Spending Cycles: There Are Signs That Carrier Spend Will Pick Up Again

IN
SI
Do GHtElWN t la lo m B aD aG S aZ IN E
BuSINES S aNalySIS for tElEcomS ProfES SIoNalS
FEbruarY 2011
lEaDEr
coNtENtS
news in brief
SPENDING CYCLES
Operator capex could be set to rise again, but carriers are still looking at ways to make the most out of networks already built
pending on telecoms infrastructure is cyclical, with operators wanting to squeeze as much out of their investments as possible before moving on to the next hot technology or service. indeed many service providers will say that media coverage, as well as analyst statistics, are ahead of reality when it comes to deployment and service rollout. nevertheless, it is important to take stock of where markets are going in addition to where they are now. while service broker technology has not been deployed by a mass of operators it is certainly on the radar of many. that is because it could help them to bridge the gap
3 Timeline
A roundup of some of the major stories reported in our daily news service, www.totaltele.com
network strAtegies
Ian Kemp Editor Total Telecom Plus
There are signs that carrier spend will pick up again

betweeen their legacy circuitswitched networks and new iP-based and fibre services towards which they are inexorably moving. our Technology Trends (p.11) this month takes a close look at how service brokers can be deployed and which operators are already doing so. when it comes to services such as mobile tV, operators also have a firm eye on making the most of their existing infrastructure rather than building costly new networks, all the while having to
accommodate fast-rising mobile broadband use by their customers. that is one reason why eU-backed broadcast standard dVb-h has not taken off as proponents had hoped (Business and Finance p.14). some analysts go as far as to say that dVb-h is dead in all but a few markets. but there is a chance more mobile operators could still embrace broadcast mobile and interactive tV serviceson their hsPA and lte networks that they already have earmarked capex to build. wholesale operators have been investing heavily in subsea cables over the past few years, particularly in previously underserved routes such as to Africa and parts of Asia. that build is slowing down, but there is still plenty of capacity coming online as operators upgrade their cables to meet continued burgeoning demand, particularly for internet and mobile services (Network Strategies p.6). whats more, there are now signs that carrier spending will pick up again: infonetics research says a new investment cycle will start in 2011 and last several years, driven by fibre, 3g and lte network build. it says capex by carriers bottomed out at Us$289 billion last year and will rise to Us$321 billion in 2014 before growth slows again. from its peak in 2008, worldwide service provider capex declined 5.3% in 2009 and another 3% in 2010, but will show a 1.6% rise this year. n
6 Subsea cables
there has been a spate of subsea network build in underserved regions, and extra capacity added to existing cables to meet broadband demand.
technology trends
11 Service brokers
operators increasingly are turning to service broker technology to help them bridge the gap between their legacy networks and new iP-based services. it could also help them to drive up ArPUs.
bUsiness And finAnce
14 Mobile TV strategies
broadcast mobile tV standard dVb-h received further setbacks as the year started. we look at what lies in store next for operators and how they might deliver mobile tV services economically.
stAtistics
17 Prime numbers
latest global broadband subscriber numbers, plus mobile services revenue growth, 3g penetration in countries worldwide, and mobile apps revenue and download growth.
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tImElINE
a roundup of the major stories in telecoms in the past month, as reported in our daily news service www.totaltele.com
Business
Vivendi closes in on SFR
Vivendi received E1.25 billion from deutsche telekom, ending the companies long-standing dispute over Polish mobile operator Ptc which telekom now fully owns. Vivendi then completed the sale of its 20% stake in nbc Universal to general electric for Us$5.8 billion, paving the way for Vivendi to buy Vodafones 44% stake in, and take full ownership of, french operator sfr.
would launch a mobile video offering on the lte network of Verizon wireless by mid-year. skype also launched video calling for Apples mobile products.
Clearwire setbacks
clearwires largest shareholder, sprint, opted out of the latest round of funding in the wiMAX operator, while reports suggested t-Mobile UsA was the only company still considering the purchase of the companys spare wireless spectrum. clearwires chairman, craig Mccaw, resigned at the end of december.
operator Polkomtel began in January, with private equity companies and teliasonera among those showing interest.
Galileo cost rises again

eU satellite navigation project galileo, which aims to compete with the Us global Positioning system, will need another E1.9 billion of investment between 2014 and 2020, in addition to the E3.4 billion budgeted until 2013.
Nokia comes without music

nokia stopped selling ovi Music Unlimited (formerly comes with Music), which bundles free music downloads with the vendors handsets, in 27 of 33 countries in which it was available.
Verizon gets iPhone

Verizon wireless will start selling Apples iPhone from february, ending At&ts exclusive agreement in the Us.
Orange eyes video site

france telecom entered talks to acquire a 49% stake in french video-sharing web site dailymotion for E58.8 million.
Qualcomm buys chip maker

Qualcomm agreed to buy mobile semiconductor company Atheros communications for $3.1 billion. Atheros makes chips for tablets and other mobile devices.
Mobile merger in the balance

Vimpelcoms planned $6.5 billion merger with orascom parent weather investments (renamed wind telecom in december) is in the balance after telenor, which holds 39.6% of Vimpelcom, began an arbitration proceeding against the deal. Vimpelcoms board had already given approval for the transaction.
Telefonica mobile money deal

Mastercard and telefonica set up a joint venture to develop mobile financial services in 12 countries in latin America. oranges VP of electronic payments and transactions, Mung-ki woo, left the operator to head up the mobile unit at Mastercard.
Huawei blocks NSN deal

chinas huawei won a temporary injunction to block the sale of Motorolas networks business to nokia siemens networks. huawei and Motorola have worked together on radio access and core networks since 2000, with Motorola reselling huawei products under its own brand.
Asian mobile alliance

Japans ntt docoMo, china Mobile and south koreas kt formed an alliance to collaborate on areas including international roaming, lte, enterprise services and smartphones.
Polkomtel sale process begins

the process to sell Polish mobile
Etisalat-Zain deal challenge

UAe operator etisalats bid to buy 46% of kuwaits Zain for Us$11.7 billion was challenged by a rival bid from turkish conglomerate cukurova, which controls turkcell. etisalat has had to extend the deadline for the deal.
Smartphone alliance
european operators Vodafone, telefonica, deutsche telekom and orange formed an alliance to monitor smartphone operating systems, citing concern over the rapid rise of googles Android and Apples ios.
International long distance and Skype traffic

50 45 40 35 30 25 20 15 10 5 0 annual growth (billions of minutes) n International phone traffic n International Skype-to-Skype
Orange NFC project

orange said it will deploy new siM cards and handsets throughout europe in the second half of this year to enable nfcbased contactless payments.
Spain-China partnership
telefonica and china Unicom agreed to invest a further $500 million in each other, having ploughed $1 billion into one anothers stock in september 2009. telefonicas stake in Unicom rises to 9.7% and the latters share of the spanish operator is up to 1.37%.
3
2005
2006
2007
2008
2009
2010
Source: TeleGeography / PriMetrica
Skype extends video calling

skype agreed to buy Us mobile video company Qik and said it
February 2011 www.totaltele.com
International Skype call traffic grew by 45 billion minutes in 2010, more than double the growth of total international voice traffic globally, says Telegeography. International phone traffic grew an estimated 4% in 2010, to 413 billion minutes, down from 5% growth in 2009 and far from the 15% average growth rate achieved during the previous two decades, says the research company.
tImElINE
India gets number portability

india launched nationwide mobile number portability in January.
current wifi partner, the cloud, for some 50 million.
neTWORKs
US net neutrality approved
the fcc approved net neutrality rules in the Us, prohibiting operators from blocking legal content, applications or services but allowing reasonable network management and charges for heavy data users. Mobile operators face fewer restrictions and will be able to limit access to high-bandwidth services and applications.
TeliaSonera network deals

teliasonera has selected ericsson and huawei to revamp its radio network in norway, upgrading 2g/3g base stations and rolling out lte infrastructure.
Mtn said current coo sifiso dabengwa will take over as ceo and president when Phuthuma nhleko steps down in March.
Tata appoints new CEO

Vinod kumar moves up from coo to ceo of tata communications from february, replacing srinath narasimhan who has been appointed Md and ceo of tata teleservices.
Bharti launches 3G
bharti Airtel launched 3g services in karnataka and said it plans to extend coverage to its 12 remaining licence circles by the end of the quarter.
JoBS WortH
Google replaces Schmidt

google co-founder larry Page will replace eric schmidt as chief executive from 4 April. schmidt will become executive chairman, focusing on deals, partnerships and business relationships.
SK Telecom picks LTE vendors

sk telecom picked samsung, lg-ericsson and nokia siemens networks to supply equipment for its lte network. commercial services will be available in seoul by July and nationwide in 2013.
Australia fibre deals

Australias national broadband network company signed deals worth A$1.6 billion for fibre infrastructure, including a A$1.2 billion agreement with corning. the government now says the network will cost A$40.4 billion.
New head for Neotel

sunil Joshi will become the new Md and ceo of south African operator neotel from 1 April, moving from tata communications.
Ericsson wins China deal

ericsson won a contract from china Unicom to supply gigabit passive optical network (gPon) equipment across china for fibre network rollout.
LTE reaches Africa

nigerian operator globacom claimed the first commercial lte launch in Africa, while ntt docoMo launched services in Japan. in the Us, Verizon plans to expand its lte network into an additional 140 markets by the end of the year having launched in 38 in december. the global mobile suppliers Association says 180 operators in 70 countries are currently investing in lte.
New Telstra executive

telstra appointed brendon riley, general manager of ibMs northeast europe operations, as coo, replacing Michael rocca.
Thai 3G agreement
thai operator true corp signed a deal to provide 3g services on state-owned cAt telecoms network and upgrade its base stations to hsPA.
TalkTalk job cuts

Uk operator talktalk will cut 580 jobs, or 13% of its workforce, as part of a major restructuring.
India national broadband

india said its national broadband Plan will connect 160 million households with high-speed internet connections by 2014.
Sprint appoints new CFO

Joseph euteneuer will move from Qwest to become the new cfo of sprint, taking over from bob brust who is retiring.
UK allows spectrum refarming

ofcom ruled that Uk operators can use 900-Mhz and 1800-Mhz spectrum for 3g services. o2 and Vodafone have 900-Mhz and 1800-Mhz spectrum, while orange and t-Mobile hold 1800Mhz spectrum only.
PEOPLE
Telekom CEO contract boost
deutsche telekom extended the contract of ceo rene obermann for a further five years until november 2016.
MySpace job cuts

Myspace confirmed plans to reduce its global staff by 47%, cutting around 500 jobs.
HTC hires Sony Ericsson VP

taiwan handset maker htc appointed former sony ericsson VP of global operations, Matthew costello, as its coo.
Free WiFi from O2

o2 said it will launch a free wifi service for all Uk consumers. A day later bskyb acquired o2s
4
Change at top for MTN

south African mobile operator
apple chief executive Steve Jobs in January announced he will take his third medical leave of absence since 2004 for an undetermined period, prompting jittery responses from some analysts. But they were reassured when Apple posted firstquarter revenues of US$26.74 billion, up 71% from $15.68 billion a year earlier, making it the companys best-ever quarter; net profit was $6 billion, up 78% from $3.38 billion a year ago. Apples chief operating officer Tim Cook will become acting CEO, having performed the duty during Jobs past leaves of absence, although the company says Jobs will still be involved in major strategic decisions. Jobs, who is 55 and has had pancreatic cancer, received a liver transplant in 2009. Apple sold 16.24 million iPhones in the first quarter, which ended December 25, up from 8.7 million in the period a year ago and from 14.1 million in the fourth quarter. The company sold 7.33 million iPads in the quarter, compared to 7.46 million in its first two quarters of availability. But Apple already is facing increased competition in both smartphone and mobile device markets. Ovum says Apples iPad took 90% of the portable Internet devices market in 2010, but expects Google to overtake it in 2015 with 36% market share from android and Chrome devices compared to 35% for products based on apples iOS. Meanwhile Apple says its iTunes Store generated revenues of $1.1 billion in Q1, with consumers now renting and purchasing over 400,000 TV episodes and over 150,000 movies per day. It says the app Store reached 10 billion downloads in January.
www.totaltele.com February 2011
NEtWorK StratEGIES
WEll CONNECTED
Submarine cable operators are building new networks and bringing more capacity online, but this time around demand is offsetting falling tariffs. By Joanne taaffe
SUBSEA CABLE NETWORKS
ast year marked the launch of key subsea cable systems that will address bandwidth shortages on underserved routes, particularly into Africa. but as the recent spurt of subsea investment slows down, newer content services as well as route-specific bandwidth requirements are set to drive capacity build in future. growth in internet and broadband services has spurred a wave of investment in subsea cables in the past few years. telegeography says international internet capacity increased 55% in 2010 alone, when 13.2 terabits per second (tbps) of new capacity was addedalmost as much as the total amount of international internet capacity in 2008. continued stellar mobile growth and the adoption of cloud services are set to alter the demographics of customers of subsea cable networks and the kinds of companies investing in them. companies such as google need connectivity to their data centres, which are not necessarily near major cities where subsea cable networks typically are laid. growing demand worldwide and the need for connectivity to major data centres in time could lead to more landing points from major subsea cables and even new routes between major geographies. A growing interestfrom that kind of customer [internet companies] and [the requirements of] data centresand cdns [content delivery networks]are changing the pattern of demand[which] is driven by the need for connectivity and not justthe route, says leigh frame, coo of Alcatel-lucents submarine network division. google, for example, in 2008 partnered with six companies including operators bharti Airtel, kddi and singtel to build a 10,000-kilometre subsea fibre cable linking the Us with Japan. the 4.8-tbps capacity network, called Unity, was activated in April last year. growth in broadband services in particular has led to a five-year period of
6
Investment in African undersea cables

Seacom cost (uS$ m) length (km) capacity 650 13,700 1.28 tbps EaSSy 265 10,000 3.84 tbps tEams 130 4,500 1.28 tbps WacS 600 14,000 5.12 tbps mainone 240 7,000 1.92 tb/s Glo1 800 9,500 2.5 tbps Q3 2010 globacom (nigeria), AFdb acE 700 14,000 5.12 tbps Q2 2012 25 telcos including orange, etisalat
completion July 2009 July 2010 ownership investment African (main investors) companies: telecoms us 25% operators south Africa 50% 90% Kenya 25%
sept 2009 Q3 2011 Q2 2010 teAMs telkom, African Kenya Vodacom, dvpt 85%, Mtn, c&W bank etisalat tata (neotel), (AFdb) 15% bb infraco
Almost as much international Internet capacity was added in 2010 as there was in total in 2008
capacity growth: between 2006 and 2010 international internet capacity grew at a compound annual rate of 64%, says telegeography in its annual survey of internet backbone operators (see chart p.8). the biggest build-out in recent years has been in Africa (see map right), which had been severely underserved during the past decade. Africa is one of the hot spots for international growth, says rick Perry, VP international networks, planning and engineering, cable&wireless worldwide. new cables are being laid along the east African coast, largely in response to growing requirements for wireless services in Africa. new systems also came on-stream in Asia, including in december iMewe india, Middle east and western europea 13,000-kilometre, 3.84-tbps cable built by a consortium of operators including indias bharti Airtel and tata communications, orange, telecom italia and etisalat (see timeline of recent cable developments p.9). some new projects will also get underway along well-served routes, including a new low-latency trans-Atlantic subsea cable system between new york and london. in January hibernia Atlantic announced a Us$250 million vendor financing deal with huawei Marine networks for the Project express transAtlantic subsea cable. Project express, scheduled to be in operation in 2012, will be the first cable system to be laid between new york and london in over ten years and is designed to provide the finance industry with transmission at sub-60 milliseconds latency. the vendor financing deal also underscores huawei Marine networks determination to compete in the longhaul submarine cable market. huawei aims to challenge the big-hitters in the subsea cable market, including Alcatellucent, Vsnl (which acquired tyco global network in 2004 and teleglobe in 2005) and reliance globalcom (which acquired flag telecom in 2004). Until now huawei has principally secured contracts to lay subsea cables on shorter routes, according to Alan Mauldin, a research director at telegeography, although he says it has been bidding for every project. such vendor financing deals and chunks of new capacity on popular routes might evoke the memory of the dotcom bubble of the late 1990s. At that time over-build pushed many operators into bankruptcy and mothballed suppliers production facilities for several years. yet suppliers, operators and analysts contend that todays subsea cable market will be less
NEtWorK StratEGIES
African undersea cable projects

London England
Mediterranean Undersea Cables

Atlas Offshore
320 gigabits 1280 gigabits 3840 gigabits Active Active Active 3840 gigabits Q1 2011
Marseille Vigo France Spain Sesimbra Portugal Asilah Morocco Casablanca Morocco
ds a vist slan Altanary I Ca
Monaco
SEA-ME-WE 4 I-ME-WE
Palermo Italy
EIG
Tripoli Lebanon Alexandria Egypt Cairo Egypt Suez Egypt Fujairah United Arab Emirates Port Sudan Sudan Massiwa Eritrea Djibouti Oman
Ann Algeaba ria Biz Tunerte isia Trip Liby oli a
N.B. Several smaller Mediterranean cables not shown.
D N G Th a C uin e G kar, ou on e a S ak Fr a- m e ch ee ak r B b ne o M on tow ie, iss ia ga tt, M n, G au l ro au via S ui rit , L ier nea an ib ra er ia Ab ia Leo ija n,C ne ote Acc D'I ra v Lo ,Ghana oire me ,T og o
Karachi Pakistan
Mumbai India Chennai India Cochin India
Cape Verde
n ni a ri Be u, Nige a un no , eri to gos ero Nig ea am Co La uin ny, la, C n a al G Bo ou tori D qua n a, E abo Bat e, G il rev Lib
Mogadishu Somalia Mombasa Kenya Dar Es Salaam Tanzania
Colombo SriLanka
Sao Tome and Principe
Pointe Noir, Congo Muanda, DRC

Cacua
Lua
Sub-Saharan Undersea Cables

SAT3/SAFE TEAMs Seacom Lion MaIN OnE GLO-1 EASSy WACS
5120 gigabits 340 gigabits 1280 gigabits 1280 gigabits Active Active Active
co,Ang
,An
ola
nda
gola
Tamatave Madagascar Walvis Bay Namibia Baie du Jacobet Mauritius Maputo Mozambique Toliara Madagascar St Paul Reunion
1300 gigabits 1920 gigabits 2500 gigabits 3840 gigabits 5120 gigabits
Active
Active
Mtunzini South Africa Melkbosstrand South Africa
Q2 2011 Q2 2012
http://manypossibilities.net/african-undersea-cables
Version 24 - Jan 2011
Source: Steve Song / Shuttleworth Foundation
African Undersea Cables (2012)
ACE
subject to swings: whereas in the 1990s investments were made on forecast traffic growth, todays networks appear to be springing up to meet demand. that is not stopping tariffs from falling: iP transit prices in major hub cities have dropped on average 25% every year since 2007, says telegeography. [but] its not like ten years ago when prices were falling 40% and 50% a year, says Mauldin. listing prices in the second quarter of
2010, telegeography in its report says iP transit prices are very low in major cities in developed markets, but remain high in many developing markets and in countries that are far from major iP transit hubs. hong kong is one of the most competitive iP transit markets in Asia, but a gigabit ethernet port cost 2.5 to 3.5 times more in hong kong than in london, while latin America is even more costly: port prices in so Paulo are
approximately five times higher than those in london, according to the research company: in cities far from major internet exchanges, the price of iP transit reflects the cost of transport back to a primary exchange, as well as the competitiveness of the local market. Median gige prices in sydney and Manila exceed $100 per Mbps [in 2Q2010], and prices in Africa can be even higher. Alcatel-lucent last August told Total
7
NEtWorK StratEGIES
10 Gigabit-per-second wavelength prices (at June 2010)

$100,000
n Low n High
Median monthly lease price (uS$)
$90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 0
FrankfurtNew York
LondonNew York
Los angelesTokyo
Hong KongTokyo
SingaporeTokyo
Source: TeleGeography
International Internet bandwidth growth

n International Internet bandwidth annual growth
40
100%
20
50%
10
25%
0%
2006
2007
2008
2009
2010
Data represent Internet bandwidth connected across international borders as of mid-year. Source: TeleGeography
I think in most cases demand is outpacing price erosion Alan Mauldin, TeleGeography
International Internet traffic (peak usage)
100% 90%
n Trans-Pacific n Intra-asia n Trans-atlantic n uS Latin america n Intra-European
Peak usage of Internet bandwidth
80% 70% 60% 50% 40% 30% 20% 10% 0%
2006
2007
2008
2009
annual growth rate
30
75%
2010
Telecom it expects the next wave of investment in submarine cable networks to be fuelled by markets in Asia-Pacific and Australasia. A month earlier hong-based operator Pacnet and Pacific fibre of new Zealand said they will build a subsea cable linking new Zealand, Australia and the Us, expected to come onstream in 2013. the Us$400 million, 13,600-kilometre cable will have a planned capacity of 5.1 tbps, five times that of the existing southern cross cable into new Zealand. further investment is likely to be made in latin America, says Alcatel-lucents frame, who adds that east india is also relatively underserved currently. there isnt a glut anywhere, says Mauldin at telegeography, even on wellserved routes. you are seeing cables deployed one year and then an order for them to be upgraded the next year. you dont build a $300 million cable one year and upgrade for fun. its happening all over the world. Upgrades of cables already laid are coming thick and fast. you are dealing with an enormous increase in demand for capacity of 30%, 40%, 60% a year, says tom Mock, senior vice president, corporate marketing and communications, at ciena corporation. that is creating a sustained revenue stream for suppliers, as well as the opportunity to upsell: Mock says service providers can hope to sell 40-gigabit circuit equipment, which he says currently costs three to five times that of older 10-gigabit equipment. in January, reliance globalcom selected ciena to deploy its 40-gigabit optical networking solution on a submarine cable linking the Uk, spain, italy and egypt, adding 2.4 tbps of capacity on the route; and Alcatel-lucent and ciena will upgrade the seA-Me-we4 network to 40-gbps technology this year, taking the cables ultimate capacity to 2.4-tbps per fibre pair. Also last month, ntt America announced it would upgrade the capacity of its trans-Pacific network to 400 gbps. such upgrades reflect sustained growth in fixed and mobile broadband networks, which create huge economies of scale for operators. As a result, sales of capacity currently largely compensate for lower iP
International Internet bandwidth (Tbps)
NEtWorK StratEGIES
transit prices. i think in most cases demand is outpacing price erosion, says Mauldin at telegeography. nevertheless, subsea network operators will struggle to charge a premium. its hard to differentiate the product, says Mauldin. there is no premium for anything except a low latency link and some underserved locations. the east Africa submarine system (eAssy), which provides fibre-optic capacity along the east coast of Africa and on to other countries worldwide, has seen wholesale transit prices fall since its launch in June 2010, says Mike last, director of marketing and international business development at wiocc, the largest shareholder in the cable. last expects an ongoing decline in iP transit prices on the eAssy network to go handin-hand with a rapid rise in demand for capacity from its operator customers, despite several competing subsea cables launching within a few months. Already international bandwidth costs in the African market have fallen more than 50% between mid-2009 and the end of 2010, according to eAssy. in december, wiocc announced the eAssy cable would be upgraded in 2011, thereby doubling its current 30 gbps capacity along its 10,000-kilometre route; the cable is built to provide maximum capacity of 3.84 terabits per second. in addition, operators are building out terrestrial fibre networks in Africa, says last, which should further lower connection costs and therefore spur consumer uptake of mobile and fixed telecoms services. eAssy is talking to major over-the-top internet service providers about buying capacity on the cable, says last. nigerian subsea cable company glo-1, owned by mobile operator globacom, says new subsea cables are lowering mobile operators costs. A 155-Mbps connection that used to cost $4,500 $5,500 now costs $2,000, according to a company spokesman. A lot of voice is now VoiP, and a lot of people are now able to get a blackberry service, says the spokesman. [but] there is not much effect on ArPU immediately; it is about subscribers having more options.
telegeography says over time there is likely to be a move away from traffic concentrated on todays major european, north American and Asian routes. regional hubs in developing markets will undoubtedly emerge, says the company in its report. but iP transit is so cheap on todays major routes it will continue to attract business from operators. data from telegeographys wholesale bandwidth Pricing database last year showed that capacity for a 10-gbps wavelength cost five times more on key trans-Pacific and intra-Asian routes than across the Atlantic (see table top left). but the company says while for many years submarine cable operators have charged
far more for circuits connecting to Asia than europe, the gap is narrowing after the recent wave of network construction and upgrades. it says 10-gbps wavelength prices between los Angeles and tokyo have fallen at a compound annual rate of 21% over the past two years, and prices from singapore to tokyo dropped by nearly 50% in the year to June 2010. new cables coming online could cause further price erosion. we dont expect that circuit prices in Asia will ever reach the exceptionally low levels seen in the Atlantic, but its certain that new cable construction in Asia and the Pacific will pull down prices, says telegeography research director rob schult. n
Timeline: recent subsea cable developments

January 2011 n Hibernia Atlantic secures US$250 million in vendor financing from Huawei for a new lowlatency trans-Atlantic cable linking the financial centres of New York and London. n Five Taiwanese and Chinese operators agree to build the first undersea cable linking Taiwan and China. The 220-km cable will cost an estimated NT$800 million (E20 million). n NEC and Fujitsu sign an agreement with NTT Communications, Philippines operator PLDT, StarHub and Telekom Malaysia to construct asia Submarine cable Express (aSE), a 40-Gbps system that will link Japan to Singapore, Hong Kong, the Philippines and Malaysia. Scheduled to be operational in 2012 it will cost an estimated US$430 million. n Venezuela says it will connect Cuba to a high-speed fibre optic submarine cable. The US$70 million cable is expected to be fully operational by July. n reliance Globalcom says it will upgrade to 40-Gbps technology a 6,400-km cable connecting the UK, Spain, Italy and Egypt, thereby adding 2.4 Tbps of capacity. n alcatel-Lucent and Ciena will upgrade the 20,000-km SEa-ME-WE4 (South East asiaMiddle East-W. Europe) to 40-Gbps technology, taking capacity to 2.4 Tbps per fibre pair. December 2010 n The IMEWE (India, Middle East, Western Europe) submarine cable, which connects India to Italy and France via the Middle East, begins commercial operation. The 13,000-km cable has capacity of 3.84 Tbps and investors include Bharti Airtel, Etisalat, France Telecom, Pakistan Telecom, Saudi Telecom, Telecom Egypt, Telecom Italia Sparkle and Tata. n Seven operators including Turkcell, Etisalat, Mobily and Zain agree to build this year a 7,750-km fibre optic cable in the Middle East stretching from the United Arab Emirates through Saudi Arabia, Jordan and Syria, to Turkey, providing capacity of up to 12.8 Tbps. n Submarine cable system Telmar, connecting Israel to France and built by Telecom Italia Sparkle and Cypriot telco Cyta, goes into operation. n Kuwait says it will install a new undersea cable linking the country to three other Gulf nations, providing transmission speeds of up to 39.8 Gbps. n Cable & Wireless Worldwide says it has deployed an undersea fibre optic cable linking Jamaica, the Dominican Republic and the western British Virgin Islands. November 2010 n bezeq International and alcatel-Lucent will build a submarine cable linking Israeli city Tel Aviv to Italy. The cable, which will continue overland into Europe, will span 2,297 km. n Seychelles Cable System announces it will lay a uS$30 million cable to link the Seychelles to Dar es Salaam in Tanzania. September 2010 n The LION2 (Lower Indian Ocean Network) consortium, which includes France Telecom, agrees to lay a new 3,000-km submarine cable in the Indian Ocean in 2012, linking the original LION networkconnecting Madagascarto Kenya. n alcatel-Lucent announces a contract with South african operator eFive Telecoms to build a submarine cable network linking the west coast of Africa to South America.
9
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tEcHNoloGy trENDS
BrIDGE buILDING
Operators looking to bridge the gap between their legacy circuit-switched networks and new IP-based services are turning to service broker technology. By roy rubenstein
ervice broker technology is playing a key role in operators network evolution, enabling them to enhance their legacy fixed and mobile offerings as well as simplify new iP-based services. Proponents say the technology is taking off because it enables operators to deliver services across the two domains to greater numbers of customers. A service broker is a purpose-built, reusable software network element that resides between the application and network layers. the service broker acts as a bridge between the circuit-switched network that delivers core operator services and the packet-based iP domain. the technology is playing an important role in coordinating circuit-switched services that are implemented using siloed, legacy networks that operators have built up over many years. circuit-switched networks typically deliver such applications as prepaid mobile, number translation, sMs and virtual private network (VPn) services. these are described as enhanced services and they generate billions and billions of dollars for the operators, says Patrick fitzgerald, vice president for global sales and marketing at Metaswitch networks. but operators now are moving inexorably towards next-generation fibre and iP infrastructure. the service broker can also co-ordinate providing those circuitswitched technologies to be offered in the iP environment, says Paul shore, head of the next-generation intelligent network business unit at Aepona. it can also take new iP developments and offer them back into circuit-switched legacy networks. with traditional circuit-switched networks, services are separated from the switching functions to simplify new service introductions as well as switch maintenance. this architecture, dubbed the intelligent network (in), uses signalling protocols such as ss7 rather than next-generation iP Multimedia subsystem technology. however, an in architecture
SERVICE BROKERS
has a significant shortcoming: only one service at a time can be processed by a node in the network. with a voice call, if you wanted to send that call onto another service that wasnt possible because of the limitation of triggering one service at a time, says desi Maguire, Aeponas product manager for next-generation in solutions. the service broker, residing between the switch and the service, overcomes this limitation by intercepting the signalling and supporting the multiple protocols, thereby triggering the switches that support the services being combined. for example, operators previously werent able to offer a mobile VPn service to prepaid customers, but with a service broker the two in services can be combined: the VPn service is triggered before the broker sends the call onto the prepaid platform. Vodafone says it is interested in providing a VPn service to prepaid customers: to orchestrate the two [in services], this is a use case where the service broker adds value, says Jens fassmer, head of network services, realtime charging, Vodafone group. we dont want to do core network retriggering; it is too complex. the service broker helps us avoid that. for Peter Mottishaw, a principal analyst at Analysys Mason, there are two clear deployment scenarios for service broker technology: enhancing prepaid services; and managing the complexity of postpaid services with a view to a future migration to iMs. for operators, prepaid is the most important service they offer and they are looking at ways of extending that without going back to their in prepaid provider and paying for a lot of platform enhancements, says Mottishaw. indeed the alternative to a service broker is for an operator to sanction custom work by an in switch vendor in order to interface the products. but as well as being costly that also takes time, thereby prolonging the service launch.
the service broker also supports signalling for billing and charging. for example, a service broker can bridge between the distinct billing systems for prepaid and postpaid customers, enabling prepaid customers to benefit from new services and operators to grow average revenues per userthat until now were exclusive to postpaid customers. Adding innovative services for prepaid customers is certainly a challenge facing operators. one example is location-based services, where if a mobile cell is underused a customer can be offered real-time call discounts for a couple of hours; or even for data, offering access to specific web sites or content. that is hard to do with existing prepaid platforms, but is enabled by the service broker, says Mottishaw: from a marketing side it is these things that operators are interested in: help me innovate with the services i can offer. the less common scenario for using the technology is where an operator has invested heavily in in services and the logic built to tie those services becomes complex to manage. they will put in a service broker to manage those complex interactions, having in mind that when they migrate to iMs the same platform can offer those services to the new environment, says Mottishaw. Vodafone is a good example of an operator using service brokers to bridge both domains. we can reuse a service in the in legacy for iMs terminals, and also vice versa: reuse services we are porting into the iMs domain into the circuitswitched world, says fassmer. Mottishaw highlights that the service broker is also an important component within the more general service delivery platform framework. the service broker can effectively mediate between three areas: legacy in, iMs and web services, he says. for colt technology services, the service delivery platform component is
11
tEcHNoloGy trENDS
Service broker deployments: operator interest on the rise Headline

While there is growing interest in service broker technology, deployments so far are limited. It is pretty new and is something for operators to digest as it has implications as to how they grow their networks, says McGarvey at Current Analysis. Service brokers have been around for several years and havent received a whole lot of attention. The creation of the Service broker Forum in 2009 has helped to raise the technologys profile. The Forum, created by several independent vendorsAepona, OpenCloud, appTrigger (acquired by Metaswitch Networks), Convergin (now part of Oracle) and jNetX (now part of Amdocs)set about defining the service broker to aid its promotion. It was a pretty effective exercise which maybe led to market awareness and the [vendor] acquisitions [in the past year], says McGarvey. Indeed, proponents say interest is accelerating, despite the technology being widely seen as only an interim solution and despite its functionality not having been defined by telecoms standards bodies. In a recent survey of some 100 operators globally, the Service Broker Forum says 86% said they are considering deployment of the technology. Just in the last quarter we had two customers, says Fitzgerald at Metaswitch. While Metaswitch will not name them, it says one is an operator in the Far East that will use the service broker to extend its mobile prepaid services to subscribers on their IMS core. The second, a wireless operator, is merging with a wireline operator and is using the service broker to consolidate what are currently separate, duplicated platforms. Michel arrede, a product marketing manager at amdocs, says it has deployments with five operators worldwide, two of which are public: Globe Telecom of the Philippines and the Mexican operator Axtel. Globe has prepaid customers on two IN systems and is using the service broker to bring uniformity. Amdocs customers are mainly interested in using the service broker for mobile applications, and prepaid in particular, but the platform is also being used in fixed networks. In Mexico, Axtel is using the system to combine IN applications within the fixed network: VPN and local number portability. Nokia Siemens Networks announced last June that it would supply Vodafone Portugal with a service broker based on an OpenCloud platform and integrated into the operators existing IMS and IN systems. The lack of service broker standards forced Vodafone Group to conduct extensive lab tests, but ultimately the operator was convinced by the benefits. For us the value we are getting [from the service broker] in terms of flexibility and re-use led us to the conclusion to follow the technology, says Fassmer.
essential. if you give me something that can blend my tdM and my iP layer network, well done, but what is the advantage? how am i going to make money? asks Alessandro Vigilante, head of unified communications at colt technology services. the way im going to make money is if i develop applications on top of that; a service broker without a service delivery platform for me is useless. here the service broker transforms the network into more of the it functions that a service delivery platform understands. it is combining network with application interfaces, says Peter Agnew, technical strategy at colt technology services. for us the service broker is more about exposing the networkin and otherwiseto the application world. colt is now lab testing two vendors service broker platforms before selecting a winner by the second quarter of this year. the operator is also trialling the technology as part of an intelligent presence service enabled using a service
12
delivery platform. Vigilante cites the example of a check being carried out when a user receives a call to see if that user is logged into their laptop and connected to the company network. if so, the user will likely be at their desk and the PbX will ring the users phone. if the Pc is idle, i might want to divert the call to the mobile, without the user doing anything, says Vigilante. if the user is not logged on, the exchange server can be checked to confirm that the user is out of the office and if so divert the call to voicemail. the service delivery platform is the glue between the exchange server, the PbX and our network, adds Vigilante. service brokers can be implemented as a standalone platform or in a distributed manner. standalone service brokers are offered by vendors such as Aepona, Amdocs and Metaswitch as well as the other founders of the service broker forum (see box). Alcatel-lucent, in contrast, argues that a standalone product
is not always the best solution. there is absolutely a role [for the service broker], says brad nicholas, product leader, social communications and application platforms at Alcatellucent. it is a fairly sophisticated element; it has different capabilities depending on the nature of the network and the problem being solved. but for nicholas it is a fallacy that the service broker is appropriate as a standalone box for every application. standalone boxes will be appropriate for several years and for a specific set of problems, he says. Alcatel-lucent is supplying standalone service broker technology to mobile operators for in mediation. based on its modular convergent application server (mcAs), the platform can be used for in, iMs and in/iMs hybrid networks. but in Alcatel-lucents experience, while operators have common brokering requirements, each has customer-specific implementations. Alcatel-lucent says with its existing in deployments it can address these custom requirements, while standalone vendors must adapt their generic platform. the standalone service broker vendors counter that they have all the tools, libraries and experience needed for their platforms to address these specific operator needs. even when the in is finally retired by operators, service broker technology will still have a role. the service broker provides core iMs functions, so even in an all-iMs world, which is utopian right now, you would still need portions of the service broker, says Joe Mcgarvey, principal analyst, iP services infrastructure, at current Analysis. but for bridging, the service brokers role is limited. the service broker creates a bridge between a legacy and a next-gen iMs world, and eventually that is not going to be needed, but that period is long enough to justify investment in the product category, says Mcgarvey. for colts Agnew, even when iMs deployment becomes mainstream, the service broker will still have a role. there is still a lot of the world that is not going to be [adopting] iMs but [will still be] web services-based, he says. n
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January marked further setbacks to the Eu-backed broadcast mobile TV standard DVB-H. So where now for operators and their mobile TV strategies? By Ian Kemp
M O B I L E T V S T R AT E G I E S
roadcast mobile tV services increasingly are set to play a supporting role in western operators service portfolios rather than becoming the primary revenue driver proponents had originally hoped. compounding matters for operators, new reports suggest in many markets telcos are likely to play second fiddle to tV broadcasters and internet companies that specialise in on-demand programming and free or inexpensive content. the new year has marked further blows to the european Union-backed broadcast mobile tV standard dVb-h. in January Virgin Mobile announced it will no longer launch mobile tV services based on dVb-h in france in the autumn; Virgin was among 13 broadcasters and operators authorised by media regulator csA last April to provide dVb-h servicesalthough orange, sfr, bouygues and free all last year said they will not invest in the technology. the Virgin Mobile decision was swiftly followed by irish regulator comreg scrapping plans to offer a mobile broadcast tV licence due to a lack of interest from operators, despite a trial of dVb-h services by o2 in ireland as long ago as 2007. Perhaps most significantly, telekom Austria, orange and hutchison 3g almost unnoticed pulled the plug on their dVb-h services over Media broadcasts network in Austria on 31 december, having reportedly signed up fewer than 15,000 customers in total in two years. Many operators plans to build dedicated broadcast networks are cooling, particularly as they continue to invest in broadband mobile infrastructure. A recent report from strand consult highlights that fewer than a quarter of dVb-h trials over the past five years have resulted in commercial services, and only a handful of those in major markets (see table above right). some of those commercial services have since been switched off: swisscom last March axed its service after
14
less than two years. strand consult says Media broadcasts network in Austria cost around E40 million, and says the revenue sharing model between it, the operators and content providers could not be sustained given the E7 per-month cost to subscribers; whats more, customers could get on-demand tV services as part of their mobile broadband package for a lower cost, it says. there is no market for dVb-h, John strand, ceo of strand consult told Total Telecom Plus. there is no reason to invest in a parallel network. strand consult says operators mobile tV services in future will be driven by streamed services over mobile broadbandpredominantly hsdPA/hsUPA and lterather than dedicated dVb-h broadcast networks. in the companys report, The Moment of TruthA Portrait of the Mobile TV Market, the analysts add: Almost all operators will view a dVb-h network as a competitor to their own UMts/lte networks and they would naturally prefer to use the transmission revenue to [recoup] their own mobile network investments, rather than send money to a dVb-h provider.
March arguably will mark the biggest blow to broadcast mobile tV to date when Qualcomm shuts down its nationwide flo service in the Us having signed up fewer than 1 million subscribers. Qualcomm in december announced it will sell its 700-Mhz spectrum used for broadcast tV for Us$1.93 billion to At&t, which will use it to bolster its lte service rollout. nevertheless, Abi research forecasts worldwide adoption of mobile tV services will accelerate in the period 20122015 reaching total revenues of more than Us$20 billion. both Abi and strand consult see broadcast companies playing an increasing role. Mobile network operators have been hampered by their lack of media industry experience, by mobile broadcasting rights and premium content, says Abi research principal analyst fritz Jordan in the report Mobile TV Services. Also, there are still few mobile devices containing the chipset required to pick up free-to-air mobile broadcast tV services. strand consult says just one dVb-h handset was launched last year, compared to two in 2009 and eight in 2008 when
There is no market for DVB-H. There is no reason to invest in a parallel network

Total end-user revenues, mobile streamed and broadcast TV ($ millions)
$7,000
n Streamed n broadcast
$0
2009
2015
Source: Juniper research
Commercial DVB-H launches (2006-2010)

country albania austria finland finland India Indonesia Iraq Italy Italy Italy Kenya malaysia morocco Namibia the Netherlands Nigeria Philippines Poland Switzerland ukraine Vietnam DVB-H Provider digitALb Media broadcast Mobiili-tV dnA-oy doordarshan global Mediacom Mobision 3 italia tim tV Vodafone Multichoice Kenya u Mobile snrt Multichoice KPn Mtn smart communications info-tV-FM swisscom ukrainian digital tV network Vtc commercial service december 2006 May 2008 december 2006 october 2009 May 2007 August 2009 May 2009 June 2006 June 2006 december 2006 october 2007 2007 May 2008 May 2008 June 2008 september 2007 July 2007 september 2009 June 2008 March 2007 december 2006
Source: DVb Project / Strand Consult
dVb-h was hyped the most. in addition to limited and expensive handsets, the analyst company cites a long list of factors that will threaten dedicated paid-for broadcast services such as dVb-h, including: free content becoming more prevalent; the growing popularity of on-demand programming; end users increasingly wanting to interact with, and have shorter, programming; and a significant increase in streaming services as data transmission prices continue to decrease. indeed wifi and broadband networks are set to account for the overwhelming proportion of operators tV services, agree analyst companies, driven by the rise in uptake of streamed services and smartphones. Juniper research in another report, Mobile TV ApplicationsServices and Opportunities 2010-2015, forecasts total end-user revenues from streamed and broadcast tV services will rise from Us$3.2 billion in 2009 to nearly $7 billion by 2015; significantly, it says streamed tV services will account for the overwhelming majority of those revenues (see chart left). even in the two markets where mobile broadcast pay-tV services
are relatively well establishedsouth korea [where dMb technology is used] and italy, launching in May 2005 and June 2006 respectivelypenetration is just 2.0% and 1.4% respectively, says report author, windsor holden. the market opportunity for mobile operators will be further fragmented by the launch of new mobile devices, in addition to the europe-wide digital switchover enabling broadcasters to simulcast mobile and terrestrial tV services. since mobile tV wont be just the province of cellular operators but also of broadcast tV providers we will see more tV-centric mobile devices: automotive infotainment systems, media tablets, Mids [mobile internet devices] and netbooks, says Jordan in the Abi report. Mobile consumers wont be forced to go through a mobile operator and have to pay for voice, messaging, email and internet plans first, just to get mobile tV. Analyst companies including Abi and strand consult say Pcs and other portable devices, using dVb-t receivers to provide digital terrestrial broadcast tV, could compete directly with dVb-h.
so where now for operators and their mobile tV business models? last June Total Telecom Plus looked at mobile tV strategies including free services, and strand consult in its report outlines the alternatives for operators: one option is to partner with a third-party mobile tV broadcaster to deliver content over existing networks, as operators such as 3 in sweden and denmark, t-Mobile in germany and Austria and telenor are already doing. strand consult says mobile network operators do not need to invest in mobile tV infrastructure in addition to their broadband investment. it takes the example of sweden and says an average mobile tV customer with streamed tV over mobile networks consumes around 100 Mb to 200 Mb of data per month, typically included in the mobile tV subscription. that compares to the average data consumption for a mobile broadband customer in sweden of just under 2,000 Mb per month. it [is] unlikely that mobile tV will require increased infrastructure investments in mobile networks, concludes the report. we believe that there is justifiable evidence to state that mobile operators can most probably handle their mobile tV traffic within the existing framework of their mobile broadband strategy. but there are signs that operators will continue to manage levels of interactivity, including downloads of video and tV programming, in order to control data usage on their networks. last year operators including At&t in the Us, and o2, 3 and Vodafone in the Uk scrapped unlimited data plans in favour of tiered caps. And last month t-Mobile Uk said it will reduce the data cap for new customers to 500 Mb, down from 3 gigabytes for some existing smartphone users with contracts. our Mobile broadband and internet on your phone service is best used for browsing, which means looking at your favourite web siteschecking your email and looking for information, but not watching videos or downloading files, t-Mobile Uk said in a statement. if you want to download, stream and watch video clips,
15
save that stuff for your home broadband. ericsson forecasts mobile broadband subscribers globally will reach 1 billion this year, up from 500 million in 2010. but it seems a small number of users still consume the majority of bandwidth: a new survey from mobile traffic management company bytemobile says video accounted for over 40% of total wireless network traffic worldwide last year, but 90% of that traffic was consumed by just 10% of subscribers. operators hope to alleviate some of the traffic burden as they roll out lte networks, and that could also herald a new opportunity for broadcast mobile services according to analysts. strand consult says multicast technology MbMs (Multimedia broadcast and Multicast services) can significantly reduce network load compared to unicast services, and because it delivers broadcast tV on existing gsM/UMts mobile
networks is far more economic than dVb-h. one advantage of MbMs is that it has a built-in return channel as part of its standard, but just like dVb-h it is not an on-demand technology, says the analyst companys report. the disadvantage compared to dVb-h is that it uses mobile network capacity, but that capacity is only used while it is actually broadcasting and is thereby dynamic. Pccw Mobile in hong kong currently offers mobile tV based on MbMs. but the bigger threat to dVb-h could come from new broadcast standard Mbsfn (MbMs single frequency network) on operators lte networks, says strand consult. it can be implemented as a broadcast and unicast service simultaneously, making video-on-demand and other tailored services possible: the lte standard includes e-MbMs (enhanced MbMs), which allows the broadcasting of mobile tV over lte
networks, thereby making lte a direct competitor to dVb-h. strand consult also has calculated business cases to estimate how many customers a mobile tV provider could need to gain a 10% return on capital invested in different technologies. it says a dVb-h solution would typically require around 390,000 mobile tV customers to give a return on infrastructure investments and to cover variable content costs, compared to 170,000 for MbMs and as few as 11,000 for existing mobile broadband networks. All the while europes operators and governments are struggling to make the dVb-h business case stack up. in another key market, germany, state media authorities are expected to reach a decision in March on whether to give dVb-h a second chance. the Mobile 3.0 consortium was forced to hand back its dVb-h licence in germany towards the end of 2008. n
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Cloud Services - 29 March How should operators provide cloud services to enterprises? Do they compete with aggregators and IT companies or is partnership the way forward? The Content Battle - 19 May Recent discussions around a two-tier Internet have reawakened the debate about customer satisfaction, maximising the commercial opportunities of content and content delivery networks. Mobile Traffic Offloading - 13 July Demand for smart devices and explosive growth in data usage are grinding mobile networks to a halt. The only choice is to offload traffic: Total Telecom looks at the options. mHealth Update - 14 September mHealth is revolutionising healthcare on every level - social, environmental, and economic. What are the opportunities for operators? Global 100 Operators - 18 October In 2010 we predicted a shake up in the global operator rankings due to M&A activity. As the 2011 report comes to market, we examine whether these changes have materialised and look at the current drivers behind the new rankings. For more information or to book your place, please contact sales@totaltele.com
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Fixed broadband subscribers reached 508.76 million globally in the third quarter of 2010, up 11.94% year-on-year from 454.51 million, says Point topic. some 14.26 million subscribers were added in the third quarter and 54.25 million over the past 12 months. china and the us together were home to 41% of fixed broadband subscribers worldwide, with 124 million and 85.7 million respectively. iPtV subscribers worldwide reached 41.89 million, representing 36.7% growth in the year to the end of september and 11.25 million net additions. Fibre (Fttx) was used by 79.76 million broadband subscribers (some 15.68% of the total) compared to 320 million using dsL (63.41%) and 100 million using cable modems (20.4%). Asia represents 81% of the Fttx market or some 56.98 million lines: china leads the way with 25.8 million subscribers, followed by Japan with 19.13, south Korea with 9.3 million and the us with 6.25 million. Fixed broadband subscribers, selected countries
130 120 110 100 90 80 70 60 50 40 30 20 10 0 n 2Q10 n 3Q10
Internet users in China, some 66.2% of them mobile Internet users. (China Internet Network Information Center) several new reports forecast healthy mobile service revenue growth over the next few years, driven largely by mobile broadband and messaging. infonetics research estimates mobile service revenues will reach Us$870 billion in 2014, with mobile broadband service revenue the fastest rising segment with a 25% compound annual growth rate from 2009 to 2014. but it says voice will still account for some 60% of total revenues by 2014, with the remainder split almost evenly between sMs/ MMs and mobile broadband. infonetics says global mobile service revenue grew 6.5% in the first half of last year compared to the same period in 2009. Another report, from strategy Analytics, says global mobile service revenue will grow 4% in 2011. And informa has issued a report that says worldwide sMs revenues will rise from $105.5 billion in 2010 to $136.9 billion in 2015, with the number of messages increasing from five trillion in 2010 to 8.7 trillion in 2015. sMs accounted for 80% of data revenues in 2010.
457 million
4th Floor, Welken House, 10-11 Charterhouse Square, London EC1M 6EH +44 (0)20 7608 7030; newsdesk@totaltele.com total tElEcom PluS Ian Kemp Editor michelle young art Editor total tElEcom mary lennighan Editor Nick Wood assistant Editor tim charters Web Developer
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contributing editors roy rubenstein royruben@netvision.net.il Israel Ingrid lunden ingridlunden@gmail.com London Ken Wieland ken2wieland@yahoo.co.uk London Joanne taaffe jtaaffe34@gmail.com France
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HEaD OFFICE, LONDON, uK Nick carter nick.carter@totaltele.com Sales Manager +44 (0)20 7608 7065 Gordon White gordon.white@totaltele.com Sales Manager +44 (0)20 7608 7041 uNITED STaTES aND CaNaDa KCS International T +1 717 397 7100 F +1 717 397 7800 Karen c Smith-Kernc East KarenKCS@aol.com alan Kernc West & Canada AlanKCS@aol.com JaPaN Hiroko Kujime Pacific Business +81-3-3661-6139
Millions
kujime-pbi@gol.com T +81-3-3661-6138 F
China
Japan
S Korea
Germany
France
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uS
uK
Italy
brazil
Source: Point Topic
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tally Judge Marketing Manager ruth clark Marketing Executive
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Total global advertising spend across all mobile channels in 2015, up from $3.1 billion in 2010. (Juniper Research)
$11.5 bn
3G penetration among wireless subscribers

telegeographys globalcomms database shows that north Korea has the highest percentage of 3g subscribers, with 99.9% of the countrys wireless users (there are just 301,399 of them) connected to a 3g network. it is followed by Japan, where 94.6% of all wireless users are connected to 3g platforms, south Korea (71.7%), Australia (64.6%) and taiwan (58.1%). sweden is the only non-Asia-Pacific country to make it into the top six, with 55.4% of wireless users connected to a 3g network, while the us is 24th with 31.4%.
100% 80% 60% 40% 20% 0% n 3G as % of total subs
EVENtS
charles Georgiou Project Manager
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aleisha Bryant aleisha.bryant@terrapinn.com Customer Services Executive +44 (0) 7608 7042 or subscribe online at: www.subscription.co.uk/totaltelecom MaNaGEMENT rob chambers Publisher Greg Hitchen Chief Executive Officer
app store downloads
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gartner forecasts worldwide mobile application store revenues will surpass Us$15.1 billion this year, up from $5.2 billion in 2010, both from end users buying applications and apps themselves generating advertising revenues for developers. Mobile app store downloads will reach 17.7 billion this year, up from 8.2 billion in 2010, and in total gartner estimates some 185 billion apps will have been downloaded by the end of 2014 since the first one in July 2008.
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leading edge
A new age of smart mobile Internet begins
The new era of smartphones and mobile tablets is beginning to unfold. Industry analysts expect 330 million new smartphones to be sold in 2011, as well as 42 million tablets (twice the number sold in 2010). Since smartphone users consume 10 times more bandwidth than others, mobile carriers face clear challenges in the years ahead. New 3G and 4G networks are coming on stream to address bandwidth and capacity needs. But in the long run, delivering the mobile Internet will require more bandwidth and more intelligence. To learn more about our next-generation platform thats purpose-built for the needs of the mobile Internet, and new professional services that deliver actionable intelligence to enable better decisions and maximize profit, see Tellabs at Mobile World Congress in Barcelona, Spain, Feb. 14-17, at stand 2A47 in Hall 2. Customers around the world have chosen Tellabs Mobile Solutions for more than 160 networks. In Asia-Pacific, were helping customers succeed in the worlds fastest-growing mobile markets, with millions of new subscribers added each month. Keeping up with growth while reining in costs is how we help customers succeed. VMS Mobifones new mobile backhaul network handles 3G and more. Vietnams largest carrier is rolling out a new mobile backhaul network for 3G, enabling it to continue rapid expansion (page 8). Soon, VMSs 2G traffic will roll on to the same backhaul network. The result: 30% savings on mobile backhaul. And theres a bonus: because its packet-based, VMSs backhaul network is ready for 4G as well. Whats ahead in mobile communications? Our panel of industry analysts foresees more speed, more value for users and more service innovations in 2011 (page 6). Not only will services be faster, so will the rate of change. One analyst foresees more than 1.2 billion new users of mobile Internet services by the year 2014. The trend toward greener networks and operations continues. Many service providers are taking steps to make their networks, facilities and vehicles more energy-efficient. A leader in the green movement is Comcast, which is pushing fiber deeper into its U.S. network as the company embraces green wherever it makes good business sense (page 14).
In Asia-Pacific, were helping customers succeed in the worlds fastest-growing mobile markets.
Sanjay Patel, Vice President Asia Pacific
Leapfrogging a generation of technology offers a tremendous upside. Tellabs is working with universities and with France Telecom on SARDANA, a new optical access technology that reduces capital costs by converging metro and access networks (page 12). SARDANA offers 32 times more bandwidth per fiber with 3 times the reach of todays passive optical networks. Our new technology will enable service providers to operate with fewer central offices and meet the needs of mobile backhaul networks too. As 2011 and the Year of the Rabbit begin, we at Tellabs wish you a Happy New Year.
Sanjay Patel Vice President Asia Pacific
TELLABS INSIGHT Q1
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Not All Futurecom Attendees See the Light
At Futurecom So Paulo in October 2010, no one was disputing the fact that service providers have their hands full trying to keep up with Internet traffic. So it was surprising that a Tellabs poll of 400 attendees found that so few have gone optical. Only 18% of respondents have deployed packet technology, and even fewer are using DWDM. Service providers are missing an opportunity by not incorporating packet optical transport technology into either the core or metro part of their networks, Juan Luis Balbas, Tellabs director of technology for Latin America and the Caribbean, recently blogged. One potential barrier to adoption is the perception that core IP networks have a high total cost of ownership. Yet service providers can reduce that TCO by offloading from the routers 80% of all the IP traffic traversing their core networks, Balbas said. Because that 80% consumer Internet, IPTV, VoIP and VoD services typically goes to only one or two peering points in a given metropolitan area, it doesnt need to go through the routers. That router-bypass strategy can save 51%-75% of CapEx. Yet only 6% of Futurecom survey respondents believed that those savings were achievable. Operators willing to buck that conventional wisdom could slash their overhead costs to gain a competitive advantage. For the rest of the Futurecom survey results and Balbas analysis, visit www.tellabs.com/blog and click on A Missed Optical Opportunity.
GLOBETELECOM SHAKESUPTHE PHILIPPINES BROADBAND MARKET

We came up with what we thought would be the ideal network, Jesus Romero, head of enterprise segments at Globe Telecom, told Insight nearly a year ago. Filipinos clearly agree: Since then, Globes broadband customer base nearly doubled to more than 1 million. Network upgrades are a major reason for that growth. In 2008, the operators Globe Business unit deployed an MPLS-enabled IP core network based on the Tellabs 8800 Multiservice Router Series. That upgrade meant Globe Business now could use a single platform to maintain its legacy ATM/Frame Relay revenue while offering new Ethernet and IP services. For an inside look at Globes transformation, visit www.tellabs.com/ insight and check out An ICONic Network in the 2Q 2010 issue.
TryafewquestionsfromtheFuturecomSoPaulosurveyandseehowyourresponses comparewithwhatmostattendeessaid.ThenfindoutwhatTellabssaysservice providerscanreasonablyexpectinreal-worlddeployments. How much CapEx can you save using packet optical transport to bypass core routers for Internet, VoIP and IPTV traffic? 28% of Futurecom attendees surveyed said 15%-50%, and 18% said less than 15%. Tellabs finds that service providers can reasonably expect 51%-75%. How much energy can you save using packet optical transport to bypass core routers for Internet, VoIP and IPTV traffic? 22% said 10%, and another 22% said 30%. Only 4% said 65%, which is the amount that Tellabs says service providers can reasonably expect. How much space can you save using packet optical transport to bypass core routers for Internet, VoIP and IPTV traffic? 30% said 15%50%, and 16% said less than 15%. Tellabs achieves 51%-75%.
TELLABS INSIGHT Q1
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MOBILEWORLDCONGRESS Feb. 14-17, Barcelona, Spain MOBILEBACKHAULASIA March 15-17, Bangkok, Thailand CTIA March 21-24, Orlando, Florida
Mobile Backhaul Spending to Hit $117 Billion by 2014

Analysts and vendors such as Tellabs have spent the past few years warning that WiMAX and LTE will send backhaul traffic through the roof. It turns out they werent crying wolf. Case in point: Sprint said some of its WiMAX sites are backhauling 30 times more than their CDMA counterparts. To keep up with that workload, carriers will spend nearly $117 billion on backhaul by 2014, a recent In-Stat report predicts. Thats 41% more than 2009, including everything from new infrastructure to leased lines. Were seeing an emerging industry consensus that the optimal solution involves running fiber optic cable straight to each base station, with the Ethernet protocol as the backhaul, said Chris Kissel, an In-Stat analyst. While this solution is prevalent in areas where fiber is available, the ability to install new fiber is cost-prohibitive in many locations and physically impossible in others. Thats a major reason why In-Stat expects the microwave market to grow from $159 million in 2009 to $874 million by 2014. The firm also predicts: By 2014, more than half of North American backhaul capacity will be dedicated to LTE. In Western Europe, backhaul capacity will triple between 2010 and 2014, to nearly 60,000 Gbps. Ethernet will be the dominant carrier technology by 2014, with 85% usage in base stations. The best solution for each operator depends upon a unique combination of factors, thus expanding the universe of potential solutions and suppliers, Kissel said. One example is Tellabs partnership with Nokia Siemens Networks (NSN), which has enabled interoperability between NSNs FlexiPacket Microwave Radio and the Tellabs 8600 Managed Edge System. By working together, NSN and Tellabs can offer network operators classic OpEx savings, Damian Dalgliesh, head of mobile backhaul sales at NSN, said in a recent Insight article. For the rest of that story, visit www.tellabs.com/insight and check out New Partners Bring New Solutions in the 4Q 2010 issue.
U.S. Teens Text More, Talk Less

American teenagers love SMS: The average teen sends and receives 3,339 text messages per month, up 8% over 2009, according to a recent report from The Nielsen Company. Thats the most of any demographic group. Texting falls off a cliff after age 18, when usage plummets to 1,630 per month. Even so, every demographic group through age 64 is texting more than they did 1 year earlier. Nielsen also found that teens arent a homogenous group. For example, females are the biggest texters, at 4,050 messages per month compared with 2,539 for males. Theres also a big gender difference when it comes to talking. Although males and females are both talking less 14%, to be exact and texting more compared with 2009, girls average 753 minutes per month and males 525. The reasons for textings popularity also have changed. In 2009, teens texted instead of calling because it was fun, Nielsen said. In 2010, fun was still a major motivation, but teens now also identified ease and speed as major reasons why they prefer to text rather than talk. Although texting is coming at the expense of talking, thats not the case when it comes to apps and other data services. Between 2009 and 2010, monthly teen data usage increased from 14 MB to 62 MB, with males using the most: 75 MB. NationalDataUsageAmongTeens
Q2 2009 vs. Q2 2010
Reported Application Usage (Used in Last 30 Days) Picture Messaging/MMS Mobile Internet Software Downloads E-mail Text Alerts 0 10 20
26% 38% 30% 38% 30% 38% 40% 49%
Source: The Nielsen Company
55% 62%
30
40
50
60
70
For more insight, visit www.tellabs.com/blog/index. cfm/2009/6/10/Welcome-to-the-Jungle
TELLABS INSIGHT Q1
Analyst Viewpoint
MoreofEverything, Please...
Operators and their customers want more speed, more value and more innovation. Six top analysts opine on how that will affect the industry in 2011 and beyond.
By Tim Kridel
As the global economic funk grinds on, consumers remain hunkered down with the things that mean the most to them, such as their iPhones and broadband. At the 2010 Tellabs analyst conference, 6 analysts discussed why consumers see value in telecom and how service providers can capitalize on that perception. Following are some highlights from those conversations. An extended video version is available at www.tellabs.com/resources/multimedia. Ray Mota, managing partner for ACG Research: A lot of people really didnt pay attention to the economy. Now they realize that the economy has a major impact on technology. Whats happened is, you move from this concept of what we call mindless consumption of data. A lot of carriers and a lot of enterprises would solve the problem by just throwing more bandwidth at it. Theyre moving to, I need to put more intelligence on the network. With that intelligence comes QoS capability, types of quality. Even in a down economy with less discretionary income, people were willing to spend up to $300 for the iPhone. It wasnt really anything new with that device from a wireless technology perspective. But it created the front-end experience where they
made the device almost like dial tone, where you pick it up, and you can do things. So people are willing to pay for that experience, and theyre willing to pay more. We recently did a survey of about 41 service providers around the world. The No. 1 priority, at least from the executive perspective, was how do we bring more customer value? No. 2 was service innovation: What service innovation is out there, and is there technology to align there to give that business value from that perspective? No. 3 was cost optimization. Those are the 3 priorities from a carrier perspective right now, which was different than what I thought it would be. Its interesting that innovation had a higher priority than cost, even in a down economy. Dana Cooperson, head of Ovums network infrastructure practice: Were seeing some technology shifts. For example, in optical were expecting to see a lot more activity in OTN in 2011. The industrys gone past the debate of do we need OTN? OTN as a technology has been in the network for a long time: Its been used as part of a digital wrapper to allow transport networks to more effectively carry packet traffic, for example. The move to OTN switching is whats new.
TELLABS INSIGHT Q1
Analyst Viewpoint Were seeing two OTN switching trends. One is the inclusion of integrated OTN switching within a platform like the Tellabs 7100 Optical Transport System that does photonics (WDM) along with a bunch of other things, such as SONET SDH and packet aggregation and grooming. The other trend is the OTN switch that lets operators pack the wavelengths more effectively and efficiently so that the traffic can be transported. This big, honking switch is a standalone, multi-terabit switch that will take the place of the old SONET SDH switches and provide a point whereby the traffic can be groomed before it gets onto the long-distance wavelengths. It will also allow router bypass for traffic that does not require routing. The standalone OTN switch is about network efficiency in the deep core, and about having a touch point in the network to look at the different kinds of traffic, Ethernet and so on, as it enters and leaves the core network. Thats a very different application than the integrated OTN switching capability, which is more about improving multiservice, multi-layer efficiency in the metro. Theres also just the need for speed, the need for capacity and scalability. The need for folks like Tellabs to provide 40G/100G capacity wavelengths to their customers is becoming a very, very big thing. Michael Howard, principal analyst and cofounder at Infonetics Research: I think the biggest difference between 2010 and 2011 will be an acceleration of whats been happening. Between this year and 2014, for example, therell be 1.5billion new mobile subscribers, but 1.2billion more mobile broadband subscribers. Mobile broadband is accelerating in all parts of the world. With the increase in devices, and smart devices causing maybe 10times more bandwidth on the backhaul networks, carriers have been rushing to increase the capacity of their backhaul networks. Carriers have been moving to packet backhaul: IP and Ethernet. Its really the only cost-effective solution for the backhaul problem. In 2009, 57% of the spending for backhaul was on Ethernet equipment. In 2010, thats up at 65%.
CapEx: Capital Expenses HSPA: High-Speed Packet Access LTE: Long-Term Evolution OTN: Optical Transport Network QoS: Quality of Service SDH: Synchronous Digital Hierarchy SONET: Synchronous Optical Networking
Eve Griliches, managing partner at ACG Research: One of the things that youve done in the analyst conference is talk about targeted advertising. Thats really where the service providers are going to be making some money. Vendors are going to have to help the service providers do that. They can start adding levels of intelligence into the optical network to enable more of those services. Iain Gillott, founder and president of iGR: The discussion is going to change from what will LTE be like to what is it like. All the people who, like AT&T, were planning it are going to get asked, When are you going to do it? Even though HSPA+ may be 99%, 95% of the way there, it wont be seen as enough by the financial markets or the press. I think the discussions going to change very quickly. Andre Viera, telecom infrastructure program manager at IDC: Theres a bit of a pickup in certain regions in terms of the demand for network infrastructure. Service providers around the globe have been migrating their CapEx from more traditional areas to mobile Internet. Definitely youre going to see that trend continue. Its the touch points that people have in their networks. Everyone around the world now has access to more devices that allow them to be connected to each other. As the touch points increase and the bandwidth for those touch points increases, people are using more and more of that as if they were using their computers in their homes. So its really a fantastic trend thats going on. Because of the personalized use, I see that people are going to have their own personal applications on all the time. They want to stay connected to other people and to whats going on in the world. Theres almost like an umbilical cord to the Internet.
For more insight, visit www.tellabs.com/ resources/multimedia
TELLABS INSIGHT Q1
For VMS MobiFone, MPLS is Key

By Joan Engebretson
Vietnams largest operator turns to Tellabs for a new backhaul strategy as it rolls out 3G.
TELLABS INSIGHT Q1
For VMS Mobifone, MPLS is Key VMSs 2G network relied heavily on leased lines, as well as some SDH and PDH microwave links for backhaul. The operator considered reusing this infrastructure for its 3G Although nearly 1 out of every 2 Vietnamese mobile users backhaul, perhaps enhancing some of it to support Ethernet. are its customers, Vietnam Mobile Telecom Services Nguyen and his team also liked the idea of using MPLS, Company (VMS) isnt content to rest on its laurels. Instead, which can be transported over a variety of physical links, the state-owned operator which sells service under the including SDH and higher-bandwidth, more economical MobiFone brand is aggressively upgrading its network to Ethernet links. MPLS became even more attractive after they stay on top in a market that some analysts forecast will be as learned at the Tellabs workshop that numerous Tier 1 mobile big as Japans by 2014. operators use it to support 2G and 3G backhaul, integrating Backhaul is a prime example. VMS knew it needed to the two networks onto a common packet infrastructure. add backhaul capacity to keep up with customer demand VMS decided to deploy its 3G network in 3 phases. for the bandwidth-intensive data and The initial phase would use ATM multimedia services that its UMTS connectivity for delay-sensitive The Tellabs product is more upgrade would enable. voice and control plane traffic, attractive because it combines But even as it was preparing to with all other traffic running over both ATM and IP packet deploy 3G, VMS also was looking IP. Next, VMS will move the traffic processing in one box, which ahead to 4G, whose all-IP design gives from its TDM-based, legacy 2G operators new options for reducing backhaul network onto the same saves CapEx and OpEx. OpEx, including on the transport side. packetized backhaul infrastructure Nguyen Dang Nguyen, vice For 3G, VMS opted to use a implemented for 3G. In the third president of network planning backhaul network architecture based phase, all 3G traffic would be and management for VMS on the Tellabs 8600 Managed Edge handled as IP. System. That choice has enabled VMS VMS also anticipated eventually to minimize both CapEx and OpEx today while also providing deploying 4G service and wanted to plan its 3G network in the foundation for 4G tomorrow. a way that would simplify the 4G upgrade. In the process, VMS wanted to minimize the cost of leased circuits and AClearChoice:MPLS optimize its existing investment in SDH and PDH microwave VMS first learned about Tellabs approach to mobile backhaul infrastructure. at a workshop that Tellabs conducted for the carrier. After attending the workshop, we realized the important BridgingTwoWorlds considerations and issues involving the transport networks to After carefully considering various options, VMS determined support 3G and 4G services, said Nguyen Dang Nguyen, vice that an MPLS backhaul architecture, centered around president of network planning and management for VMS. We the Tellabs 8600 system, would help it achieve all also understood the scalability and potential of a high-speed, of these goals. Even so, VMS was concerned that its packet-based transmission infrastructure. We assimilated technicians were accustomed to certain maintenance and important concepts for design, planning and dimensioning the troubleshooting capabilities inherent in their traditional transmission architecture for next-generation networks. SDH approachand that MPLS would not support the same capabilities. But the Tellabs 8600 system has an important feature Headquartered in Hanoi, that helped address these concerns: It supports packet MobiFone is the largest loop testing so that even when its using MPLS circuits for telecommunications provider transport, VMS technicians still can measure the circuit in Vietnam, with 41% of the mobile market. performance of these packet-oriented circuits. If there were a problem, this capability would help us identify the problem conveniently and easily so that it could be solved quickly, Nguyen said. EarlyEfficiency VMS chose a network architecture that uses Tellabs 8600 systems installed at 2 types of key anchor points in its backhaul network: Hub Site and RNC Site locales.
TELLABS INSIGHT Q1
For VMS Mobifone, MPLS is Key
Vietnams aged wireline infrastructure cant keep up with its population of more than 87 million.
At the Hub Site locales, some Tellabs 8600 network The Tellabs 8600 Multiservice Routers at the Hub Site elements aggregate traffic from multiple Node Bs. Typically, and RNC Site locales work as a pair to enable legacy traffic the Hub Site-located Tellabs 8600 is connected via a leased and interfaces to be transparently transported over a MPLSFast Ethernet circuit to a second Tellabs 8600 installed next based packet network infrastructure, said Richard Jung, to an RNC. Tellabs strategic business development manager for Vietnam. In other parts of the network, SDH microwave radios The platforms ability to support both IP and ATM traffic connect Hub Site and RNC Site locales. In both scenarios, aggregation was an important reason why VMS chose Tellabs. the Tellabs 8600s use MPLS to communicate with Edge network devices from some other manufacturers are each other. not able to support both traffic types and instead require two In Phase 1 of VMSs 3G network deployment, IP datagrams separate pieces of equipment. handle data traffic, while ATM cells carry delay-sensitive But as Nguyen explained, The Tellabs product is more voice and control plane traffic attractive because it combines both ATM over the MPLS links using and IP packet processing in one box, We are happy with the product Pseudowire (PWE3) emulation. which saves CapEx and OpEx. and the technology and the support The Tellabs 8600 also supports ATM IMA, enabling FastSavings we have received from Tellabs. early termination of ATM IMA The Tellabs 8600 also eliminates the Nguyen Dang Nguyen, vice links, from the Node Bs, at the need to lease expensive SDH circuits president of network planning and Hub Site locales. to support high-bandwidth, best-effort, management for VMS The ATM cells are then Internet-bound mobile traffic, resulting extracted and encapsulated as in additional cost savings. For handling MPLS-based Pseudowire circuits and transported over such traffic, the Fast Ethernet circuits are more economical a packet-based transmission. This approach enables on a cost-per-bit basis than the SDH circuits that VMS is early packetization of the backhaul network, thus phasing out. allows statistical multiplexing to happen closer to the Fast Ethernet also uses bandwidth more efficiently because access network. unlike SDH, it supports statistical multiplexing, eliminating With this design, network transport efficiency is the need to nail the bandwidth of the transmission link like experienced as early as possible in the traffics journey. The PDH/SDH circuits usually do. PWE3 technology will also play an important role when 2G If you lease SDH circuits and groom them using SDH, traffic, based on the TDM framing format, is moved onto the there is no multiplexing gain to talk about when using this new backhaul network in Phase 2. method to transport best effort user traffic, Jung said. You
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For VMS Mobifone, MPLS is Key will burn a lot of bandwidth, and be forced to use the high Node B and the Hub Site-based Tellabs 8600. There, the QoS that is inherent on these leased lines, to transport the RNC performs a phase or frequency time synchronization over datagram traffic that is based on best-effort QoS classes. This the packet based with the Node B base stations. is both wasteful and inefficient. VMS also considered how 4G would impact the 3G Tellabs also maximized the VMS backhaul networks backhaul network. In 4G networks, unlike previous generations, efficiency with a network architecture that uses a single individual BTSs can communicate with one another, rather than Tellabs 8600 at the RNC Site locale to connect to multiple communicating only with the RNC. This capability requires co-located RNCs. This design the backhaul network to support enables a higher speed multipoint IP-VPN, a feature the interface, such as STM-1, Tellabs 8600 includes. between these RNCs and the RNC Site-based Tellabs AtLeast30%BackhaulSavings 8600, while the lower speed Nokia Siemens Networks was E1 connections are terminated chosen for the VMS 3G contract early in the Hub Site locale in 2009 and integrated the Tellabs 8600 node. Tellabs 8600 system for the This approach enables VMS mobile backhaul deployment. to increase the number of Node Several segments of the Bs that can be terminated and network have been operational controlled per RNC, instead of since late that year, with having each RNC terminated additional segments going live VMS Mobifone is excited about modernizing its network to the Node Bs directly with on a regular basis. to 3G and implementing an IP backbone to handle the expected growth. native E1 interfaces. Those E1 The carrier expects to have the interfaces usually are a limited deployment completed by 2011. and expensive resource. VMS plans to move traffic from its 2G network onto the new Apart from using more cost-effective, packet-based backhaul infrastructure in its 2010 3G expansion. leased circuits, VMS also wanted to be able to continue to Nguyen estimated that using the Tellabs 8600 has saved use as much of the companys existing microwave backhaul at least 30% in the costs paid to its wholesale network infrastructure as possible. The solution was to use groups of provider for connectivity. microwave radios to create an SDH ring between the Tellabs Instead of using TDM and separate Ethernet circuits, 8600 anchor points at the Hub Site and RNC Site locations we can aggregate all that traffic onto one transmission link, and to run MPLS over this SDH infrastructure. Nguyen said. It enables VMS to re-use their SDH infrastructure as a Overall savings undoubtedly are even greater when the packet-based network, Jung said. savings created by the multiplexing gain and the ability to This approach provides the best of both worlds: The control more Node Bs per RNC are factored in. packet-based MPLS network has the resiliency and robustness Nguyen is confident that the Tellabs platform will support a of a SDH network, yet it enables the efficient transport of smooth transition when the company moves voice and control packet-based datagram traffic. plane traffic onto IP and when VMS deploys 4G. We are happy with the product and the technology and PhasingOutATM the support we have received from Tellabs, Nguyen said. Beginning in 2012 or 2013, VMS plans to make its 3G backhaul network even more efficient by enabling it to carry 2G: Second Generation OpEx: Operating Expenses delay-sensitive voice and control plane traffic in IP format 3G: Third Generation PDH: Plesiochronous rather than using ATM. Digital Hierarchy 4G: Fourth Generation In order to support this traffic, the backhaul network must QoS: Quality of Service ATM: Asynchronous Transfer Mode RNC: Radio Network Controller be able to support packet synchronization technologies. BTS: Base Transceiver Station SDH: Synchronous Initially the Tellabs 8600 at the Hub Site location will Digital Hierarchy CapEx: Capital Expenses provide synchronization to each Node B over the E1 TDM: Time-Division Multiplexing IMA: Inverse Multiplexing connection to the Node B. over ATM UMTS: Universal Mobile Eventually VMS may use packet synchronization techniques Telecommunications System IP: Internet Protocol VPN: Virtual Private Network such as Synchronous Ethernet or IEEE 1588v2 Precision MPLS: Multiprotocol Label Switching Timing Protocol over the Ethernet connections between each
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SARDANA and the Bandwidth Boom
SARDANAs WDM technology will enable operators to offer premium-priced, high-bandwidth packages to both residential and commercial customers.
Tellabs teams with major operators and researchers to develop next-generation PON.
By Jim Hinckley Goodbye, dark fiber. Hello, new set of challenges. In the enterprise market, bandwidth-intensive applications have become the norm. Businesses are increasingly using videoconferencing and telepresence to save time and travel costs. Meanwhile, consumers are spending more time online playing games, sharing photos and watching videos and increasingly from wireless devices such as smartphones and tablets. That usage has operators scrambling to strike a delicate balance among capacity, speed, scalability, density, resilience and OpEx. Enter the SARDANA consortium, which is approaching a key milestone toward providing operators with new PON-based solutions to stay ahead of bandwidth demands. Short for Scaled Advanced Ring-based passive Dense Access Network Architecture, SARDANA was founded in 2008 with European Commission sponsorship. Tellabs is the only infrastructure vendor in the consortium, whose other members include France Telecoms Orange unit and several major research universities. SARDANA shakes up PON technology and brings the potential for a new suite of high-quality services to our customers, said Dr. Philippe Chanclou, France Telecom manager of advanced access and home networks. Were very excited to start the field trials in Lannion to demonstrate both the urban and rural scenarios of SARDANA.
PassiveConvergence SARDANAs goal is to evolve GPON from the ITU-T G.984 standard to the new ITU-T G.987 standard and beyond. G.984 was notable for both its speed 2.5 Gbps downstream and 1.25 Gbps upstream and its support of non-native transport protocols such as ATM, Ethernet and TDM. But G.984s complexity has limited its deployment. Issued in June 2010, G.987 has become the leading candidate for a FTTH GPON specification, largely because of interest from FSAN, a group of major operators and industry experts. FSANs research into 10G GPON produced the technical designs and system requirements for two classes of service: XG-PON1, which meets the G.987 standard by providing 10 Gbps downstream and 2.5 Gbps up, and XG-PON2, featuring 10 Gbps symmetrical. In response, the SARDANA consortium came together in 2008 to develop a structure for next-generation PON networks. SARDANA merges the access part of todays networks with their core or metro ring, where multiservice Layer 2 and 3 functionalities now reside. The merger extends these capabilities out to locations that currently rely on a CO, including cellular base stations, homes, small businesses and rural areas.
By merging the metro and access parts of their networks, carriers can reduce capital costs.
Dan Kelly, Tellabs executive vice president, global products
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Cover Story SARDANA and the Bandwidth Boom Convergence is what SARDANA is all about, said Dan Kelly, Tellabs executive vice president, global products. By merging the metro and access parts of their networks, carriers can reduce capital costs. Using passive products helps to reduce operating costs, and consolidating locations pares down labor expense, property tax, maintenance and other office-related expenses. SARDANA helps with all that. 24MonthstoCommercialLaunch Consortium members and European Commission representatives got their first demo of SARDANA on October 28, 2010, at the Tellabs facility in Espoo, Finland. SARDANAs public debut will be February 9-11 at the FTTH Council Exhibit in Milan, Italy, where consortium representatives plan to urge the ITU to consider incorporating SARDANA into the NG-PON2 standard.
This is the first step weve had with Tellabs, and it was perfect.
Dr. Philippe Chanclou, France Telecom manager of advanced access and home networks Although SARDANA is at least 24 months from commercial rollout, Tellabs and others are already talking about the applications it can enable or dramatically improve. HDTV, UHDV and 3D TV are some potential consumer beneficiaries, along with holographic telepresence and telemedicine in the business market. The challenge [for service providers] is, how do you deliver more and more services at higher bandwidths and make the economics work when revenue per user is largely fixed? Tellabs Kelly said at the Espoo demo.At Tellabs, we understand that very well, and it challenges us to innovate and drive down costs. PushingtheEnvelope But perhaps the largest, most immediate market opportunity is mobile backhaul, which is struggling to keep up with about 130,000 TB of traffic per month, according to iGR, a research firm. By 2014, the monthly load will hit 990,000 TB. Carriers that use mostly legacy transport protocols for backhaul such as PDH, ATM over PDH or SONET/ SDH have seen their service charges per connection rise significantly more in recent years than those using PON or Ethernet. To rein in their backhaul costs, carriers increasingly are seeking GPON services. The focus [of SARDANA] is on pushing the envelope from a technology perspective: How can we solve bandwidth problems of capacity, density and reach to deliver high-bandwidth services in the metro and access networks? Kelly said. Its a question that just about every major service provider is asking, putting SARDANA in the right place at the right time.
3D: Three Dimensional ATM: Asynchronous Transfer Mode CO: Central Office FSAN: Full Service Access Networks FTTH: Fiber to the Home GPON: Gigabit Passive Optical Network HDTV: HighDefinition TV ITU: International Telecommunication Union NG-PON2: Second Next-Generation Passive Optical Networks ONT: Optical Network Terminal OpEx: Operating Expenses PDH: Plesiochronous Digital Hierarchy PON: Passive Optical Network SDH: Synchronous Digital Hierarchy SONET: Sychnronous Optical Networking TB: Terabyte TDM: Time Division Multiplexing UHDV: Ultra HighDefinition Video WDM: Wave Division Multiplexing XG-PON: 10 Gbps Passive Optical Network
BIGGER,STRONGER,CHEAPER
SARDANAs compatibility with existing GPON technology is one of its benefits. Others include: Fewer COs, reducing OpEx. 100 km (62 mile) signal range, more than triple the reach of todays PONs. 32 times more bandwidth on a single-mode fiber than todays best PONs provide. SARDANA uses WDM to drive up to 32 10 Gbps wavelengths down a fiber where only one currently goes. This breakthrough delivers 128 times the bandwidth of G.984 GPON and will enable operators offer premium-priced, high-bandwidth packages to large commercial customers. For smaller businesses and residential customers, SARDANA provides higher split ratios: up to 1,024 subscribers per PON. Cheaper, simpler installations. Todays optical network connections rely on a pair of laser transmitters for one specific frequency of light to and from the end-users location. SARDANA replaces these transmitters, which can cost as much as $1,000 each, with smaller, colorless ONTs. Because they have no laser and need no tuning, these passive ONTs are much less expensive and can manage all 32 incoming wavelengths. That slashes inventory requirements. Greater network resiliency, thanks to a dual-ring architecture. This also gives PONs greater stability comparable to Ethernet and legacy SONET platforms. More bandwidth and network intelligence for smart mobile backhaul applications. Only optical networks can keep up with skyrocketing mobile data traffic.
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Comcast Goes Green

From its plant to its vehicles, Americas largest cable operator is ferreting out inefficiency, saving millions of dollars annually so far.
By Dawn Bushaus
Comcasts new headquarters is the largest LEED-certified building in the United States. Its highly efficient design is one of the ways that Comcast is reducing its $300 millionplus annual electric bill.
Visitors to the 58-story Comcast Center headquarters building in Philadelphia might be impressed by the buildings striking architecture and seasonal gardens. But they probably dont know that these features arent just for show. Instead, they help make the building more energy-efficient just one of the many ways Comcast is going green. Because of data centers, the information and communications technology (ICT) industry is responsible for 2% of the worlds carbon output, which puts it on par with the airline industry. A 2007 Environmental Protection Agency report to Congress predicted that this year, annual U.S. data center power consumption will double to 100 billion kilowatt hours. Thats $7.4 billion a year. As the largest cable operator in the United States, Comcast feels the pain of energy consumption. We have electric bills in excess of $300 million annually, so there is obviously an opportunity for efficient solutions that can help us address that, said Sam Chernak, senior vice president of network architecture at Comcast.
GreenisGood Comcast also sees an opportunity for it and other ICT companies to play a leadership role in reducing energy consumption. A 2008 report from The Climate Group, an independent not-for-profit organization dedicated to advancing technology that cuts global carbon emissions, shows that while ICTs 2% carbon footprint will nearly double by 2020, the sectors ability to offer products and services that reduce energy consumption could cut carbon emissions 5-fold. That would save 7.8 Giga-tons of carbon dioxide.
TELLABS INSIGHT Q1
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Comcast Goes Green Comcast has embarked on several initiatives to reduce fourth-largest fleet in the United States, so improving fuel energy consumption, which promises a 2-fold benefit of economy is important. Since 2009, 80% of all Comcast saving money and helping the company become a better vehicles purchased have been flex-fuel-capable, and all corporate citizen. passenger vehicles have been hybrids, Chernak said. We will embrace green wherever it makes good business Taking employees cars off the roads can also reduce sense, Chernak said. Comcasts carbon footprint. Currently about 5% of its In 2009, Comcast formed a sustainability working group 20,000 customer service representatives are participating to identify ways the company can become more energy in a work-at-home trial. The preliminary results are efficient. The company also initiated a young leadership encouraging. program for rising-star employees and gave them the task of identifying ways WasteNot,WantNot Comcast can improve. Waste reduction is Comcasts fourth area Collectively, those efforts have of focus. The companys Philadelphia identified 4 main target areas: headquarters is the largest Leadership in Energy-efficiency in buildings, such Energy and Environmental Design (LEED) as data centers, and in the network certified building in the United States. Better fleet management Comcast also provides recycling bins Increased telecommuting throughout the building. Waste reduction Comcast encourages paperless billing, as In terms of energy efficiency, well, and about 20% of its customers have Comcast is working to improve adopted it. The company also has moved to airflow and upgrade air-conditioning e-proxies for shareholder meetings, reducing equipment in its 8 data centers, which paper use by 85%. will result in $2 million in savings Comcast has not yet set specific By definition there is over the next 5 years, Chernak said. carbon-reduction goals, nor has it begun The company also is rolling out a using alternative forms of energy such an inherent greening of PC-management program that will the network as you push as solar, wind or fuel cells. But those encourage employees to power down options are on the horizon, Chernak fiber deeper. computers when they leave for the day. said. The company is also looking into Sam Chernak, senior how it can help its customers use cable vice president of network FibersCarbonFootprint technology to manage their homes architecture at Comcast On the network side, Comcast continues energy consumption. its push to replace power-hungry coaxial According to The Climate Groups cable with fiber. Its plant currently Smart 2020 report, ICT companies such consists of about 600,000 miles of HFC. as Comcast could help save $800 billion annually in energy The biggest power consumer for us is the plant because use by enabling applications such as smart buildings and there is so much of it, Chernak said. We are taking this homes and smart electricity grids. The report also anticipates passive, non-powered piece of glass and laying it into the savings from replacing physical products, such as servers, network, so by definition there is an inherent greening of the with virtual ones. network as you push fiber deeper. We have this wonderful broadband connection into 17 The company is also spearheading an effort to develop a million homes in America, so theres a natural extension of next-generation edge device called the Converged Multiservice our services to include home, light and energy management, Access Platform (CMAP), which merges QAM channel systems Chernak said. with CMTSs. Comcasts goal is to deliver tools to help consumers With the CMAP, many more subscribers could be be as green as they want to be. Ultimately, the world provisioned per box, and the power profile on a perwill find its green equilibrium on both the consumer and subscriber basis is a fraction of what it has been historically, corporate sides. Chernak said. CMTS: Cable Modem Termination System Comcast plans to have a CMAP prototype in its lab early HFC: Hybrid Fiber Coax this year, with deployment slated for late 2011 or early 2012. ICT: Information and Communications Technology Better vehicle fleet management is another goal for QAM: Quadrature Amplitude Modulation Comcast. With 38,000 vehicles, the company operates the
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Spending Cycles: There Are Signs That Carrier Spend Will Pick Up Again

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Spending Cycles: There Are Signs That Carrier Spend Will Pick Up Again

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IN

BuSINES S aNalySIS for tElEcomS ProfES SIoNalS

Ian Kemp Editor Total Telecom Plus

There are signs that carrier spend will pick up again

Galileo cost rises again

Nokia comes without music

Verizon gets iPhone

Orange eyes video site

Qualcomm buys chip maker

Mobile merger in the balance

Telefonica mobile money deal

Huawei blocks NSN deal

Asian mobile alliance

Polkomtel sale process begins

Etisalat-Zain deal challenge

International long distance and Skype traffic

Orange NFC project

Source: TeleGeography / PriMetrica

Skype extends video calling

India gets number portability

current wifi partner, the cloud, for some 50 million.

TeliaSonera network deals

Tata appoints new CEO

Google replaces Schmidt

SK Telecom picks LTE vendors

Australia fibre deals

New head for Neotel

Ericsson wins China deal

LTE reaches Africa

New Telstra executive

TalkTalk job cuts

India national broadband

Sprint appoints new CFO

UK allows spectrum refarming

MySpace job cuts

HTC hires Sony Ericsson VP

Free WiFi from O2

Change at top for MTN

SUBSEA CABLE NETWORKS

Investment in African undersea cables

African undersea cable projects

Mediterranean Undersea Cables

Ann Algeaba ria Biz Tunerte isia Trip Liby oli a

N.B. Several smaller Mediterranean cables not shown.

Mumbai India Chennai India Cochin India

Mogadishu Somalia Mombasa Kenya Dar Es Salaam Tanzania

Sao Tome and Principe

Pointe Noir, Congo Muanda, DRC

Sub-Saharan Undersea Cables

Mtunzini South Africa Melkbosstrand South Africa

African Undersea Cables (2012)

10 Gigabit-per-second wavelength prices (at June 2010)

Median monthly lease price (uS$)

$90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 0

International Internet bandwidth growth

n Trans-Pacific n Intra-asia n Trans-atlantic n uS Latin america n Intra-European

Peak usage of Internet bandwidth

80% 70% 60% 50% 40% 30% 20% 10% 0%

annual growth rate

International Internet bandwidth (Tbps)

Timeline: recent subsea cable developments

Entries now open

GLOBETELECOM SHAKESUPTHE PHILIPPINES BROADBAND MARKET