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Since the earliest days of the telecom industry, competitive carriers have played a key role in the market. Their presence in rural, underserved areas helped ensure access to the vast majority of the U.S. population. Their proximity to the customer enabled them to provide a level of service that the larger tier 1 carriers could not—and even today, in many cases, cannot—match.
Today the evolution of technology enabling over-the-top application providers, combined with the proliferation of tier 1 providers taking up larger market share each year, make it harder than ever for smaller carriers to carve out a sustainable niche, even in rural markets they once considered to be home turf. This is worrisome, not only for them but for the industry as a whole. Competition in mobile services has contributed to a history of continuously falling prices, improving service quality, and continuous innovation across the wireless value chain.
In the new reality, smaller rural operators are under intense pressure to adapt and everything is on the table, including the design of their network infrastructure. The trend toward more efficient IP-based platforms is well underway. The challenge for competitive carriers is how to transform their network infrastructures and service delivery platforms into a standards based IP network infrastructure that is more open, future-proof and flexible. Enter cloud based hosting services: an opportunity for smaller carriers to reach customers in a scalable, cost-efficient way. Rapid application deployment, lower CAP-EX investment, and managed back-office services make an IP multimedia subsystem (IMS) an attractive option, but presents a variety of challenges for a competitive carrier.
IMS-Enabled Services: Opportunities and Challenges
IMS is an architectural framework that enables the delivery of a variety of IP services such as voice over LTE (VoLTE) and voice over Wi-Fi (VoWiFi). It is also the platform for providing Advanced Messaging such as enhanced voice calling, video conferencing and screen sharing. An IMS platform is generally viewed as the next stepping stone to a more evolved all-IP network. For competitive carriers, migrating to an IMS platform is filled with opportunities as well as challenges. Over the last couple of years, the demand for IMS-based services, including VoLTE and VoWiFi, has exploded. In 2016, Deloitte Global predicted that about 100 carriers worldwide will be offering at least one packet-based voice service at the end of 2016, double the amount year-on-year, and six times higher than at the beginning of 2015. In the U.S., AT&T, T-Mobile and Verizon Wireless all launched VoLTE networks last year. By 2020, it is estimated that global VoLTE services will account for nearly $120 billion (USD) in annual service revenue.
The Deloitte study suggests that the primary drivers behind VoLTE and VoWiFi are increased capacity and coverage. VoLTE allows operators to off-load some of their 2G and 3G voice traffic onto the LTE (4G) network. The freed up 2G/3G spectrum can then be reused to support the increasing demand for data services. Additionally LTE is a more efficient interface, supporting up to twice as many voice calls per megahertz of bandwidth. VoWiFi, on the other hand, enables operators to off-load voice and data traffic from their networks, provided the user is within a hot spot. The strong business case for IP-based voice services has not escaped the notice of non-telecom providers. Microsoft®, which owns Skype, Rakuten, Inc. (Viber) and Apple, with its popular FaceTime app, are just a few of the players who grabbed a share of the VoWiFi market.
However, these over-the-top services all require the user to sign on with a layered app, whereas facility based carriers can offer them as fully integrated native capabilities. That is what Google envisioned when it announced its Project Fi mobile service in April 2015. The service will use more than a million Wi-Fi hotspots as the foundation of its network, filling in the gaps with cellular based on deals with Sprint and T-Mobile and integrating it into the Android platform. Industry analyst estimate that Project Fi could result in a 20 percent subscriber churn for AT&T and Verizon. That is stiff competition for North America’s two largest operators, and even tougher for competitive carriers.
In order to compete, smaller operators must upgrade their networks to support IMS. However, unlike tier 1 carriers, the business case for competitive networks is much more challenging. Upgrading to an IMS platform requires a significant investment in infrastructure at a time when the focus is on improving the network’s radio access network (RAN). The deployment of an IMS platform generates zero revenue. Instead, it requires the carrier to allocate a considerable amount of technical expertise and financial resources, both of which are in precious short supply for most competitive carriers.
Moreover, the available options regarding IMS solutions have left the smaller carrier between a rock and hard place. Those available from the large vendors have the standards-based design and technical expertise required but come with a hefty price tag and long design-to-deployment cycle. There are smaller IMS vendors as well. While their solutions tend to be more affordable and quicker to market, most use proprietary designs and lack the technical expertise required for a scalable, long-term solution.
Comparing IMS Development Options
Pioneered by Mitel, a new model for deploying a fully integrated cloud-based IMS platform is helping to level the playing field for smaller operators. The mobile cloud suite model supports on-demand IP services using highly secure, standards-based architecture that enables carriers easily deploy, manage, scale and evolve their IMS capabilities. As a hosted platform, it requires no infrastructure investment and significantly accelerates the time to market.
Learn more about our Mobile Cloud Suite >
