White Paper
Migrating Service Provider Voice
Infrastructure to the Cloud
Prepared by
Jim Hodges
Senior Analyst, Heavy Reading
www.heavyreading.com
on behalf of
www.alianza.com www.level3.com
June 2016
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Introduction Though the fundamental need for voice communications remains a constant, the
reality is that there are now many competing platforms and technologies that can
deliver basic or even more advanced communication services.
Therefore, while communications service providers (CSPs) have consistently deliv-
ered voice services for decades, they now need to reconsider service delivery mod-
els and platform delivery requirements in response to strategic shifts and changes
on the competitive landscape and customer usage.
Accordingly, this white paper examines the state of voice delivery from several per-
spectives, including: CSP commitment level; the impact of technology factors such
as the cloud and virtualization; and business drivers and challenges such as declin-
ing call volumes, revenue margins and total cost of ownership (TCO).
Defining a New Voice Strategy There is no longer any shred of doubt that CSPs face numerous challenges and
headwinds on the voice services front. Their ability to cost-effectively compete with
more agile alternative providers continues to diminish, which in turn is driving an
even greater rate of revenue decline.
Traditional time-division multiplexing (TDM) and early-generation voice-over-IP (VoIP)
models are no longer viable, which is driving CSPs to define and adopt a new voice
strategy, which addresses improved cost structure, operational simplicity and agile
service delivery. Given the challenges, some industry participants believe that CSPs
should cut their losses and simply run obsolete platforms into the group and then
discontinue the service.
While this "status quo" model does have some immediate positive impacts from a
capex reduction perspective, the benefits must be carefully weighed with the stra-
tegic value of voice services and the fact that capex is just one factor that affects
margins. In addition, the opex-heavy implications of running legacy platforms must
be also carefully measured since it is readily apparent that the cloud will assist CSPs
in achieving a significant reduction in operational costs.
Another factor in favor of maintaining voice services is the continued ability to lev-
erage voice services as a foundation to sell other services and promote stickiness,
especially for business subscribers, which are less likely to rely on OTT applications.
In order to assess the stickiness of voice services, Heavy Reading, in conjunction with
Alianza and Level 3 Communications, launched a major research study in the first
quarter of 2016, focusing on the North American and Central America markets.
One of the key findings from this research is that despite challenges such as flat or
declining revenue, as shown in Figure 1, many CSPs still remain committed to voice
services since they believe it still enhances their overall services portfolio. For exam-
ple, 81% view voice as driving adoption or growth of other services.
However, 69% also pragmatically believe that voice will eventually become a free
application. Next-generation voice solution must address this future of CSPs needing
voice, but it may not drive revenue.
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While CSPs remain committed to voice services, the research study also confirmed
our belief that many CSPs understand that relying on current platforms – i.e., the
status quo option – is an extremely risky proposition. There are several factors to con-
sider in assessing the risk. As shown in Figure 2, the hot buttons for legacy voice plat-
forms include scalability, platform obsolescence, lack of support, and inability to
develop and launch additional services.
Figure 1: Competing in the Voice Services Marketplace
Question: Do you agree or disagree with the following statements? (n=81-82)
Figure 2: Voice Platform Satisfaction Level
Question: How satisfied is your company with its voice services platform based on the following performance
metrics? (n=80-81)
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It is fair to say, then, that CSPs understand there are numerous significant challenges
associated with running outdated platforms. But of these the operational cost stand
out since they drew one of the lowest levels of "very satisfied" responses (just 16%)
and the highest level of "somewhat dissatisfied" responses (30%).
However, while many CSPs are not satisfied with the opex hit of existing voice plat-
forms, in reality it is likely that the numbers are even worse. We adopt this stance
because, as shown in Figure 3, the research also revealed that only 32% indicated
they had a solid grasp on the costs, leaving more than two thirds (68%) with a some-
what murky view of TCO.
We view this as a major concern, since TCO directly affects bottom-line profits and
is a crucial variable that all CSPs factor into measuring operational efficiency. The
executive suite needs a handle on TCO and, better yet, they need a cost structure
that's in line with their revenue.
Another factor we view as impeding the ability of CSPs to deliver voice services on
current platforms is product lifecycle and ongoing support of these legacy plat-
forms. Referring back to Figure 2, it is also important to note that product lifecycle
achieved the lowest ranking of "very satisfied" requests – only 14%, which is a very
telling sign that platform support is on the decline.
Similarly, when we asked the survey respondents about when current platforms
would reach end of life (EOL), 22% indicated this was already a factor within the
2016-2018 window, while 36% anticipated these platforms would reach EOL in 2019
or later. Consequently, for almost a quarter of the respondents, EOL is an immediate
Figure 3: Total Cost of Ownership
Question: Please indicate your level of agreement with the following state-
ment: We accurately know our voice network TCO. (n=82)
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major concern given platform transitions take many months of planning to execute,
while another third expect it to become an in issue in the near future.
Therefore, a key conclusion we take from these series of inputs is that while CSPs
remain committed to delivery of voice services even in a period of declining oppor-
tunities, limitations of their current voice platforms are hindering their competitive
response strategies.
Given that these platforms face challenges on several levels – including operational
costs (the major contributor to TCO), network management, scalability, product
lifecycle, EOL and even service agility – it is readily apparent that they must adopt
a new architecture that is better equipped to compete in a new, more demanding
market realm.
Moving Voice Services to the Cloud: Evaluating
the Technology Options As we have documented, CSPs have several reasons for moving legacy voice ser-
vices to a new platform. Moreover, few – if any – would disagree that any new voice
platform must leverage the cloud and virtualization curve to enhance chances of
success in a changing market.
Still, there are several valid IP and cloud options that can be implemented, which
means that CSPs must select the best option based on their requirements, services
vision and even competitive landscape. But there is a common fundamental first
decision to be made: build a network or rely on a third-party network. Within the
build category, the options include deploying a non-virtualized softswitch/IP multi-
media subsystem (IMS) or virtualized softswitch/IMS.
On the third-party side, there are also two options: the traditional third-party IP-
based hosted wholesale solution (traditional, non-cloud enabled); and a new op-
tion that we refer to as a Cloud Voice Platform (CVP), which was defined in the
survey as a:
"Web-scale, turnkey virtualized software solution hosted in external data
centers designed for service providers to deliver VoIP and UC [unified com-
munications] services. CVP provides a complete and pre-integrated pack-
age of VoIP functional elements (softswitch, app service, media server,
fraud prevention, SBC [session border controller], etc.)."
CVP is distinct from the NFV build scenarios in that is a single source comprehensive
software solution and delivered in a software-as-a-service (SaaS) model. And CVP
differs from a traditional wholesale hosted model in that the service provider is di-
rectly sourcing a complete, horizontally integrated virtualized software solution in a
cloud deployment model (hosted and managed in data centers with a opex SaaS
business model) and as opposed to using a competitive local exchange carrier
(CLEC)/reseller using a collection of third-party vendors. (See Appendix.)
Our research shows the top two most likely approaches focused on voice network
evolution are to build an NFV network (38%) or embrace CVP (18%). (See Figure 4.)
We interpret this data as confirmation that CSPs are committed to virtualized soft-
ware and cloud-centric solutions for voice platform evolution and also increasingly
receptive to a CVP model, as opposed to a traditional hosted model, when they
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decide to work with a third party for network services. We believe the strong show-
ing for CVP is due to multiple CVP attributes, including low TCO, zero capex require-
ments and a more agile service delivery model.
The second most popular response was the no-action status quo option (21%). Even
though this take no-action option achieved second place scoring metrics, we are
encouraged that the remaining 79% of CSPs plan to take action to migrate services.
We also cannot help but wonder which percentage of these no-action respondents
also had limited insight into the TCO of their current platforms. We believe that stay-
ing with the existing platform will not be sustainable and this number will decline
over the years.
Conclusion Even though voice revenue is on the decline, CSPs plan to continue and must con-
tinue offering voice services to their customers, since competitive pressures demand
that they maintain a complete portfolio to enable upsell of other high-value services.
However, they also need to address voice platform TCO, performance limitations and
commit to migrating from less cost-effective platforms to cloud-based architectures.
Still, cloud options are also evolving, and no longer include only in-house deploy-
ments. And while there is no single uniform correct approach for all CSPs, for a sig-
nificant number, the emerging Cloud Voice Platform model represents the most
sensible approach for addressing their TCO and platform evolution requirements.
Figure 4: Voice Services Evolution Preferences
Question: How likely is your company to use the following approaches to evolve its voice services platform over
the next two years? (n=82)
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Appendix: Cloud Voice Platform Architecture As we have documented, there is considerable interest in leveraging the cloud to
enable a progressive hosted voice model enabled via a new breed of voice plat-
form we refer to as Cloud Voice Platform (CVP). Therefore, in this Appendix we pro-
vide additional detail on a typical commercial CVP deployment model. The infor-
mation in this appendix is provided by Alianza and Level 3 Communications.
Architecturally, CVP integrates all the functions of a voice platform (e.g., SBC, fea-
ture server, billing and session/policy manager) as a hosted virtualized platform. It
also integrates with carrier networks for phone numbers, 911 support and PSTN orig-
ination and termination. Figure 5 shows the CVP architecture model deployed by
cloud software provider Alianza.
In conjunction with partner Level 3 Communications, Alianza has deployed a com-
plete VoIP solution targeted at service providers that are looking for a seamless and
cost-effective approach to replace aging softswitch/IMS networks, TDM switches
and legacy wholesale hosted/white-label solutions. The joint solution branded as
Carrier Cloud Voice, as shown in Figure 6, integrates Level 3's Enhanced Local Ser-
vice portfolio and Alianza's CVP.
Figure 5: Alianza CVP Architecture
Source: Alianza
Figure 6: Carrier Cloud Voice Architecture
Source: Alianza and Level 3 Communications
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Utilizing Level 3's broad and reliable U.S. local voice network, industry-leading VoIP
numbering and interconnection platform, and deep industry relationships, Carrier
Cloud Voice provides a comprehensive, turnkey solution.
Finally, as shown in Figure 7, since CVP is a turnkey solution, implementing this ap-
proach can have dramatic and immediate impact when compared to both imple-
mentation and non-cloud hosted options.
Figure 7: CVP Attributes & Impacts
Attribute Impact
Capex Require-
ments
Unlike any build option, CVP has zero capex requirements.
Opex Require-
ments
While CVP is opex-driven, since it is cloud-based and utilizes share facili-
ties, it is more efficient from a power and facilities cost perspective than
legacy TDM and non-virtualized IMS deployments. Since it is less expensive
to scale, it is more opex-efficient than non-cloud hosted solutions.
Service Agility As a cloud solution, CVP is inherently more agile than non-cloud infra-
structure deployments, as well as non-cloud-based hosted solutions.
Cloud Migration CVP is unique from all other options in that it simplifies the migration to the
cloud. CVP enables the network operator to maintain control over prod-
uct, pricing, subscriber provisioning and customer service.
Source: Alianza and Level 3 Communications
