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The inevitability of Telco-OTT & the implications for operator infrastructureFierce Webinar 27th September, 2012dean.bubley@disruptive-analysis.com @disruptivedean

Harsh truth: OTT services are telcos only option Telephony & SMS prices have peaked Telephony & SMS demand has peaked APIs, bundles, HD, video only delay the inevitable Need for new voice-based services beyond calls Too fast-evolving for new federated services Too uncertain / innovation-driven for standardsOTT-style services offer only the hope for continued telco communications services growth & increase in relevanceSep 2012 Copyright Disruptive Analysis Ltd 2012

Europe already far down the cliffMobile core services revenue, indicative W EuropeTotal c40% fall from peak Telephony c80% fall from peak

SMS & todays mobile data services Mobile telephony

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020September 2012 Copyright Disruptive Analysis Ltd 2012

Peak Telephony is hereIf telephony was free, how many minutes would you use?Source: Ofcom

UK mobile call volumes falling despite increasing use of contract plans with large inclusive bundles of minutes

And is that number rising or falling?

September 2012

Copyright Disruptive Analysis Ltd 2012

Voice Telephony: Catastrophe imminent?Supply Price Demand

Core question: Can data services & other revenue streams grow enough to offset the probable flattening & decline of voice & messaging? Uncomfortable answer: probably not, based on recent evidence Disruption (positive & negative) is both inevitable & essential

September 2012

Copyright Disruptive Analysis Ltd 2012

Messaging (SMS): Dead Man WalkingSupply Price

DemandMessaging is already fragmented & becoming more so. It is already a feature, not a service, for many use-cases. Can it continue to be monetised directly? Very uncomfortable answer: not much, for anyone with a data connection Disruption is likely to be terminal, in the medium termSeptember 2012 Copyright Disruptive Analysis Ltd 2012

Outright substitution often = better experience

Voice telephony only used for exceptions & problems

Sep 2012

Copyright Disruptive Analysis Ltd 2012

Phone calls are old, clunky & rudeRuth: Am I alone in really not liking talking on the phone? Or am I a bit weird? It's just that someone phoning you on a mobile is a bit like someone leaping into the middle of your room yelling "Talk to me! Drop everything you are doing and talk to me RIGHT NOW! Scott: I like voicemail. My phone is for me to talk to people when I want to. Not for them to bug me at their leisure. Matt: nods* Asynchronous communication FTW! * Fleur: Totally agree. People should ask for permission by text or email before calling.

APIs, HD & bundles arent going to save the day

HD may drive a little extra use Video-calling extremely niche Bundles

Most bundled products are cheaper than constituent parts Unclear where telcos can magic extra value from Unlikely customers too stupid to spot implicit price rises

APIs

Definite uses for embedding voice/messaging in apps Telephony or SMS arent always the best raw ingredients WebRTC on the horizon

RCS / RCSe. No. VoLTE really just ToLTE. Necessary but too late to matter

Sep 2012

Copyright Disruptive Analysis Ltd 2012

Voice TelephonyNow: 2G & 3GVoice

Future: Smartphones & LTEVoice

Telephony

Telephony Gaming, CEBP, surveillance, social voice, TV voice etc Video, context, senseCopyright Disruptive Analysis Ltd 2012

Voicemail Conferencing PTT

Video

September 2012

Fragmentation is valuable & inevitable

Convergence, interoperability & standards

OTT-led Fragmentation & innovation

It will fragment because it can. Consumer need for ubiquity is over-rated

new standardised services are neither necessary, nor sufficient. They are irrelevant at best, and actively damaging at worst.Sep 2012 Copyright Disruptive Analysis Ltd 2012

Device diversity more reason OTT is inevitableProbability of all of a users Internet / messaging devices being on a single telcos network 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%Free 3rd party WiFi

Shared data plans only a partial response

1

2

3

4

5

6

# connected devices ownedSep 2012 Copyright Disruptive Analysis Ltd 2012

What do these services have in common?

Owned & operated by mobile operators Usable by anyone, not just subscribers Via apps & public Internet Telco-OTT ServicesSep 2012 Copyright Disruptive Analysis Ltd 2012

Different models for Telco-OTTTelco OTT service

Internet

Normal on net users

Telco service

Off-net extension user

TelcoBilling & IDSep 2012

Internet

Copyright Disruptive Analysis Ltd 2012

Telco-OTT is neither new, nor impossible

Not just voice & messaging: Telco-OTT Cloud, Content, Social, TV, Connectivity..Sep 2012 Copyright Disruptive Analysis Ltd 2012

Build vs. buy decisionBuild own OTT from ground up

Integrate off-theshelf OTT solution

Acquisition

Uniqueness & flexibilityCustomise existing Internet-OTTPartner existing Internet-OTT

Budget, resources & skillsSep 2012 Copyright Disruptive Analysis Ltd 2012

Key success factors for Telco-OTT services

Organisation & governance

Managing cannibalisation

Network awareness

DesignSep 2012

Software mindsetCopyright Disruptive Analysis Ltd 2012

Synergies

Telco-OTT: Carrier-grade & Internet sensibilities

Web / app philosophies (eg freemium) Security Scalability Flexible platform for multiple services/features Good QoE (UI design, battery life, voice quality, OSs etc)

But also: (Probably) Lawful intercept / emergency (Possibly) integration with billing / OSS (Maybe) interop with legacy / IMS / OTT services & enablers (Maybe) integration with network QoS mechanismsSep 2012 Copyright Disruptive Analysis Ltd 2012

OTT infrastructure choices

OSS Telco-OTT Application platform Flexible Rapid update Differentiation Mostly proprietary logic, may use standard platform Security, session mgmt etc

Web

Internet

Telco coreVarious backend integration strategiesSep 2012

Serviceindependent functions (mostly standardised)

App / Web / OS native . Proprietary UI, maybe standard protocols

Copyright Disruptive Analysis Ltd 2012

Conclusions

Traditional telephony & SMS future looks bleak Some mileage in bundling, marketing voice better, APIs etc.

But only postponing the inevitable RCS unlikely & may damage things

VoLTE likely, but late & wont fundamentally change things

Fragmentation is desirable, valuable & inevitable OTT plays will dominate in usage & value, maybe not revenue

(Revenue from other sources, offset from voice/messaging directly)

Telco-OTT strategy becoming mainstream But not easy to design, manage or build

Ownership & infrastructure decisions determine scalability & flexibility Investment in platform approach is desirable, if possible

Sep 2012

Copyright Disruptive Analysis Ltd 2012

Telco OTT

infrastructure challenges & solutionschart@acmepacket.com

Chad Hart Director, Product Marketing

@chadwallacehart

Non-exclusive real-time service delivery choices

Networks architecturesIMS Web Telco-OTT

User interfacesphone app

browser

Technologies

SIP

OTT service delivery challengesImmediatePractical core session managementCost effective at low & high-end Able to start small & grow rapidly

Service qualityNAT & firewall traversal (i.e. HTTP & HTTPS only)Near PSTN-quality media & availability Consistent experience across devices & interfaces

OTT service delivery challengesImmediatePractical core session managementCost effective at low & high-end Able to start small & grow rapidly

ImminentFlexibilityQuickly adjust to changing service needs Works with many infrastructure & client devices

Federates with network service providers

Security

Service qualityNAT & firewall traversal (i.e. HTTP & HTTPS only)Near PSTN-quality media & availability Consistent experience across devices & interfaces

Protect user information

Maintain service availability during attacks

Regulatory complianceCurrent expectations: E911, lawful intercept, taxes

Expect more IP network regulations, not less

OTT service delivery implicationsImmediatePractical core session managementLight weight, dynamic core session management Smarter clients vs. omnipotent core for scalability

ImminentFlexibilityOff-the-shelf, but programmable for flexible, rapid changes Quickly interoperable with any device & network

Security

Service qualityClient-side technologies to overcome packet-loss & jitterMake all traffic look like web-traffic (http & https, SSL, etc.)

Robust, service-intelligent security

Regulatory complianceOut-of-the box regulatory compliance

Todays core session management options are not idealIMS Open source

My SIP Switch

Opensourcesip.org

Too complex difficult to implement & maintain Too costly OPEX & CAPEX

Too long time-to-service Too risky many unknowns Too costly creation, maintenance & evolution

What are the leading service delivery architectures?3GPP R10 IMS WebDB DB AS AS AS

WS

WS

WS

WSLB-L LB-G

Internet

Telecom architecture can be web-likeAS TDMM Q CFirewalls LB

DatabaseWeb servers AS media M Q C Load balancers Firewalls TDM

TDM

TDM

MQC: Mobility Quality Charging

Telco-OTT architectures should be web-likeWebDB DB AS AS AS DB DB AS DSC AS

Telco-OTT

WS

WS

WS

WS

SMX

SMX

SMX

Peering partners

LB-L LB-G

LB-L SLB-G

Internet

Managed IP Network

Internet

30

30

Telco-OTT architectures should rapidly scale & adaptStart-upDB DB AS DB DSC AS

High-scale

AS SMXSMX

SMX

SMX

Peering partners

LB-L SLB-G

Managed IP Network

Internet

Managed IP Network

Internet

9/27/2012

31

Scaling strategies are changingHardware systemsVertical scaling

Virtual machinesHorizontal scalingElasticity Manager

Virtualization Layer

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Simplicity should not preclude ecosystem interoperability

TAS ENUMDNS/DDNS ISC

CSSIP ISC

IM&P MCU

HSS

Cx SIP Rx SIP/ WebTRC SIP TSCF

PCRF

SBC & Core session management Web-based RTC with SIP33

SIP clients

Its all about apps

700M250M 90%

apps available in App Store

iPad specific appsdownloaded each month average apps per user34

>100

Tunneled Service Control Function brings firewall traversal & QoE to Apps Individual users real-time comms & data services within a TLS or DTLS tunnel Strict firewall traversal Appears as SSL port 443Service provider data center Web SIP MSRP

QoE controls Tunnel redundancy Bandwidth controls per app voice vs. data Admission control - server transaction load User authentication Privacy and confidentiality Service delivery security (Net-SAFE)

TLS/ DTLS tunnel

Security

High availability stateful failover

TSCF SDK

Acme Packet-enabled TSCF client

Engineering around packet-loss: Tunnel redundancyService provider data center

Redundant tunnels created by SBCTunneled packets take different network paths TSCF client chooses switches to optimal tunnelTSCF client

Network with packet loss

5/30/2012

Acme Packet | Confidential

36

Better voice quality than Skype during severe packet loss

Tunnel redundancy MOS preserved

No tunnel redundancy MOS quickly degrades

5/30/2012

Acme Packet | Confidential

MOS estimates based on R-factor scores at the SBC. MOS at user device typically higher.

37

TSCF is open 3GPP technical requirement TR 33.830 (V.0.2.0) TSCF approved for inclusion in TR SA3#68 in Bratislava (July) Supporting companies:

Acme Packet Intel China Mobile RIM Ericsson Vodafone ZTE Huawei Free TSCF client source code available Reference applications & tools Linphone TSCF client tsc_sip_client, tsc_sip_server sipp Wireshark plug-inAcme Packet Interconnect 2012

Windows 7, Vista, XP PC & laptop based softphones

Android 2.3/3.x/4.0 Honeycomb (2.3), Gingerbread (3.x), Ice Cream Sandwich (4.0)

iOS 5.1/5.0 iPhone 4G/4GS, iPad 2/3 & iTouch

38

TSCF vs. WebRTC - different approaches for different use casesSIP with TSCFServices data centerWeb servers SIP core MSRP servers

Web-based RTCServices data centerWeb servers SIP core MSRP servers

Any network

Any network

HTTP(s)

SIP RTP

MSRP

HTTP(s)

SIP & RTP RTMP/WebRTC

MSRP(s)

App

Data

Voice video, IM

Video/file share

Browser

Data

Voice video

Video/file share

Net-Net

Telco-OTT architectures should resemble web-architectures without sacrificing key service-enablement features

Telco OTT service delivery challenges are numerous, but surmountable - i.e. TSCF, effective core session management, smart clients, etc.

Telco-OTT is already delivering successful services in timespans of months!

'Me Too wont cut itSo we made TU Me

TU Me is... Communications timeline Voice + text

Media and photos Location More... And much more to come Pure OTT (first ever from a Telco!) Engineered in 100 days

TU Me is not.. Not meant to undermine Telco value.. Instead create new categories. The game has changedGoogle, Facebook, Apple, Microsofthave been innovating for years !! Not a tricky maneuver to distract consumers or confuse the marketplace We're building a real service for real people

DIY Lessons Don't do fake digital... Customers will know. Have a vision and do the vision. Break down your internal walls: digital has to be the plan, not the enemy or an afterthought

Shoot for Near-Telco-Grade, not perfection, and compete on quality and vision Build an infrastructure that will allow you to expand

Incubate + risk Twitter emerged from a different product idea nobody strategized it Startups incubate concepts and discover products, Telcos need to invest a similar way. Plan two years of risk before expecting good things Think about the larger value picturenot about squeezing more out of old models

Digital Infrastructure Telcos can go industrial faster and jump to the right infrastructure Invest in the future or prepare to be a dumb pipe (which might be fine, too)

Voice and text will have near zero value soon only connectivity and new services matter Break down the technical walls that prevent you from taking advantage of the opportunities

TU Me InfrastructureApplication Analytics

Enum

Public Internet

Telco-OTT from the Softphone POVTodd Carothers,, EVP Sales and Marketing Fierce Webinar 27th September, 2012

CounterPath Corporation 2012

Telco-OTT: Challenges

NAT issues Media routing difficult in all

Consistent user experience Goal is provide a consistentuser experience over disparate networks

cases No media 1-way media

Mobile/Tablet, desktop Devices / OSs have different

challenges of their own Mobiles/Tablet require support for Wi-Fi and Mobile broadband networks

Want to be like Skype49

CounterPath www.counterpath.com

Telco-OTT: How TSM can help from a Softphone POV

Creates an SSL tunnel signaling and media to go over a single tunnel Less complicated Local media can be run locally Enabling a consistent user experience Overcome Internet restrictions Combines the SIP/RTP over asingle connection (i.e., ports 80 or 443)

Better packet loss performance Redundant data (RTP) Secure Encrypted (TLS)50

CounterPath www.counterpath.com

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