Wholesale operators everywhere have long invested in global next generation IP networks. Now they’re adding gateways, session border controllers, submarine cables and points of presence (POPs) to that investment burden, writes Priscilla Awde
Wholesalers are getting bigger and carrying increasing amounts of the world’s traffic, so, to increase capacity and international footprints, they have to invest to meet demand and grow to the scale the competitive market place demands.
David James, principal analyst, wholesale telecoms at Ovum, sees a trend in operators outsourcing international voice traffic to big wholesalers which have the reach, Next Generation Networks (NGNs), volumes and therefore economies of scale to carry traffic cost effectively. His message is: “Get bigger; get better or get out.”
And they need to get bigger fast. In spite of falling margins, wholesalers are investing in meeting demand for international capacity and services. Telegeography calculated 2009 global voice traffic reached 406 billion minutes of which 27% was transported as VoIP and estimates it will grow between 7-8% from 2010-2011. In 2009, average international backbone traffic volumes on international links grew 74% and internet capacity increased 64%. In the same year, network operators added 9.4Tbps of new capacity to handle demand for IP transit.
If wholesale carriers have made the transition to next generation IP architectures, their established retail telco customers still transmit and terminate voice over circuit switched platforms. Although IP is the upgrade path for existing telcos and the technology choice for new entrants, for many incumbent fixed and mobile Tier 1 operators, building end-to-end NGNs is in the early stages.
Operators with wholesale arms have or are building core NGNs and are starting to switch off legacy systems. “Our build strategy is to shut down as many legacy platforms as possible,” explains Michael Lawrey, executive director, networking, technology at Telstra. “NGN network construction is complete and we have moved all broadband and 90% of frame and ATM via multi-service edge equipment. The only thing left is PSTN voice switching and to migrate products and customers.”
Apart from budgetary considerations and retraining staff, operators must time transformation projects correctly and do them quickly to avoid the cost of running two networks. “The new technology needs new experts to migrate all the traffic,” suggests Alexandre Pebereau who is executive vice president of international carriers for Orange. “Wholesale VoIP is wide scale for big operators but generally voice is only starting to migrate to IP now. Large wholesalers have new networks making it cheaper and smarter to use IP. Big incumbents have been providing international voice via TDM for years and only now are switches reaching full capacity - operators are still making money over TDM. The transition from the entire TDM switching system to IP is a step-by-step, customer-by-customer process.”
TDM and IP co-exist
During the transition, TDM and IP must co-exist but wholesalers can provide the glue between technologies and networks.
In the middle of the transmission chain, wholesale carriers must seamlessly interconnect their IP networks with TDM at the edge. This entails interoperability, interconnect, quality of service and reliability challenges; challenges which wholesalers are converting to opportunities adding managed services, data centres and outsourcing to capacity and international connectivity. Retailers are outsourcing international voice traffic to wholesale carriers’ networks, benefiting from economies of scale, reducing the number of international contracts and potentially allowing them to shut down legacy systems and migrate to IP according to their business plans.
Carrier grade deployments of VoIP have largely addressed reliability, quality and security issues. “VoIP QoS depends on how solutions are architected and can be done at close to five nines reliability,” explains John Nolan who is executive director of wholesale product marketing at AT&T Business Solutions. “The industry still needs TDM until all retail end points become IP. Fixed and mobile voice are the last barriers – issues have been solved for other IP traffic.”
Wholesale carriers are adding more gateways to handle the transition from TDM to IP at interconnect points between their global networks and Local Exchange Carriers (LECs). Work is on-going to formalise IP peering interfaces but their adoption is not yet widespread. John Hayduk, the chief technology officer at Tata Communications, says: “We hoped to work with more operators for pure IP-IP connections. It is slow but we are starting to work on the network edge. Softswitches support TDM and IP interfaces. The technology is maturing to the point where most interoperability issues are in the past now and most vendors have done interworking so there is a seamless transition between TDM and IP.”
If interconnect at the transport layer is largely solved, protocol interoperability issues remain. Standards exist to convert voice from TDM to VoIP but they are interpreted in many, and subtly different, ways. “It’s important that there’s a standardised understanding of how to present IP peering interfaces for carriers,” explains Mark Rankin, a distinguished system engineer at Cisco Systems. “There are many different options but a standardised set of mechanisms will speed adoption of services.”
Session Initiation Protocol (SIP) was developed mainly by the IP community and the codecs for carrying VoIP are not standardised. The telecoms industry is developing SIPi which, says Steve Best, a director of product management at BT Wholesale, allows operators to offer all the TDM features but maintain them in the IP environment. “Everyone is developing SIPi,” says Best. “To win business, carriers must be able to handle all interface standards within the marketplace; interoperate with all softswitches to transfer applications to IP; provide connectivity to the rest of the world and gateways to TDM. Physically interconnecting traffic is complex and all new customers go through full interoperability tests.”
Operators and vendors are collaborating through industry fora to resolve problems especially at network edges. There are no QoS issues in all IP networks but these, suggests James at Ovum, are thin on the ground resulting in perceptible delays for VoIP. “There are lots of initiatives and a number of different ways of sorting standards differences,” he says. “The GSMA has set up an initiative to devise IPexchange (IPX), for fixed and mobile traffic delivered over IP. Using whatever codecs they support, carriers wanting to transmit traffic between each other’s networks can connect to an IPX provider so content is sent transparently over IP to the destination. The IPX translates and unifies different standards.”
Telcos connecting to a single IPX provider (frequently an international wholesaler), can therefore connect to all its other customers. This IPX model of federated hubs makes interconnection easier for wholesalers’ customers and reduces the number of international agreements they must make.
Wholesalers are increasing the number of session border controllers which have many of the features typical on TDM platforms. Border controller technology from major vendors is interoperable and, in future, session border controllers at network edges may become cards in routers with voice eventually merging into routing platforms. “The aim is to get all customers on IP-IP networks connecting via SIP. The biggest challenge is to get incumbents to interface via IP,” explains Greg Wallace, a vice president of global network engineering at Global Crossing. “We can do everything else. The LECs space on the edge is not moving. Enterprise customers are connecting to us because they cannot get IP connections from incumbents for VoIP. Although we are committed to moving to an all IP voice network, it cannot be 100% until operators connect via IP.”
Carriers are adding capacity and filling in gaps especially in developing regions. They are building POPs in different countries and investing in subsea cables, both as consortia members or sole owners, to expand global reach. Telegeography puts investment in new cables at around $4billion in the past two years and predicts $5billion from 2010-2011.
Some suggest in future there will be a few supra-national carriers carrying the world’s traffic. Retailers will negotiate one outsourcing contract and connect via IPX hubs and POPs. “Wholesalers are very well positioned to act as neutral third parties to resolve ‘any to any’ connectivity, leverage economies of scale and expand addressable markets,” believes Paolo Campoli,a senior director of service provider architectures at Cisco Systems. “They are taking a long term view of cost optimisation; they see IP as a common transport layer and are converging multimedia traffic on a common platform.
“There is considerable investment in business related services and huge acceleration in SIP/IP touching for enterprises which is driving what wholesalers are thinking about,” he adds. “There is also new demand for cloud interconnect but understanding this business model and standards are key barriers.”
Ultimately no operator can cover the world but the advice is to get as big as possible to achieve economies of scale. Wholesale carriers are opening up new borders, adding locations and capacity and increasing access to their platforms. Some are offering raw capacity giving customers more flexibility in designing their own trunk routes and are creating value-added services to compensate for falling voice revenues. Scott Morrison, who is research vice president at Gartner, says: “Supra-national carriers make money by providing the glue between national wholesalers and retailers. IP peering, IP transit and interconnect are ways for them to make money. Operators can buy capacity into a wholesaler’s cloud and offload traffic as required. Wholesale operators will extend the classic interconnect model into new, big ticket, high value, high margin services like telepresence, video conferencing and data centres.” He suggests those with the biggest capacity, most submarine cables and that can make transit happen will win.
There is no doubt that the future is all about using IP technology to transmit all traffic. The question is how fast will all players in the chain convert. The cost of not doing so is rising as revenues and margins are squeezed. “Operators will burn cash by not being on IP: the business case is overwhelming,” believes Matthew Finnie, the chief technology officer of Interoute. “There are no structural, technical or interoperability reasons not to convert to IP. The technology fundamentally works. Debate over.” GTB