ITU workshop, 07/09/03 — 1 All rights reserved © 2003, Alcatel An Industry View of NGN Wireline...

ITU workshop, 07/09/03 — 1 All rights reserved © 2003, Alcatel

An Industry View of NGN Wireline

Geneva July 9, 2003Jean-Pierre LartigueVP Business Strategy, Fixed

Networks


Optical Core

Multi-protocol IP/MPLS/ATM

Core

Towards a Smarter Consolidated Network

ConsolidatedConsolidatedServices PoPServices PoP

Any Any AccessAccess

Any Any ServiceService

AnyAnyBackboneBackbone

Metro Ethernet Aggr.

Multi-serviceATM Aggr.

Multi-serviceOptical Aggr.

BroadbandAccess

IP/MPLSCore

Networkmanagement

SwitchingEvolution

Traditional VPNsLeased Lines

Internet AccessIP-VPN

IP-VPNEthernet VPN

Hosted Services

Services for Mission Critical Business Aplications

RoutingEvolution

Application servicesApplication services

Edge network

MPLS

G-MPLSG-MPLS


NGN Wireline/Voice, an evasive market?

Softswitching investment Market by IDC

0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2001 2002 2003 2004 2005

Million $

June 2000 August 2001 July 2002

DelayDelay

Declin

eD

eclin

e


NGN Wireline covers three market segments

> Competitive Voice:Competitive Voice: Long Distance Bypass & local competitive basic IP Telephony

> Broadband NGN:Broadband NGN: New business and high end residential Broadband services, including Voice + services

> PSTN evolution:PSTN evolution: Incumbents’ traditional Voice Local & Long Distance/transit services

Different dynamics - different solutions requirements

Common NGN building blocks


Broadband seen as a key catalyst across segments

0

1000

2000

3000

4000

2001 2002 2003 2004 2005 2006

PSTN evolution

BB NGN

Competitive voice

WW NGN

CAPEX(Mio €)

Source: Conservative analysts perspectives for Softswitch, C-AGW and TGW market

WW NGN Voice Equipment market (1)

Voice over BB competition

New BB services•Managed

communications.•Multimedia

PSTN & BB convergence


(1) Regulation, competition offering and perceived end-users needs

Market perspective for Competitive VoiceAn early growing niche market

> Long Distance Bypass:Long Distance Bypass: a proven NGN voice service

• Alternative Long Distance for Competitive operators

• Bypass to out-of-region for incumbents

> Internet (PC) TelephonyInternet (PC) Telephony deployed in some countries

• Niche service to High End residential or businesses

> Emerging Residential Voice over BroadbandResidential Voice over Broadband competition

• Yahoo BB Japan (1.6 Mio Subs), Voice over Cable (2.9 Mio Subs)

• Cheap basic telephony bundled with High Speed Internet

• Yahoo example: $3.3/subs/month & $0.06/3minutes (local, LD,US)


Market perspective for Broadband NGN Premises of a new Broadband Economy market

Source: Jefferies & Company, RHK, Yankee Group

Subsc

ribers

(0

00

)

Total CAGR = 47%Total CAGR = 47%

DSL49%CAGR

Cable41%CAGR

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2001 2002 2003 2004 2005

DSLCableSatelliteFWAFTTU/Other

DSL annualized service provider revenue end 2002 > 14 Bn € Starts to compensate for voice revenues erosion Growth rate continues at > 2M lines per month


Market perspective for Broadband Grow Broadband services value in three waves

TIME

Business Access

High Speed Internet access

$

Residential Multimedia

Today

Address new audiences (PC, TV, console) with new services (gaming, personal communication,

content sharing)

Move aggressively into

HSI

Build on existing infrastructure & start with underserved SOHO segment

Observed timeframe to generate positive contribution• For an incremental Consumer: 12 to 14 months• For an incremental Business subscriber: 4 to 6 months


Market perspective for Broadband NGN Raising Managed Communications for Small businesses

End-user segments

ServicesProfile

Full hosting seekers(45%)

• Hosted IP PBx• Web call centers• Web hosting• Hosted messaging• IP Videoconferencing• E-commerce

Conservatives(25%)

• Traditional voice• High Speed Internet

Average access needs - no real leading service

Networkers(30%)

• IP & Voice VPNs• Web call centers• IP Videoconferencing

Remote worker or Multi site & remote

Stronger interest in turn-key solutions

Source: Alcatel end-users analysis

Secu

rity & m

ob

ile office


Market perspective for Broadband NGN Telephony, embedded in BB residential services

Music download VOD

Video/audio streaming

On-line gaming

Entertainment content

E-mail, chat, and instant message

Unified messaging

PC- and cable-based telephony

Video conferencing

Commun-ication

Walled Gardens, security

Virtual models and toursEnabling /

Productivity tools

“Click and talk“ audio/video support On-line care

Embedded BB NGN telephony services

Wired &

unwired

connectio

n


Market perspective for Broadband NGN Home networking: a key dimension for futureAlice’s Video portalAlice’s Video portal

Alice’s PhoneAlice’s Phone

Alice’s HomeAlice’s Home


Market perspective for Broadband NGNBB NGN net contribution to an Operator’s wireline business

Source: Alcatel analysis, (1) includes full cost impacts (billing, network management, network impact); HIS: High Speed Internet, BBE: Entertainment

Share of operators’

Wireline value (% NPV DCF )

1,3%

1,0%

0,7%

0,5%

0,1%

21,6% 25,3%

Hoted IP PBX Messaging Video conf. IP Phone Messaging HSI, VPN & BBE Total BB

BB NGN BB NGN BusinessBusiness

BB NGN BB NGN ResidentialResidential

Hosted

IP PBX

Messa-ging

Video-conf.

IP Phone Messa-ging

HSI, BBE, VPN

Total

BB

3.6%3.6%

Payback: ~12 months Payback: ~30 months


Market perspective for PSTN evolutionNot yet a shift from PSTN to full NGN

> Traditional switching telephony is Traditional switching telephony is still still preferred choicepreferred choice

• Economically competitive

• Optimised (voice services regulation & feature) & robust

• Existing investment protection

> Operators anticipating evolution towards NGN Operators anticipating evolution towards NGN

• Network consolidation opportunities

• Replacement of end-of-life TDM technology

> Evolution scenario and timing specific to local situationsEvolution scenario and timing specific to local situations

• Constraints of legacy architectures

• Feature parity requirements

• Broadband penetration


Market perspective for PSTN evolution~25% estimated OPEX savings for large deployments

TDM drawbacks

• Layered & meshed network

• Many network nodes

• Large footprint per node

• Dedicated networks for individual services

NGN voice improvements

• Self managing• More flat networks

• Less # service-related nodes

• Reduced # switching ports • Lower site costs per node

• Shared voice & data resources • Centralised management• Reduced transmission capacity• Cheaper new SW development


Market perspective for PSTN evolution Upfront CAPEX remains the key barrier: C4 networks

Note: CDE included. Important impact on 200K project. Network description in note page

Relative C4 equipement Cost (%)

0

20

40

60

80

100

120

140

TDM 1 hop

TDM 50% 1 hop50% 2 hops

TDM 2 hops

NGN with trunking

gateway

Complex C4 networks replaced with NGN


Market perspective for PSTN evolution Upfront CAPEX remains the key barrier : C5 networks

Large obsolescence or

extension in BB markets

• NGN Voice comparable with TDM costs

• C5/NGN replacement under consideration

• Risk hedging (maintenance, failure, BB Voice)

• Fast PSTN/BB access synergies

Other situations

• Primary TDM investment

• NGN-readiness of the infrastructure

• BB, the main next investment wave

Limited obsolescence

or extension

• TDM still advantageous

• No major C5/NGN replacement

• Gradual access (& mobile) synergies


In summary

> NGN build out will occur from three different markets

• Competitive voice, Broadband NGN & PSTN Evolution

> Broadband, a key catalyst to opening the opportunities for new NGN services

• Basic voice over BB

• Managed Communications for SMEs

• Embedded telephony in new residential BB services

> PSTN will progressively be improved with NGN components

• Converging PSTN & BB infrastructure over time

ARCHITECTS OF AN INTERNET WORLDARCHITECTS OF AN INTERNET WORLD

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ITU workshop, 07/09/03 — 1 All rights reserved © 2003, Alcatel An Industry View of NGN Wireline...

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Transcript of ITU workshop, 07/09/03 — 1 All rights reserved © 2003, Alcatel An Industry View of NGN Wireline...