[Heavy Reading]: The Market for DPI and Policy Control is Saturated; Yet to Double by 2018

A new report on DPI and Policy Control by Graham Finnie [pictured], Chief Analyst, Heavy Reading, finds "a significant slowdown in growth, from a whopping 30 percent in 2012 to around 17 percent in 2013. A key factor: The initial market for policy servers and deep packet inspection (DPI) gear is pretty much saturated, at least in the wireless sector .. our forecast predicts. We expect the market to nearly double from $1.45 billion in 2013 to $2.8 billion in 2018, a CAGR of 13 percent -- still pretty respectable by the standard of the overall telecom market"
 

Opportunities:
  

".. there are many new use cases driving a second or third round of spending by telcos ... enable telcos to offer a wider range of service packages and options, such as packages built around specific applications, shared usage plans, temporary passes, and so on. Support for VoLTE, telco WiFi, end-user security, prioritization under congestion, M2M, and sponsored data are also emerging on wish lists .. The good news is we've clearly moved on from theory to practical implementation with some of these ideas, with both vendors and operators reporting a wider range of new packages actually being deployed, especially in emerging economies. Here, it's not unusual to see 20 or more plans, with Facebook-only, Google Zero, and daily data passes among the options"

Challenges:

The not-so-good news is that these plans require a different kind of business justification, based on new revenues rather than lower costs -- which is often harder to justify .. Vendors report long lead and deployment times, slowing revenue recognition .. In the longer term, meanwhile, the risks are primarily associated with the transition to virtualized networks, including networks based on SDN"

See "Policy Revenues Climbing, but Hazards Loom" - here.

[LightReading]: SDN/NFV Still Doesn’t Show Capex Savings for US MNOs

Sarah Reedy [pictured], Senior Editor, LightReading shows that despite the SDN/NFZ buzz, the great Capex saving are not yet there (at least for 2014).

"SDN and NFV have operators planning for lower capital expenditures, but that's not yet being reflected in their projections for 2014 .. AT&T [see "AT&T Expects SDN and NFV to Reduce Capex in 5 Years" - here], Verizon Wireless, Sprint and T-Mobile US have all wrapped up their fourth-quarter earnings, and on average, their wireless capex projections for this year are flat, none significantly decreased".

Tier-One US Wireless Operators' Capex: 

	2012 Capex	2013 Capex	Projected 2014 Capex
AT&T	$19.7 billion	$21.2 billion (wireless: $11.19 billion)	$21 billion
Verizon Wireless	$16.2 billion	$16.6 billion (wireless: $9.4 billion)	$16.5 - $17.0 billion
Sprint	$5.37 billion	$7.45 billion	$8 billion
T-Mobile		$4.2 billion	$4.3 - $4.6 billion
Source: operators' Q4 earnings reports

Related posts:

• [Light Reading]: Telefonica NFV Plans Start w/DPI and PCRF - here
• Openet: NFV based PCC Deployment by NA Tier1 (AT&T?) - here

See "SDN, NFV Not Slashing Wireless Capex Yet" - here.

[Light Reading]: Will F5's DPI have DPI? PCRF?

 
Craig Matsumoto, Managing Editor, Light Reading, reports that F5 is going to announce the long awaited DPI tomorrow (Tuesday).

See my previous posts:

• [Jan '13]:  F5 CEO Reports on DPI Products; Availability not Provided - here
• [Oct '12]: F5 - Moving Ahead with DPI (already in Beta) - here 
• [Nov '11]: F5 Service Provider/Mobile Road Map: Focus on DPI - here - see charts below

Craig reports that "The BIG-IP Policy Enforcement Manager (PEM), due to be announced Tuesday, is applicable to any network, but F5 is emphasizing its utility in mobile networks, partly because the company thinks it can tap mobile operators' rising interest in value-added services and in network functions virtualization (NFV) .. F5 wants to offer more complex policy enforcement as a product, making it an option in the intelligent services framework .. F5 says it can offer PEM to its installed base as a software add-on, rather than adding another box to the network".
   

"PEM monitors traffic and applies policy accordingly -- making sure a gold-package user gets the promised level of access, for instance. Asked via email whether deep packet inspection (DPI) is involved (a PCEF can involve DPI but doesn't have to), F5 answered indirectly, saying PEM can "identify applications and protocols that are being used in the network," as Product Marketing Manager Misbah Mahmoodi [pictured] describes it .. A PCEF has to work with a Policy and Charging Rules Function (PCRF), and Mahmoodi points out F5 has completed interoperability testing with other vendors' PCRFs".

The following charts were presented by F5, back in November 2011, about their DPI plans (see more here)

Source: F5 - November 2011

   

"Asked whether F5 might offer its own PCRF eventually, Mahmoodi replies that F5 "will continue to leverage its strong partnerships with PCRF vendors in service provider deployments"

See "F5 Gets Into Policy Enforcement" - here.

[Light Reading] Openet's 2011 Revenues - $120M

Interesting information provided by Openet's to Ray Le Maistre, Light Reading following their recent win against Amdocs (see "After 2 Years, Court Denied Amdoc's Suit Against Openet" - here).

Niall Norton (pictured) told Ray that "I'm glad to be out the other side. On a personal level this is a great result .. this is going to make things a lot easier .. [the] company, which now employs about 1,000 staff, has been growing at about 30 percent each year and its revenues hit €92 million (US$119 million) in 2011 .. We expect to see that growth rate continue, possibly even accelerate, especially now that 3G is being monetized and 4G is coming in, with cloud services, Wi-Fi integration. ... This all broadens our addressable market .. We're looking at how we might integrate other technologies with our portfolio".

See also "Openet Expects Revenues of €75M in 2010 ; Getting Ready for IPO" - here.

See more "Openet: The Legal Brakes Are Off" - here.

Cache Deployments [184]: Conway [US, Cable] Deploys Qwilt's Transparent Caching Solution

Qwilt (see "Caching Announcements: Qwilt Unveils Transparent-video Delivery Solution" - here) announced that Conway Corporation deployed its transparent caching solution. Conway Corporation operates the city-owned cable internet and cable television utility services for the citizens of Conway, Arkansas
  
Light Reading published a video with Jason Hansen, CTO, Conway, describing the selection process and benefits of Qwilt's solution.

See "Conway Deploys Qwilt for Transparent Caching" - here.

Tekelec: 19 of 23 Major LTE Deployments Use our DSR

 
Jatinder Singh reports to Light Reading that "According to Tekelec, out of the 23 major LTE deployments [see LTE World Map - here] that have taken place globally, 19 of them are using DSR (Diameter Signaling Router) deployments offered by them. In India, the company is in advanced discussions with a leading operator to deploy DSR".

"In PCRF, Tekelec claims to have 63 customers around the world out of which 46 are tier 1 customers and a couple of customers are coming up in China".

See "Tekelec Preps For Data Boom" - here.

Tekelec Comments on Verizon's PCC Source

Following my earlier post on Verizon Wireless' home grown PCC solution for its Shared Data Plans (here), I asked Tekelec (PCRF and DSR supplier for Verizon) for a comment.

Tekelec spokesperson, Joanne Steinberg (pictured), provided me with the following statement:

"Operators are hoping to play a big role in personalization of services and it is critical that they start leveraging what they know (or can know) about subscribers’ usage patterns, preferences, locations, and circumstances.

Based on our experiences with over 55 Policy customers globally including 43 Tier 1s, most operators will opt to source solutions from outside vendors, but some may have the wherewithal at the early stages to do some of it in-house. Of paramount importance will be access to real-time data from networks and subscriber data management (SDM) systems. The goal is to balance data and signaling traffic in a way that optimizes the customer experience based on customer preferences and the value they place on the services. Central to that will be Policy solutions (PCRF), which define the rules for new services for different subscriber segments based on operator network requirements and marketing strategies".

Light Reading: Verizon Uses Home Grown PCC for Shared Data Plans

Analysts say that Shared Data Plans are important for MNOs business, but require significant IT (PCC) infrastructure (see "OVUM: Shared Data Plans are "here to stay"; Require Management Tools" - here and "Infonetics: Shared Data Plans - an Opportunity with OSS Needs" - here).

So who leads this market? for example which vendor was selected by Verizon Wireless, one the world's largest MNOs and strong believer in shared data plans (see "Verizon: Why Shared Data Plans are Good for Our Business" - here)?

Sarah Reedy (pictured) reports to Light Reading that Verizon Wireless recent shared data plans  are based on its own development!

   

"Behind the scenes, as it manages almost 100 million subscribers on its network, Verizon's Policy and Charging Rules Function (PCRF) must be tied to its billing systems and the data from all the devices on all the plans it manages must be compiled, managed and reconciled to avoid billing mistakes. The cost of making things easier for consumers is that you make things complicated somewhere along the way .. And what vendor is Verizon entrusting with this complex policy management? No one, actually. We asked, and a Verizon spokeswoman led us to believe the move to share data plans, and all the complexity it brings, is handled by Verizon". 

  

Sarah also mentions Tekelec, as a PCRF (and Diameter signaling router) supplier to Verizon's LTE network (see "How does/will Verizon Wireless Use Tekelec's Diameter Router?" - here).

See "Verizon Manages Its Own Data Destiny" - here.

ISP Shares Transparent Caching Experience

Frank Bulk, Technology and Product Development Manager, Premier Communications, shared with Carol Wilson (pictured), Chief Editor, Events, Light Reading his reasons, expectations and results of using transparent caching (see video below and "Transparent Caching Saves Transport $" - here).

Highlights:

• Streaming video makes 55-70% of Premier's traffic, of which YouTube and Netflix are 82% and therefore the main goal - both to the vendors of transparent cache and operators  [at least in the US market]
• Caching could potentially save 30-40% of uplink bandwidth; 20-25% savings will represent a good ROI for transparent caching 
• CDN (Akamai, for example) is not an option for small ISPs, as volume is too low
• The success so far has been moderate, as some of the Netflix and YouTube traffic has not been identified - need to improve the signatures to increase cache hits

[Light Reading] Rumors: Tekelec Seeking a Buyer

Ray Le Maistre (pictured) reports to Light Reading that "the new private equity owners of Tekelec Inc. are believed to be seeking a buyer for its Broadband Network Solutions business, which includes the company's policy control, diameter signaling router and subscriber data management (SDM) assets".

".. Tekelec was acquired for $780 million in January by a consortium of investors .. Now, according to a number of industry sources, the owners are looking to cash in on the growth part of the business and manage the older side of the company that should generate cash-flow for a few years yet ..  industry sources, though, say the Broadband Network Solutions unit has been offered to a number of companies, including the IP router vendors and IMS (IP Multimedia Subsystem) players .. One industry executive ventured a potential sale tag of $500 million".

The Broadband Network Solutions unit includes the Policy Management product line [ex Camiant], Diameter Singling Router (see "Tekelec: 10 New Diameter Router Customers; Total of 19" - here) and SDM products.

"Tekelec is saying nothing about the speculation".

See "Tekelec Back in M&A Mode" - here.

Cisco: "LTE will not solve 3G problems; Network-Based Optimization is needed"

 
Jonathan Morgan, Director, MITG Product Marketing and Jim O’Leary (pictured), Senior Manager, Mobile Solutions Marketing, both from Cisco, presented in a webinar, hosted by Light Reading, Cisco's video optimization architecture for mobile networks.

According to Cisco, optimization is crucial for mobile networks (while some think that Adaptive Bit Rate will replace it). See below few slides from the presentation. DPI also plays a role along optimization - it steers
only video traffic into video solution to reduce load.

LightSquared: "No intelligence in our network" - but its Retail Partners Use Intelligence!

     

Light Reading's Sarah Reedy quotes LightSquared's CEO Sanjiv Ahuja (pictured) keynote during Open Mobile Summit held in San Francisco this week:

• "LightSquared is building the ultimate dumb pipe .. We want to be the dumbest wireless broadband pipe. No intelligence in our network. None. Zero .. LightSquared was formed to make wireless broadband a pure utility, bringing it to 100 million people in the U.S. before the end of 2012. Inherent in that wholesale structure is an open network"

• "You aren't looking for your carrier to provide intelligence; you want the device manufacturer to have connectivity embedded"

See "LightSquared: 4G America's Dumbest Pipe" - here.

Last month LightSquared announced (here) it has 17 partners across the US (including Sprint and Leap Wireless), and waits now for the FCC approval. While I am not sure if the term "Network Intelligence" means the same to all, it seems that LightSquared customers are using it to a certain degree - see "How does Sprint Use Network Intelligence?" - here and "Leap Wireless/Cricket New Service Plans" - here. 

See also "Sandvine CEO: "there could be some business in the large U.S. carrier wireless side in 2011" - here.

PCRF Deployments [94]: Bharti [India] Uses PCRF for Billing and VAS (and Needs to Scale!)

 

Gagandeep Kaur, interviewed Amrita Gangotra (pictured), Director IT, India & South Asia, Bharti Airtel to Light Reading on the IT changes to the operator network in India.

Among other IT issues, Ms. Gangotra was asked about the changes made to the IT systems "before the launch of 3G services few months back"

The answer was: "3G had a significant impact both on the network and IT side. We implemented PCRF for the first time last year. The business logic around billing had to pretty much change. When we implemented PCRF, it was not in its full-fledged form but obviously we are improving  .. The challenge that we have is that our scale is huge [see below]. As soon as we deploy any system we have to start thinking of scaling it. A lot of times, vendors test out the scale in our environment. And it is a pre-paid market ...so the behavior of PCRF has to be adopted for this market. Last year we started a project called Vastu, which was about the technical initiatives which we needed to take to bring-in the VAS vendors on a common platform".

As for the scale issue - according to the latest report from the Cellular Operators' Association of India (here), Bharti-Airtel added 1.15M subscribers during August 2011, bringing the total number of subscribers to 171.8M, the largest Indian mobile operator with 28% market share.

See "Interview - Amrita Gangotra: Director - IT, India & South Asia, Bharti Airtel" - here.

ATIS Develops OTT Video Delivery Standards (eliminating CDN providers?)

   

Carol Wilson reports to Light Reading that "the Alliance for Telecommunications Industry Solutions (ATIS) Carrier Cloud Forum is preparing to publish a set of requirements that enable ISPs to deliver over-the-top (OTT) Internet video traffic more efficiently, using local interconnections .. The new Content Delivery Network (CDN) interconnect requirements and use cases will be published within the next week or two, only a little more than three months after the ATIS CCF  began meeting".

See "Trade Group Develops Standards for Faster Web Video" - here.

"Today, a request from a consumer on one carrier network seeking to view video content hosted on another carrier network consumes bandwidth on the networks of both, plus at a peering point. The new CDN interconnection [here] standards will enable the video-hosting ISP to recognize a request for video and allow it to be delivered via a CDN location that is closer to the consumer, and potentially even locally sited, to reduce core and backhaul network consumption"

So - what is the idea here? Replace the CDN providers (Level3/Akamai) with carrier CDN and direct n:m relations between ISPs? Please help me understand!

 
See also "ATIS - Creating a Common Policy Management Framework" - here.

Ovum: Profit from "Ultra Broadband" Networks Using QoS and Efficiency

  

Light Reading's Heather Stanic interviews Nigel Pugh, Consulting Director for APAC, Ovum and former Telstra executive about "Ultra Broadband" networks, and what operators need to do to maximize their profits from building such networks.

In the APAC region, Ultra Broadband networks have been deployed in Japan, South Korea and Hong-Kong; Malaysia and China are in the process of deployment while other countries, including New Zealand and Australia, are getting ready to deploy.

Nigel talks about QoS, fair use, network efficiency and more.

See "Taking Broadband Into the QoS Era" - here and video below.

TeliaSonera to Charge OTT VoIP Usage

 

The trend of charging by application (or protecting legacy revenues) continues. Following announcements from KPN (here) and Allot (here), Michelle Donegan, reports to Light Reading from TeliaSonrea keynote at LTE World Summit 2011: "on over-the-top voice-over-IP (VoIP) services and pledged that they will not come for free on its 4G network".

See "TeliaSonera: No Free VoIP on Our 4G" - here. See also "TeliaSonera's LTE Comes with Traffic Management" - here and "Review of Current LTE Pricing" - here.

Tommy Ljunggren (picture), VP of system development for mobility services at TeliaSonera, said:

"We will not offer VoIP for free.. TeliaSonera hasn't worked out yet how its customers will pay for these services .. VoIP is "excluded" from TeliaSonera's 4G service for now, just as it is on its 3G networks. The operator either blocks or throttles VoIP over its 3G networks .. It could be by paying more for a better service tier for which TeliaSonera will guarantee quality of service (QoS) levels for VoIP, for example"

Wi-Fi Offloading - Booming in India but Failing For AT&T?

 
2 recent articles show a very different carrier view of Wi-Fi offloading:

Gagandeep Kaur (picture) reports to Lightreading that "In line with the global trend, Indian operators are planning to use public Wi-Fi access points to offload mobile data traffic .. Aircel Ltd. recently launched 50,000 Wi-Fi hotspots around India ..Bharti Airtel Ltd.  has also hooked up with O-Zone, which is in discussions with Vodafone Essar and Idea Cellular Ltd. In addition, Reliance Communications Ltd. is also believed to be in discussions with Wi-Fi service providers"

Sanjeev Sarin, founder and CEO of O-Zone Networks said: "Globally, Wi-Fi has recorded unprecedented growth in the past two-and-a-half years. We believe India is going to experience similar growth in the coming years".

See "Wi-Fi Offload Set to Boom in India" - here.

A recent In-Stat report supports the above trend (see "In-Stat: Wi-Fi Hotspot Growth Continues to be Strong" - here). See also "Juniper Research: By 2015 63% of Mobile Traffic will be Offloaded to a Fixed Connection" - here and "How Much of Smartphone Traffic could be Offloaded to Wi-Fi?" - here.

Nevertheless, Stacey Higginbotham (picture) reports to GigaOm that an AT&T "executive noted that AT&T didn’t see Wi-Fi helping the nation’s No. 2 carrier offset congestion [see "AT&T: Times Square needs a Wifi Boost to cope with 3G Traffic" - here] because in most cases people don’t use Wi-Fi unless they are sitting still in a hot-spot. And apparently, there are plenty of people still wandering around watching YouTube videos"

The article notes that "It is possible to create a Wi-Fi network that allows a user to remain on the Wi-Fi network, even when moving. Other good work on this comes from chip firms where engineers are discussing standards to enable seamless hopping from hot spot to hot spot or perhaps even a handoff between a cellular and Wi-Fi network"

See "Why Isn’t Wi-Fi Better?" - here. See also "AT&T: We Need T-Mobile for the "wireless broadband revolution" - here.

Heavy Reading: "DPI will be widely distributed in LTE; NEPs will buy the technology"

 

Graham Finnie,  Chief Analyst, Heavy Reading, analyses why DPI is going to be an important technology in LTE networks (for reason we heard many times), and provides some new thoughts on how it is going to be implemented:

1. DPI will be everywhere, moving from dedicated devices we see today to other network elements, down to the base stations.
    
2. Graham believes that although DPI is strategically important, TEMs will prefer to buy the technology, rather than develop it in house, due to the complexity and the need to keep-up with traffic and application changes. The use of standard hardware (ATCA) helps making this a simpler process

An example for the above may be seen in the Procera - GENBAD OEM deal, which states that "Procera’s DPI technology, integrated with GENBAND’s data products on the ATCA-based GENBAND GENiUS™ platform" (more - here).

DPI Vendors focus on OEMing are Qosmos (here) and Ipoque (here).

See an interview by Georgina Burnett to Light Reading TV - "DPI & Network Intelligence in the LTE Era" - here, and below.

Light Reading Survey: 38% of Operators have Policy Management Plans

 

Debra Baker (picture) reported to Communications Technology on Light Reading's  "Policy Management in the 4G Era" event held during CTIA 2011 last week:

"According to Graham Finnie, [Chief Analyst, Heavy Reading] .. 30 percent of 70 operators polled seven months ago said they had no policy-management plan in place, while 38 percent said they did. However, with the predictions of how much mobile data will be consumed in the next several years, not having a way to monitor and manage usage just seems shortsighted".

See "Live From CTIA: Got DPI?" - here and the short video below (from Light Reading's coverage - here).

"The bottom line is that DPI gives operators the tools to begin charging subscribers for the data they use, and isn’t that the whole idea?"

See also "Ovum: MNOs should use Customer Data and Policy Management to Drive Profits" - here.

 

Alcatel-Lucent: "Cache in Routers is more than Nice to Have"

   

Phil Harvey, Editor-in-chief for Light Reading, interviews Basil Alwan, President IP Division and Head of Portfolio Strategy Networks Group, Alcatel-Lucent, during OFC/NFOEC 2011.

See "OSA 2011: Caching's In at Alcatel-Lucent" - here and video below.

According to ALU, network caching should have an hierarchical structure, and in order to get deeper into the network, and closer to the users, it should be more than "nice to have" feature of the routing platforms.

Alcatel-Lucent acquired the caching technology vendor Velocix (chart below) and has a reselling agreement with Bluecoat for its ProxySG cache appliances (see "Alcatel-Lucent Adds Bluecoat's Over-the-Top Caching to its Velocix CDN Solution" - here).

It seems that we are about to see one of the two integrated into ALU products (the 7750 Service Router?).