“LTE is seen by many as the catalyst of growth for IPX and even as the killer IPX application by some,” explains Hot Telecom in IPX: Trends, Key Players and Traffic.
The majority of IPX customers interviewed for the report suggested this is what prompted them to connect. The majority of providers interviewed claimed this was the main driver to offer LTE. As the report finds, many mobile operators have postponed connecting to IPX until the launch of their LTE network.
In that case, the next two years will see the growth that early IPX providers were hoping for before now.
“Everyone needs a reason to connect in the first place,” says Catherine Haslam, senior analyst for wholesale at Ovum, “LTE is that reason.”
“When we meet we all say the same thing: our CEO has been asking where all the IPX revenues are,” says Chris Lengyel, director of strategic marketing and new products at iBasis. “I tell him that the guys from the other carriers haven’t seen a huge uptake either. What do you want from me?”
The CEO might have wanted a compelling business case to put to potential customers. And, with 115 LTE networks in 51 countries as well as 308 LTE commitments in 94 countries spread evenly between Europe, Asia-Pacific, the Middle East and the Americas, that case has arrived.
There are several reasons why LTE and IPX fit together. In domestic markets, a new generation of devices that support all-IP services built on IMS will require an IP-native interconnection between operators. National interconnects are often bilateral today, but IPX offers an alternative that may be favoured, especially by new entrants or service providers for those all-IP devices. LTE roaming supports local break-out of traffic too. In the 3G world, roaming required data connectivity to the home network through a GRX. In LTE, users can connect to the internet locally through the network they are visiting.
Even if operators prefer to use a GRX service as before, the increased number of services and bandwidth, and the need for an end-to-end SLA mean that this will only be possible using a GRX hosted on an IPX. Finally, mobile roaming requires that the visited network and the home network exchange information, such as subscription and authentication data, and policy and charging information if there is local breakout. In LTE, this requires Diameter signalling.
Mobile IP solution provider Tekelec, whose Diameter Signalling Router is used in Telstra Global’s IPX offering among others, predicts that Diameter Signalling will grow at a CAGR of 252% between 2011 and 2016, reaching almost 50 million messages per second at that time.
Therefore, migration to IPX becomes a part of the introduction of new technology for the operator. Lengyel considers that the ‘IPX’ label is partly marketing, but mostly a brand which helps operators make their decision on how to plan its LTE migration - as a package of standards and ways to do business its value is in speeding the decision process among operators. “The problem is that, until now, IPX has been a solution looking for a problem. The GSMA had the foresight to see the need for IPX a long time ago,” he says, “but the right idea at the wrong time is as good as a wrong idea. They were just a few years too early in promoting it.”
What might have occurred to IPX had LTE not created this sense of urgency? The economic conditions would have delayed migration for much longer, Lengyel says.
“Consumers are fine with standard voice, and TDM is an inexpensive way to deliver TDM voice. All the TDM equipment is fully depreciated and the infrastructure works pretty well. That’s why we saw false starts in 2008 and 2009. This all changes with LTE, this has turned the intercarrier connection world upside down. The SS7 network is getting transitioned away.”
Solving the roaming problem
However, the critical mass of operators required means that IPX adoption is only the first step to solving the interworking problem in LTE. In Asia, for example, Haslam points out that many of the interworking problems are being addressed by operators working among themselves to discover the most efficient way to connect through IPX. Notably thorough Conexus Mobile Alliance, which now has a base of around 330 million mobile subscribers, and launched its LTE data roaming service in June 2012. The aggressive adoption of data roaming in Asia, which is in part due to the large amount of migration in the region, is driving IPX uptake for HCG, according to Cecilia Wong vice president, product & business operations, international business. “Most of the services have been available already, but the LTE part is new. Launching a domestic LTE network creates requirements and needs for the international arena. HGC has PoPs in many countries including USA, Europe, Hong Kong, Thailand, South Korea, Vietnam, Singapore, Malaysia, Taiwan, Japan, Cambodia, Myanmar and Indonesia, so that’s an advantage,” she says.
A fundamental part of accelerating the rollout of LTE data roaming is being able to introduce it on a committed group of early operator adopters, she adds: “Hutchison Group has a big international mobile operation in Asia and Europe. Hong Kong is an advanced market in LTE. This gives us a competitive advantage in how roaming, for example should be done. Our IPX can interconnect all these mobile operators together to provide roaming and interconnect services within the Hutchison Group, so this creates acritical mass which encourages more and more network operators and service providers to join.”
Solving the LTE roaming problem will also recover a group of subscribers who were lost in the 3G environment. Syniverse analysed its data to indetify “transient roamers” – the subscribers who use alternatives to traditional mobile roaming. It extrapolates that they spent US$17 billion in 2012 on alternative connectivity options while travelling. Some buy local SIM cards. Some buy local wi-fi connectivity and use VoIP. All of them are lost to the MNO through a failure to provide a seamless service under 3G.
Share of voice
Roaming may dominate the discussion of IPX for LTE operators, but it is far from the only benefit. Lengyel points to the experiments with VoLTE as another driver of IPX adoption. VoLTE uses a data connection through LTE, rather than the IP protocol, to deliver voice, and promises consumer benefits apart from price: with guaranteed QoS from an IPX connection, the voice quality should improve - but also MetroPCS testing in the US implies increased battery life for mobile devices.
MNO subscribers seem increasingly willing to tolerate best-effort voice. Oven predicts that 6.9% of voice revenues will be delivered over VoIP by 2020, which is a total of $479 billion lost to operators during this period.
As VoIP users all know, voice calling is susceptible to jitter and latency. VoLTE (and video calling), will demand QoS end-to-end that is higher for most LTE data applications: both IP latency and jitter must be extremely low. Managing this on net is challenging, but backhaul in the local network and, and between networks, needs equivalent QoS. It may be possible to achieve this without IPX, but both the simplicity of interconnection, and the ability to monitor CoS across the connection, are greatly improved.
Internationally, this is not an easy problem to deal with. In November 2012, Aicent announced successful testing of interworking between two laboratories in China and Europe, backed by China Mobile and Telecom Slovenia. If the future is bright for Slovenian immigrants in China who want to call home, international VoLTE is not yet a driver of IPX adoption.
In local markets, the interconnection problem can sometimes be more straightforward to investigate, but still requiring IPX. “Speaking with Verizon and MetroPCS and Sprint and AT&T, it’s almost a foregone conclusion: they’re doing a trial of VoLTE, of course they connect over IPX,” Lengyel says.
Developing markets
In many markets, LTE is not simply a replacement for 3G, and so the problems are not always based around MNOs, handsets or roaming.
Lengyel recently visited Jamaica: “The ARPU is $12, and smartphone penetration is 15 per cent. They’re focused on building out an LTE data network to replace WiMax, and provide broadband to the home.”
The problems an IPX may be able to solve in this environment will be less about interconnecting operators, but providing a common platform for connecting global content providers to local flavours of LTE.
LTE will, for some operators, follow after the types of service that it can develop are in place. That has been the case with Telecom Italia Sparkle’s announcement that ASGSM.MOBI in Somalia as its first IPX customer in the African continent. With only three LTE networks found outside of South Africa, using the technology as a trigger to encourage IPX migration will be a long, slow business. Instead ASGSM.MOBI has created outbound data roaming, SMS and MMS. The large amount of migration from Somalia, and the lack of development in banking means that the service already offers free international voice roaming and a mobile wallet.
Yet with LTE rollouts planned across the horn of Africa in the near future, services like this will soon migrate. If this is a one-in-a-lifetime opportunity for IPX providers, it will require effective cooperation between them to minimise the pain of the transition for operators and service providers to the LTE environment.
Carrier cooperation has not always been the default position, but Dan Warren, senior director of technology at the GSMA, is encouraged by their businesslike attitude to dealing with the opportunities of LTE and data roaming, because of lessons learned in the 2G and 3G environments.
“The carriers are playing nice: they all see this as a significant opportunity. They had good business around GRX, and the principle of GRX being a common way to do business might make it look like they will struggle to differentiate their IPX - but carriers have been very positive.
All the bits of what we have been doing have come together at once because of this moment. This is what we’ve been evangelising all this time.”
