Carrier Strategies - Exchanging Views On Interconnect
With commercial customer announcements so far thin on the ground, what has been the experience of service providers pioneering the IP exchange?
The IPX community today encompasses a mix of incumbent carriers in the process of IP transformation, some of which have legacy VoIP offerings, hubbing providers migrating from GRX/SMS, and pure-play, over-the-top IP wholesale carriers. Earlier this year, Ovum reported that 14 service providers had implemented IPX, but also noted that uptake had been slower than expected.
“The current hiatus boils down to the fact that mobile operators have not moved forward with the implementation of IMS as quickly as envisaged, and thus IP in the core, and at interconnect level, remains in the early stages,” says Eli Katz, founder and CEO at Xconnect. Katz compares the current situation to the early days of SMS, in that many of the new IP-based services coming to market, such as HD voice and video, rich communication suite (RCS), IM and presence, cannot be delivered over the existing circuit-switched PSTN, or public “best effort” internet. “When SMS launched in 1995 it was only available within the operator’s network. Only once interconnect became possible did you get significant growth. The catalyst was ‘reachability’, and this was enabled via cross-network interconnection.”
Xconnect’s approach has been to adopt a federated hub model, which it calls “interconnect 2.0” (although the company also supports IPX), under which a variety of services and commercial arrangements are offered – including both bilateral and multilateral interconnection to other federations, ENUM registries, and hubs (see Internet traffic growth, 2009-2010). “The idea is to provide carriers with the ability to choose their services and their preferred model on a peer-by-peer basis, whereas IPX defines a very specific implementation,” says Katz.
Still on trial
“It is a ‘chicken and egg’ scenario in that not all of the world will belong to this ecosystem on day one,” agrees Ajay Joseph, CTO at Ibasis. “There has been too much hype around IPX, which was not supported by commercial services, while customers were a little disappointed by the fact that the killer application is voice. What has been done to get it going is the creation of an ‘IPX fabric’, where you have both direct IP and TDM endpoints. TDM break-outs actually enable the IP interconnect in situations where traffic is coming in on IP. As more and more IP endpoints build up, the number of TDM break-outs will decrease.”
Having successfully implemented voice-based value-added services, including caller line identifier, international roaming and ISDN data over managed IP interconnects, Ibasis and TI Sparkle completed the first migration of international voice bilaterals to IP in January 2010. A representative for TI Sparkle says that the carrier is now progressing its
IPX services in collaboration with other IPX providers, and is also working with TI Mobile towards a pilot of RCS/LTE in early 2011. Currently, TI Sparkle’s IPX service supports hubbing for voice over IPX, and transport-only for mobile data services.
Sybase 365 is another service provider to have announced a suite of IPX services in early 2010, and says that DTAC in Thailand, and CSL in Hong Kong have completed trials of its IPX for voice transport between them. Full production systems are currently being finalised, with a view to launching shortly. “We have two other operators in Asia that are signed and building out production systems,” says Bill Dudley, group director, product management at Sybase 365. “They plan to launch this in Q4 or Q1 next year, but it is taking a little longer to get their switches and media gateways configured correctly and allow transport over IPX. However, there is a long line of operators in Asia wanting to join this community – because by having services all ‘on-net’, the quality is better, the call set-up times are less and the pricing is very competitive.”
Lowering the cost
Mobile providers commonly operate multiple interconnects, such as SS7/C7 for signalling, SS7/C7 or IP-based interconnect for SMS and multimedia messaging, and a further TDM connection for national and international long-distance voice transport. The argument is that by consolidating these onto a single point of interconnect, they will realise savings and efficiencies. “Under the TDM model, you are paying for capacity that you don’t yet need,” says Allan Chan, executive VP for global carrier solutions at Tata Communications. “Today, each interconnect would be scaled independently and in TDM, you are bound by capacity. But with IPX, you can grow as the business grows.”
Tata launched its IPX in January 2010, and Chan says it is poised to announce a commercial customer by the end of the year. “We have four to five serious trials ongoing, all of which are mobile operators, with two of these outside Asia. What we see today is that IPX is used for voice, for signalling and for push email connectivity. RIM for example is piloting IPX for carrying its roaming traffic.” Chan believes early IPX migration will place service providers at an advantage when new IP applications gain traction, because they will already have established relationships around the IP domain. He also contends that IPX can help operators to manage their costs and deliver services in a more efficient and scalable manner, even if it is just traditional services.
“Larger telcos with multiple, geographically dispersed heterogeneous networks for example, are looking to interconnect across a private IP backbone to lower transport and management costs,” he says. “The interconnect is effectively the same as with inter-operator interconnect, since both require the ability to support a diverse set of IP and TDM signalling protocols, ensure end-to-end QoS, and provide low-cost but high-quality media transport.”
However, convincing operators that IP can save them money now is not an easy sell for carriers. “Those operators running IP and TDM in parallel will point out that the cost of migration is high,” counters Dimitri Repinec, product manager for mobile data at BICS. “So we are now waiting for operators to migrate to full IP interconnect (not necessarily IPX), and we see none doing that before 2012.”
Voice providers are still hesitant to undertake large-scale upgrades on their switches given the lack of revenue growth in the fixed-line business. “They have the equipment and it is paid for,” agrees Greg Collins, vice president at Dell’Oro Group. “Thus they do not see the need nor have the desire to replace legacy circuits. That will change over time, but it will speak to how long the upgrade cycles are – which are typically measured in decades.”
In mobile, which is where Collins sees the IPX play, subscriber numbers continue to grow strongly, but price erosion is also limiting revenue growth. Dell’Oro Group forecasts the market for IMS core equipment to reach $780 million by 2014.
Whose lunch is it anyway?
The competitive threat posed by pure-play VoIP wholesalers to incumbent trunk carriers is said to be another factor shaping IPX strategies. Providers such as Aicent, Sybase and Syniverse have built out peering fabrics using a combination of MPLS, NGN technologies and commercial relationships with multiple service providers and MNOs. “The incumbent wholesale players for voice are worried that players such as us will eat their lunch,” argues MK Chang, VP of product management at Aicent. “GRX/IPX players have global IP managed networks with direct IP connectivity to Tier 1 mobile operators around the world. Layering voice softswitches, plus session border controllers (SBCs) and SIP proxies, onto their managed IP network provides instant voice exchange capability to mobile carriers, who are therefore tempted to bypass their traditional wholesale voice carriers and use the IPX network for voice transit.”
Aicent announced its IPX service in May 2010 and released its first application, IPX Voice, in July. It has since established voice IPX peering with companies such as Neutral Tandem, which has 70% of the wireless carrier market in north America, and has further commercial voice IPX agreements with 10 carriers.
Since IPX-to-IPX interconnection between any of the IPX providers has yet to be enabled, the market remains a competitive play. However, trials are to commence shortly at the Amsterdam Internet Exchange (AMS-IX). “This is a pilot and we may or may not develop the actual service, but we have about seven or eight parties that are joining between November and February,” confirms Cara Mascini, CMO at AMS-IX. “There is a lot of confusion surrounding IPX. Looking at it from the traditional internet perspective you have best-effort delivery with no SLAs and a settlement-free interconnect. That does not fit with the business models of the MNOs and carriers for interconnect. Building a very controlled and quality-assured environment such as IPX will most likely translate to premium services. But from the perspective of the MNOs, we do see the need, and if they are AMS-IX members, why not give them that service?”