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White Paper

Fixed-Mobile
Convergence

02/16

Fixed-Mobile Convergence

Contents

03

Abstract

04

Executive summary

05

Convergence, its happening now

06

Operators plan for FMC

07

Device convergence

08

Service convergence

09

Network convergence

11

Smooth transitions to converged networks

13

Services for operators

14

Conclusions

Abstract
Fixed-Mobile Convergence is one of the most eagerly anticipated
changes in communication and services provision for end-users, and
poses unique challenges for operators and service providers.

Here we consider FixedMobile


Convergence from three
perspectives: device convergence,
service convergence and network
convergence. This is a convenient
way to examine and define the
differing but related needs of network
operators, MVNOs and service
providers and those of their users.
This paper looks at the trends and
rationale behind convergence as
well as the devices, networks,
functionality and software that will be
used to access new services.

Throughout, our underlying focus


is on how operators can make
the step-by-step transition to
Fixed-Mobile Convergence, while
decreasing complexity in their
networks, finding effective strategies
to launch new services, benefit from
cost effective end-to-end solutions
and differentiate their offering in a
highly competitive marketplace.

04/16

Fixed-Mobile Convergence

Executive summary

One of the most visible outcomes of Fixed-Mobile Convergence (FMC)

is its convenience and simplicity for consumers and business users,

giving them highly featured, lower cost communications.
End-user appetite for reduced costs and high quality, reliable and enabling services makes
customer retention one of the hardest fought battlegrounds.

Trends in different regions and


countries are different, but on a
global level operators are facing
increasing competition and declining
prices for voice traffic, fixed lines
and fixed minutes. At the same
time, mobile voice traffic is growing
rapidly and substituting that of
voice traffic over fixed lines. Endusers now expect high quality with
reliable mobility and are using the
Internet more as the penetration of
broadband grows rapidly.
Now, Voice over IP (VoIP) is starting
to substitute PSTN. Meanwhile,
key enabling technologies, such as
smart phones, wireline and wireless
broadband and IMS for seamless
service over different access types
are readily available.
Combined, this means that
operators are looking for long-term
evolutionary strategies towards
converged, access-agnostic
networks, with service integration
and interoperability across domains
and devices.
Successful FMC requires
convergence in three areas,
devices, services and networks
Device convergence brings diverse
functionality together in a single

device, for example a phone with


a camera, FM radio, TV, Internet
browser and MP3 player. Device
convergence then works together
with network convergence to provide
connectivity to services using the
access technology most suitable at
a particular location or moment in
time. Service convergence enables
the delivery of services seamlessly
and transparently to the user over
any network.
Concurrent delivery of all major
media types voice, data and
video/TV, over fixed lines, has been
around for some time as Triple
Play. But FMC adds mobility to the
mix (Quadruple Play) and allows
the same services to be used
with different devices and through
different access networks, while
users are on the move. It is enduser demand for mobile access of
services that traditionally have only
been available in the fixed domain
that has become one of the main
business drivers of FMC growth.
Finding ways to deliver this without
increasing complexity, greater
network management and still
benefit from CAPEX and OPEX
savings is a major challenge for
the operator community. Operators

Three key opportunities for operators


To decrease complexity in their network and in so
doing benefit from CAPEX and OPEX savings
To launch services rapidly and efficiently and
differentiate their offering to meet end-user needs
To take advantage of end-to-end solutions that
ensure operational efficiencies

are taking advantage of end-toend solutions that ensure costefficient operation. Converged
core networks, operations support
systems, business support systems
and service machinery to enable
savings in service development,
deployment and network operations
and maintenance. With FMC,
operators can utilize the converged
core network, share transport across
IP networks, and employ the same
solutions for all access networks
using common service creation
based on IMS for both fixed and
mobile environments.
Delivering what the market wants
has to be fulfilled if network
operators are going to enjoy longterm profitability and launch new
services to meet end-user demands,
attract new customers and retain the
existing customer base.
The basis of the FMC opportunity for
operators is real time applications
such as Voice over IP (VoIP) using
IMS, or Video services. The variety
of services coming from other
service providers and a myriad of
user-created content and services,
now available on the web provides
the potential for increased up-sell.
The gains for both the business and
consumer sectors, is clearly too
large to ignore.
Operators must now evaluate
the options, define their business
objectives and create carefully
constructed strategies for FixedMobile Convergence.

Convergence,
its happening now
More than ever, the way we communicate is blurring the
boundaries between the business and personal sides of our
lives making possible the emergence of new lifestyles.

This is a trend that started with


the launch of the very first mobile
phones, allowing users greater
freedom and flexible communication
possibilities. But the current state
of mobile telephony is only part of
the story. Developments such as
broadband in the home, for example,
facilitating access to corporate
resources using IP-VPNs give
users the opportunity and flexibility
to work when and from wherever
they wish.
Now end-users are looking for the
services that will let them take both
their personal and office life with
them, with the benefit of access from
just one device, while on the move.
With Voice over IP offering apparently
free telephony, and with voice,
video and internet services available
on multiple devices via a single
broadband connection, operators,
service providers, content owners
and device manufacturers are all
now re-thinking the fundamentals of
their business models.
At the same time, they have to cope
with the continuing rise of mobility
usage, which in the voice domain is
already overtaking fixed-line usage.
As mobile data rates edge closer to
those enjoyed by fixed broadband
users, the race is on to deliver a
cost-efficient, seamless, multimedia
experience anywhere, any time,
on any device the customer may
choose.
For new multimedia services,
the combination of IP and SIP*
allows different sessions now to be
established over any IP network or
combination of networks, thereby
giving users the perception that
there is just one, single network.

This represents network unification


rather than physical convergence,
but is a key development in that it
enables greater usage of multimedia
services.
Service convergence is also
starting to generate new revenue
streams, examples include, SMSs
sent between mobile and instant
messaging users, or video calls
made between fixed and mobile
devices, Presence services,
surveillance, services, blogging and
many more.
Multimedia and multimodal services
take convergence to new levels.
However, the fact remains that
voice is still the optimal way of
communicating in most cases.
Making voice services more
convenient to use is just as important
as the addition of new functionality.
But equal to the end-users

perception of greater simplicity is the


complexity of delivery for operators
against the background of a fiercely
competitive market.
Fixed, mobile, cable and hybrid
operators are competing not
only with traditional players but
with ISPs, content providers and
new, agile entrepreneurs who
can identify and exploit profitable
niche markets. Faced with these
challenges and horizontalization
of their businesses, they need to
re-evaluate their options, define new
business objectives and pursue a
carefully constructed Fixed-Mobile
Convergence strategy.

* Session Initiation Protocol, an IETF standard, one of


the leading signaling protocols for Voice over IP

Convergence trends
As competition grows and markets mature, traditional
telephony revenues and margins inevitably decline.
Broadband access is enabling not only low-cost IP
telephony, but a wide range of new applications such as
video calling, video on demand (VoD) and IPTV.
The traditional Telco model is no longer viable long term
and, at best, is under massive external pressures from
agile ISPs, cable operators offering voice over cable and
entrepreneurs who can see easy profits to be made.
Bandwidth has become a commodity and this has led to
the dynamic advent of xVNOs, virtual network operators
that operate in the fixed (FVNO), mobile (MVNO)
domains or in both as hybrid operators.

06/16

Fixed-Mobile Convergence

Operators plan for FMC

FMC demands long range strategies


from operators and investment
decisions that will reshape not
only their networks, but their future
success. They must develop and
enhance their ability to create and
implement new services in very
short timescales and offer the
market a comprehensive portfolio
of new services in line with the
markets demands. Without FixedMobile Convergence, operators will
not be able to match the needs of a
communications-centric economy.
The drivers for FMC are already
here. The technologies are in place.
DSL, cable and IP technology
are widely used. SIP has been
implemented to make service
initiation for different services
easier. And content is stored and
transferred in digital formats.
Smart phones already support these
technologies and have a feature set
that enables the use of rich content
and advanced services. Smart
phones also enable the consumption
of media and the creation of
personal content with their large,
high quality displays, high resolution
cameras, MP3 players, FM radios
and other advanced features. PCs
are easily upgraded to support new
services too, simply by installing new
applications and now even set-top
boxes allow the installation of new
software based features.

Fixed clients can be SIP phones


supporting features for IP PBXs for
the Enterprise/SOHO users, SIP soft
clients running on PCs or laptops or
standard analog telephones. Analog
black phones can be connected
to a DSL or cable modem with
appropriate adapters, or by existing
2 wire POTS connections using
standardized access machinery
specified by TISPAN.
Service convergence is facilitated by
IMS, defined by 3GPP and adopted
by TISPAN and CableLabs, allowing
different services, such as Presence,
VoIP and interactive gaming to share
common components. IMS lets
operators create a dynamic service
environment and introduce new
customized services, quickly and
economically, independent of the
access network.

FMC means a transformation


of business for the operator in a
broad sense, but not necessarily
disruption or huge technology leaps.
Operators can evolve towards an All
IP Network based on their existing
assets and strategies. They can
start with network modernization
with fixed soft switches or Release 4
based architecture and then add new
services such as VoIP by introducing
a VoIP server in their network.
IMS can be implemented to give a
cost-efficient service architecture.
Operators can also select the order
in which they prefer to proceed with
these different steps.

Convergence trends
Apart from regulatory constraints, there is nothing to stop a
mobile operator, for example, from becoming an FVNO that
offers DSL services or even a fixed voice service provider
without owning a broadband access network.
Equally, FNOs or cable operators can expand their service
bundles via IMS or take an MVNO stance to provide VCC or
joint services for mobile devices, for example.
The Internet is loaded with services offered by service
providers competing with operators and may provide good
partnering opportunities.
There is now a myriad of user created content and services
in the Internet that can also be enabled, either to create
traffic revenue for operators or ideas that operators are
already adopting and offering themselves.

Device convergence

Most of the devices we use for communication are constrained


in their functionality or limited by the network they access.

Typically, a device is only used in


the main for a single purpose and
the support for its other functions
is limited. PSTN phones, low end
mobile phones and set-top boxes
are good examples. Consumers
use these devices for a single
purpose. When they change tasks
they change device and access
network. This means service islands,
which lead to mis-matched user
experiences from different public and
private networks. Whats needed
are unifying devices that can access
services in a similar and easy way.
Smart phones are serious
contenders for voice-plusmultimedia services in a truly
mobile environment. Multiple radio
interfaces provide access over
circuit and packet-switched networks
(cellular, WLAN etc) and SIP allows
services and applications to traverse
different IP networks.
Mobile phone development has been
rapid in the last decade and new
models take increasing advantage of
new technologies. They incorporate
the enhanced color displays and high
quality imaging features needed to
support service consumption and
the creation of own content. Plus
the exponential growth of memory
capacity and processing power means
that smart phones can now replicate
the applications currently employed in
notebook PCs and PDAs.

Consumers want the quality of fixed


services with the flexibility of mobile
and convergence lets this happen,
by allowing service access through
the most suitable access network,
and by letting consumers choose the
best device for the service. In many
cases that device will be a smart
phone, but it could just as easily be
a PC or laptop with VoIP software
or converged fixed clients who can
share IM, presence etc with mobile
devices, a fixed VoIP phone or even
a TV with a set-top box.

08/16

Fixed-Mobile Convergence

Service convergence
The mobility model has become
me-centric, with my phone book,
my contact information, my agenda,
my messages, my availability and
preferred communication method, my
Internet, my pictures and video clips
(received and shared), my personal
and business email, my wall-paper,
my music and so on.
Multimedia services, such as
Presence, Push-to-talk, messaging,
interactive applications, data or video
sharing plus streaming, browsing and
downloading, are being delivered over
fixed and mobile packet networks.
To launch new services and
applications quickly, operators can

use IMS to eliminate the complexity


of different service platforms in
the network. Standards based
Service Delivery Framework (SDF)
provides comprehensive lifecycle
management, making the launch of
new services and applications quicker
and easier to integrate and operate;
delivering solutions more speedily to
market and reducing the total cost of
ownership. In effect the operator can
provision and the end-user quickly
and conveniently self-provision the
new services.

a seismic impact on telephony within


enterprises and, as the penetration
of broadband access increases, so
does the availability of this transport
mechanism within the home.

VoIP and Instant Messaging are two


developments that helped kick-start
service convergence. VoIP has had

IP DSLAMs are letting operators


offer both DSL access and traditional
two-wire POTS connections using
a SIP client in the DSLAM. This
development and others like fixed
VoIP phones, Analog Telephony
Adapters (ATA) and fixed soft
switches place fixed line operators
in an excellent position. They can
offer multimedia services via DSL
and attractive tariffs for analog POTS
connected to an IP network, thereby
maintaining existing services where
required and evolving the core
network to an IP-based solution.

Application community support


Service creation & evaluation
Prototypes

Ideas

Validation

Commercialization
End-User
Evaluation

Launch Modify Scale

Operator
Bus.Case

Ideas

Project

Developer Program

From idea evaluation to successful launch


with Nokia Siemens Networks

Responding to markets quickly will improve customer lifetime value (CLTV)

Launch

Grow

Services
according
to your own
differentiation
strategy

The right
business
and
technical
framework

And ensure
rapid service
discovery
and take-up

Capture the
mass market
quickly to
establish the
offering and
build revenue

Lower

Create

Period
of profits

Shorten

Cultivate

Ramp down

Maximize service
profitability and create
long-term business
value

Expand

Innovate

At the right time


with minimum
disruption

Period
of profits

= Cost of serving customer base


= Revenues from users

Time/customer lifecycles

Studies of European operators show that lengthening end-user contract


times by one year translates into a 22% increase in CLTV and 6.3%
increase in EBITDA
Customer lifetime value (CLTV) = ARPU (annual) * Expected lifetime in years * EBITDA %

Users also benefit from personalized


VoIP, including same number,
same contacts and the same
supplementary services like call
barring, call waiting, ring back
tones, one voice mail, option for one
postpaid bill or prepaid account, etc.
through any access network.

Smart phones, on the other hand,


have WLAN interfaces so they can
access fixed broadband networks.
This allows the mobile phone to be
used as an IP phone and users to
continue employing their personalized
services at home,
or via WLANs, connected to DSL,
in hot spots or offices. Convergence
in this case enables a practical
combination of cellular and fixed
broadband access. The user
experience doesnt change: the same
voice and multimedia services are
used in the same way.
Fixed to Mobile Substitution and fixed
VoIP are gradually replacing PSTN
voice telephony. Multimedia services
are being delivered over fixed and
mobile packet networks
Operators must now decide on the
kinds of services they wish to provide
by themselves or by partners, to
whom and in which regions. And what
they might offer is no longer limited to
traditional telecom services only, but
perhaps entry into new businesses
such as surveillance solutions as an
example.

Network convergence


Network convergence simplifies the end-user experience and dissolves

the barriers and complexities that separate todays network islands.
The same services are available across all networks and, in an ideal world, appear and
perform in exactly the same way, making usage easy, transparent and intuitive.

From an operators perspective,


the goal of network convergence is
to migrate todays separate PSTN,
PLMN, backbone and IP networks
to a fully converged network that
supports any access technology.
The full evolution includes a costeffective migration to an All-IP
network using IMS as the unifying
platform, allowing all new services
to be accessed in a standard and
consistent manner. Advancing
in this evolution will be the key
to an operators ability to reduce
OPEX and CAPEX, and increasing
competitiveness and profitability.
Many locations, such as homes,
enterprises and public places
already have access networks
available (xDSL, WLAN, cable
etc.). When operators launch new
services such as video streaming
or hosted email they can take
advantage of these existing
networks, extending service access
to more potential subscribers. In turn
this will mean launching services
to new market segments for new
revenue opportunities. With multiple
access networks operators can
attract existing and new customers
with an enhanced convergence
service portfolio using unified billing.

A converged core network is the


key enabler for converged networks.
Multi-access to a common,
converged core network enables
cost optimization for both mobile and
hybrid operators. Re-use of existing
access network infrastructure
and integration with the service
infrastructure results in both
OPEX and CAPEX savings. And
multi-access enables operators to
introduce end-to-end quadruple-play
services to new customers.
Native IP access
IP-based access connection using
the SIP protocol between the device
and the converged core network
so called Native IP access allows
voice, video and other multimedia
applications over any access
network. Native IP access supports
a wide variety of applications in
different devices, including mobile
handsets, PC clients and SIP
desktop phones. POTS phones
too, can also be supported, via
a connection to an SIP-capable
DSLAM or analog terminal adapter
(ATA). Native IP access architecture
allows the introduction of new rich
IP multimedia services through
IMS functionality, such as video
streaming, media push, video calls,

10/16

Fixed-Mobile Convergence

and various other SIP enabled


applications, furthering revenue
streams for operators.
Unlicensed Mobile Access
Unlicensed Mobile Access (UMA)
provides complementary access to
existing GSM/GPRS/EDGE services
over WLAN (802.11). UMA is defined
by the UMA Consortium (www.
umatechnology.org) and Generic
Access to the A/Gb interface
specifications defined by the 3GPP.
By deploying UMA technology,
service providers allow users
roaming and handover between
cellular networks and public and
private WLAN sites using multi-radio
(GSM/WLAN) mobile handsets via a
UMA client.
Femto access
An Access Point Base Station
or femtocell is a stand-alone unit
typically deployed in hot-spots, inbuilding or in the home. Femtocells
are scalable, multi-channel, two-way
communication devices extending a
typical base station by incorporating
all of the major components of the
telecommunications infrastructure.
Application of VoIP allows voice
and data services in the same way
as a normal base station, but with
the deployment simplicity of a WiFi
access point.
An important enabler of the
femtocell concept is the rapid
proliferation of DSL or cable based
broadband access which is used
as the backhaul solution. While the
femtocell concept could be applied to
any cellular technology, the industry
is mainly focused on 3G femtocell.

Femtocells provide operators with a


better means of controlling the traffic
generated at home and reduce
customer churn by encouraging fixed
to mobile substitution and attractive
home tariffs.
As new access methods are
emerging and threatening the
cellular operators revenue from
home traffic (WLAN, VoIP),
femtocell will be an important
weapon in the battle for the home
In WCDMA HSPA, femtocell not
only provides the home user with
higher bit rates but off-loads the
macro network, potentially leading
to cost savings in the overall
network investment

Smooth transitions to
converged networks
Convergence trends
Mobile phone penetration is expected
to reach 4 billion users by the end of
2010. Combine this with the growth of
VoIP over fixed broadband and there
is clear demand for a converged and
unified service experience.
The market for business services and
applications generates high-margin
traffic, has far less churn, and it is set
to grow massively.
Many businesses have already
converged local area networks and
IP PBXs to gain cost and productivity
benefits from IP telephony. They are
now forcing network operators to
implement more cost-effective, hosted
voice services, such as IP Centrex.
Interactively, mobile and IPTV
services are becoming a reality with
over 100 operators having launched
mobile TV services offering different
kinds of live TV channel packages
and on-demand video. A further
100 fixed telecom operators globally
provide IPTV services.

when defining FMC strategy and


customer optimized solutions. The
evolution can be done step-by-step
and the steps can vary depending
on the strategy.
A first step in implementing the
solution could be to optimize the
circuit-switched core to improve the
delivery of regular voice services by
introducing softswitch architecture
as specified by TISPAN and 3GPP.
This separates the call control and
user traffic into separate network
elements softswitch and Media
Gateway supporting common IP
backbone, and providing significant
OPEX and CAPEX savings.
Next, there is the introduction of
VoIP services for consumers and
enterprises, followed by enhancement
of the packet core network to allow
rapid deployment of new value-added
IP multimedia services in the most
cost-effective manner.

FMC solution overview

Presence

The solution must support the


introduction of IP multimedia
services that can be delivered to
a variety of terminals
Delivery must be cost effective
and employ complementary
access technologies
It must reduce operating costs
while allowing traditional services
and applications to be retained
All aspects including business
strategy, existing assets and country
specific drivers, must be considered

To ensure efficient delivery of


convenient, easy-to-use services
To facilitate ease of interworking
with business partners and other
networks
To effectively manage the
operators day-to-day operations
and business

FMC solution overview

Messaging

There are a number of requirements


for the successful evolution of FixedMobile Convergence.

The final goal is migration to an


All-IP network, with single, IPbased service machinery, using
common components and servicespecific extensions to reduce the
cost of service development and
subsequent implementation. This is
best achieved using the converged
core network, and common IMS
for fixed and mobile as the service
delivery engine. The resultant
converged network is then optimized
in three ways.

Mobile
Centrex

Push
To Talk

Interactive
gaming

Chat

IMS
NGIN

OSS
BSS

Video
sharing

Content
sharing

Voice

IP
Centrex

Rel-4

Provisioning

Rich
messaging

SDP

Service control

NGN

Business
partners

Cellular

Internet

IP
Broadband

Corporate
Cable

Fixed and
mobile access

PSTN

12/16

Fixed-Mobile Convergence

OSS and BSS


Operations Support Systems
(OSS) and Business Support
Systems (BSS) are moving from
organizational silos into a common,
centralized environment, so that
different accesses, domains
and services are all under one
management umbrella.
Future management systems will
consist of a common adaptation
layer, with the common platforms
and applications grouped together
according to the most relevant
operator processes. Moving towards
an environment where services can
be managed almost independently
from the underlying network.
The transition from the current
OSS and BSS to the converged
environment should be made
in steps, carefully evaluating an
operators needs and processes and
protecting existing investments.

OSS & BSS


OSS & BSS

Charging
Reporting

Configuring

Monitoring

Optimising

All-in-one
Service
Management

Planning
Security &
System Mgmt.

Subscription
Management
Adaption

Services for operators

Services play a key role in the implementation of FMC solutions towards


a complete, end-to-end FMC reality. Services bond the different building
blocks of a successful FMC solution together.

The services portfolio should include:


Business consulting to define
customer challenges, help
operators analyze the business
benefits of FMC, and find new
convergent end-user services
to meet the needs of both
consumers and business users
Services for the planning and
operational phases, including
network optimization, pre-launch
optimization of the network,
service modeling, network
design and operations support
Telecom implementation providing
project management, customer
logistics and implementation
services
Systems integration offering
multi-vendor network solutions,
developing convergent end-user
services together with operators
Care services
Hosting of new convergent enduser services, such as IMS, PoC
and location-based services

Service Development services


also need to cover phases of the
development process:
Managed Services for larger scale
projects, such as managing traffic
migration from PSTN to IMS
Competence development to
ensure that personnel have the
skills to operate the network
effectively and to offer an
integrated approach that identifies
where learning is required,
delivering the right learning
solution to the right people at the
right time, while reflecting the
business needs

14/16

Fixed-Mobile Convergence

Conclusions

The long-term profitability of fixed


and mobile businesses is predicated
on the delivery of a wide range of
user-centric services that can be selfprovisioned and personalized.
To do this the industry must
provide a simple and convenient
user experience combined with
complementary access and cost
effective solutions. These are the
key drivers behind FMC. When
these criteria are met, we can start
to realize the full potential of new
communications technology.
There is broad agreement within the
industry on standards based initiatives
such as IMS and the need for fast
service creation and deployment. Use
of these services must be intuitive
and deliver a unified user experience
across the different fixed and mobile
access networks. Success in the
emerging FMC environment will be
determined by user acceptance, not
networking technology, although IP,
VoIP and SIP are important enablers.
We are in a communications-centric
era. This equates to a huge market
for smarter, tailored services and
an unprecedented opportunity for
network operators and service
providers. We have the technology
to create and deploy virtually any
service for which there is an appetite.
However, the size of the market,
combined with factors such as
broadband access and locationagnostic delivery, allows new players
entry, resulting in new business
models and the arrival of xVNOs.
The convergence requirement
from users is simple convenient
quadruple play access to
personalized voice, data and video/
TV services, supported by mobility
over any access network. From the
operators and the service providers
perspective, the challenge is to meet
this requirement with long-term
profitable business.

The value that Nokia Siemens


Networks can bring is clear.
Nokia Siemens Networks
provides a customer optimized
end-to-end solution, complete
with business and technology
consulting, deployment services,
and hosting and other managed
services. This is done by working
closely with operators and
service providers to meet their
goals. Nokia Siemens Networks
combined breadth includes the
most comprehensive offering of
mobile and fixed soft switching,
cable solutions, applications and
IMS based solutions.

Nokia Siemens Networks Corporation


P.O. Box 1
FI-02022 NOKIA SIEMENS NETWORKS
Finland
Visiting address:
Karaportti 3, ESPOO, Finland
Switchboard +358 71 400 4000 (Finland)
Switchboard +49 89 5159 01 (Germany)

Copyright 2007 Nokia Siemens Networks. All rights reserved.

www.nokiasiemensnetworks.com