BROAD BAND FOR ALLWorkshop on “Techno-Economic
Feasibility”
Brussels, September 23rd 2005
Authors: Ángel Ferreiro (Telefonica. Contact: [email protected])Jesús F. Lobo (Telefonica. Contact: [email protected]))
POTENTIAL NEW BUSINESSFOR THE CORE AND METRO NETWORKS
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Outline
Global vision– Drivers and costs
Business models– Market agents
– Network services and applications
– Value chain
Migration scenarios– Strategies
New business and opportunities– Classification
• Examples
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Global vision
Main characteristics of NGN:– High capacity end to end
– Transparency:
– Automatic:
– Flexible:
Transparent to:
Means:
User data User data is mapped by network in some manner that the user does not know/care
IP Complete IP packets are transported between points (= IP tunnelling)
VC-n Normal SDH, ATM transport.
SDH, ATM, Eth Complete, untouched, SDH, ATM, Eth frames are transported. Termed ”SDH etc. (Transport/Network) Service”.
All-optical connection. A wavelength Service
? A VLAN Service
User
User data, may be:• ”raw”• Complete frames• EncryptedNever visible/used/needed by
Network/transport service
Operator
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NOBEL reference model
LOGICAL NETWORK TO ACCESSVALUE-ADDED NETWORK SERVICES
(e.g. L3-L2-L1 VPN-static and dynamic-, etc.)
MULTI-SERVICE NETWORK INFRASTRUCTURE
NETWORK RESOURCESMA
NA
GE
ME
NT
CO
NT
RO
L
APPLICATIONS (e.g. Video, Grid, etc)
VANSACCESSPOINTS
ABSTRACT REQUESTSOF NETWORK SERVICES
NETWORKACCESSPOINTS
PROVISIONING OFNETWORK SERVICES
REQUESTS OF ACTIVATIONOF NETWORK SERVICES
ACTIVATION OF NETWORK SERVICES
CU
ST
OM
ER
SC
ON
TR
OL
OF
VP
N
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Efficient Trafficaggregation
OXC
IP Router
DXC
Efficientswitching
and transport
Control PlaneDistributedIntelligence
Control PlaneDistributedIntelligence
Multi-layerRestorationMulti-layerRestoration
Provisioningof dynamic
services
Provisioningof dynamic
services
ManagementSystem
Multi-layer Traffic
Engineering
Multi-layer Traffic
Engineering
Bandwidth on DemandBandwidth on Demand
NG-SDH
End-to-end services (QoS)
Efficientswitching
and transport
IP/MPLS
IP/MPLS
IP/MPLS
Global vision
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NOBEL has developed a Methodology to foresee NGN
Drivers identified:
– Clients demand• Internet, p2p applications• Multimedia applications • SAN, GRID, etc.
– Technology development• NG-SDH, Ethernet, ROADM• GMPLS and VPN standard protocols
– Market and Governments• End of monopolies• Convergence
Global vision
TRAFFIC EVOLUTION
DEVICES AVAILABILITY
ARCHITECTURE MODIFICATIONS
ADVANCED NETWORK
CONTROL PLANE DEVELOPEMENT
+
Applications like VoD genete traffic
ROADM, OxC, etc. More distributed intelligence
For ex.: Rings substituted by mesh networks.
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Costs– NOBEL methodology for CAPEX and OPEX calculation– Several practical applications prop0osed and analysed in the
project– Plausible migration scenarios must balance demands and costs
• Bandwidth growth sustainability depends on: Bandwidth growth rate Rate of bandwidth price decline Revenue growth rate
• Challenges for Network Operators: Cost of bandwidth provision
Under growth of revenues? Price decline of electronic
systems, fast enough? Interfaces and protocols
standardization, will allowindependence of manufacturers?
Global vision
0
10
20
30
40
50
60
70
80
90
100
2000 2001 2002 2003 2004 2005 2006
Costs
Rela
tive
Rela
tiveg
row
th
Bandwidth
Broadbanddominanttrafficsource
0
10
20
30
40
50
60
70
80
90
100
2000 2001 2002 2003 2004 2005 2006
Costs
Rela
tive
Rela
tiveg
row
th
BandwidthBandwidth
Broadbanddominanttrafficsource
0
10
20
30
40
50
60
70
80
90
100
2000 2001 2002 2003 2004 2005 2006
Revenues
Rela
tive
Rela
tiveg
row
th
Costs
Margin erosion
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
2000 2001 2002 2003 2004 2005 2006
RevenuesRevenues
Rela
tive
Rela
tiveg
row
th
CostsCosts
Margin erosionMargin erosion
Source of figures: D. Payne, R. Davey & D. Nesset (BT)
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Network services and applications
– NOBEL analyses and classifies available services over NGN and their relationship with applications.
– Old schemes based on specific networks must be transformed.– The whole transmission network becomes a simple resource for
value added service providers (VASP) to make business.
Sto
rag
e
- B
ack-U
p /
Resto
re
- S
tora
ge o
n D
em
and
- A
syncrh
onous M
irro
ring
- S
ynchro
nous M
irro
ring
Gri
d c
om
pu
tin
g
- C
om
pute
Gri
d
- D
ata
Gri
d
- U
tility
Gri
d
Mu
ltim
ed
ia
- V
ideo o
n D
em
and
- V
ideo B
roadcast
(IP
-TV
)
- V
ideo D
ow
nlo
ad
- V
ideo C
hat
- N
arr
ow
band V
oic
e,
data
(V
oIP
,...
)
- G
am
bling
- G
am
ing
- D
igital dis
trib
ution,
dig
ital cin
em
a
- V
ideo c
onfe
rence
Tele
-medic
ine/d
iagnostic
Public IP Business IP
permanenton-demandpermanent, Hi availpermanent, Low availon-demand, Hi availon-demand, Low avail
permanent, Hi availpermanent, Low availon-demand, Hi availon-demand, Low avail
VPN - L3
VPN - L2
VPN - L1
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– The established (vertical) value chain is being deconstructed. It is becoming a mesh as illustrated for the VoD business example:
– Then generic roles are better to describe such a dynamic value chain with so many market agents
The value chain
Con
tent
s
Pro
vide
rs
VoD ServicePROVIDER
#1
VoD ServicePROVIDER
#2
VoD ServicePROVIDER
#3
NETWORKCARRIER #1
NETWORKCARRIER #2
Example: VoD business
– “Old” Telco companies will have to change their structure– New agents are going to provide (value added) services over
the NGN
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The value chain
– NOBEL has analysed the telecom network layers(entity of the same kind) by levels and services (commercial transactions). They can be mapped to market agents:
Seller
BuyerDuct, Dark
FibreInfrastructure
provider RoWWDM, SDH,
Eth VC-4
ATM, RPR, VLAN...
IPServers: web, mail, voice...
Network operator,
CLEC
Tower, Radio
Spectrum
Leased Line provider RoW
QPSK, PDH, SDH
ATM IPMobile
voice, dataMobile
operator
Duct, CopperplantVPN provider RoW DTM, Eth
ATM, RPR, VLAN...
IPServers: web,
mail, VoIPISP...
IP connectivity IPServers: web,
mail, VoIPISP
Infrastructure owner RoW
Telecom infra-
structure
Network operator, ILEC
Internet Café Mail, games... End-user
Dedicated network
Utility grid DCN
L3 Service L.L2L-1L -2 L0 L1- L1+
”Communication operator” ”Service Operator”
Enterprise NetworkOVPN Provider
Infrastructure owners
Network operators
Service operators
Enterprise users
Technical interface
Service interface
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The value chain
Each box corresponds to an activity or a group of activities
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Migration scenarios
Transport Plane
Copper (Analog)
Copper(Digital) Optical Fibre
Point to PointOptical Switching
OBS (Optical burst switching)
1970 1995
Control and Management Plane
Centralized Management
Optical Transport Network (OTN)
SDH
??
Today
Distributed Control Plane(GMPLS)
Transmission
20xx 20xx
Evolution
Source: Alcatel (NOBEL)
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Migration scenarios Strategies and fundamental considerations
– Any technical interface can be Internal or Open, the difference being if a commercial Service is provided over the interface.
– An operator generally carries out several activities (plays different roles).
– Multioperator solution create an open market in which operators will be interconnected.
– NGN provide high bandwidth capabilities; so less revenues per bit.
– But they also provide new services based on their dynamic control plane:• Carriers can sell conectivity services of different quality.• Carriers can provide bandwidth on demand and even bandwidth based
on applications for a better infrastructure commercial usage.
– New speciallised market agents can emerge: ISP, Mobile communications, Service broker, virtual operator...
– There must be some value-add in each layer to drive the business.
– Collateral business will also appear for carriers as a consequence of new technologies implantation: Reduction of buildings required to host equipment, vgr.
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New business and opportunities
Let us mention a few ones:– Improvements in network exploitation:
• More revenues for dynamic connectivity provision
• Adapted SLA for different QoS
• More efficient resilience
• Technologies convergence
– New services:• BoD
• L1 VPN and “carriers carrier”
• Ethernet dynamic link provision and L2 VPN for Mobile Communication Companies.
• SAN, GRID, etc.
– Cooperative network control (carrier-customer)
– VNO
– Services broker
– Buildings trade
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New business and opportunities
Opportunities for new services derived from NGN capabilities:
– The distributed control plane, within a more simple architecture, allows
• Mapping network resources (if appropriate permissions).
• Faster connectivity provisioning.
• Automatic routing (and restoration).
• Dynamic definition of QoS for a given connectivity (end to end) service.
Central Management
CxC
CxC
CxC
Control P lan eControl P lan e
Transport P lan eTransport P lan e
NM I-T
NM I-A
CC I
M anagem ent Plane
M anagem ent Plane
ASTN
Client N etw orkC lien t N etw ork
UNI
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New business and opportunities
– Improvements in network exploitation• NGN allow for cheaper and faster upgrades (according to traffic demand).
• Reduction of time to provide a connexion means revenue growing.
• Establishing different QoS levels for connectivity services means added flexibility for SLAs
• This possibility combined with the automatic restoration, allows no to overprovision.
• Level 1 VPN (SDH or WDM) can lead to better organization of carriers.
• Besides, BoD represents a new source of revenues.
0
50
100
150
200
250
300
350
400
450
500
1 4 7 10 13 16 19 40 70
Provision delay (days)
rev
en
ue
lo
st
(K€
) 155 Mbps
622 Mbps
Source: Telefonica
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New business and opportunities
– Improvements in network exploitation• NGN allow for cheaper and faster upgrades (according to traffic demand).
• Reduction of time to provide a connexion means revenue growing.
• NOBEL studies on NGN deployment economic impact cover
• P2mp versus p2p solutions
• Analysis of Ethernet solutions for metro networks.
• Ring versus mesh architectures.
• Complete transparency versus hybrid solutions (CAPEX and OPEX).
• Optimal SAN (Storage Area Networks) provisioning with NGN tools.
• Other studies to perform concern GRID implementation by NGN, convergence of technologies…
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New business and opportunities
• NGN allow for implementing more dynamic and cheaper resilient strategies.
• Strategies of partial liberation of backup resources for BoD or less QoS uses.
• Customer active participation in network control (VPN) should generate mutual benefits.
• This requires standard interfaces
• Network topology is only partially offered to the customers.
• SLA must explicit what level of integration (sharing power over the network elements).
Working capacity
Backup capacity
IP Layer(logical links)
ODXC ODXC
Working capacity
Backup capacity
On demandchannel
COMMON POOL
Optical Layer(physical channels and OXC)
Working capacity
Backup capacity
IP Layer(logical links)
ODXC ODXC
Working capacity
Backup capacity
On demandchannel
COMMON POOL
Optical Layer(physical channels and OXC)
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New business and opportunities
Incumbent Operator versus Virtual Operator
• Parts of the value chain occupied by an incumbent network operator and a virtual operator
• A virtual network operator has no real transport infrastructure: Its services rely on traditional carriers infrastructure (VoIP, VoD, and BoD reseller are good examples of VNO business).
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New business and opportunities
– Infrastructure trading and bandwidth leasing• VASP (Value Added Service Provider) can deal with different network
providers
• Carriers can set up VPN in cascade.
• Brokers of communication services can make business. They appear as intermediate between the assets suppliers and customers
CE
serviceprovider
network 1
serviceprovider
network 1 CE service 1service 1
service demarcation
VPN scope (provider 1-2)
CECE
serviceprovider
network 2
serviceprovider
network 2
CE
service providernetwork 1
service providernetwork 1
CE serviceservice
VPN scope (provider 2)
service provider 2
VPN scope (provider 1)
CE
PE PE
CE
P
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New Business and opportunities
– One example:
• A company that rents a L1 VPN can offer p2p connectivity services or L2 VPN services to others (like mobile communications companies, for instance).
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New Business and opportunities
Other types:– Collateral source of revenues: Selling or renting buildings liberated
by NGN equipments.• New equipments are smaller and need less cooling and DC generators extra-
equipment. So a big amount of space is free for administrative use.
• The following is a real example form a switching node building transformation in Barcelona, Spain:
* Including reuse of old equipments.
Released
Released
Released
Released
Cooling .108m 2
Mobile B.S.
Pow. Equipment
Offices - Released
Lib
era
do
Offices - Released
Offices - Released
Restaurant – TELYCO shop
Offices - Released
Offices - Released
Cable
galleryS
0
1
4
5
6
7
8
At.
2
3
Cx570 m2
Tx 380 m2
Repartidor187 m2
TData330 m2 TX / IBERMIC
348 m2
Cooling. 108m 2
Mobile B.S.
MusicalAntena
Power Common
Offices
Cable
s
Restaurant - TELYCO shop
S
0
1
4
5
6
7
8
At.
Cable
Gallery
Offices
Offices
2
3
Offices
Offices
Released
Released
Released
Released
Cooling .108m 2
Mobile B.S.
Pow. Equipment
Offices - Released
Lib
era
do
Offices - Released
Offices - Released
Restaurant – TELYCO shop
Offices - Released
Offices - Released
Cable
galleryS
0
1
4
5
6
7
8
At.
2
3
Released
Released
Released
Released
Cooling .108m 2
Mobile B.S.
Pow. Equipment
Offices - Released
Lib
era
do
Offices - Released
Offices - Released
Restaurant – TELYCO shop
Offices - Released
Offices - Released
Cable
galleryS
0
1
4
5
6
7
8
At.
2
3
Cx570 m2
Tx 380 m2
Repartidor187 m2
TData330 m2 TX / IBERMIC
348 m2
Cooling. 108m 2
Mobile B.S.
MusicalAntena
Power Common
Offices
Cable
s
Restaurant - TELYCO shop
S
0
1
4
5
6
7
8
At.
Cable
Gallery
Offices
Offices
2
3
Offices
Offices
Cx570 m2
Tx 380 m2
Repartidor187 m2
TData330 m2 TX / IBERMIC
348 m2
Cooling. 108m 2
Mobile B.S.
MusicalAntena
Power Common
Offices
Cable
s
Restaurant - TELYCO shop
S
0
1
4
5
6
7
8
At.
Cable
Gallery
Offices
Offices
2
3
Offices
Offices Total project cost*
5.071.819 €
Selling revenue15.200.000 €
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New Business and opportunities
Other types:– Network operators and VASP companies can find their place
based on• Content delivery schemes
• Bandwidth adapted to applications
• Specialization in accounting and billing.
• Network topology and its resources knowledge.
• Specialized services for SME (and other segments).
– This specialization scheme can be translated into traditional network operators structure.
– Leasing network infrastructures is the complementary business for traditional carriers with regards to VNO as well as connectivity service for VPN, LL (leased line) and capacity wholesale to ISP, multimedia distributors, etc.
