Research: IP Transformation

ABIresearch
Research Report
IP Transformation
All IP Architectures, IMS, Mobile Backhaul, Mobile Softswitch,

Session Border Controllers, and Core Gateways
Nadine Manjaro
Senior Analyst Wireless Infrastructure
Stuart Carlaw
Vice President and Chief Research Officer
NEW YORK
LONDON
SINGAPORE
ABIresearch
IP Transformation
Section 1.
EXECUTIVE SUMMARY
1.1
What Is IP Transformation?
IP transformation refers to the migration from a circuit-switched network to an all-IP network that
is taking place in core, access, and backhaul networks. It also denotes the transformation of the
service architecture to a common service layer.
Transformation of the network to all-IP began in the core and various portions of the wireless
network. Some operators have IP in the core or access network, or only at interconnection
points. True transformation will occur when the end-to-end network is transformed to IP. The
strong growth in 3G data traffic is driving network utilization to new capacity limits and choking the
backhaul of at least one large US operators network. AT&T reported that its data traffic has
increased by 5000% over the last three years. Operators with high data utilization will need to
start the transformation in the backhaul network since this is typically the limiting factor.
Most transformations will include a migration to Ethernet-based solutions. In the radio access network
(RAN), the base stations will be equipped with Ethernet ports for connectivity to Ethernet over fiber or
Ethernet over microwave backhaul. Operators are migrating their backhaul networks to Ethernet over
fiber or Ethernet over microwave to support increased traffic on their networks. Ethernet is a low-cost
solution that is widely deployed and through efforts of the Metro Ethernet Forum robust enough to
be considered carrier grade and meet required QoS performance expectations.
In general, IP transformation started in fixed-line networks over five years ago and is now
evolving to the wireless networks. As wireless networks are developed further to offer mobile
broadband services, operators are faced with the same bandwidth constraints that wireline
operators once faced. Thus, operators are migrating their mobile networks to IP to simplify the
architecture, reduce latency, lower costs, and improve network performance.
1.2
Mobile Operator Perspective

In wireline networks, operators upgraded to IP and Ethernet to increase bandwidth, reduce costs,
increase flexibility, and improve performance. They were able to throw bandwidth at network
constraints. Mobile network operators are migrating to IP for the same reasons. Operators managing
wireless networks are limited by air interface, spectrum, and mobility. However, they can upgrade the
core, transport networks and application layers to gain some of the benefits described above.
1.2.1
Challenges of All-IP Mobile Networks

The challenge in moving to all-IP is ensuring that the carrier-class service and reliability of the
TDM network is carried over to the IP network. QoS, reliability, and security have to be robust
enough to support voice and real-time services. IP was not initially designed to support real-time
services. It tends to create jitter when packets arrive at irregular intervals, which results in
disorder in the packet stream. For large mobile operators like Verizon Wireless, latency and jitter
are the most important considerations, along with high availability. OEMs have developed
solutions to enhance resource control, which has resulted in improved QoS. They have also
implemented jitter buffers to eliminate the risk of jitter.
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IP Transformation
1.2.2
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IMS Impact
In terms of service delivery, operators have long talked about deploying an IMS platform whereby
services can be quickly added and removed without significant incremental costs. However, the
transition to IMS has been a lot slower than predicted. Operators are reluctant to interfere with
their mobile switching center (MSC) platforms. The MSC is the center of circuit-based services
such as voice and SMS, which to date account for over 70% of most operators revenue. In
addition, the MSC is tied to current billing systems and operators are reluctant to interfere with the
operation of any of these systems.
While IMS can theoretically help operators reach the next level of service delivery, they are reluctant
to make the full transition to IMS. Part of the reason is that the initial deployment cost for IMS is
typically high and most operators lack the business case to justify this cost. The lack of solid IMS
products also contributes to operator reluctance to adopting IMS. Some operators have implemented
IMS for one or a few services, but have not fully committed to IMS across all services.
Another barrier to IMS has been the lack of IMS-capable devices. The completion of the
Rich Communication Suite (RCS) standard in early 2009 and global support for the standard
among GSM operators and several large device manufacturers such as Nokia, Samsung, LG,
and Motorola will help to drive new life into IMS. In fact, Nokia is expected to have commercial
terminals with RCS by 2010.
In more recent developments, several leading operators and OEMs defined IMS as the standard
to deliver voice and SMS over LTE. The participating operators include Verizon Wireless,
Vodafone, Orange, Telefonica, and TeliaSonera, while the OEMs are Ericsson, Alcatel-Lucent,
Samsung Electronics, Nokia, Nokia Siemens Networks, and Sony Ericsson. This development
will definitely drive IMS deployments for those operators with LTE plans and no IMS network.
1.3
OEMs May Finally See Return from IMS Investments

OEMs have developed a plethora of products to support IP transformation. These products
range from backhaul solutions to RAN, core, and service layer solutions. Several of the large
OEMs provide products for IP transformation in fixed networks and leverage their skills to support
transformation in the mobile networks. OEMs like Alcatel-Lucent have developed end-to-end IP
products from transmission and core solutions to service layer architecture solutions. Others
like Starent and WiChorus provide key elements such as core network gateway solutions.
The challenge for the OEMs is understanding an operators timeframe for deploying these new IP
networks. Mobile operators have been slow to fully implement some of the new IP technologies,
such as IMS. Operators sometimes spend years evaluating a solution that costs vendors millions
of dollars to develop; consequently, the vendors have no real revenue to offset the costs.

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1.4
Global Market Forecast

In order to accurately forecast the opportunity or cost of IP transformation, each segment of the
network has to be analyzed. The RAN, which mainly includes the base station equipment, will
have to be transformed. Most of the transformation will occur in 3G and 4G base stations as
operators upgrade their equipment from legacy base stations with ATM or TDM interfaces to
newer models with Ethernet interfaces. In 2009, 2G is the most commonly deployed base
station, accounting for 71% of accumulated base stations. However, the number of 3G base
stations is forecast to surpass 2G base stations in 2011. As a result, industry-wide base station
transformation to IP will occur in the 2011 timeframe.
Chart 1.1
Base Station Deployments by Technology Generation, World Market, Forecast: 2009 to 2014
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
2G
3G
1,000,000
4G
500,000
0
2009
2010
2011
2012
2013
2014
(Source: ABI Research)
1.5
Scope of the Study

IP transformation impacts multiple segments of the network, including operations and billing
support. In order to limit its scope and size, this study focuses on a few key areas, including
backhaul, session border controllers, IMS, media gateways, and softswitches. This by no means
underscores the importance of areas like OSS/BSS; these segments will be addressed in future
versions of the report. Backhaul will have the most immediate impact on network performance,
especially for operators that are faced with capacity limitations. Therefore, backhaul is one of the
first segments addressed. The other elements discussed are being upgraded by operators in
their IP transformation process.
1.5.1
Backhaul Transformation
Transformation of the backhaul network to IP has already begun as mobile operators scramble to
meet 3G capacity demands. The type of backhaul used will vary by region and network, but will
most likely include Ethernet. Generally, Ethernet over fiber will be used in developed markets like
parts of Asia, North America, and Western Europe. Ethernet over microwave is becoming the
backhaul technology choice for greenfield operators like Clearwire and Digicel. Ethernet over
copper will be used in regions like Eastern Europe in the form of ADSL2 or VDSL. Since 3GPP

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IP Transformation
standards for UMTS specify ATM, some operators with large WCDMA or HSPA networks will
continue to leverage pseudowire in the near term to encapsulate ATM. However, the longer-term
solution is to migrate to Ethernet because pseudowire solutions add delay and overhead due to
encapsulation requirements and are also limited in terms of bandwidth.
Global backhaul distribution in 2009 is as follows:
Copper T1 accounts for 39% of all backhaul
Microwave accounts for 37% of backhaul
Ethernet over fiber accounts for 12%
Ethernet over copper accounts for about 9%
In North America, T1 is still the most common type of backhaul used due the low cost of T1s
compared to similar technologies in other regions, strong QoS, and high availability. T1s also
enable bundling for higher capacity. However, they become less feasible as backhaul capacity
requirements increase, thus requiring more than seven T1s. As a result, operators are looking to
higher-capacity solutions such as Ethernet as an alternative.
Backhaul distribution in 2009 in North America is as follows:
T1s account for 47% of deployed backhaul
Ethernet over fiber accounts for 19%
Microwave accounts for 14%
Ethernet over copper accounts for 12%
Operators like Verizon Wireless and T-Mobile are aggressively upgrading their backhaul
solutions to Ethernet over fiber. Verizon Wireless plans to upgrade over 90% of its cell sites
during the next three years.
In Asia, fiber is largely deployed in the major telecom markets, such as Japan, Korea, and China.
Japan and Korea are densely populated with smaller geographic footprints; thus, it is more
cost-effective to deploy fiber. China has also deployed a lot of fiber, though there is more PDH fiber
than Ethernet over fiber. Since fiber is already deployed in these regions, it is easier to upgrade the
backhaul compared to in the United States. In India, microwave accounts for about 80% of backhaul
due to faster deployment speed and lower costs versus competing technologies.
In Europe, microwave is the primary technology used in Western Europe (72%) while
copper-based solutions are more common in Eastern Europe (32%). The cost for an E1, which is
the European equivalent of a T1, is higher than in the United States due to government-regulated
pricing. As a result, operators have looked for different options. Eastern Europe has a broader
distribution of backhaul technologies without a heavy focus in any one area.
Latin America also uses a combination of copper T1s and microwave backhaul. Copper is
the most common solution used. In Africa and the Middle East, microwave is the more
commonly used backhaul because of the time to market issues and expenses associated
with copper. Additionally, copper deployments are more subject to theft due to the black
market opportunity for copper.

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Chart 1.2 shows the number of new base stations connected by Ethernet fiber. Asia-Pacific leads
and will continue to lead in new Ethernet over fiber opportunities, followed by Western Europe
and North America. The Asia-Pacific region has a large installed base of SDH fiber due to fiber to
the home deployments in countries like Japan and Korea. China has a large installed base of
PDH fiber. Most deployments in these regions will just need an upgrade from SDH or PDH fiber
to Ethernet over fiber.
Chart 1.2
New Ethernet over Fiber Opportunities, World Market, Forecast: 2008 to 2014
120000
(Number of New Base Stations)
100000
Asia-Pacific
North America
80000
Latin America
60000
Western Europe
Eastern Europe
40000
Middle East and Africa
20000
0
2008 2009 2010 2011 2012 2013 2014
1.5.2
Session Border Controllers

Session border controllers are critical for interconnecting different networks and enabling access
to different content. They are used to manage the flow of data between borders, as well as to
manage access control and conversion. While the overall quantity of session border controllers is
low compared to other network elements, their function is critical to overall network performance.
The global market for session border controllers for mobile networks is limited. In 2009,
ABI Research estimates a net addition of 627 SBCs, a figure that will rise to 1,546 by 2014.
The price for this element varies depending on the number of sessions supported and
whether it is used to interconnect different networks or used to manage access to specific
content. On average, per session price is in the $7 per session range. In 2009, the overall
market opportunity for session border controllers is $156.8 million. This figure will increase to
$386.5 million by 2014.

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Chart 1.3 shows the global revenue opportunity for session border controllers by region.
Western Europe leads the market in 2009, followed by the Asia-Pacific region.
Chart 1.3
Session Border Controller Mobile Networks Revenue, World Market, Forecast: 2009 to 2014
140,000,000
Western Europe
Eastern Europe
Asia-Pacific
North America
South America
Middle East
120,000,000
Revenue ($)
100,000,000
Africa
80,000,000
60,000,000
40,000,000
20,000,000
0
2009
2010
2011
2012
2013
2014
1.5.3
Media Gateways/Softswitches
Most media gateways and softswitches are sold to fixed network operators. While mobile
operators are implementing these elements, adoption may be curtailed by the migration to IMS,
which provides wider-scale support for multiple products. Most of the RAN vendors, such as
Ericsson, Alcatel-Lucent, and ZTE, also provide softswitches. Ericsson is the self-proclaimed
leader in mobile softswitch installation and reportedly serves more than 50% of GSM/WCDMA
subscribers globally. Each vendor is a leader in its own market. For example, 98% of ZTEs
softswitch/media gateway ports are sold in China. Most of Alcatel-Lucents ports are sold in
former Lucents home market, the United States.
Western Europe is the strongest market for mobile softswitches with 2009 revenue estimated at
$1.8 billion. North America is second with revenue of $1.37 billion, followed by Asia-Pacific at
$1.18 billion. 3G is aligned with mobile softswitch deployments, and these regions have the
highest 3G penetration rates.

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Chart 1.4
Mobile Softswitch Revenue, World Market, Forecast: 2008 to 2014

2,750,000,000
2,500,000,000
2,250,000,000
Revenue ($)
2,000,000,000
1,750,000,000
1,500,000,000
1,250,000,000
1,000,000,000
750,000,000
500,000,000
250,000,000
0
2008
2009
2010
2011
2012
2013
2014
Western Europe
Eastern Europe
Asia Pacific
North America
South America
Africa
Middle East
1.5.4
IMS
IMS is necessary in any IP transformation discussion since it is the most likely solution for
migrating subscriber management and managing voice and SMS traffic, signaling, and several
other required features in a packet domain. In addition, IMS will be critical to providing converged
service offerings for those operators with more than one network.
Ericsson is the leader in overall contract wins with over sixty-nine commercial contracts to date.
Alcatel-Lucent follows with forty full IMS contracts and sixty IMS contracts tied to application
servers. Nokia Siemens Networks is in third place with thirty full IMS contracts and multiple trials.
ABI Research estimates mobile IMS revenue of $8.4 billion in 2009, and this figure will grow to
$17.3 billion by 2014. LTE deployments and fixed mobile convergence will be the two biggest
drivers for IMS deployments. Asia-Pacific will lead in IMS revenue, followed by Latin America
and North America. In Asia-Pacific, demand will be driven by 3G and 4G deployments, while in
Latin America IMS is and will be driven by converged network services. North American IMS
deployments were once tied to push-to-talk, video share, and converged services. Now 4G will
drive additional IMS deployments in the region.
IMS revenue includes revenue for call session control function (CSCF) servers, home subscriber
servers (HSS), and common application servers used for VoIP. Application servers do vary
depending on operator and services deployed, but these are the most commonly deployed
elements. For example, AT&T is using IMS for its video share service so the company would use
the baseline elements including the CSCF, HSS and video share application servers.

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Chart 1.5
Mobile IMS Revenue, World Market, Forecast: 2009

4,500,000,000
4,000,000,000
3,500,000,000
Revenue ($)
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
Western Eastern
Europe Europe
AsiaPacific
North
South
America America
Middle
East
Africa
Mobile IMS Revenue, World Market, Forecast: 2014

9,000,000,000
8,000,000,000
7,000,000,000
6,000,000,000
Revenue ($)
Chart 1.6
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
0
Western Eastern
Europe Europe
AsiaPacific
North
South
America America
Middle
East
Africa

IP Transformation
1.6
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Conclusion
IP transformation has different meanings to different companies. In the scope of this research, it
refers to transforming the network from TDM, ATM, and different legacy architectures to an IP or
packet domain. Mobile network transformation to IP has already started and will continue to
expand over the next five years as operators seek ways to minimize operational and capital
expenditure while increasing network capacity. Network traffic is growing by 12% per month,
according to leading network infrastructure vendor Ericsson, while AT&T reported that the iPhone
uses thirty times the amount of traffic as a regular cellphone. The general industry consensus is
that data traffic is growing much faster than expected. Revenue growth is also increasing, but not
enough to offset the cost of meeting traffic demand. Operators are seeking means of reducing
the cost to deliver each bit of data. It has been proven in the wireline industry that IP provides
high data delivery at a much lower cost than alternative technologies. As mobile traffic grows and
network usage becomes more like wireline networks, operators are looking to a solution similar to
that used in wireline networks and IP is that solution.
The transition to IP is not without cost. In terms of backhaul, operators typically purchase T1s
through five- to seven-year agreements and may have to pay a penalty to transition to Ethernet
over fiber. Many operators will do a flash cut to Ethernet over fiber during the maintenance
window once the solution is in place. Others will gradually migrate traffic from the T1s to
Ethernet. If the operator is the anchor tenant, it will also typically share the cost to deploy the
fiber, which can cost $10,000 to $50,000 per mile depending on the location.
Note also that IP transformation requires new equipment, which means an increase in
CAPEX during the transformation and a boost in OPEX during the cut-over period. In
addition, engineers require IP training to manage and operate the new equipment, and there
is always the potential for outages during the transition. However, operators will work with
skilled vendor technicians and their own staff to mitigate risks. Vendors like Alcatel-Lucent
and Ericsson have proven step-by-step processes to transition operators networks and have
handled hundreds of transformation projects.

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Section 2.
IP TRANSFORMATION STRATEGIC RECOMMENDATIONS
2.1
Overview
IP transformation relates to how to optimize the performance and design of the wireless network to
reduce costs and improve an operators ability to monetize the network. It requires the following:
The use of IP multimedia subsystems (IMS) elements to manage and bill for subscriber
sessions
High-performance routers to transport data
Session border controllers to convert traffic from TDM to IP at interconnection points
In-line functions such as deep packet inspection (DPI) to monitor network traffic and
implement dynamic or static rules
In the backhaul, IP transformation refers to the migration from TDM-based solutions to primarily
high-capacity carrier Ethernet solutions over fiber or microwave. When operators upgrade RANs
to meet growing traffic demand, they upgrade the backhaul to prevent bottlenecks in the network.
Ethernet over fiber or microwave has become the solution of choice for several Tier One
operators, including Verizon Wireless and Vodafone.
Services will be transformed as operators move from traditional Internet access and voice calls to
richer communications and less consumer-centric services. New services will include but are not
limited to the following:
Expansion of e-health services with remote monitoring, diagnostic, and imaging capabilities
Machine-to-machine communications
Digital signage
Mobile advertising
In-vehicle video and audio services
Personalized services combining location, preferences, presence, and address

book information
Operators business models will also transform as they reach out to a wider ecosystem for new
service ideas through new entities like ng Connect, Verizon Wireless LTE Innovation Center, and
the Joint Innovation Lab established by Vodafone, China Mobile, Verizon Wireless, Softbank, and
others. In addition, changes in business models may require vendors to absorb some of the
development costs and participate in revenue-sharing to reduce operators risks. Over time, the
roles of equipment vendors, software and content partners, and integrators will evolve and become
more interwoven into the management and running of the operators networks. Operators will
choose vendors with expertise in managing and administering multi-vendor, multi-technology
networks, which will lead to more cooperation and coordination among vendors.

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2.2
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Radio Access Network (RAN)

Today, most of the new base stations have Ethernet interfaces, even though operators continue
in some cases to use TDM via pseudowire to transport this traffic. Most of the legacy base
stations deployed have TDM or ATM interfaces, which necessitate multi-technology or
pseudowire backhaul solutions. As a result, not much change will be needed in the deployed
RANs. However, LTE will change the RAN architecture. Some of these changes include an
increase in RAN intelligence due to the migration of radio network controller (RNC) functions to
the base stations. There will be more direct base station-to-base station communications through
the X2 interface defined in 3GPP Release 8.
2.2.1
Strategic Recommendations
Operators should look to retire legacy base station equipment with TDM and ATM interfaces to
standardize their networks. This will diminish the need for the multi-technology backhaul
solutions, thus reducing operational costs. Standardizing on a multi-technology platform also
reduces the number of network elements, which will cut operational costs further. Newer base
stations are being developed to support multiple radio access technologies, especially when
deployed in the same frequency band. Operators can migrate legacy base station traffic to the
new converged platform via card additions, which will reduce long-term operational costs,
backhaul costs, and power consumption.
Most vendors already have multi-technology base station offerings, but they need to ensure that
the offerings are more than marketing hype. Self-optimized networks, which can sense
suboptimal performance for individual subscribers and self-correct to improve user experience,
will be a tremendous help to operators in reducing deployment time, costs, and radio planning
requirements. Most vendors only have baseline SON support; consequently, they need to extend
this capability.Self-optimized networks will be a true differentiator.
2.3
Core Networks
Although it is evolving to similar features as the fixed network core, the mobile network core still
has to maintain mobility management and handoff. The mobile network core is migrating from a
hierarchical network to a flat architecture that minimizes delays and reduces the number of
network elements. Included in the 3G core are the radio network controller (RNC), serving GPRS
support node (SGSN), and GPRS gateway support node (GGSN). In this architecture, data traffic
and control traffic traverse the SGSN and the GGSN from the RNC. As part of the transition of
the core network to a flat IP architecture, the RNC is incorporated into the base station and data
traffic goes directly to the GGSN (bypassing the SGSN). The SGSN is replaced by the Mobility
Management Entity (MME), which only manages control traffic.
As operators move from UMTS/HSPA or CDMA to LTE, one of the main areas of change is the IP
core. The core network will be optimized to accommodate higher processing capabilities, less
network elements, and the in-line functions required for subscriber-level management, as well as
evolved billing options for LTE. In the evolved packet core (EPC), there is a distinct separation of
signaling and data traffic. This results in the elimination of the RNC and a reduction in the
number of MMEs because the MME is solely responsible for signaling while the PDN gateway
and serving gateway manage data traffic.

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Chart 2.1 shows ABI Researchs projections for LTE gateways. Since the P-gateway and
S-gateway can be combined into one element depending on operator preferences, they will be
shown in the forecast as one element.
Estimates indicate that only 361 PDN and serving gateways have been deployed in 2009.
Operators are ramping up to roll out LTE in 2010. The majority of the gateways deployed during
this time will be in trial networks, with the exception of Verizon Wireless, NTT DoCoMo,
TeliaSonera, Tele2, and a few others. By 2011, many Tier One operators will begin deployments
or preparation for commercial deployment, which will increase the number of gateways to
5,695 units. Western Europe and Asia-Pacific will lead the way in LTE deployments. Initial
deployments will be centralized as operators deploy macro networks to provide hotspot-like
coverage in the major cities. However, the number of gateways deployed will rise over time as
the number of LTE network deployments increases and operators deploy more distributed
architectures to meet capacity and coverage demands. By 2014, LTE gateway shipments will
grow to over 41,736 shipped annually.
Chart 2.1
LTE Gateway Shipments, World Market, Forecast: 2009 to 2014

18,000
16,000
Number of Units Shipped
14,000
12,000
Western Europe
Eastern Europe
Asia-Pacific
North America
South America
Middle East
Africa
10,000
8,000
6,000
4,000
2,000
0
2009
2010
2011
2012
2013
2014
2.3.1
Operators should look for core solutions that have been developed for the higher processing
required for LTE. Some vendor solutions have been marginally updated with MME or serving
gateway software, but are not optimized to meet next-generation network requirements. Gateway
products should be designed with multi-threaded processing technologies and the latest chipset
processing technologies, such as 35 nm processing, to serve increasing data traffic demand.
Equipment vendors need to ensure that their solutions have the latest processing technologies and
are scalable to evolve with changing traffic demands. The solutions should also be flexible to meet
centralized deployments in early networks and decentralized deployments in more distributed

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networks due to larger serving areas or operators deployment strategies. In addition, core network
elements should include in-line functions such as security features and DPI to help operators optimize
network performance. Mobile networks will soon face security issues similar to the wireline network.
Vendors that plan ahead to address these concerns will have an advantage.
2.4
IP Backhaul
In developed countries where 3G is widely deployed, the backhaul network will experience
the biggest transformation as smartphones and data cards proliferate, significantly increasing
network traffic. In countries like the United States, Japan, and Sweden, where are operators
have spectrum and defined LTE plans, operators are upgrading their backhaul networks as
the first step in upgrading to a 4G network. Even operators without fully defined 4G plans,
such as T-Mobile USA, are upgrading their backhaul network (T-Mobile USA is upgrading its
backhaul to Ethernet over fiber).
Most of these operators are migrating to Ethernet-based backhaul either over microwave or fiber.
The primary reason for using Ethernet is that it is now carrier grade, widely available, and low
cost. In two of the markets studied (China and the United States), the average cost for an
Ethernet over fiber solution is approximately $80 per Mb. This figure includes the cost to deploy
the fiber. Yet, one has to be mindful that labor costs vary from region to region, which will impact
the cost per Mb. Clearwire declares that the average cost per link for its Ethernet over microwave
is in the $10 per Mb range; however, this does not include the cost to deploy the equipment.
In Europe, operators will look to leverage their DSL networks to provide Ethernet over copper
solutions. Improvements in bonded copper solutions such as VDSL2 and ADSL2 have
enabled higher-capacity links.
2.4.1
The backhaul can no longer be the bottleneck in the network. Although T1s may still be needed to
support synchronization and some real-time services such as voice, higher-capacity backhaul is a
requirement even in emerging markets. Operators deploying high-capacity data networks must start
with the backhaul; if they do not do so, they are wasting their spectrum investment. While fiber is the
ideal solution, it will not be available everywhere and is cost-prohibitive in less populated markets.
Operators should ensure that the backhaul solution is scalable and robust enough to meet both their
short-term and long-term needs. Microwave technologies have improved enough to make them
viable, low-cost backhaul options. Vendors have implemented dynamic bandwidth via adaptive
modulation. This solution enables the use of a lower modulation scheme with lower capacity to
accommodate for rain fade. As a result, operators can set a minimum capacity level acceptable for
meeting traffic demand during poor weather conditions. The issue with this solution is that most
implementations do not use the dynamic capability; rather, they fix the modulation to a specific level.
Future improvements should include true dynamic modulations and higher-capacity solutions since
operators are seeking Gigabit Ethernet with guaranteed minimum bandwidth.
While microwave is being deployed by some greenfield operators and established operators in
developed and emerging markets, most North American operators will only consider microwave
for sites greater than 2 miles from the central office or wireline facilities. Thus, continuing
improvements in microwave solutions are critical to ensuring more operator support, especially in
developed markets.

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2.5
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Service Architecture Evolution

Several factors will lead to differentiated LTE services, including open networks and devices,
which were mandated as part of the 700 MHz C-block requirements. These requirements will
spur third-party development. In addition, the completion of RCS (Rich Communication
Suite) specifications will enable device-to-network IMS capabilities that were not previously
present. Efforts by vendors and operators to formalize the service development ecosystem
will also lead to innovations.
Over time, the service architecture will evolve to IMS, and operators are already designing 4G
networks to include IMS. When Verizon Wireless announced vendor selection, it also named
Nokia Siemens Networks as its IMS provider. IMS is being considered both as a potential
softswitch replacement and as a way to support 4G multimedia services.
Operators can deploy many more services at a reduced cost if they deploy IMS. Additionally,
they can support a lot more voice calls using their LTE architecture compared to using legacy
voice architecture. For example, LTE is expected to support sixty-three VoIP calls in the uplink
and forty-nine in the downlink compared to GSM, which supports up to five calls.
2.5.1
IP Multimedia Subsystems (IMS)

IMS is essential to IP transformation and has been discussed for a long time. However, most
IMS implementations to date have been on fixed networks. Mobile operators have been trialing
IMS and a few have implemented IMS for some applications. Yet, the migration to LTE will
probably be the biggest driving force for IMS deployment. Although IMS has been defined in
3GPP standards since Release 5, with enhancements in subsequent releases, it is not required
for LTE deployment. Operators looking to deploy advanced services leveraging presence,
location, advanced address book options, personalized user services, and other applications are
considering IMS to support these features.
Voice over LTE will be the primary driver from an application perspective. In order to get the full
benefits of LTE, operators will need to leverage IMS to support all applications. Most operators
have legacy networks in place that are already optimized for voice services. VoIP on LTE is
probably the ideal solution, except for those operators that do not have IMS deployed in the
network. IMS is seen as a costly and complex solution by these operators.
One of the drivers to deploy LTE is to leverage a single carrier for voice and data to reduce
the cost of delivering both services. Today, deployed CDMA networks leverage separate
carriers for voice and data. Verizon Wireless, a CDMA operator, plans to continue on this
path at least for the next few years. It will use its CDMA2000 1xRTT network for voice
services and move its EV-DO data customers to LTE. Most WCDMA or non-CDMA operators
will use GSM for their voice solution for the near term.
Softbank is one of the few operators using voice over cellular with IMS. The company is also
planning to launch LTE in 2012 and will mostly likely continue using voice over cellular with IMS.
IMS is the only solution currently supported by 3GPP standards.
Operators are presently considering at least three options to support voice over LTE, including:
voice over LTE via generic access (VoLGA), NSNs NVS solution, and the One Voice Profile.

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2.5.1.1
VoLGA
VoLGA is an initiative by T-Mobile Germany and several equipment vendors (Kineto, Motorola,
Ericsson, Huawei, Alcatel-Lucent, T-Mobile, ZTE, Nortel, Starent, and LG Electronics) to support
voice over LTE networks. This solution will enable the transparent delivery of traditional
circuit-switched services such as voice, SMS, and VMS over LTE without IMS deployment. The
overall objective is to enable GSM/UMTS operators to reuse existing equipment to deliver
circuit-based services over LTE and reduce costs.
Figure 2.1 VoLGA
Tel.
SMS
VMS
Pres.
Share
Circuit Services
GANC
WAP
MMS
IMS
Packet Services
A/Iu-CS
BSC
RNC
EPC
GERAN
UTRAN
LTE
(Source: Kineto Wireless)
The proposed architecture will require a client on the devices and gateway (VAN-C) deployed in
the LTE network (in or behind the EPC). The gateway will connect legacy R4 switches to the
EPC via the 3GPP Generic Access Network (GAN) standard. Circuit-based services like voice,
SMS, and VMS will be encapsulated in packets to traverse the LTE network. This will not require
any changes to the MSC and operational systems. The advantage of the proposed solution is
that it will minimize the number of elements required to deploy VoIP over LTE. Additionally, the
architecture will enable the handoff of circuit-based services between GSM/UMTS and LTE
networks. Thus, operators with legacy networks will be able to migrate portions of their network
to LTE while still supporting legacy services in rural and suburban areas. The architecture will
also facilitate roaming between LTE and GSM/UMTS networks.
2.5.1.2
Nokia Siemens Networks NVS Solution

Other vendors, such as Nokia Siemens Networks, have developed their own solutions. NSNs
solution replaces the VAN-C gateway with an NVS VoIP server and uses the operators existing
mobile softswitch equipment along with media gateways and session border controllers. The
solution uses SIP (Session Initiated Protocol), which is also used in IMS. SIP eliminates the need
for additional device clients since it will be supported on LTE devices. This solution enables the
smooth migration to IMS-based VoIP solutions over time.

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2.5.1.3
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One Voice Profile

The One Voice Profile is an initiative by Verizon Wireless, Samsung, Ericsson, Motorola, AT&T,
Vodafone, TeliaSonera, Sony Ericsson, Nokia, Nokia Siemens Networks, Telefonica, Orange,
and Alcatel-Lucent to standardize multimedia services over LTE on IMS. Since 3GPP has
defined multiple ways to complete a single function, the group agreed to a common
recommended feature set for voice. The profile lists the essential features to launch IMS voice,
including components of the evolved packet core, eNodeBs, user equipment, and IMS.
The standardization of voice over LTE solutions will facilitate the development of the ideal
solution. Such a solution will be implemented by most (if not all) operators to enable roaming and
service continuity across networks. One common solution is needed to fit all LTE operators.
Implementing voice over LTE with IMS eliminates the need for circuit-switch fallback, which
results in delays and sometimes an increase in the number of dropped calls. The challenge with
IMS is that currently there is no support for prepaid services. In addition, there are concerns
regarding SMS support, which is not defined in the LTE standards. Yet, SMS support is
mandated by regulators and is also needed for operators to manage devices in the field.
2.5.2
Operators and vendors should work toward a standardized solution for next-generation
services. History shows that mass market adoption requires standardization. SMS did not
take off until there was full interoperability across platforms and networks. IMS is defined by
the 3GPP as the standard services platform and is also standardized across cable, wireline,
and wireless networks. As a result, operators and vendors should embrace IMS as the
common service architecture platform.
2.6
Business Model Evolution

Most of the existing 3G business models are very consumer-centric models geared toward
increasing mobile broadband usage. This business model has been successful to the extent that
many more consumers are using mobile broadband. In fact, mobile data revenue is increasing.
The United States reported over $32 billion in data revenue for 2008 and Japan reported $26.8
billion. In 2010, this number is expected to increase to $39 billion and $27 billion respectively.
Globally, operators are reporting increased uptake of laptop cards and a rise in mobile data
traffic. AT&T reported a 50% increase in laptop connect cards subscribers in the second quarter
of 2009 compared to first quarter 2009. Orange reported a five times increase in mobile data
traffic in four of its operating countries during 2009 The increased traffic resulted from HSPA
devices that support video and Internet-based services.
The issue with the consumer-centric model is that operators offer reduced flat-rate pricing to
increase uptake. As a result, the revenue increase is not proportional with the increased cost to
support the traffic spike. Operators are looking to vertical markets for 4G applications. Verticals
like the energy sector will use 4G for meter reading, which is expected to provide constant
revenue of $1 per connection with minimal traffic impact. Another vertical is the healthcare
industry. In this market, operators are looking at e-health solutions with remote monitoring
capabilities. This model will enable patients and healthcare providers to share information and
perform remote diagnostics at a monthly recurring cost and with periodic network usage versus
the always-on nature of traditional consumer services.

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Another change in the business model is that operators are now looking to their infrastructure
partners to assist in new product and services development. Vendor partners will share the cost
of developing new services, but will also share revenue from the new services. An example of
such a partnership is Verizon Wireless Joint Innovation Lab, which is being co-developed with
the companys LTE vendors, Alcatel-Lucent and Ericsson.
2.6.1
Operators need to expand beyond traditional business models to recoup their investment in 4G
technologies. In developed markets like North America, Japan, and Europe, competition has
forced an erosion in data and voice revenue. Operators need to evolve their business plans from
flat-rate pricing, bundling, and subsidized contract models to a more open model whereby
customers with unlocked devices can access an operator network easily and with simplified
billing. Improvements in network speeds, latency, and device processing capabilities open new
opportunities for expansion into other vertical markets beyond healthcare monitoring, smart
metering, and machine-to-machine communications.
Operators need to invest more in
researching and developing new, non-traditional business models. While partnerships with
equipment vendors are important, stronger partnerships with chipset vendors and their
ecosystem will be more helpful in terms of service innovation. Chipset-level focus will remove
some of the device limitations, thus resulting in more non-traditional solutions.
Several vendors are pushing unified subscriber database solutions for personalized service
offerings. This approach is a great start in evolving services, but more definition around specific
services is needed. Vendors like Alcatel-Lucent conduct their own end-user studies to determine
the types of services that customers are willing to purchase. However, further work is needed on
leveraging this information to create new services.
2.7
Conclusion
IP transformation impacts several areas of the network, thus requiring operators to take a
well-planned approach to transforming their networks. Operators will begin the transformation in
areas of the network that are critical to improving network performance, such as the backhaul.
They will work to consolidate all wireless technologies deployed in their networks into a single
backhaul solution. As a result, they will leverage high-capacity, Ethernet-based solutions with
pseudowire to support legacy 3G requirements such as ATM.
Operators will also transform the RAN by deploying new base stations with Ethernet interfaces.
The core network will evolve based on the elements defined in the standards. Technologies like
LTE require flat IP architecture, which combines existing functions with other elements to simplify
the architecture and reduce delays. The 3GPP standards also define requirements for the new
elements.
Operators are more reluctant to change elements in the network that are critical to overall
performance, such as the mobile switching center (MSC). The MSC is tied to Prepaid, billing,
and call control; consequently, operators are hesitant to make any changes without
understanding the impact.
A thorough transformation plan will include a detailed analysis of each element impacted and
potential issues, as well as workaround solutions. Operators will need vendor partners to help
define and implement the transformation process.

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Section 3.
DRIVERS AND INHIBITORS FOR IP TRANSFORMATION
3.1
Drivers
The primary driver for IP transformation is cost. Network utilization and capacity are increasing
while revenue remains relatively flat. In the voice-centric network, utilization was tied to revenue
and there was a direct correlation between the two. Now utilization is increasing steadily, but
operators cannot charge consumers for the cost to meet growing capacity demand due to
competition and market pressures. As a result, operators are focused on reducing network costs.
IP and Ethernet are fairly low-cost solutions that have been optimized for the wireline network.
As the wireless network becomes more like the wireline network, especially at the core, operators
are looking to leverage the proven, low-cost solutions used for wireline networks.
Network capacity is another driver for the transformation to an all-IP network. As wireless
technologies improved, operators began selling data cards and USB dongles. The use of these
devices simulates utilization on the wireline network. Lower-capacity networks like EDGE/GPRS
replicate dial-up networks while 3.5G networks like HSPA imitate utilization on always-on DSL or
cable networks. The primary differences between these networks are capacity and latency. When
users employ data cards in a similar fashion as wireline connections, operators face capacity limitation
issues. Since spectrum is a scarce resource, operators cannot throw bandwidth at the problem as
they did in the wireline world. Network capacity is limited by channel bandwidth, which in turn is
limited by spectrum availability and the technology used. It is also restricted by the backhaul
technology and capacity used to connect the base stations to the core network.
Legacy technologies like GSM are limited to 200 KHz for channel bandwidth, CDMA2000 is
limited to 1.25 MHz, and WCDMA is limited to 5 MHz channel bandwidth. Newer technologies
such as WiMAX and LTE enable the more efficient use of spectrum by eliminating waste caused
by the guard bands used between smaller channel sizes and increasing the number of bits per
hertz. WiMAX and LTE use larger channel bandwidths such as 10 MHz and 20 MHz, thus
significantly increasing network capacity. These technologies also require the transformation to a
flat IP core, which reduces overall network latency.
3.1.1
Device Migration
Traditional wireless devices were handsets focused on voice communications. Newer devices
are more data-centric, with QWERTY keyboards to simulate PC-like usage, Internet access,
e-mail capability, and more multimedia-centric usage. End users are connecting to the network
with more devices than ever. New devices include:
Netbooks
USB dongles
Ultra mobile PCs
iPhone
eBooks
Mobile Internet devices
Handheld gaming devices
All of these new devices need a means to connect to the Internet and thus require an IP address.

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3.1.2
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Services and Business Models

Operators will need new business models to monetize the use of off-portal content. Today, many
services are offered in silo, which is more costly to grow and maintain. Consequently, operators
are migrating to a centralized service platform that enables them the quickly evaluate and deploy
new services without incurring high incremental costs. An IP-based service platform enables
sharing across multiple access networks.
3.1.3
Cost Reduction
Data revenue is not increasing on par with bandwidth utilization, as was the case with voice
traffic. As a result, operators are looking for a way to reduce costs. The migration to IP will
lower costs since IP networks are already widely deployed by fixed operators, resulting in
reduced costs due to economies of scale.
Flat IP architecture lowers costs by minimizing the number of network elements. In addition, IP
platforms are widely available in off-the-shelf configurations. Most OEMs focus on software
developments for gateways and core infrastructure products. They are then able to purchase
ATCA chassis or Sun servers with the configurations that most closely meet their needs. ATCA
products are standardized and can easily be scaled as needed.
Centralized service architecture also helps to reduce costs since systems and platforms can be
shared across access networks and different services. Operators do not have to purchase a
discrete set of network elements for each application developed.
3.1.4
Data Bandwidth
Mobile networks are expected to be on par with wireline network speeds. Wireline broadband
networks provide the baseline for consumer expectations of always-on services. These
expectations will drive the wireless core to be comparable with wireline networks. The challenge
with wireless networks is that the air interface is limited and customers are mobile.
One potential solution to increase network capacity is to deploy a more distributed network with
smaller cell sites and more in-building solutions. However, the smaller cell site will require
high-capacity backhaul. This means that operators will have to deploy more distributed services
and backhaul architectures, which can be very costly.
Femtocells may solve some of the backhaul issues since the traffic is routed off the wireless network
onto the wireline infrastructure at each site. Yet, femtocells present a different set of challenges, such
as how to manage interference with the macro networks overall management of radio resources.
The common theme across the industry is that data traffic is growing exponentially, thereby
increasing operator costs. At the same time, data revenue is relatively flat, as indicated in
Chart 3.1. The United States is the only country where data revenue is increasing at a relatively
steady rate though not enough to keep pace with data utilization.

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Chart 3.1
Data Service Revenue, Countries with Strong Data Growth, Forecast: 2008 to 2014
60,000
Revenue ($ Billions)
50,000
USA
Japan
China
Germany
Italy
UK
France
India
40,000
30,000
20,000
10,000
0
2008
2009
2010
2011
2012
2013
2014
3.1.5
4G Network Migration
The migration toward 4G or OFDMA-based networks will be the strongest driver for IP
transformation. 4G, unlike 2G and 3G technologies, does not include a circuit-switched
component. The circuit-switched component is not as efficient as the packet-switched network
because it establishes a dedicated path between the communicating end points, which is more
wasteful. In contrast, the packet-switched network routes each packet independently and
reassembles them at the termination points for optimal use of the network resources. 4G
networks will begin with the evolved packet core, which is all-IP.
Since 4G is one of the primary drivers for IP transformation, the regions that are the first to adopt
4G technologies will be the earliest adopters of end-to-end IP networks. Such regions include
North America, parts of Asia (Japan and Korea), and Western Europe. The migration to 4G is
also aligned with the release of much needed spectrum resources. Countries that release new
spectrum will be the earlier adopters.
The migration to 4G or OFDM networks started with mobile WiMAX (802.16e) and LTE
deployments. Mobile WiMAX deployments started in 2008 and will continue over the next several
years. LTE deployments will start in late 2009 and continue over the next ten years or so with
improved versions on the 3GPP Release 8 standards. Once operators begin to convert their
networks to all-IP, the trend toward all IP will continue.
3.2
Inhibitors
Cost is a major inhibitor to IP transformation. While operators can save money over the long run
by upgrading to all-IP networks, there are still costs associated with the upgrade. New equipment
is needed and business cases are typically linked to revenue not cost savings. Many of the
legacy systems are still operational and are tied into complex billing schemes. Given all of the
unknowns, operators are reluctant to invest in transitioning their networks.

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Section 4.
WHY IP TRANSFORMATION?
4.1
Service Evolution
Services will transform to become more personalized. They will also shift from the traditional
consumer-centric services to vertical applications such as e-health or telemedicine, remote meter
reading, automotive services, and machine-to-machine communications. Meanwhile, traditional
services will be enhanced by faster data rates, lower latency, and improved QoS.
Service transformation will also lead to changes in business models as operators move toward
more open networks, devices, and applications. Operators will leverage third-party services and
rely less on their own internal development teams. They will also have to rely less on subsidy
and contracts and more on strong products and services to retain customers. Operators are now
collaborating with vendors and a larger ecosystem to develop new applications and services. As
a result, OEMs will share some of the risks and revenue of the new services.
The completion of the Rich Communication Suite (RCS) standards will further enhance service
delivery. RCS enables richer communications by enhancing and integrating multiple features that
already exist. Some of these features include the integration of location-based services,
enhanced address book video share, multimedia messaging, file sharing, and Presence.
4.1.1
Service Brokering
3GPP Release 8 provides enhancements to IMS that improve service brokering. New features include:
Improvement in application server support to prevent termination of primary session when

there is an application server error
Explicit sequence of services can be invoked in the application server
The user device can trigger the service delivery process
Identity of the original called party is retained through multiple service activations to prevent
operator policy violations
4.2
Radio Access Network (RAN) Evolution
4.2.1
3.5G Evolution
Transforming the RAN to all-IP results in the ability to reliably deliver many sessions of bursty
data to a large number of users in a cell. WCDMA (with its dedicated channels) and its
predecessor technologies were not designed to manage bursty data. The process used in
those technologies to handle a mix of regular and bursty traffic was slow. In terms of 3GPP
technologies, Release 5 (HSDPA) was the first release designed to manage IP traffic.
Instead of using dedicated channels, HSDPA extends the use of shared channels. Shared
channels, as the name implies, allow data for many users to share one higher bandwidth
channel similar to Ethernet in the wireline world. Release 5 also improved the channel
configuration process from 500 ms to 100 ms.
Moreover, Release 5 moved the MAC control from the RNC to the base station. This improved
the responsiveness of the base station by enabling the base station to quickly schedule those
users with the best channel quality. The base station uses a fast scheduling algorithm to
determine channel quality and adjust modulation and coding schemes for the best results.

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Otherwise, if served first, those users with poor channel quality would have high error rates
based on the past algorithm, which used the average channel condition to determine
modulation and coding schemes.
Release 5 (HSDPA) also introduced higher order modulation (16 QAM), thereby increasing the
peak data rates. Release 5 of the 3GPP standards also moved Hybrid Automatic Repeat
Request (H-ARQ), which enables the retransmission of dropped or corrupted packets, from the
RNC to the base station. This shift resulted in an improvement in base station latency. Due to
the combination of an 80% reduction in response time, moving the intelligence to the edge of the
network, and adaptive modulation, the performance of HSDPA is significantly better than that of
WCDMA. HSDPA demonstrates a seven times improvement in data rate and an 80% reduction
in response time compared to WCDMA.
Release 6 (HSUPA) balanced overall performance by providing improvements in the uplink.
Such progress is essential for real-time services such as VoIP and video chat, which require
more synchronous transmission.
4.2.2
3.9G Evolution
The transformation of the RAN will focus on 3.9G or 4G base stations and smaller form factor
base stations such as picocells and femtocells. LTE base stations will have more intelligence
than traditional base stations since the RNC function will now be incorporated into the base
station. In addition, the introduction of the X2 interface will enable direct communications
between base stations, which was not possible in predecessor 3GPP technologies. There
will also be some transfer of data during handoff between LTE base stations without the
data traversing the core network.
While pico and femtocells will be critical in enabling operators to offer higher data rates in smaller
cell sizes, they will present unique challenges. IP transformation will be required for management
of these elements. Operators are concerned about how best to manage large numbers of
femtocells. IP capabilities will enable operators to automatically detect when new femtocells or
picocells join or leave the network, help in troubleshooting these elements, and support the
self-optimization feature of LTE networks.
Remote radio heads also mark a transformation to more intelligence at the top of the tower.
In the past, operators were reluctant to place electronics at the top of the tower for fear of
failure, which would result in costly tower climbs. Now operators are looking to remote radio
heads to increase deployment flexibility. Remote radio heads enable the deployment of the
radio away from the base band unit.
4.3
Backhaul Evolution
The primary evolution taking place is in the backhaul. As operators migrate to 4G
technologies or solidify their 3G networks to deal with the increase in 3G traffic, they are
turning to Ethernet-based solutions in the backhaul. The main solutions will be Ethernet over
fiber or Ethernet-based microwave solutions. Operators with mostly 2G networks will use
pseudowire solutions to aggregate TDM and ATM traffic onto Ethernet backhaul. However,
due to the high growth in 3G traffic, pseudowire solutions will no longer be a good option.
Most backhaul solutions will leverage Layer 2 solutions such as switched Ethernet while
Layer 3 functions will occur chiefly in the network core.
Ethernet is the technology used in the wireline network to manage bursty IP traffic. It is a
proven, low-cost technology that is widely available. Over time, operators and vendors have
worked through issues to improve the reliability and performance of Ethernet solutions. As

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operators migrate to 3G and now 4G, they are evolving their backhaul networks to an all-IP
architecture by leveraging Ethernet. 3G and 4G traffic are more bursty than typical voice and
SMS traffic and have higher peak-to-average requirements. Ethernet was developed to
handle this type of traffic. As mentioned, it is widely available and provides higher-capacity
solutions at lower cost than most other technologies.
In the past, operators were reluctant to use Ethernet due to its connection-less state (less
reliable) and inadequate synchronization support. Yet, improvements in synchronization
technologies and the standardization of Ethernet solutions have optimized the technology for
backhaul. Today, Ethernet solutions are optimized to provide predictability, QoS support,
security, reliability, and reductions in overall delay. Standardization efforts in groups like the
Metro Ethernet Forum (MEF) are improving the key features of Ethernet and establishing a strong
ecosystem for Ethernet-based solutions.
Chart 4.1 shows the number of base stations connected via Ethernet over fiber. ABI Research
estimates the number of base stations connected by fiber in 2009 is approximately 582,700. This
number will grow to 1.1 million by 2014. Most of the growth in Ethernet over fiber backhaul will be
attributed to LTE deployments. However, countries like China, Japan, and South Korea already
have a large installed base of fiber and will evolve their solutions to Ethernet over fiber.
Operators in markets like North America with large TDM bases are also migrating to Ethernet
over fiber to meet growing traffic demand.
Chart 4.1
Ethernet over Fiber Base Stations, World Market, Forecast: 2008 to 2014
500,000
450,000
400,000
Western Europe
Eastern Europe
Asia-Pacific
North America
South America
MEA
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2008
2009
2010
2011
2012
2013
2014
Ethernet over microwave solutions provide the benefits of using Ethernet without the cost of
deploying fiber and the time to install fiber, which can take six to nine months. Today, microwave
over Ethernet is primarily used by greenfield operators or as a fill-in solution for those operators
deploying Ethernet over fiber. Clearwire is an example of an operator that uses Ethernet over
microwave for 90% of its backhaul network. The operator uses microwave backhaul with
Ethernet switches to form a ring architecture that provides SONET-like resiliency in case of

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failure. This ring architecture provides resiliency to ensure four nines (99.99%) backhaul
availability. Each cell site is connected via two microwave links, with Ethernet switching
connecting the links. Clearwire recently selected DragonWave as its microwave provider.
Enhancements in microwave backhaul include a built-in Ethernet switch to enable ring-like
architecture for redundant routing options in case of failure.
4.4
Mobile Core
The evolution of the mobile network to an all-IP core began with 3GPP Release 5, which
introduced IMS, then continued with Release 6 through Release 8. In Release 7, one-tunnel
architecture was introduced to flatten the network. Flattening the network reduces the latency in
the network by minimizing the number of hops that the traffic traverses. It also leads to a more
decentralized core network architecture. Additionally, the one-tunnel architecture prepares the
network for evolved packet core migration. In the evolved packet core, the RNC function is
incorporated into the base station and the MME.
A lot of the focus has been on operators migrating their 3G or 3.5G networks to 4G. However,
there are operators that are trying to get the most out of their 3G networks while meeting
increasing capacity demand. These operators are looking for a means of leveraging their current
networks to meet growing demand. Telstra is one such operator, and it is operating an HSPA
network optimized for coverage and capacity. The network has been upgraded to support a peak
data rate of 21 Mbps in the downlink and 11.5 Mbps in the uplink.
4.4.1
Quality of Service
Jitter is inherent in IP networks, and it degrades voice quality. This is an issue that needs to be
addressed. Jitter occurs when IP packets arrive at the destination at irregular intervals, thus
causing disorder and intermittence in the voice stream and resulting in poor voice quality. Some
solutions include the use of jitter buffers in the media gateway to gather voice packets, reduce
jitter, and rectify packet order.
4.4.2
Mobile Softswitches/Media Gateways

The softswitch is sometimes referred to as the media gateway. Softswitches are used in VoIP
architecture to control the media gateways. They are also used in IP networks to improve voice
quality by providing the following voice quality enhancement features: echo cancellation, echo
suppression, gain control, and mute detection. Improvements made to the softswitch include the
use of MSC pools to increase reliability (instead of a simple dual-home solution). The A/lu
interface is used to connect the softswitch to multiple MSCs.
Ericsson commercialized the first softswitches in 2003 and used them in 3 Italys network.
The latest version of the mobile softswitch is deployed in server blade clusters. Server blade
clusters can support over 8 million subscribers with two cabinets of equipment, which
enables a 90% footprint reduction.
Media gateways are needed to bridge the gap between 2G/3G and the IP core. They are used
for interworking functions between IP and non-IP networks. The challenge with media gateways
is that they add cost and delay to the network.
Media Gateways also provide transcoding functions. In all-IP networks, transcoding is needed to
make different networks work together. Transcoding is similar to the role of session border
controllers in TDM to IP transformations.

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4.4.3
Session Border Controllers

Session border controllers are used in the delivery of IP-based voice and data services. For the
most part, they are employed to enable real-time traffic sessions (VoIP and other real-time
services) to traverse network address translation (NAT) boundaries and firewalls. They perform
this function by incorporating signaling control elements to process different signaling protocols.
More specifically, session border controllers are used at network interconnection points to
convert TDM traffic to IP and vice versa, secure subscriber access, enable interoperability
between different end points, and service infrastructure elements and networks. As the core
transforms to IP, more session border controllers will be needed to control admission,
balance IP transport, and meet service level agreements. Session border controllers also
help in meeting lawful intercept requirements, government priority services, and emergency
services requirements. Primary functions include:
Security Manages subscriber access and interconnect points at peering borders; prevents
denial of service (DoS) attacks and protects subscriber session privacy
Enables interoperability between different types of networks and devices
Assures session capacity and quality
Optimizes session routing to minimize costs
Enables compliance with various government agencies such as emergency services, lawful
intercepts, and government emergency telecommunication services
One of the leaders in this space, Acme Packet, provides Net-Net session border controllers. The
company has sold over 8,000 units since 2002, a figure that indicates the relatively low-volume
opportunity for these elements. Overall volume is expected to increase as operators are forced to
transition to IPv6 due to the lack of address space in IPv4. Typical costs for session border
controllers are in the low $200,000 range, but can be as high as $800,000 depending on the
number of sessions supported.
Session border controllers are used in carrier-to-carrier peering, carrier-to-enterprise access, and
carrier-to-residential access. Today, most session border controllers are sold to fixed network
operators. Only about 15% to 20% are sold to mobile operators. However, the number is
expected to rise as mobile operators move to 4G and IP-based architecture.

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Note that the forecast provided in this study reflects the mobile opportunity for session border
controllers and not the overall market opportunity, which covers fixed and enterprise networks.
In 2009, North America leads in terms of the market for session border controllers; Western
Europe and then Asia-Pacific are next. These positions are primarily tied to the fact that the
United States is one of the strongest markets for data, followed by the Asia-Pacific region (Japan
and South Korea), and Western Europe.
Chart 4.2
Session Border Controllers, World Market, Forecast: 2009 to 2014

4,000
3,500
Number of Units
3,000
Western Europe
Eastern Europe
Asia-Pacific
North America
South America
Middle East
Africa
2,500
2,000
1,500
1,000
500
0
2009
2010
2011
2012
2013
2014
In 2009, North America and Western Europe account for over 57% of session borders shipped.
By 2014, Asia-Pacific and North America will comprise approximately 56% of session border
shipments while Western Europe will account for 22.9% of new session border controllers. The
completion of the RCS standards, which extend IMS to devices, will have a positive effect on the
session border controller market. LTE deployments in these regions will also boost the market as
networks migrate to all-IP and more real-time services are delivered over LTE networks.
4.4.4
CDMA EV-DO Networks

Many CDMA operators, especially those in North America, are migrating their networks to
non-CDMA technologies. Verizon Wireless, the largest CDMA operator with over 86 million
subscribers, started migrating to LTE in late 2009. Sprint Nextel, the second-largest CDMA
operator, began migrating to WiMAX as its 4G technology choice. In Canada, CDMA operators
(including Bell Mobility and Telus) started migrating to HSPA in 2009 while maintaining their
CDMA EV-DO networks. In Asia, Reliance, the second-largest CDMA operator globally with over
73 million subscribers, started deploying GSM in 2009. KDDI in Japan is also upgrading its
CDMA network to LTE. China Unicom is one of the few large incumbent CDMA operators
focused on CDMA (it recently began its 3G upgrade to CDMA EV-DO Rev. A).

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As a result, CDMA operators migrating to 4G have to enable interworking between their

current CDMA networks and LTE or WiMAX networks. The Evolved High Rate Packet Data
(eHRPD) gateway was developed to replace the Packet Data Serving Node or (PDSN).
EHRPD will act as a serving gateway to connect LTE and EV-DO networks. This platform
will be critical for companies like Verizon Wireless and other CDMA operators migrating to
LTE. Since LTE will be deployed in hotspot-like locations initially before it is widely available,
operators will need strong interworking between both networks. EHRPD enables seamless
handover between EV-DO networks and LTE, which will be essential for real-time
applications such as voice and other low-latency applications.
ABI Researchs forecast indicates that the number of LTE base stations deployed as CDMA
overlay will begin with approximately 4,200 units in 2009 and grow to over 118,660 by 2014. The
majority of the growth will result from North America, where operators like Verizon Wireless,
MetroPCS, Telus, Bell Mobility, and others are upgrading their CDMA networks to LTE.
Asia-Pacific will be second as operators such as KDDI in Japan and CDMA operators in Korea
upgrade to LTE. Chart 4.3 shows the global trend for CDMA base station migrations to LTE.
Chart 4.3
LTE Base Stations Deployed in CDMA Networks, World Market, Forecast: 2009 to 2014
60,000
50,000
40,000
Western Europe
Eastern Europe
Asia-Pacific
North America
South America
Middle East
Africa
30,000
20,000
10,000
0
2009
2010
2011
2012
2013
2014
4.4.5
WCDMA Networks SGSN and GGSN

As 3G traffic increases, operators are addressing the issue by adding more SGSNs and GGSNs
to meet traffic demand. This solution is both temporary and costly. Additionally, in most cases
3G core network elements cannot be reused for 4G. The SGSN is typically collocated with the
mobile switching center (MSC), and there is usually one per serving area. It manages the data
traffic while the MSC manages the voice traffic. In addition, the SGSN receives and forwards
packets to and from the GGSN, which is the mobile IP router. The GGSN forwards and receives
traffic from the Internet and assigns IP addresses to mobile devices for data sessions. There is
typically one GGSN per external network. SGSNs and GGSNs are used in both GSM-based
networks and WCDMA/HSPA networks.

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LTE architecture requires a Mobility Management Entity (MME) and the packet data node, or
P-gateway, which makes up the evolved packet core. These elements differ from their 3G
counterparts in that they require a lot more processing power. In the EPC, there is more of a
separation of roles; the MME focuses on control layer functions while the P-gateway manages the
actual data traffic. The role of the radio network controller is incorporated into the eNodeB and
the MME, which reduces the number of elements in the EPC.
4.4.6
HSPA Networks
As the first mobile cellular network to deliver VoIP capabilities, HSPA leads the way to true IP.
The 3GPP Release 7 standard includes enhancements to IMS and true QoS capabilities to
support voice. Continuous packet continuity (CPC) is one feature that enhances voice support by
reducing uplink interference. It enables discontinuous uplink transmission and discontinuous
downlink reception. CPC allows the modem to be turned off during a period of inactivity, thereby
reducing the power consumption of VoIP devices.
Operators will probably defer voice support on HSPA networks since it will require IMS or other
elements. In addition, UMTS networks already support circuit-switched voice and packet data
simultaneously, which reduces the urgency for 3GPP operators to move to VoIP.
It is within the 3G network where true mobile IP transformation begins. OEMs have already
introduced base stations with software-defined radios and core network elements on ATCA
chassis to standardize and simplify the core network platforms. HSPA Evolved begins the
transformation to a flat IP core with direct tunnel architecture. This architecture provides a direct
path for user data between the RNC and the GGSN, while the SGSN focuses solely on control
functions. For packet-based services, there is an optional architecture whereby the RNC is
incorporated in the NodeB. Both architectures reduce the number of elements in the network,
thus resulting in lower costs and less transmission delay.
4.4.7
LTE Network Evolution

The LTE core network architecture is the evolved packet core, or EPC. The EPC consists of two
primary nodes: the control plane node, which is the MME; and the data plane nodes, which
consist of the serving gateway (S-GW) node and the packet data node (PDN). LTE core
architecture includes the following elements:
MME
S-GW
P-GW
eNodeB
PCRF (Policy and Charging Rule Function)
The EPC spurs the migration to an all-IP core network and flat network architecture. It also
causes an overall reduction in the number of network elements since the radio network controller
(RNC) function is mostly integrated into the eNodeB; some functions are on the MME and the
data plane functions are on the S-GW.

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More specifically, the EPC provides connectivity from the operators base stations to the Internet,
as well as connectivity between LTE, legacy 3GPP networks, and non-3GPP networks. EPC
elements are separated into control plane functions and data plane functions. These elements
include the MME, the S-GW, the P-GW, and the PCRF. Their functions are as follows:
The MME is a control plane element that manages signaling and control, mobility, end-user
equipment, gateway selection, and security parameters.
The PCRF element is also a control plane element, and it enables service data flow
detection, policy enforcement, and flow-based charging.
The S-GW is a data plane element that terminates the interface from the eNodeB, provides a
local mobility anchor for inter-eNodeB handovers, and routes data traffic to the P-GW.
The P-GW is also a data plane element that routes data traffic from the S-GW to the Internet
or external packet networks.
Elements that provide control plane functions can be combined onto one platform, and likewise
for data plane elements. The S-GW and the P-GW can be combined on a common hardware
platform and remain logically separated by the S5 interface, or they can be deployed on separate
physical hardware. Actual deployments will depend on an operators requirements for distributed
or centralized architecture and vendor implementation. Deployment configuration will also
depend on the size of the operators network and coverage area. Operators may choose to
separate the elements to minimize network latency since low latency is critical for mobility.
Equipment scalability is also important. Function-specific devices enable higher scalability
without impacting other function performance. Operators like Verizon Wireless prefer a more
distributed architecture whereby each element is located near the traffic origin. The P-GW will
need to process large amounts of data quickly for a large number of subscribers while the S-GW
will need to quickly process base station signaling and provide feedback.
In general, the EPC provides a unified platform with the following features:
Common policy and charging control
Unified user data management
Tightly coupled mobility management
Converged gateway for multiple access technologies
Common service control and service creation environment

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Figure 4.1 Evolved Packet Core
2G
RNC
SGSN
3G
S3
S4
S6a
HSS
PCRF
MME
S7
S1-C
SAE GW
S8b
S1-u
PDN GW
Serving GW
IP Services
(IMS, PSS, )
eNode-B
Trusted
Non-3GPP
S2a
S5
4.4.8
WiMAX Network Evolution

WiMAX, like LTE, also uses a flat mobile packet core. The packet core sits behind the backhaul
network and terminates all of the connections from every mobile device.
Figure 4.2 WiMAX Architecture
The primary function of the WiMAX Access Service Network (ASN) gateway is to aggregate
subscriber traffic and control traffic from the base station. In addition, the ASN gateway provides
radio resource management, mobility management, Layer 3 connectivity for devices, and WiMAX
network discovery based on user preference. It also communicates with the AAA, home agent,
and DHCP servers. The WiMAX forum supports three ASN architectures, including: flat,
hierarchical, and centralized.

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The centralized architecture, or profile C, is the most commonly deployed architecture. In profile
C, the base station handles radio resource control and radio resource management. The
mapping of base stations to the ASN gateway depends on the type of applications being
supported. In voice applications, the ASN typically supports up to five base stations while a
purely data-centric network can support up to thirty base stations.
Chart 4.4 depicts the growth rate for WiMAX gateways. ABI Research forecasts that the net
additions of new WiMAX gateways will peak in 2009 then decrease over the next five years. This
is largely due to the strong impact of the Asia-Pacific market. During late 2008 into 2009, the
certification of 2.5 GHz and 3.5 GHz products was completed, which resulted in a stronger
deployment rate. In 2009 to 2010, WiMAX operators will build out their networks, after which they
will focus on growing their subscriber base. WiMAX will continue to grow in all markets.
However, the rate of growth will be slower due to the availability of LTE, which will be more
cost-competitive because of economies of scale.
Note that WiMAX ASN gateways are designed with software and a common off-the-shelf (COTS)
platform, which lowers overall costs.
Chart 4.4
WiMAX Gateway Net Additions, World Market, Forecast: 2009 to 2014

16000
14000
Western
Europe
12000
Eastern
Europe
10000
Asia-Pacific
8000
North
America
6000
South
America
4000
Middle East
2000
Africa
0
2009
2010
2011
2012
2013
2014
4.5
IP Multimedia Subsystem (IMS) Implications for IP Transformation

IMS and IP UTRAN were defined by the 3GPP Release 5 standards around 2005. Although
there have been a lot of discussions around IMS, issues such as cost, complexity, and lack of
clarity have limited deployments. The introduction of LTE and its flat, all-IP core architecture is
expected to increase IMS deployments. IMS will be instrumental in supporting rich multimedia
applications developed for LTE, but it is not an absolute requirement. Device implementation was
once one of the key bottlenecks to IMS. OEMs are now collaborating to standardize IMS
implementation through efforts like the Rich Communication Suite (RCS) standards.

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Operators such as Sprint in the United States and Softbank in Japan are using IMS to deploy pushto-talk, presence, and group list management services. In addition, operators are leveraging IMS
for mobile VoIP over HSPA networks. This solution was first demonstrated in 2007.
In the core network, IMS will be used to implement the common service layer, QoS, and call
control. HSUPA was the first cellular technology to provide the bidirectional data rate required to
support voice over IP over cellular.
Large operators are more likely to migrate to IMS-based solutions while smaller operators will
seek alternative solutions due to the cost and complexity of IMS.
4.5.1
IMS Development
In Release 7, the 3GPP defined IMS to be open to non-cellular technologies. It was at this
juncture that other 3GPP partners developing IMS standards for fixed-line networks decided to
collaborate and shift all IMS development to the 3GPP to simplify IMS solutions and make them
standard across all networks. IMS work that was being done by ETSI, TISPAN, and CableLabs
will now be done by the 3GPP. This move will simplify the migration to fixed mobile convergence
(FMC) by unifying IMS across all access technologies. 3GPP Release 8 was the first release
with the common IMS standard.
In mobile networks, IMS is essential for enabling some of the features that were inherent in
circuit-switched networks. These features include traffic prioritization, end-to-end QoS, and the
delivery of real-time services. In addition, IMS enables a platform for other real-time non-traditional
services. IMS combined with RCS facilitates end-to-end IMS-supported applications.
Feature improvements to IMS that are essential for wide-scale acceptance include: security
enhancements for home networking, number portability, service customization, and
improvements in service brokering.
Recently, a group of mobile operators and Tier One OEMs agreed on a One Voice Profile for LTE
based on IMS standard. This decision will increase IMS deployments in conjunction with LTE.
LTE deployments will begin in late 2009 into 2010. The One Voice Profile is supported by AT&T,
Verizon Wireless, Vodafone, Telefonica, TeliaSonera, Orange, Alcatel-Lucent, Ericsson, Nokia,
Nokia Siemens Networks, Sony Ericsson, and Samsung.
Based on ABI Researchs forecast and interviews conducted for this study, IMS adoption in
mobile networks is gaining traction starting in 2009 and will accelerate with LTE deployments.
The IMS penetration rate will grow to over 40% in North America and roughly 20% in markets like
Eastern Europe, Asia-Pacific, and South America. Advanced data services and LTE will be the
primary drivers for IMS implementations in North America.

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Chart 4.5
IMS Penetration Rate, World Market, Forecast: 2008 to 2014

0.40
0.35
0.30
0.25
Western
Europe
Eastern
Europe
Asia-Pacific
0.20
North America
0.15
0.10
South
America
Middle East
0.05
Africa
0.00

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Section 5.
IP TRANSFORMATION STRATEGIES
5.1
Greenfield Operators
5.1.1
Clearwire
In the case of greenfield operators such as Clearwire, the network is designed to be IP-enabled at
the onset so no transformation is necessary. Transformation elements are primarily required at
the network interconnection points where Clearwire passes traffic to the Internet or to another
operator. This is where network elements such as session border controllers are needed.
In terms of backhaul, Clearwire uses an Ethernet-based microwave solution. Microwave links are
connected via Ethernet switches in a ring architecture to provide SONET-like resiliency. Metro
Ethernet rings are deployed in each market. Base stations are connected to Ethernet switches
for transport back to the core network. This architecture will evolve in the future to leverage fiber
in the core ring architecture with microwave in the last mile.
While the company is evaluating IMS as an option for delivering voice and multimedia products, it
has not publicly announced its direction. Clearwire does not see IMS as essential for SIP-based
VoIP, but may use IMS to interconnect with other carriers and centralize service distribution.
5.2
Mobile Operators
5.2.1
AT&T
AT&T currently deploys an HSPA network at 7.2 Mbps with plans to upgrade to LTE by 2011
while still optimizing its HSPA network. The operator has had exclusive rights with Apple to
distribute the iPhone and was one of the first operators to sell the device. AT&T has experienced
tremendous success with this device, selling over 9 million units over the last three years. In
addition, the operator has been doubling its quarterly sales of laptop data cards. The combined
success of these two products has been both a blessing and a curse. In 2008, AT&T reported
mobile data services revenue of $10.58 billion. Yet, both devices have caused traffic on the
operators network to grow over 5000% over the last three years, as reported by AT&Ts chief
technology officer.
As a result of the increased traffic, AT&T had to quickly devise a strategy to upgrade its backhaul
network to alleviate the strong traffic growth. The operator is upgrading the backhaul network
using a combination of technologies such as Ethernet over microwave, Ethernet over fiber, and
Ethernet over copper. AT&T has a large deployed base of fiber to support its U-verse video
service and will be able to leverage some of this fiber to support backhaul (though this has not
been publicly stated by AT&T).
AT&T has also deployed IMS to support its video chat service and is said to be a major proponent
of IMS. It is unclear how successful this service is since the operator does not publicly announce
subscriber numbers. Still, AT&T is expected to expand its IMS to other services.

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5.2.2
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NTT DoCoMo
NTT DoCoMo also has an HSPA network deployed at 21 Mbps and will be one of the first
operators (along with Verizon Wireless) to deploy LTE. The operator is known for being a global
leader in mobile data services, as well as extremely innovative in terms of early technology
acceptance and deployment. NTT DoCoMo has also deployed IMS for push-to-talk (PTT) and
video chat services and will leverage IMS in its LTE deployment in 2010.
5.2.3
Telstra
Telstra is cited throughout the industry as an innovator due to its early adoption of HSPA Evolved.
The operator was one of the first to deploy HSPA at 21 Mbps. It has over 828,000 mobile
broadband users. However, Telstra has no plans to deploy LTE in the near future; rather, it aims
to maximize utilization of its HSPA network.
5.2.4
Verizon Wireless
Verizon Wireless is one of the leading operators in regard to transforming its end-to-end network
to all-IP. It is also one of the most aggressive in terms of migrating its backhaul network to IP.
Verizon Wireless began upgrading its backhaul network from T1s to Ethernet over fiber five years
ago according to the operator.
As Verizon Wireless migrated from ATM to Ethernet, it still used copper T1s to transport its
backhaul traffic in most markets. It is now in the process of migrating all of its backhaul traffic to
Ethernet over fiber, but will use microwave where fiber is not available or where it is
cost-prohibitive. As a result of this migration, Verizon Wireless CDMA and LTE networks
leverage Ethernet over fiber backhaul in some markets. The operator plans to have fiber to 90%
of its territory cell sites by 2014.
Verizon Wireless will rely on fiber from Verizon Partners where available and use other carriers in
markets like Las Vegas where it does not have its own solution. Cable companies and LECs are
the primary alternate backhaul providers for Verizon Wireless. In terms of leased solutions, the
operator prefers to work with large partners with solid financial standings.
The primary requirements for Verizon Wireless backhaul include an Ethernet-based solution with
high availability and minimal jitter (deviation in timing, phase, amplitude, or width of the signal
pulse). This solution also has to have SONET-like reliability, which usually relates to
synchronous, redundant networks.
5.2.5
Vodafone
Vodafone is a multinational operator ranking number two globally with over 289 million mobile
subscribers. The operator has operations in over twenty-five markets, including Europe, Africa,
Asia, and North America. It currently has HSPA deployed in some of its networks with plans to
upgrade to LTE once the technology becomes more stabilized.
Vodafone has about 48% ownership in Verizon Wireless and 3% ownership in China Mobile.
Both of these operators plan to deploy LTE. Verizon Wireless will be first to market, launching
FDD LTE in 2010, and China Mobile will look to launch TDD LTE in the 2011 timeframe. All three
operators have been jointly testing the technology.

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5.3
Equipment Vendors
5.3.1
Acme Packet
Acme Packet is one of the leading providers of session border controllers. The companys product
portfolio includes: session border controllers, session routing proxies, and a multi-service security
gateway. Products are sold to enterprise customers, government agencies, and small and large
service providers. Acme Packet offers four hardware platforms, a blade solution, and software-only
solutions for partners that wish to integrate Acme Packet products into their platforms.
Acme Packet supports three approaches for delivering voice over LTE: VoLGA, MSC VoIP, and
IMS/pure SIP. The Net-Net Security Gateway, designed for FMC and femtocell applications, is an
element in the VoLGA. The company also advocates SIP based approaches to LTE voice including
transition options like MSC VOIP, and IMS, for which it sells session border controllers. Along with its
partner Mavenir Systems, Acme Packet supports a MSC VoIP solution that is architecturally similar to
the NSN NVS/FastTrack Solution, but is MSC independent.
Acme Packet had 2008 revenue of approximately $116 million and projected 2009 revenue of
$134 million. Over 50% of the companys sales are through channel partners, with OEMs and
integrators accounting for 50% to 60% of revenue. Acme Packet currently has about seventy-five
channel partners. OEM channel partners include Alcatel-Lucent, Nokia Siemens Networks, and
Ericsson. For the first half of 2009, Alcatel-Lucent accounted for 25% of revenue while NSN
accounted for 18% of revenue. Sales to mobile operators accounted for 15% to 20% of 2008
revenue while sales to enterprise customers comprised 10% to 20% of revenue.
Acme Packets session border controller (SBC) product line includes the following elements:
Net-Net 2600: Integrated SBC optimized for enterprise and contact centers.
Net-Net 3800: Integrated SBC optimized for smaller enterprise, government agencies, small
service providers, and smaller sites within larger organization. Supports up to 500 sessions.
Net-Net 4000: Most widely deployed carrier-class platform. One rack unit form factor that
includes all three functions: session border controller, session routing proxy, and
multi-service security gateway. Supports up to 32,000 sessions.
Net-Net 9200: Latest platform that supports transcoding and transrating for a wide selection
of wireless and wireline codecs. Provides the highest level performance and availability for
service providers and large enterprises. Supports up to 128,000 sessions.
Net-Net OS E: Software-only, integrated SBC for third-party servers.
Net-Net 4500 ATCA Blade: This blade can be integrated into the ATCA chassis of Acme
Packets partners. The blade supports all three features (session border controller, session
routing proxy, and multi-service security gateway). It is built on the .NET operating system
and supports up to 64,000 sessions.
Acme Packet sells directly to operators, but also leverages partners such as Ericsson,
Nokia Siemens Networks, and Alcatel-Lucent for wider distribution. The company has over 700
service provider customers.
5.3.2
Alcatel-Lucent
Alcatel-Lucent recently announced its EPC solution. The company is leveraging its 7750 service
router platform to provide PDN and S-GW functions. This platform is widely deployed, with over
30,000 units in service. The 7750 has been optimized to support 4G with the ability to support up
to 100 Gbps of throughput per slot. Additional features include per subscriber, per session
control, QoS, and policy enforcement. The PDN function is supported via a card add (Mobile

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Gateway Integrated Service Module, or MG-ISM) to the 7750 platform. New features supported
by the card include DPI and IPv4/IPv6 functions. All solutions are designed to support both
centralized and distributed architectures. Alcatel-Lucents packet core solution and backhaul
products leverage the same operating system, which enables tighter end-to-end integration.
The company also provides element management through its 5620 Service Aware Manager (SAM).
This platform can be used to manage the 7750 service router, Alcatel-Lucents eNodeB, and META
backhaul products. In addition, the 5620 SAM can scale to support up to 50,000 network elements.
Alcatel-Lucent will provide MME and PCRF via software add to its in-house ATCA platform, which
is widely deployed in 3G networks. Each functional element will be deployed on separate
platforms. The ATCA platform also enables MME pooling to improve resiliency and scaling
performance. Processing boards are hot-swappable in the event of failure.
The companys EPC products support hierarchical QoS, which means they can manage traffic
and QoS on several levels, including per flow, per subscriber, and per session queuing. This
capability enables the optimized use of network resources and the proper prioritization of traffic.
Alcatel-Lucent is the leading CDMA vendor. As such, it has developed an eHRPD solution to
assist operators in transitioning their networks from CDMA to LTE. The solution includes
software upgrades to existing CDMA network elements, such as the base station, PDSN, RNC,
and HLR. In order to support CDMA 1x voice until LTE VoIP is ready, operators will need to
upgrade the CDMA MSC and EV-DO RNC via a software upgrade.
The company also provides media gateway products, the 7549 wireless media gateway, which
simplifies the transition to all-IP. It supports both TDM to IP for PSTN support and IP to IP for
peering. The company has over 200 next-generation mobile network customers.
In addition, Alcatel-Lucent offers a complete set of IMS products, including the 5060 IP Call
Server and the 5450 IP Session Controller. The IP Session Controller (IPSC) supports both
3GPP and 3GPP2 call session control functions. Functions supported include: serving call
session control function, interrogating call session control, proxy call session control, and
break-out gateway call session control function. The IPSC can manage SIP sessions for voice,
video, or data and can be deployed in either centralized or distributed architecture. The IP Call
Server can be used to support small IMS deployments requiring class 5 functions or a
combination of call control functions. Alcatel-Lucent largely coined the term IP transformation and
has over forty IP transformation projects to date. IP transformation customers include MTNL (India)
for 3G and IMS-based services.
5.3.3
Cisco
Cisco is the leading vendor in network routing and security for wireline networks. The company is
leveraging this expertise to provide gateway functions for the wireless network core. Cisco
purchased P-Cube, a deep packet inspection provider, and has integrated P-Cubes DPI solution
into its routers. The company is leveraging its 7600 and ASR platforms to provide gateway
routing functions as operators move away from TDM and ATM to IP. Cisco also provides
backhaul products such as the ME3400 for Carrier Ethernet solution.
The company leverages a blade platform model whereby a Service Application Module for IP
(SAMI) is added to existing routers to introduce new features and increase processing power.
The SAMI blade has six PowerPC processors and supports subscriber management features as
well as intelligent service gateway functions. The 7600 with SAMI blade architecture can support
up to 600,000 subscribers on a single platform.

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One example of a feature added to a SAMI blade is Ciscos Deep Packet Inspection feature.
Using DPI on a blade enables deployment deep into the network. Platform-specific solutions can
be placed in the network where needed to supplement the lighter capabilities of the blade.
The benefit of the blade solution is that it enables integration where needed without requiring
additional network elements. Operators are able to evaluate certain network features without
installing dedicated platforms for those features. The challenge with Ciscos blade solution is that
it is not well suited for wide-scale deployment; network operators typically prefer platforms. Blade
solutions do not scale as well and are usually designed to handle smaller amounts of traffic.
Ciscos recent gateway wins include the Clearwire WiMAX gateway contract. Nevertheless, the
challenge with Ciscos platform is that the gateways were built as routers and then repurposed for
the wireless network. The wireless network has unique challenges related to mobility and
handoffs. A platform that was not designed with this in mind may not be as efficient as one
designed with mobility management from the onset. Ciscos recent acquisition of Starent
Network will solve this issue since Starent has a comprehensive gateway product line.
5.3.4
Ericsson
Ericssons EPC has a two-pronged approach to providing EPC elements. The first approach
is to reuse existing GGSNs by upgrading the software to support S-GWs or PDNs.
(Juniper has provided some of Ericssons deployed GGSN products.) The second approach
is to use new equipment based on Redbacks SmartEdge platform, which is a router-based
platform. Moreover, the MME function can be supported via a software upgrade to the
Serving GPRS Support Node (SGSN).
Ericsson provides mobile softswitch products, media gateways, IMS, and MSC servers. The
company was first to the market with its softswitch products in 2003. Today, Ericssons products are
deployed in over 240 networks serving 2.2 billion subscribers. The company has also developed
innovative solutions such as MSC pooling and clustered blade solution for its gateway solutions.
5.3.5
Genband
Genband provides multiple products used in IP transformation, including: softswitches, security
gateways, session border controllers, and signaling controllers. Genband products are deployed
in Tier One operator networks throughout the world. The company provides media gateway
products to work with the distributed MSC solutions. Its session border controllers are used
mostly for interconnection to other providers networks.
5.3.6
Huawei
Huawei provides a Unified Gateway platform for the EPC. This platform is based on open,
scalable architecture. The MME platform can support the SGSN and access gateway on the
same node. Additionally, the P-GW node can support the S-GW, ASN (Access Service Network)
gateway, PDSN, and GGSN gateway function. The physical architecture can be distributed with
a centralized policy server. In-line services include DPI and service-aware features. The policy
server is the PCRF, which enables flexible content control, flow-based charging, bandwidth
control, online charging, policy control, and service reporting. Huaweis IP transformation
customers include KPN Netherlands and Saudi Telecom.
5.3.7
Motorola
Motorola partners with Starent for its gateway products, but developed its own IMS platform
and is currently developing its own MME. The company has a line of softswitches that
combines the MSC and the VoIP gateway solution on a standard API platform. Overall,
Motorola does not seem to be as strong as its competitors in this space.

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5.3.8
NEC
NEC leverages an ATCA platform with its middleware software to deliver the MME, S-GW, and
P-GW functions. The company also provides a compact EPC node that combines the MME,
PDN, and S-GW functions in one piece of hardware. All of the EPC elements and eNodeBs are
managed under a single rack unit management platform, the OMC.
5.3.9
Nokia Siemens Networks

Nokia Siemens Networks response to IP transformation started with its Internet HSPA, or
I-HSPA, solutions. The company began with its version of the one-tunnel architecture developed
in the 3GPP Release 7 standards. This architecture enables the data to bypass the serving
gateway and go directly to the gateway node, which reduces network latency and processing
requirements. NSN also incorporated the RNC function into the base station, thereby minimizing
the number of elements in the network and further reducing latency and costs.
The companys EPC solution includes the Flexi Network Gateway and Flexi Network Server.
NSN uses its ATCA chassis for all EPC elements. The ATCA service blade architecture
supports the high-subscriber density and signaling requirements. It also provides a variety of
interface and enough processing power to handle LTE traffic. NSNs ATCA platform has
already been used in over fifty implementation projects and twenty commercial deployments
over the course of just more than a year. The company was selected by NEC and Panasonic
to provide core equipment for NTT DoCoMos network.
5.3.10
Starent Networks (now with Cisco)

Starent Networks produces a line of IP gateway solutions supporting multiple technologies,
including CDMA2000, HSPA, and LTE. In addition, the company provides multimedia platforms
such as the Session Control Manager. This product supports SIP-based solutions, including
converged fixed and mobile network messaging, push-to-talk over cellular, and other services.
The session manager also includes IMS elements such as an IETF-compliant SIP
Proxy/Registrar, a 3GPP-compliant Proxy Call Session Control Function (P-CSCF), an Access
Border Gateway, an Interrogating Call Session Control Function (I-CSCF), a Serving Call Session
Control Function (S-CSCF), and a Policy Agent (PA).
Starent currently supports two hardware platforms, the ST16 and ST40, equipped with a
Linux-based StarOS operating system. Both platforms support multiple mobile core network
functions (e.g., GGSN, SGSN, PDSN, and HA) and can support multiple functions
simultaneously. As a result, changes in device functions can be accomplished via software
upgrades without any hardware changes. The platforms can support data transport and
management functions or signaling control functions. Starent designed its hardware with
processes distributed across the platform for optimal performance.
Starents network elements include the following:
Packet Data Serving Node/Foreign Agent (PDSN/FA) for CDMA 1x, EV-DO Rev 0, and
EV-DO Rev A packet core networks: This element performs multimedia session
establishment and termination, accounting, and traffic routing. It also provides redirection to
the subscriber home network.
Gateway GPRS Support Node (GGSN): This element performs a similar role to the PDSN,
except it is used in the packet core of the GSM/GPRS and WCDMA/HSPA networks.
Home Agent (HA): This is the element in the subscribers home network that ensures
that the subscriber is reachable via the home address even when it is attached to
other networks.

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Session Control Manager: This element enables integrated multimedia services such as
VoIP and IPTV. It serves as a SIP proxy and registrar. In addition, it manages VoIP routing,
accounting, mobility, registration, and authentication.
Access Service Network (ASN) Gateway: This is an element in the WiMAX network that
performs multimedia session establishment and termination. It is similar to the PDSN and
GGSN in other networks described above.
Service GPRS Support Node (SGSN): This is an element in GSM/GRPS and

WCDMA/HSPA networks that tracks the location of a mobile device on a network and routes
the traffic to that location.
Security Gateway: This element enables interworking between various wireless networks and
WLANs. The gateway also terminates tunnels between the different networks. Moreover, it
manages session aggregation and termination for Wi-Fi networks and femtocells.
Internet Protocol Service Gateway (IPSG): This element supports enhanced charging and
billing, content filtering, and intelligent packet control. It sits behind the other gateways in the
packet core.
Starent develops software for each of the elements mentioned above, including the new LTE
EPC elements such as the PDN gateway (P-GW), serving gateway (S-GW), and MME. The
company also provides in-line services on the packet core with integrated DPI and policy
enforcement for services such as peer-to-peer detection, enhanced content charging, intelligent
traffic control, firewall, and content filtering. These in-line services are significant since operators
typically have to purchase separate elements to provide these functions. The addition of in-line
services reduces the number of elements in the networks, simplifies network configuration and
accounting and billing, and supports policy enforcement.
Starent was recently acquired by Cisco Systems for $2.9 billion in an all-cash transaction. The
acquisition will help Cisco gain access to the potentially lucrative 4G ecosystem. Cisco has been
a leader in IP networking, but has not been a significant player in the wireless infrastructure
market. The acquisition of Starent will provide Cisco with a considerable wireless customer base
and strong product line to compete for future 4G core businesses. Starent has been selected by
Verizon Wireless and Telenor for LTE core equipment and Cox Cable for CDMA then LTE
deployment. Other customers include Sprint Nextel, Vodafone, and China Telecom.
However, the acquisition could be a negative for Starents products if Cisco does not market
or promote the product line well. Cisco has acquired other companies in the past that
basically disappeared after the acquisition. Examples include P-Cubes DPI solution and
Navinis WiMAX products.
5.3.11
WiChorus
WiChorus provides four hardware platforms in various sizes (SC26, SC100, SC600, and
SC1400). Each platform can be customized via software to provide SGSN, GGSN, MME, PDN
gateway, ASN, or CSN gateway functions. The hardware is equipped with IPP cards, which have
dedicated accelerators for key functions such as QoS, deep packet inspection (DPI), switching,
encryption, compression, and other control functions. WiChorus hardware is fully distributed
since each IPP card has a switch fabric and processor versus the centralized switch fabric and
processor used in legacy routers. Some of the benefits of the distributed architecture include
improved scalability, redundancy, QoS, and increased active subscriber density.
WiChorus hardware also includes in-line functions. The in-line functions enable network
optimization capabilities by providing visibility into the rest of the network (e.g., the backhaul).
This allows the operator to pinpoint bottlenecks in the network. The solution also enables

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hierarchical flow control and compression. The compression is done at the line rate to
minimize network impact. Network monitoring capabilities provide direct feedback from the
base station for dynamic policy control.
WiChorus was recently selected by Clearwire to provide IP core elements for Clearwires all-IP
WiMAX core network. This was a huge win for WiChorus since it is a relatively new player in a
market with strong competitors like Motorola, Samsung, Alcatel-Lucent, and others. The
company was recently acquired by Tellabs for $165 million following a similar acquisition of
Starent by Cisco Systems for $2.9 billion. These acquisitions are important because they provide
entrance to the mobile networking market, which has long been dominated by Tier One vendors
such as Ericsson, Nokia Siemens Networks, and Alcatel-Lucent.
5.4
Winners and Losers
5.4.1
Winners
Acme Packet is strong in session border controllers and is considered by competitors and others
in the industry to be a leader in this space. There is not much competition in this segment; thus,
Tier One OEMs typically partner with Acme Packet or resell its solution. The companys annual
revenue is around $116 million, which does not make this segment lucrative enough for Tier One
operators to target it aggressively. Competitors in this space include Sonus, Starent, Genband,
and Cisco. Acme Packet will benefit from increased adoption of IMS and RCS products since the
company provides proxy call session control functions.
Starent is also a winner because it was purchased by Cisco for a premium of 20% over its
closing stock price and more than eleven times its current revenue. The company also won a
few LTE contracts, which helped strengthen its position in the market since not many LTE
contracts have been awarded to date. The company has streamlined its product to use two
hardware platforms that can be customized into different core network solutions. This will
simplify integration into Ciscos product portfolio.
Tellabs is a winner because it acquired WiChorus for $165 million. WiChorus products can be
used for WiMAX or LTE, thus providing Tellabs with a low-cost entry into the 4G core market.
Prior to the acquisition, Tellabs was mostly known for its backhaul products. Now the company
has solutions from the backhaul to the core network. Tellabs had 2008 revenue of $1.7 billion,
and this acquisition will help the company access new markets and opportunities.
5.4.2
Losers
Juniper Networks has failed to capitalize on the wireless migration to IP. The company is strong
in IP routing and security, but has not made significant inroads into the wireless market. Over
time, wireless will become the primary means of accessing the Internet. Consequently, those
companies that miss the opportunity may be risking their long-term viability. Juniper has not
made any aggressive moves into this space. Ericsson has been using Junipers equipment for
2G and 3G cores, but now the company will leverage its Redback SmartEdge platform for LTE
core. This will relegate Junipers equipment to legacy networks.
Motorola is also a loser since the company does not have its own evolved packet core products; it has
been reselling Starents solution. In addition, Motorolas only LTE win is due to its incumbency in
KDDIs CDMA network. The company seems to be fading into the background. Meanwhile, Ericsson,
Huawei, Alcatel-Lucent, and NSN are going after bigger market share more aggressively.

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Section 6.
FORECAST METHODOLOGY
ABI Research conducts primary research by interviewing a wide range of participants throughout
the wireless infrastructure ecosystem. For technologies like LTE where there is no historical
data, we leverage the Bass forecasting model to develop baseline forecasts for base stations and
subscribers. In addition, ABI Research tracks wireless infrastructure contracts on an ongoing
basis and leverages this information in developing and validating projected data. Forecast
numbers are also validated through direct communications with mobile operators and OEMs.
Subscriber data were used to develop the forecast models in this report relating to network
elements such as session border controllers and other session-based elements. Base station
data were employed as a baseline for the gateway forecasts since there is an average mapping
of each type of gateway to a number of base stations.
A detailed description of the subscriber and base station forecast methodologies is provided
below since both were used as the foundation for the forecasts provided in this research report.
6.1
Outline of ABI Researchs Subscriber Forecast Methodology
Quarterly historical subscriber data are gathered from operators
Data are aggregated by technology
Subscriber data are fed into a Bass Model
Set addressable market (m) and growth coefficients (p, q) are determined
Total market forecast is developed
Historical technology market share is analyzed
Underlying technology trends are projected as: Primary (competing 3G platforms); Secondary
(competing 2G platforms); and Thirtiary (competing 1G platforms and operator subscriber
market share, by technology)
Underlying trends are analyzed
Output quarterly subscriber forecasts, by technology, by operator (two years ahead)
Output quarterly subscriber forecasts, by technology (seven years ahead)
Leftover subscribers filter down to next level
Input assumption is based on historical data
Analysis and modeling

Output forecasts for report

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6.2
Base Station Forecast Methodology
6.2.1
Base Station Forecast

ABI Research details the forecast methodology for base station infrastructure deployment in
Figure 6.1. Essentially, there are two processes that have to be modeled, including:
The number of base stations required for rural coverage
The number of base stations required for urban/capacity-constrained coverage
Figure 6.1 Key Assumptions
Key Assumptions
2
Landmass (km ), population size, rural/urban landmass ratio, rural/urban population ratio, number of
2G & 3G licensees, BTS performance indicators
Each country divided into 1) Wilderness; 2) Rural; 3) Urban (LD and HD)
Wilderness: Excluded from

coverage calculations
Rural: Coverage-driven
calculation over x years
Urban: Capacity-driven
calculation based on
subscriber growth and traffic
profile
3G co-location assumptions applied
BTS Forecasts
6.2.1.1
Rural Coverage Calculations

These calculations take into account the network performance characteristics of the system in
question, which vary for GSM 900, GSM 1800, dual-band GSM, TACS 900, etc. Other necessary
factors include the following:
The network deployment schedule of the operators
The competitive conditions, terrain, and distribution of the population (i.e., what percentage of
the population lives in rural parts of the country; what percentage of the landmass is
unpopulated wilderness)
The average range of the base station, which varies for the 900 MHz (GSM and analog),
1800 MHz (GSM), and 2000 MHz (3G) bands

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6.2.1.2
Urban/Capacity-Constrained Calculations
These calculations are less dependent on addressing open area coverage requirements; instead,
they are derived according to the need to meet subscriber demand for unoccupied mobile
communications channels. If the available channels are fully occupied, customer dissatisfaction
grows. Therefore, in a capacity-constrained environment, the number of base stations required is
a function of the following:
6.2.2
The number of subscribers in that geographic location

The amount of traffic (either voice or data) generated at the busiest time of the day
Analog and GSM Networks

ABI Researchs forecasting model considered the following elements in a variety of ways for
analog and 2G networks:
Variable population densities: Estimates were generated for the percentage of the
population living in high-density and low-density population environments. It was then
possible to take into account the deployment of higher-capacity base stations in more
congested areas within the model.
Multi-sectored BTS: Base station sectorization was considered to enhance the overall
capacity of a base station.
Individual operator characteristics: Operator-specific network optimization factors were

generated to reflect each operators aggressiveness of deployment, as operators differ
significantly in their attitudes toward rolling out both geographical and capacity-based coverage.
Active-to-passive caller ratio: In urban environments, operators need to plan the capacity
of their networks for the peak busy-hour scenario. Analysts, however, are often not privy to
detailed traffic distribution data belonging to the operator, and therefore have to work with the
total number of subscribers on the network as the starting point.
Single-band and dual-band networks: Dual-band startup dates were analyzed. For
example, a number of European GSM 900 operators were awarded the GSM 1800 spectrum.
Depending on the location within the country, additional GSM 1800 base stations may or may
not be required.
6.2.3
3G Networks
Due to the unique characteristics of 3G (primarily because it is IP-orientated and does not rely on
spectrum reuse like GSM), a very different approach was required compared to forecasting the
GSM environment. For 3G equipment, ABI Research also considered the following:
2 GHz RF propagation characteristics: For rural environments, the propagation

characteristics of the 3G spectrum band and the geophysical challenges were seen as the
major limiting factors upon a base stations range (estimated to be 7 km on average).
Rollouts: 3G operators were forecast to roll out rural coverage by ABI Research, but at a
much slower rate than that witnessed for GSM 1800 or GSM 900.
The size of 3G spectrum blocks: 3G relies on spectrum carriers that are significantly larger
(5 MHz wide) than those for GSM (200 KHz wide). Some operators can take advantage of
greater levels of licensed spectrum. On average, 15 MHz of duplex bandwidth and 5 MHz of
unpaired spectrum were assumed.

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6.2.4
3G BTS Capacity
The capacity of a 3G base station cell is a function of the following:
6.2.4.1
The number of active 3G callers in adjacent cells.
The size of the cell (the larger its size, the smaller the bit rate achieved). The corresponding
bit rate for a low-density urban environment was assumed to be 860 Kbps per carrier
frequency block, where the typical cell size was a radius of approximately 3 km. For a
high-density urban environment, the figure was assumed to be 1.5 Mbps (equating to a
1.2 km radius). The capacity of the 3G base station was extrapolated to reflect new
capacity-enhancing technologies, such as HSDPA and HSUPA.
Network Suitability for GSM-WCDMA Co-Location

GSM operators, of course, will be able to take advantage of their existing GSM (900 MHz and/or
1800 MHz) base stations to co-locate some of their 3G equipment. For a well-established
GSM 900 network, it was assumed that 50% of the existing GSM 900 base stations would be
utilized, while 66% of GSM 1800 base stations are thought to be available to incumbent
GSM 1800 operators such as Orange (UK).
6.2.4.2
Average Data Load per End User

It is also important to take into account the variable bit rate streams that end users are likely to
employ. In theory, it will be possible to use speeds of up to 2 Mbps in the early days of 3G. In
light of the likely interest by end-user segments in different speed rates, ABI Research anticipates
the weighted average data load per end user will grow from 33 Kbps in 2002/112 Kbps in 2005 to
180 Kbps in 2007.
6.3
Core Network Forecast Methodology

Core network elements include SGSNs, GGSNs, P-gateways, and serving gateways. The core
network forecast was based on a combination of the base station forecast numbers and
subscriber forecasts. Each operator strategy for the number of gateway elements may vary
depending on the operators geographic territory. For example, operators with a larger coverage
area may choose a more distributed network architecture while those in urban areas may deploy
a centralized network. 3G gateway numbers were calculated using the subscriber forecast and
an average of 200,000 subscribers per element. The media gateway forecast leveraged the base
station forecast and average number of base stations for a gateway element.

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Section 7.
IMPORTANT DEFINITIONS
7.1
What Constitutes a Base Station?

It may be beneficial to define what ABI Research means by a base station. In a 2G cellular
environment, a base station communicates between an end-user device and a network. The
term end-user device typically denotes a handset. Increasingly, however, end-user devices also
comprise PC dongles, mini-PCIe cards, and embedded modems. In addition, base stations can
be referred to as NodeB in 3G environments and eNodeB in prospective LTE networks. For the
purposes of simplicity, ABI Research uses just the term base station, or BTS.
A base station has the following general architecture:
Antenna: Transmits and receives the radio signs to/from the transceiver
Power Amplifier (PA): Amplifies the signal from the TRX for transmission through the
antenna
Combiner: Allows for multiple digital data streams to be combined into one signal
Duplexer: Combines two or more signals into a common channel to improve transmission
efficiency
Transceiver (TRX): Generates and processes the reception of radio signals
Baseband Receiver Unit: Sets up the frequency hopping in signals, as well as the digital
signal processor (DSP)
Cabinet: Provides a secure and weatherproof shelter for the base stations electronics
Antenna Mast: Supports the elevation of antennas; the height of the antenna depends on
whether the base station is a macro, micro, or pico deployment
Backup Batteries: In the event of a power cut, the backup batteries cut over and maintain
communications; in the event of a long-term power cut, the backup batteries perform a
managed shutdown of the base station
Monitoring System: Monitors the status of various parts of the base station and
communicates the information to the operations & maintenance (O&M) command center
Control Function: Software-based; controls and manages the functioning of the base
station, guided where necessary by the O&M command center
Base Station Foundations: Especially for macro base stations, the site needs to be prepared
for base station installation; this may include installing a concrete base for the cabinet and
anchor placements for the antenna mast

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Figure 7.1 Base Station Location Site with Separate GSM and WCDMA Poles (Two Different Operators)
(Source: Mike Pratt, Illustration Only)
7.2
Base Station Accumulative Total

A base station is capable of supporting a number of radio transceiver access technologies. Over time,
the carrier upgrades the base station to support a number of GSM and WCDMA roadmap
technologies. A GSM Basic.GPRS.EDGE base station has three access technologies installed on
the base station. A WCDMA base station may have UMTS, HSDPA, HSUPA, and LTE access
technologies installed on the base station. Therefore, the base station Accumulative Total
represents the total number of base stations deployed, including all supported access technologies.
7.3
Net Additions in Base Stations

The base station reflects the deployment of the mobile cellular base station that is able to
support one or more access technologies within a particular access technology roadmap (GSM
versus WCDMA versus CDMA). Thus, access technologies such as GSM, GPRS, and EDGE
can be installed on a GSM base station.
Similarly, UMTS, HSDPA, HSUPA, and LTE can be installed on a WCDMA base station. The data
included in this study therefore report the underlying industry trends in base stations irrespective of
whether the base station supports one or more access technologies. For the CDMA roadmap, 1x,
Rev 0, Rev A, Rev B, and UMB have been allocated to the CDMA2000 base station.
Net additions in base stations display tracking data for two underlying infrastructure processes:
New Build & Upgrade base station net additions
Like for Like replacement base station net additions

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New Build & Upgrade base stations represent either entirely new deployments or upgrades.
Thus, a new base station has been deployed on a virgin site or the old 2G equipment has been
ripped out and multi-mode 2G-3G equipment has been installed. Like for Like replacement
base station net additions refer to existing base station equipment that has been replaced by
base station equipment consisting of similar functionality. The rationale for the switch is typically
improved signal propagation characteristics, reduced OPEX, or a smaller footprint on site.
In summary, net additions in base stations represents the total new base stations added in a
specified year and therefore does not include base stations already deployed.

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Section 8.
COMPANY DIRECTORY
Alcatel-Lucent (France)
www.alcatel-lucent.com
Nortel Networks (Canada)

www.nortel.com
Acme Packet
www.acmepacket.com
NTT Communications Corp (Japan)

www.ntt.com
AT&T
www.att.com
NTT DoCoMo (Japan)

www.nttdocomo.com
Bell Canada (Canada)

www.bell.ca
Rohde & Schwarz (Germany)

www.rohde-schwarz.com/us/
China Telecom (China)

http://en.chinatelecom.com.cn
Tektronix
www.tek.com
Cisco Systems, Inc

www.cisco.com
Telefnica SA (Spain)
www.telefonica.com
Cox Communications, Inc

www.cox.com
TeliaSonera (Sweden)
www.teliasonera.com
Ericsson (Sweden)
www.ericsson.com
Telstra Corp Ltd (Australia)

http://telstra.com.au
France Telecom/Orange (France)

www.francetelecom.com
Telus Corp (Canada)

www.telus.com
Genband
www.genband.com
T-Mobile (Germany)
www.t-mobile.net
Huawei Technologies Co, Ltd

(China)
www.huawei.com
Verizon Communications
www.verizon.com
Motorola Inc
www.motorola.com
NEC Corp (Japan)
www.nec.com
Vodafone (United Kingdom)

www.vodafone.com
WiChorus
www.wichorus.com

(Finland)
www.nokiasiemensnetworks.com

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Section 9.
ACRONYMS
1xRTT
Single-Carrier Radio Transmission Technology
2G
Second Generation
3G
Third-Generation Mobile Technology (www.umtsworld.com)
3GPP
Third-Generation Partnership Project (www.3gpp.org)
3GPP2
Third-Generation Partnership Project 2 (www.3gpp2.org)
4G
Fourth Generation
AAA
Access, Authentication, Authorization (www.billingworld.com)
ADSL
Asymmetric Digital Subscriber Line
API
Application Programming Interface
ASN
Access Service Network
ATCA
Advanced Telecom Computing Architecture
ATM
Asynchronous Transfer Mode
BSS
Base Station System
BTS
Base Transceiver Station
CAGR
Compound Annual Growth Rate
CAPEX
Capital Expenditure
CCCF
Call Continuity Control Function
CDMA
Code Division Multiple Access (www.cdg.org)
COTS
Commercial Off-the-Shelf
CPC
Continuous Packet Continuity
CPRI
Common Public Radio Interface
CS
Circuit-Switched
CSCF
Call Session Control Function (part of IMS standard)

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CSCP
Call Session Control Platforms (Cisco)
CSN
Connectivity Service Network
DHCP
Dynamic Host Configuration Protocol
DoS
Denial of Service
DPI
Deep Packet Inspection
DSL
Digital Subscriber Line
DSP
Digital Signal Processor
E1
European Basic Multiplex Rate (30 voice channels; 2.048 Mbps)
EDGE
Enhanced Data for GSM Evolution
eHRPD
Evolved High Rate Packet Data
EPC
Evolved Packet Core
ETSI
European Telecommunications Standards Institute (www.etsi.org)
E-UTRAN
Evolved UMTS Terrestrial Radio Access Network
EV-DO
Evolution Data Only (optimized version of CDMA2000)
FCC
Federal Communications Commission (www.fcc.org)
FDD
Frequency Division Duplex
FMC
Fixed Mobile Convergence
GAN
Generic Access Node or Network (www.thefmca.co.uk)
GANC
Generic Access Node Controller
Gbps
Gigabits per Second
GERAN
GSM/Edge Radio Access Network
GGSN
GPRS Gateway Support Node
GHz
Gigahertz (thousands of MHz)
GPRS
General Packet Radio System
GPS
Global Positioning System
GSM
Global System for Mobility (www.gsmworld.com)

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HA
Home Agent
HARQ
Hybrid Automatic-Repeat-Request
HD
High Density
HLR
Home Location Register
HSDPA
High-Speed Downlink Packet Access
HSPA
High-Speed Packet Access
HSPA+
High-Speed Packet Access Plus
HSS
Home Subscriber Server (www.apertio.com)
HSUPA
High-Speed Uplink Packet Access (data access protocol for mobile

phone networks)
I-CSCF
Interrogating Call Session Control Function
IETF
Internet Engineering Task Force (www.ietf.org)
IMS
IP Multimedia Subsystem (www.3gpp2.org)
IP
Internet Protocol
IPSC
IP Session Controller (Alcatel-Lucent)
IPSG
Internet Protocol Service Gateway
IPTV
Internet Protocol Television
IPv4
Internet Protocol Version 4
IPv6
IP Version 6 (www.ietf.org)
Kbps
Kilobits per Second
KHz
Kilohertz (1,000 Hertz)
km2
Square Kilometer
LD
Low Density
LEC
Local Exchange Carrier
LTE
Long Term Evolution
MAC
Media Access Control

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MB
Megabyte
Mb
Megabit
Mbps
Megabits per Second
MCS
Multimedia Communications Server
META
Mobile Evolution Transport Architecture
MG-ISM
Mobile Gateway Integrated Service Module
MHz
Megahertz (million Hertz)
MME
Mobility Management Entity
ms
Millisecond
MSC
Mobile Switching Center (www.gsmworld.com)
NAT
Network Address Translation
nm
Nanometer
NSN
NVS
Nokia Siemens Networks' Mobile VoIP Server
O&M
Operations & Maintenance
OEM
Original Equipment Manufacturer
OFDM
Orthogonal (or Optical) Frequency Division Multiplexing
OFDMA
Orthogonal Frequency Division Multiple Access
OMC
Operation & Maintenance Center
OPEX
Operating Expenditure or Expenses
OS
Operating System
OSS
Operational Support System
PA
Power Amplifier
PA
Policy Agent
PC
Personal Computer
PCIe
Peripheral Component Interconnect Express

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PCRF
Policy and Charging Rules Function
PCS
Policy Control Server
P-CSCF
Proxy Call Session Control Function
PDH
Plesiochronous Digital Hierarchy
PDN
Packet Data Node
PDSN/FA
Packet Data Serving Node/Foreign Agent
P-gateway
PDN Gateway
P-GW
PDN Gateway
PS
Packet-Switched
PSTN
Public-Switched Telephone Network
PTT
Push-to-Talk
QAM
Quadrature Amplitude Modulation
QoS
Quality of Service
R&D
Research & Development
RAN
Radio Access Network
RCS
Rich Communication Suite
RF
Radio Frequency
RNC
Radio Network Controller
SAM
Service Aware Manager (Alcatel-Lucent)
SAMI
Service Application Module for IP (Cisco)
SBC
Session Border Controller
SCC
Session Call Continuity
S-CSCF
Serving Call Session Control Function
SDH
Synchronous Digital Hierarchy
S-gateway
Serving Gateway
SGSN
Serving GPRS Support Node

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S-GW
Serving Gateway
SIP
Session Initiation Protocol (www.sipforum.org)
SMS
Short Message Service
SON
Self-Optimized Network
SONET
Synchronous Optical Network
SSGN
Serving GPRS Support Node
T1
T-Carrier 1 (digital transmission line; 1.544 Mbps, 24 voice channels)
TACS
Total Access Communication System
TDD
Time Division Duplex (Wireless)
TDM
Time Division Multiplex
TI
Texas Instruments
TISPAN
Telecommunications and Internet Converged Services and Protocols for

Advanced Networking
TRX
Transceiver
TV
Television
UK
United Kingdom
UMB
Ultra Mobile Broadband
UMPC
Ultra Mobile PC
UMTS
Universal Mobile Telecommunications System (www.itu.org)
US
United States
USB
Universal Serial Bus
UTRAN
UMTS Terrestrial Radio Access Network
VAN-C
VoLGA Access Network-Controller
VDSL
Very High Bitrate Digital Subscriber Line
VMS
Voice Messaging System

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VoIP
Voice over IP
VoLGA
Voice over LTE via Generic Access
WAP
Wireless Application Protocol
WCDMA
Wideband Code Division Multiple Access
Wi-Fi
Wireless Fidelity
WiMAX
Wireless Microwave Access
WLAN
Wireless Local Area Network

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Table of Contents
Section 1. ........................................................................................................................... 2
Executive Summary..................................................................................................... 2
1.1 What Is IP Transformation? ................................................................................................. 2
1.2 Mobile Operator Perspective................................................................................................. 2
1.2.1 Challenges of All-IP Mobile Networks .............................................................................. 2
1.2.2 IMS Impact ......................................................................................................................... 3
1.3 OEMs May Finally See Return from IMS Investments...................................................... 3
1.4 Global Market Forecast......................................................................................................... 4
1.5 Scope of the Study ................................................................................................................. 4
1.5.1 Backhaul Transformation .................................................................................................. 4
1.5.2 Session Border Controllers ................................................................................................ 6
1.5.3 Media Gateways/Softswitches ........................................................................................... 7
1.5.4 IMS ...................................................................................................................................... 8
1.6 Conclusion............................................................................................................................ 10
Section 2. ......................................................................................................................... 11
IP Transformation Strategic Recommendations............................................. 11
2.1 Overview .............................................................................................................................. 11
2.2 Radio Access Network (RAN).............................................................................................. 12
2.2.1 Strategic Recommendations ............................................................................................ 12
2.3 Core Networks ..................................................................................................................... 12
2.4 IP Backhaul ......................................................................................................................... 14
2.5 Service Architecture Evolution........................................................................................... 15
2.5.1 IP Multimedia Subsystems (IMS) ................................................................................... 15
2.5.1.1 VoLGA ............................................................................................................................ 16
2.5.1.2 Nokia Siemens Networks NVS Solution ..................................................................... 16
2.5.1.3 One Voice Profile ........................................................................................................... 17
2.6 Business Model Evolution................................................................................................... 17
2.7 Conclusion............................................................................................................................ 18
Section 3. ......................................................................................................................... 19
Drivers and Inhibitors for IP Transformation.................................................... 19
3.1 Drivers.................................................................................................................................. 19
3.1.1 Device Migration .............................................................................................................. 19
3.1.2 Services and Business Models ......................................................................................... 20
3.1.3 Cost Reduction .................................................................................................................. 20
3.1.4 Data Bandwidth ............................................................................................................... 20
3.1.5 4G Network Migration ..................................................................................................... 21
3.2 Inhibitors.............................................................................................................................. 21
Section 4. ......................................................................................................................... 22
Why IP Transformation? .......................................................................................... 22
4.1 Service Evolution................................................................................................................. 22

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4.1.1 Service Brokering ............................................................................................................. 22

4.2 Radio Access Network (RAN) Evolution ............................................................................ 22
4.2.1 3.5G Evolution .................................................................................................................. 22
4.2.2 3.9G Evolution .................................................................................................................. 23
4.3 Backhaul Evolution ............................................................................................................. 23
4.4 Mobile Core .......................................................................................................................... 25
4.4.1 Quality of Service ............................................................................................................. 25
4.4.2 Mobile Softswitches/Media Gateways ............................................................................. 25
4.4.3 Session Border Controllers .............................................................................................. 26
4.4.4 CDMA EV-DO Networks.................................................................................................. 27
4.4.5 WCDMA Networks SGSN and GGSN.......................................................................... 28
4.4.6 HSPA Networks................................................................................................................ 29
4.4.7 LTE Network Evolution ................................................................................................... 29
4.4.8 WiMAX Network Evolution ............................................................................................. 31
4.5 IP Multimedia Subsystem (IMS) Implications for IP Transformation ............................ 32
4.5.1 IMS Development ............................................................................................................. 33
Section 5. ......................................................................................................................... 35
IP Transformation Strategies ................................................................................. 35
5.1 Greenfield Operators........................................................................................................... 35
5.1.1 Clearwire........................................................................................................................... 35
5.2 Mobile Operators ................................................................................................................. 35
5.2.1 AT&T ................................................................................................................................. 35
5.2.2 NTT DoCoMo .................................................................................................................... 36
5.2.3 Telstra ............................................................................................................................... 36
5.2.4 Verizon Wireless ............................................................................................................... 36
5.2.5 Vodafone............................................................................................................................ 36
5.3 Equipment Vendors............................................................................................................. 37
5.3.1 Acme Packet...................................................................................................................... 37
5.3.2 Alcatel-Lucent................................................................................................................... 37
5.3.3 Cisco .................................................................................................................................. 38
5.3.4 Ericsson ............................................................................................................................. 39
5.3.5 Genband ............................................................................................................................ 39
5.3.6 Huawei .............................................................................................................................. 39
5.3.7 Motorola ............................................................................................................................ 39
5.3.8 NEC ................................................................................................................................... 40
5.3.9 Nokia Siemens Networks................................................................................................. 40
5.3.10 Starent Networks (now with Cisco)............................................................................... 40
5.3.11 WiChorus ........................................................................................................................ 41
5.4 Winners and Losers............................................................................................................. 42
5.4.1 Winners ............................................................................................................................. 42
5.4.2 Losers ................................................................................................................................ 42
Section 6. ......................................................................................................................... 43
Forecast Methodology............................................................................................... 43
6.1 Outline of ABI Researchs Subscriber Forecast Methodology .......................................... 43
6.2 Base Station Forecast Methodology ................................................................................... 44
6.2.1 Base Station Forecast....................................................................................................... 44
6.2.1.1 Rural Coverage Calculations ........................................................................................ 44
6.2.1.2 Urban/Capacity-Constrained Calculations.................................................................. 45

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6.2.2 Analog and GSM Networks.............................................................................................. 45

6.2.3 3G Networks ..................................................................................................................... 45
6.2.4 3G BTS Capacity .............................................................................................................. 46
6.2.4.1 Network Suitability for GSM-WCDMA Co-Location .................................................. 46
6.2.4.2 Average Data Load per End User ................................................................................ 46
6.3 Core Network Forecast Methodology ................................................................................. 46
Section 7. ......................................................................................................................... 47
Important Definitions ............................................................................................... 47
7.1 What Constitutes a Base Station?...................................................................................... 47
7.2 Base Station Accumulative Total ....................................................................................... 48
7.3 Net Additions in Base Stations........................................................................................... 48
Section 8. ......................................................................................................................... 50
Company Directory ................................................................................................... 50
Section 9. ......................................................................................................................... 51
Acronyms...................................................................................................................... 51
Sources and Methodology ........................................................................................ 62
Notes.............................................................................................................................. 62
Please be aware that an Excel worksheet containing all market forecasts accompanies this
document. When downloading this report as a PDF from the ABI Research Web site, please
check to see if the Excel worksheet is also available for download. If you have any questions
regarding this, please contact our client relations department.
TABLES
Table 1-1. Session Border Controller Mobile Networks Revenue, World Market, Forecast: 2009 to 2014
Table 1-2. Mobile Softswitch Revenue, World Market, Forecast: 2008 to 2014
Table 1-3. Mobile IMS Revenue, World Market, Forecast: 2008 to 2014
Table 2-1. LTE Gateway Shipments, World Market, Forecast: 2009 to 2014
Table 3-1. Data Service Revenue, Countries with Strong Data Growth, Forecast: 2008 to 2014
Table 4-1. Session Border Controllers, World Market, Forecast: 2009 to 2014
Table 4-2. LTE Base Stations Deployed in CDMA Networks, World Market, Forecast: 2009 to 2014
Table 4-3. WiMAX Gateway Net Additions, World Market, Forecast: 2009 to 2014
Table 4-4. IMS Penetration Rate, World Market, Forecast: 2008 to 2014
Table A-1. Session Border Controller Mobile Networks (Net Additions), World Market, Forecast:
2009 to 2014
Table A-2. Session Border Controller Total Market( Net Additions), World Market, Forecast: 2009 to
2014
Table A-3. MME and Serving Gateways, World Market, Forecast: 2009 to 2014
Table A-4. Media Gateways (Net Additions), World Market, Forecast: 2009 to 2014
Table A-5. ASN and CSN Gateways , World Market, Forecast: 2009 to 2014
Table A-6. SGSNs and GGSNs (Accumulated Total), World Market, Forecast: 2009 to 2014

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Table A-7. Total Traffic Through the Mobile Core, World Market, Forecast: 2009 to 2014
Table A-8. IMS Upgrade Capital Expenditure Estimates, World Market, Forecast: 2009 to 2014
Table A-9. Carrier IMS Capital Expenditure, World Market, Forecast: 2009 to 2014
Table A-10. OSS/BSS Deployments, World Market, Forecast: 2009 to 2014
Table A-11. Session Border Controller (Mobile Market) Revenue, World Market, Forecast: 2009 to 2014
Table A-12. Mobile Softswitch Revenue, Middle East and Africa, Forecast: 2008 to 2014

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SOURCES AND METHODOLOGY

An analyst was assigned to coordinate and prepare this Research Report. Research and query
specialists helped lay the data and information groundwork for the analyst, who also developed a
focused interview strategy.
ABI Research teams follow a meticulous process when examining each market area under study.
The three basic steps in that process are: information collection, information organization, and
information analysis.
The key element in ABI Researchs information collection process is developing primary sources,
that is, talking to executives, engineers, and marketing professionals associated with a particular
industry. It is from these conversations that market conditions and trends begin to emerge, free
from media hype.
Analysts use secondary sources as well, including industry periodicals, trade group reports,
government and private databases, corporate financial reports, industry directories, and other
resources.
Analysts conclusions take several forms. The text addresses hard data and well-defined trends
and is supported by forecast tables and charts. The text also addresses issues and trends that
are difficult to quantify and present in neat, tabular form. Lying at the margins of an industry, they
are often precursors of the next technology wave.
NOTES
CAGR refers to compound average annual growth rate, using the formula:
CAGR = (End Year Value Start Year Value)(1/steps) 1.
CAGRs presented in the tables are for the entire timeframe in the title. Where data for fewer
years are given, the CAGR is for the range presented. Where relevant, CAGRs for shorter
timeframes may be given as well.
Figures are based on the best estimates available at the time of calculation. Annual revenues,
shipments, and sales are based on end-of-year figures unless otherwise noted. All values are
expressed in year 2009 US dollars unless otherwise noted. Percentages may not add up to 100
due to rounding.

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Published 1Q 2010
2010 ABI Research
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Tel: +1 516-624-2500
Fax: +1 516-624-2501
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ALL RIGHTS RESERVED. No part of this document may be reproduced, recorded, photocopied,
entered into a spreadsheet or information storage and/or retrieval system of any kind by any
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publisher.
Exceptions: Government data and other data obtained from public sources found in this report
are not protected by copyright or intellectual property claims. The owners of this data may or may
not be so noted where this data appears.
Electronic intellectual property licenses are available for site use. Please call ABI Research to
find out about a site license.

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ABIresearch

All IP Architectures, IMS, Mobile Backhaul, Mobile Softswitch,

Mobile Operator Perspective

Challenges of All-IP Mobile Networks

2010 ABI Research abiresearch.com

OEMs May Finally See Return from IMS Investments

2010 ABI Research abiresearch.com

Global Market Forecast

Scope of the Study

2010 ABI Research abiresearch.com

Copper T1 accounts for 39% of all backhaul

Microwave accounts for 37% of backhaul

Ethernet over fiber accounts for 12%

Ethernet over copper accounts for about 9%

T1s account for 47% of deployed backhaul

Ethernet over fiber accounts for 19%

Microwave accounts for 14%

Ethernet over copper accounts for 12%

2010 ABI Research abiresearch.com

(Number of New Base Stations)

Session Border Controllers

2010 ABI Research abiresearch.com

2010 ABI Research abiresearch.com

Mobile Softswitch Revenue, World Market, Forecast: 2008 to 2014

2010 ABI Research abiresearch.com

Mobile IMS Revenue, World Market, Forecast: 2009

(Source: ABI Research)

Mobile IMS Revenue, World Market, Forecast: 2014

(Source: ABI Research)

2010 ABI Research abiresearch.com

2010 ABI Research abiresearch.com

High-performance routers to transport data

Session border controllers to convert traffic from TDM to IP at interconnection points

In-vehicle video and audio services

Personalized services combining location, preferences, presence, and address

2010 ABI Research abiresearch.com

Radio Access Network (RAN)

2010 ABI Research abiresearch.com

LTE Gateway Shipments, World Market, Forecast: 2009 to 2014

Number of Units Shipped

2010 ABI Research abiresearch.com

2010 ABI Research abiresearch.com

Service Architecture Evolution

IP Multimedia Subsystems (IMS)

2010 ABI Research abiresearch.com

Figure 2.1 VoLGA

Nokia Siemens Networks NVS Solution

2010 ABI Research abiresearch.com

One Voice Profile

Business Model Evolution

2010 ABI Research abiresearch.com

2010 ABI Research abiresearch.com

Ultra mobile PCs

Mobile Internet devices

Handheld gaming devices

2010 ABI Research abiresearch.com

Services and Business Models

2010 ABI Research abiresearch.com

2010 ABI Research abiresearch.com

Improvement in application server support to prevent termination of primary session when

Explicit sequence of services can be invoked in the application server

The user device can trigger the service delivery process

Radio Access Network (RAN) Evolution