Policy Server Market - Still Small, but Always Optimistic!

     

Infonetics Research released the first edition of its 2010 biannual Policy Servers market size, share, and forecast report, which tracks fixed line and 3G broadband, WiMAX, and LTE wireless policy server software. According to the report (press release here) "Worldwide revenue for policy servers implemented in both fixed line and mobile networks grew 65% between 2008 and 2009, and is forecast by Infonetics to reach $1.4 billion by 2014".

Infonetics tends to take a very optimistic approach on market growth. However this year we start to see this sharp growth, mainly due to the implementations of policy servers in the wireless market (PCRF based). In previous years, we saw these policy server in the cable market (PCMM based), mainly in North America which is dominating by few huge MSOs, therefore with a limited market.

As analyst Shira Levine says "“Wireless is clearly the growth engine driving the policy server market. Mobile operators are increasingly understanding that they can no longer build their way out of the congestion issues created by the uptake of data services, and looking to policy control as a way to not only address the strain on their existing radio access network resources, but also to maximize the value of their upcoming WiMAX and LTE deployments”

Camiant and Bridgewater were quick to issue a press release (here and here) celebrating their leadership in the Infonetics report. For Camiant it comes in conjunction with its announced win at Verizon Wireless this week (see "Verizon Wireless Selects Camiant for PCRF " - here).

Back in December 2006. Yankee group predicted that "Policy Management Market to Eclipse $700 Million by 2010" (here). The report was focusing mainly on the fixed market and did not address the mobile internet market at all. It is clear that we are far away from this '06 forecast - but this challenges (as huge growth in the demand for data over mobile, limited air and backhaul capacity and even Net Neutrality which require sophistication in traffic management) should accelerate this market.

It is also important to well define the policy server market. I believe we should split it into 3 categories: 

• Pure play policy server vendors, such as Camiant and Bridgewater Systems, selling standard (PCMM, PCRF) and non-standard compliant products. This is a clear market, easy to measure and fast growing. Nevertheless, we also have seen a number of start-ups that did not survive during the recent years (e.g. Operax or Orchestream or TAZZ Networks).
   
• Vendors of networking equipment that is usually associated with policy based networking (such as DPI, GGSN or BRAS). These vendors usually have their own "policy server" which is a s/w piece necessary to operate the equipment. In most cases it is proprietary and supports only the vendor's gear. Some vendors charge for a license some include it in the cost of the network elements.
   
• The larger TEMs which have a central management facility, also supporting policy provisioning to their equipment (when applicable).  

Since revenues in the latter 2 categories are harder to measure, it is really difficult to asses the policy server market size. Nevertheless, since carriers seem to adopt the standard approach, it clears the way for the pure player – and we do see a large number of new offering in this space now mainly from OSS/BSS vendors (Openet, Volubill,  Broadhop, Telcordia - to name a few). It will probably lead to some consolidation.