage their entire network on five KPIs, aside from their current 200. We have learnt a lot from that as they were continually asking what data they needed, and what they can do with it, and how they can pull data from multiple sources to do that.

KEITH DYER:
And how did they build that system, so that they could manage the data the needed?

PAUL GOWANS:
You still have a control plane, and still have a user plane. You will need to have 100% visibility of the control plane, bearing in mind it is also a plane that has got a lot more complex over the years. That’s fundamental. At the same time the operator needs to be looking at the user plane, but here they can be more flexible. They can drill into the user information only when they need to – looking at data over time, and when you need to resolve an issue, perhaps. I think you’d also look for KPIs around service completion, so that you know when someone uses a service you know it was delivered. And you might have a KPI on roaming connect, which will be fundamental to LTE. But by keeping these at the dashboard level, whilst knowing you can drill into it when you need to you can really improve your business efficiencies whilst keeping control of revenue-critical services.

KEITH DYER:
Finally, do you think operators require new tools and infrastructure for testing and monitoring LTE?

PAUL GOWANS:
I think that will depend very much on the operator. You can retrofit as an extension of where you are now, mapping over, say, HSPA to manage the same services. Having said that some carriers will build from the ground up for LTE, seeing the increased scale and the need for end to end monitoring in an environment of increasing complexity. Our job at JDSU is to help operators manage that transition in a way that best fits their business needs.

About Paul Gowans:
Gowans is Marketing Manager, EMEA, for JDSU

One lesson learned from the global rollout of 3G is that when you have a problem with your  first deployment it takes a long time and a lot of money to recover the market. LTE has arrived – with the first deployment by TeliaSonera in December 2009 and a trickle of arrivals announced for later this year.  A lot depends on these early deployments delivering on the technology’s promise, says Nigel Wright of Spirent Communications

High expectations is the first challenge that must be met. The initial 3G market was relatively forgiving. The productivity increase attributable to the transition from fixed-line modem to mobile Internet connection was so significant that mobile executives made allowances for any unmet expectations. But today’s user is becoming addicted to high-speed mobile broadband and their natural instinct is to blame service faults on the network rather than the device. The expectation is that the next generation of mobile services will be a quantum leap beyond the current 3G user experience.

The second challenge is the complexity of LTE deployments. Although LTE makes use of a simpler all-IP architecture with smarter network nodes, there are still plenty of challenges that can impact a user’s Quality of Experience (QoE). Inter-technology (2G/3G/LTE) mobility, support for voice services and greater air interface complexity with MIMO, to name but a few. So it is vital to learn from past mistakes that everybody – operators, equipment and device manufacturers – must take every measure to ensure that subscribers have a great experience from day one.

How long have we got?
While there is no doubt that mobile communication’s future is LTE, there are technical challenges to address, as well as business reasons for delaying LTE deployment.

The deployment of 3G taught us that it is one thing to launch a few pilot services, but quite another to allow time for the whole ecosystem – including the radio access network, the packet core network and handsets and devices – to reach critical mass. This is especially true for LTE, where there is still churn in the specifications.

There is a strong business case for not rushing prematurely into LTE. The majority of operators planning to deploy LTE already have robust and extensive HSPA networks. Purchasing new spectrum, in addition to brand new infrastructure, will cost billions of euros and the operator must determine over what time period these hefty up-front costs will be recouped by their LTE services.

According to the Dell’Oro Group, many operators are planning to migrate to HSPA+ as an interim step. It’s no match for expected LTE performance, but as a cost-effective interim measure for the massive existing 3G user base, HSPA+ is a sound business decision for many.

As a result, analysts suggest that the real take off point for LTE will not be until 2012 when Europe and China begin significant deployments. All three Chinese operators have committed to deploying LTE by 2013.

Two more years – that deadline might not seem that near for operators, until we look a little more closely at what lies ahead…

Key QoE challenges to address
Delays in initial adoption simply reinforce the obvious fact that carriers will need to operate both 3G and 4G networks. Multi-mode devices will continue to be required, negotiating the highest level of service where available and falling back to legacy services when necessary. Although wireless access can pose some of the more visible QoE issues, the more fundamental challenges lie in LTE’s All IP Network (AIPN) architecture, replacing legacy TDM/ATM voice networks, as well as the need to upgrade existing backhaul networks to support the Evolved Packet Core (EPC).

There are five key areas where QoE issues can arise:

– User authentication and mobility. These functions depend on three devices in the LTE system – the MME (Mobility Management Entity), SGW (Serving Gateway), HSS/AAA (Home Subscriber Server / Authentication, Authorization and Accounting) server – and their interaction between wireless and core networks.

– Multi-platform interoperability – the mobile user must move transparently between LTE and legacy technology cells without call loss or other QoE degradation.

– Timing and synchronization – this was a standard feature of legacy TDM backhaul technology, but LTE architecture specifies an All-IP network based on Ethernet, which lacks these native features. While the IEEE 1588v2 standard promises the precise levels of synchronization needed for real-time applications, thorough testing of its implementation is necessary.

– Operations, Administration and Maintenance (OAM) is another area where enhancements were needed to qualify Ethernet for mobile backhaul. Link OAM is for a single link between two devices, and Service OAM is for fault management, performance monitoring and protection switching for a circuit that traverses multiple devices over one or more network operators.

– Backhaul throughput and latency – once Carrier Ethernet was formalized to ensure features such as predictable latency, minimal jitter, guaranteed bandwidth and traffic engineering, it became the obvious candidate for All-IP mobile backhaul.

The way forward
Cost-effective backhaul throughput is clearly going to be a major issue once LTE puts its anticipated data rates of up to 100Mbps or more into users’ hands. But haven’t we shown that we still have two years leeway before that challenge begins?

Forget it! Backhaul networks are already creaking at the seams from the mass of data traffic and adding leased lines is an expensive temporary solution. The smartphone has moved from a niche business solution to a consumer must-have.

This converged mobile communications device is putting an enormous data throughput load on mobile networks, not to mention the added signalling burden as smartphones conserve their batteries by constantly signing on and off the network during use. As a result, there is already a lot of pressure to upgrade to Carrier Ethernet backhaul simply to meet the scalability and performance needs of today’s traffic, let alone the data tsunami in years to come.

So, although the rollout of LTE wireless networks may not be an urgent priority, the transition to next generation backhaul is already high on the agenda. And it must happen without disrupting or degrading existing services as well as being ready to support superb performance and QoE when LTE comes online. We cannot allow existing users to be treated as guinea pigs, we need to get the service right from day one. And that calls for thorough pre-testing of network upgrades prior to roll-out.

Although an All-IP core network offers a simpler and more efficient basis for data traffic, as the previous section shows, there is more complexity involved in testing the interface between the evolved packet core and LTE radio network that delivers services to the user. Testing to ensure a seamless upgrade to Ethernet backhaul is already an urgent priority and the need to fully test the LTE EPC is increasing rapidly, especially when inter-technology mobility and impact on QoE is considered.

Solutions for LTE testing
The lessons from 3G need to be remembered. Even if LTE roll out is not an immediate prospect, gearing up the infrastructure is already a vital priority. Today’s user of smartphones, data cards and netbooks already has sky-high expectations and infrastructure upgrades must only be apparent to a user in terms of improved QoE. It may take a long time to recover from the business implications of user disappointment with networks and services that are rolled out before they are thoroughly tested and ready.

Spirent Communications is a global leader in integrated performance analysis and service assurance solutions for IT systems and networks, with well over a decade of experience in pre-testing 2G and 3G technologies, as well as providing test and monitoring to ensure continued service quality. Building on this experience, Spirent is now geared up to offer the same support for the next-generation mobile network and devices and is actively supporting mobile operators, core network infrastructure manufacturers and device manufacturers with their LTE evolution product testing.

Already the world’s leading provider of 2G/3G mobile packet core and Ethernet network test solutions, Spirent is ahead of the game in providing and supporting Ethernet backhaul test and monitoring solutions, and solutions for testing mobile packet core performance, scalability and mobility. Spirent also offers solutions for LTE device testing.

Spirent test solutions are used by operators for acceptance testing, user device and network equipment interoperability testing, as well as validation of equipment manufacturers’ performance claims. Network equipment manufacturers use Spirent solutions during development, QA, installation, service and sales cycles to verify and demonstrate that their equipment meets operator requirements.

As the one-stop provider of choice for next generation test solutions, Spirent provides operators and manufacturers with innovative and industry-standard tools to test from the device through the backhaul and mobile packet core to the Internet.

Spirent has the test solutions, experience and support you need to make sure your LTE network will be ready.

About the Author:
Nigel Wright is Vice President of Product Marketing at Spirent Communications. In this role he oversees the marketing communication and industry engagement around all of Spirent’s wireless and positioning product lines.

Spirent Communications plc
Tel: +44 (0)1293 767676
www.spirent.com

Jerome Buvat, Global Head of Capgemini’s TME (Telecom, Media and Entertainment) Strategy Lab explains why there should be no delay in operators positioning themselves in the app store space

Application stores have gained considerable attention in recent years, and are emerging as an important channel for distribution of mobile content. While application Stores have been in existence for almost a decade, the category received a shot-in-the-arm only after the entry of Apple’s App Store.

The advent of Apple’s App Store has resulted in a paradigm shift in how mobile applications are created and distributed. The success of Apple’s App Store was followed by a spate of announcements from various players around their decisions for entering the space. Device vendors such as Nokia and Research in Motion (RIM, maker of Blackberry smartphones); OS vendors Microsoft and Google; and telecom players, have all forayed into the applications store market. Most leading mobile operators have launched their own application stores or have announced their intent to launch one in the near future. The launch strategies range from creating proprietary solutions to embracing third-party hosted application stores. While application stores are an important key growth area within the mobile data market, telcos are faced with the question of whether they should launch application stores at all, and if yes, how they should position themselves in a space dominated by device players.

Application stores are emerging as a key distribution channel for mobile content. Research recently carried out by Capgemini has found that total revenues from paid mobile application downloads during 2009 are estimated at around US$ 3.8 billion. However, changes taking place across the ecosystem are likely to result in both demand side pull as well as supply side push, ultimately resulting in growth of the segment. Increasing customer base forms a key demand-side driver, while improved device capabilities are expected to be the primary supply-side driver. These drivers are expected to boost adoption of mobile application services with the market expected to reach US$ 8.6 billion by 2013, growing at a CAGR of 30% between 2010 and 2013.

Launching an application store will provide operators with an opportunity to augment their existing data services revenue. There are going to be primarily four revenue streams for operators, viz. revenue share from the sale of applications, mobile advertising revenue, incremental data usage revenue and payment gateway revenue. Relying on these revenue streams, our analysis indicates that a typical operator (based in Western Europe with a subscriber base of 50 million) can expect a data revenue uplift of 11% by 2013. Additionally, if an operator is successfully able to implement a strategy wherein they are able to push web-based applications which result in greater data consumption, the revenue upside can be as much as 17% with over 30%-40% of this uplift coming from increased data usage.

In addition to augmenting current data revenues, applications storefronts can also be instrumental in attracting and retaining subscribers with high-spend on mobile data services. High-value customers exhibit a greater proclivity to download and use mobile applications. Moreover, application stores are becoming increasingly important for operators to build and maintain a robust content ecosystem, something that is essential in today’s economic climate and competitive landscape.

Operators are threatened by the prospect of being rendered “bit-carriers” due to the expansion of online and device players across the value chain. The emergence of application stores as primary channels for mobile content distribution can further impact operators’ positioning in the value chain. Consequently, inaction in this space would not only undermine the competitive positioning of operators vis-à-vis other players who actively launch application Stores, but also the ability to drive data consumption amongst existing consumers.

Key challenges
Amongst the device manufacturers, Apple, with its existing dominant position in the market and access to the early adopters of technology with a tendency to spend on mobile services is likely to continue as the dominant application store. RIM, with access to a niche, enterprise audience is also likely to be a strong contender in this segment. Nokia can leverage its large base of existing users and its strength in the emerging markets across Europe. One of the consequences of multiplicity of platforms, devices and application stores will be that developers will align themselves with particular storefronts. Since the success of a storefront is intricately linked to the quality of applications available on it, the competition for retaining the best developers on the major stores is going to be intense. Driven by the proliferation of free and mass market applications, the average selling price (ASP) for applications is likely to drop – analyst estimates indicate a value of US$ 1.72 by 2014, as compared to US$ 3.83 in 2009.

Recommendations
Capgemini believes that mobile operators can shore up their position in the mobile applications space by taking a series of definitive measures. Operators need to decide on the extent of activities that they would want to undertake in the application store segment. While global players with a large captive customer base might want to build end-to-end capabilities in the space, smaller players might decide to undertake only select activities in-house, relying extensively on third-parties for the technology platform.

A critical component of operator strategy to compete in the space would be their support of device-agnostic platforms. This will allow operators to support a much wider device portfolio through their storefront, while simultaneously reducing porting efforts, and hence costs and time-to-market for the developers. Additionally, platform-agnostic applications will allow a distinct positioning option for operators, thereby avoiding direct competition with vendor partners. Another option available to operators looking to encourage device-agnostic application creation would be to actively promote web-based applications.

Since the quality and reliability of the applications available on a storefront will be dependent on the strength of the developer community, it is imperative that operators provide the necessary incentives for the creation of exclusive applications for their storefronts. We believe that aggressive revenue share arrangements, wherein operators allow developers to retain a higher share of the application revenues when compared to other storefronts, can help operators play the role of ‘disruptor’ and corner a higher market share. While a revenue share of at least 75% for the developers will be necessary to remain competitive, analysis indicates that by increasing developer share to 80%, operators can get incremental revenue uplift of around 11% points, resulting primarily from a greater market share of application downloads.

Operators should strive to develop pricing models which are optimized based on the nature of the application, with popularity, market potential and stickiness of an application being the defining criteria. For instance, typically applications in categories such as medical and finance are highly customized, resulting in a limited number of such applications. However, because of the utilitarian nature of these applications, the consumer willingness to pay is fairly high. As a result, these applications are very suitable for subscription pricing. Operators should also play an active role in formulating the monetization strategies of applications, to ensure the greatest returns from their storefronts.

Capgemini believes operators should launch application stores to retain their prominent position in mobile content distribution, as well as to benefit from new revenue streams through the sale of applications, provision of access services and rendering of additional services such as integrated billing and access to networks that application interfaces are supported on. While application stores provide operators with an opportunity to re-establish their position in the mobile content value chain, the opportunity requires a strong operational strategy for success. Operators need to leverage existing capabilities in this space so as to be able to create a robust offering for the consumers. The opportunity should be looked at from the perspective of a strategic imperative to reverse the present trend of disintermediation from the content ecosystem, rather than a pure revenue enhancement exercise. It can’t be left to Apple to pave the way anymore in the application store market. There is plenty of room for more.

About the author

Jerome Buvat is the Global Head of Capgemini’s TME (Telecom, Media and Entertainment) Strategy Lab