Global Telecom Software Market Analysis

Telecom Application Servers Outlook December 2008

By Peter Mottishaw

Table of Contents Contents Executive summary................................................................................7 Figure 1: Global telecom application servers (includes evolved IN) forecast; 2007-2012...............................................................................7 Market share..........................................................................................9 Figure 2: Legacy IN and telecom application server technology share (Total $3.3 billionnincluding RTC session control and IN pre-paid) ...... 9 Figure 3: IN and telecom application server market share................... 10 Figure 4: Evolved IN and next generation telecom application server market share........................................................................................12 Figure 5: Next generation telecom application server market share.... 13 Technology share.................................................................................16 OSS Observer LLC PO Box 1319 Sugar Grove, IL 60554-1319 Phone: +1.630.466.9223 Fax: +1.630.566.3863 Email: [email protected] Website: www.ossobserver.com OSS Observer is part of Analysys Mason Ltd www.analysysmason.com [email protected] Analysys Mason Ltd is registered in England and Wales. Registration No. 5177472

Figure 6: Positioning of telecom application server standards and technologies.........................................................................................16 Figure 7: Next generation telecom application server technology share.18 Forecast ..............................................................................................20 Figure 8: Global legacy IN and telecom application server forecast 2007-2012............................................................................................20 Figure 9: Breakout of IN and telecom application servers forecast 2007-2012............................................................................................21 Forecast by communications service...................................................22

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

© 2008 Analysys Mason Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any other means – electronic, mechanical, photocopying, or recording or by any otherwise – without the prior permission of Analysys Mason Ltd. Analysys Mason Ltd. maintains that all reasonable care and skill has been used in the compilation of this document. However, Analysys Mason Ltd. shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this document by the customer, his or her employees, contractors, agents or any third party. OSS Observer LLC is an Analysys Mason Ltd. company.

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Table of Contents Figure 10: Telecom application servers (NG TAS & EIN) forecast by telecommunication service 2007-2012.................................................22 Forecast by region................................................................................23 Figure 11: Global telecom application servers forecast by region 2007-2012............................................................................................24 Market drivers.......................................................................................25 Drivers..................................................................................................25 Competition Legacy IN replacement and evolution Emerging markets with high subscriber growth Partner enablement and new business models Convergence of internet, mobile and wireline services Reduce cost of developing new services IMS deployment IPTV deployment Inhibitors...............................................................................................28 Increasing complexity of mobile devices and the service layer CSP organizational and system integration challenges Business environment..........................................................................29 Figure 12: Telecom architecture functional layers................................29 Figure 13: Delivering converged services with a telecom application server...................................................................................................31 Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Market definition...................................................................................33 3

Table of Contents Figure 14: Telecom application server OSS Observer segmentation... 33 Telecom application server definition ..................................................34 Figure 15: Telecom application server functional components............. 34 Telecom service exposure layer Telecom service creation environment Service execution environment Network abstraction layer Related product categories .................................................................36 Network gateway definition Figure 16: Network gateway functional components............................37 Feature server definition Figure 17: Feature server functional components................................37 Deployment scenarios..........................................................................38 Partner enablement..............................................................................38 Figure 18: Scenario 1: Partner enablement deployment ..................... 39 Service creation....................................................................................39 Figure 19: Scenario 2: Service creation deployment scenario............. 40 IMS/VoIP prepackaged services .........................................................41 Figure 20: Scenario 3: IMS/VoIP pre-packaged services..................... 41 IN evolution or replacement.................................................................42 Figure 21: Scenario 4: IN evolution deployment scenario.................... 42 Migration of prepaid IN session control................................................43 Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Figure 22: Scenario 5: Migration of IN prepaid session control............ 43 4

Table of Contents Vendor summaries...............................................................................44 Aepona.................................................................................................44 Alcatel-Lucent.......................................................................................44 Amdocs................................................................................................44 Avaya....................................................................................................45 Broadsoft..............................................................................................45 Comverse.............................................................................................45 Convergin.............................................................................................46 Ericsson................................................................................................46 HP.........................................................................................................47 IBM.......................................................................................................47 jNetX.....................................................................................................48 Microsoft...............................................................................................48 Nokia Siemens Networks.....................................................................48 Nortel....................................................................................................49 OpenCloud...........................................................................................49 Oracle...................................................................................................49 Personeta.............................................................................................50 Sylantro................................................................................................50 Tekelec.................................................................................................50 Telcordia...............................................................................................51 Telenity.................................................................................................51 Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Suppliers..............................................................................................52 5

Table of Contents Table 1: Comparison of evolved IN and next generation telecom application server suppliers .................................................................52 Recommendations...............................................................................54

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

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Executive Summary Executive summary Telecom application servers are products that use modern IT software technologies to support the creation, execution and exposure of telecom services. Communication service providers (CSPs) are deploying telecom application servers for partner enablement, service innovation and as a replacement of legacy IN platforms. OSS Observer forecasts good growth in spending on telecom application servers, from $1.19 billion in 2007 to $1.82 billion in 2012 (see figure 1) at a CAGR of 9%. This partly reflects a transfer of budget from legacy IN spending, but also reflects the importance of partner enablement and service innovation to CSPs’ strategies. Competition between CSPs and with companies in adjacent industries, such as Google, Yahoo, Microsoft, and Apple, is driving investment in telecom application servers to enhance existing services and combine them with new offerings such as presence, location, IPTV, and other new capabilities. Figure 1: Global telecom application servers (includes evolved IN) forecast; 2007-2012. $2,000 $1,800 $1,600

$ Millions

$1,400 $1,200 $1,000 $800 $600 $400 $200 $TAS (CAGR 9%)

CY2007

CY2008

CY2009

CY2010

CY2011

CY2012

$1,193

$1,361

$1,407

$1,475

$1,622

$1,819

Source: OSS Observer part of Analysys Mason

The forecast in this report takes into account the difficult economic conditions that we are currently experiencing. We have revised our forecasts to show these conditions continuing into the second half of 2010. The growth forecast for telecom application server spending has been revised downwards in 2009 and 2010 from the forecast in the SDP Market Review, but with growth rates returning to the levels we have seen in recent years in 2011 and 2012 Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

In this report we take a more detailed look at the telecom application server market. In the SDP market review published in August 2008 we 7

Executive Summary

included a definition of telecom application servers (TAS) that focused on the Java based platforms introduced by new entrants to the market. In this report we update the market definition to include evolved IN platforms that also support IP based signaling protocols such as SIP. As a consequence the earlier definition of TAS is now referred to as next generation telecom application servers (NG TAS). We continue to exclude the legacy IN platforms that were introduced in the 90s and provide no support for IP based signaling. However, in this report we quantify spending on legacy IN platforms and analyze the transition of this spending towards next generation telecom application servers and evolved IN platforms. Another significant addition is the analysis of five separate deployment scenarios for telecom application servers. Each of the following reflects a particular CSP opportunity. 1. Partner enablement: build an ecosystem of partners using CSP service enablers to offer innovative new services. 2. Service creation: develop a platform to reduce the time to create and deliver CSP owned services. 3. IMS/VoIP services: the CSP wants a set of configurable services that deliver immediate revenue on its VoIP or IMS deployment. 4. IN evolution or replacement: the CSP wants to replace or evolve existing IN infrastructure to support new IP signaling protocols or because the products are reaching end of life. 5. Prepaid scenarios: the CSP requires a session control platform that integrates with real-time charging systems.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

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Market Share Market share The telecommunications industry has had a series of standards efforts to deliver common platforms for service creation and execution. In the 1990s IN and AIN-based service control points (SCPs) were extensively deployed. The service creation environments associated with these were generally proprietary. The installed base of these legacy platforms is still significant, but declining as a source of revenue for the major equipment providers. In figure 2 the combined IN legacy and telecom application server market share is shown. It also includes for comparison, the spending on real-time charging (RTC) session control broken out into IN legacy (pre-paid) with 27% share and RTC session control with 18% share. These RTC segments are included in the OSS Observer report Real-Time Charging Outlook published in November 2007. The overall spending on IN platforms and telecom application servers including RTC session control was $3.3 billion in 2007. Revenues from the RTC session control segments are not included in the vendor market shares quantified in this section or in the spending forecasts in the rest of this report. Figure 2: Legacy IN and telecom application server technology share (Total $3.3 billion including RTC session control and IN prepaid)

NG TAS 15%

IN Legacy (prepaid) 27%

Evolved IN 21%

IN Legacy (VAS) 19%

RTC session control 18% Source: OSS Observer part of Analysys Mason

In this section we break out three market shares with increasing focus on the next generation telecom application server (NG TAS) segment as follows: •

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

IN and telecom application server market share in figure 3. This includes next generation telecom application server, evolved IN and IN legacy value-added services (VAS), shown in figure 2. This excludes the RTC session control and IN prepaid. 9

Market Share

•

Evolved IN and next generation telecom application server market share in figure 4, which excludes Legacy IN.

•

Next generation telecom application server market share in figure 5;, which further excludes Evolved IN.

The definitions and a more detailed breakdown of technology shares are provided in the next section. In figure 3 the overall market in 2007, including both IN segments and next-generation telecom application servers, was $1.83 billion. The leading market positions are still taken by the major IN equipment providers indicating the ongoing importance of IN platforms particularly in mobile service infrastructure. Ericsson leads with 20% market share, Alcatel-Lucent is next with 17% market share, Nokia Siemens Networks follows with 16% market share and Comverse, Huawei and HP have 6%, 5%, and 5% respectively. Figure 3: IN and telecom application server market share

2007 Total IN + TAS Revenue = $1,825 million Oracle/BEA Telcordia Broadsoft XIUS-bcgi IBM JNETx Aepona Sylantro Avaya

Other 31%

Ericsson 20% NSN 16%

HP 5%

Huawei 5%

Alcatel-Lucent 17%

Comverse 6% Source: OSS Observer part of Analysys Mason

The IN installed base is important because vendors have the opportunity to migrate their existing customers to new platforms. If the large IN providers execute well on supporting migration from earlier generations of IN platforms they will be able to hold on to customers who want to evolve their IN infrastructure to support new IP signaling protocols, improved service creation or better service experience.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Market leader Ericsson has product offerings in all three sub-segments; legacy IN, evolved IN and next generation telecom application servers. It’s AXE based legacy IN platform still has over 100 deployments 10

Market Share

generating maintenance revenues, but it was replaced as Ericsson’s IN platform nearly eight years ago by the INS product. The INS product is an evolved IN platform with more than 130 deployments mainly with mobile CSPs. Ericsson continues to migrate the legacy IN installed base to the INS platform. Ericsson is close to delivering its next-generation TAS product. This is a SIP servlet based software product that will compete directly with NG TAS products from Oracle, IBM and the specialized TAS ISVs. Ericsson has taken a very interesting approach of basing the product on Sun’s open source Glassfish JavaEE platform. Using an open source platform will undercut the license model of Oracle and IBM, the dominant JavaEE providers. This fits well with Ericsson’s growing services business, but it will be a challenge to take on Oracle and IBM in this space. Second placed Alcatel-Lucent provides a broad product line in the telecom application server segment. It has presence in the legacy IN, evolved IN and next-generation TAS segments. The legacy IN deployments are still a significant source of maintenance revenue, but the 8690 OSP evolved IN platform has been the main IN offering for more than four years. It supports both SIP and legacy signaling protocols and a Java service creation environment. The 5400 IAS is the core of Alcatel-Lucent’s next-generation TAS offering. This was developed by Alcatel as an IMS application server and provides a Java service creation environment to support SIP applications. It supports RCS (rich communications suite) clients. Alcatel-Lucent also provides the 5400 ISG service gateway, a presence server, and a number of specialized feature servers to support specific applications. Together these products position Alcatel-Lucent strongly in the telecom application server segment, but leave the challenge of managing a fairly complex product line. Third placed Nokia Siemens Networks has a large installed base of IN customers using both its evolved IN platform and its legacy IN platform. The original Siemens IN platform was introduced in the mid 1990s using proprietary hardware and extensively deployed with tier-1 operators. It was replaced by IN@vantage in 2001. This provided a Java service creation environment and was delivered on a Sun Solaris platform. It now supports IP signaling protocols. The majority of the installed base has migrated to the IN@vantage platform.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

In the next generation TAS sub segment Nokia Siemens provides a next generation feature server, the SURPASS hiQ 4200. It supports IP and legacy networks with residential VoIP, business VoIP and fixed mobile convergence solutions. It has been successfully deployed particularly with cable operators in North America. In the broader NG TAS segment 11

Market Share

Nokia Siemens Networks has focused on partnering with companies like jNetX as part of the its service delivery framework. Figure 4 shows the overall market share in 2007 excluding legacy IN platforms. The big three NEMs lead with Ericsson at 18%, Alcatel-Lucent at 16% and Nokia Siemens Networks at 15%. The significant change from figure 3 is that Oracle/BEA is in fourth place with 8% market share and BroadSoft is in sixth place with 5% market share. Both vendors provide next generation telecom application servers and have benefited from the growth in VoIP services for business and residential customers. Figure 4: Evolved IN and next generation telecom application server market share

2007 EIN + NG TAS Revenue = $1,193 million Telcordia IBM HP Huawei JNETx Aepona Sylantro Avaya Telenity Italtel

Other 33%

Ericsson 18% NSN 15%

Broadsoft 5%

Alcatel-Lucent 16%

Comverse 5% Oracle/BEA 8% Source: OSS Observer part of Analysys Mason

In the other category Telcordia is the highest placed of the evolved IN platform providers; it has invested in migrating its IN platform to a Java based service creation environment, provided support for IP based signaling and moved to COTS blade server hardware. Telcordia has a strong IN installed base in North America that it can maintain with the addition of SIP and next generation services. It has also been successful in winning new customers in Latin America, Europe and India. These are sometimes as extensions to a real-time charging deployment. Major customers include AT&T and Sprint Nextel in North America, Oi in Brazil, Tata and Idea Cellular in India and Cellcom and Elisa in Europe.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

What is clear from figure 4 is that the major IN platform providers have held on to market share despite the introduction of new technologies such as IP based signaling protocols, Java based service creation environments and web services based service exposure. 12

Market Share

The market share for next generation telecom application servers (NG TAS) is shown in figure 5. The overall spend was $498 million in 2007. The top six suppliers account for 58% of the market. This is a more fragmented market than shown in figure 4 and reflects the entry of many ISVs and some major IT companies into this segment over the last 5 years. Oracle/BEA leads with 18% market share followed by BroadSoft with 12% market share, IBM with 9% market share, Comverse with 8% market share, Alcatel-Lucent with 6% market share and jNetX with 5% market share. Note that the NG TAS market definition is equivalent to the TAS market definition used in previous SDP reports from OSS Observer. There have been some corrections to explicitly include next generation feature servers that have caused some changes from the SDP market review published in August 2008. This has boosted the market share for BroadSoft and Comverse. Figure 5: Next generation telecom application server market share

2007 NG TAS Revenue = $498 million Aepona Sylantro Ericsson Avaya NSN Telenity Nortel Amdocs Microsoft Personeta

Other 42%

JNETx 5%

Oracle/BEA 18%

Alcatel-Lucent 6%

Broadsoft 12%

Comverse 8%

IBM 9%

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Oracle acquired BEA in April 2008. BEA was the market leader of the NG TAS segment and a major supplier of IT middleware in the telecom vertical with its WebLogic, Tuxedo and AquaLogic product lines. WebLogic Server is BEA’s Java EE application server, which is widely used in billing, customer care, service fulfillment and service delivery solutions. BEA launched its web services application integration product family, AquaLogic in 2005. Also in 2005, BEA established its position in the telecom application server market by launching the WebLogic Communications Platform product family, formed through acquisitions and adding telecom specific capabilities on its WebLogic Server platform. These include its WebLogic SIP Server based on SIP Servlet and IMS 13

Market Share

technologies and its WebLogic Network Gatekeeper (service exposure, policy enforcement, and partner management platform) based on Web Services and Parlay X technologies. BEA had significant deployments with InterCall, SingTel, O2 UK, Telecom Italia, Hutchison 3 and Vodafone Netherlands.    Oracle built its telecom application server offerings, called Oracle Service Delivery Platform, from the acquisition of Hotsip, a SIP server supplier, in 2006, and Net4Call, a Parlay gateway supplier. Upon closing the BEA acquisition, Oracle announced in July 2008 that its future telecom application server platform would be based on BEA’s WebLogic Communications Platform products. The combined OracleBEA SDP product line is branded Oracle Communications Service Delivery (OCSD). The BEA WebLogic SIP Server is renamed as Oracle Communications Converged Application Server (OCCAS). This will replace the Oracle Communication and Mobility Server (OCMS) product that came from Oracle’s Hotsip acquisition. The BEA WebLogic Network Gatekeeper, renamed as Oracle Communications Services Gatekeeper (OCSG), will replace the Oracle Network Connectivity Server (ONCS) that came from the acquisition of Net4Call. Some of the Oracle consumer and business telephony applications will be ported to the new OCCAS platform. OCSD is part of the overall Oracle Communications suite of products that include Billing and Revenue Management, Service Fulfillment, and Network Assurance. BroadSoft’s BroadWorks platform enables CSPs to offer business trunking, residential broadband, hosted IP PBX and Mobile PBX services. BroadSoft has deployments with most tier-1 CSPs around the world. BroadSoft works with numerous partners including Alcatel-Lucent, Huawei, Ericsson, Nortel and Siemens. The majority of BroadSoft’s revenues come from CSPs offering business services such as Hosted VoIP. A lesser amount comes from providers selling VoIP services to residential customers. Mobile is currently a small portion of BroadSofts business, but it anticipates this being the area with the most growth in the coming years.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

IBM had the third largest market share in 2007. IBM offers a next generation TAS product based on its WebSphere JavaEE application server. This supports SIP Servlets with a fully integrated HTTP/SIP container out-of-the-box. IBM has developed telecom specific capabilities on top of this platform including an IMS Connector, Parlay X Gateway, Presence Server, XML Data Management Server and TCAP Connector. It has addressed CSP requirements for availability and scalability and support for IMS deployments with SIP and Diameter. IBM has deployments worldwide including Sprint Nextel, AT&T, Bharti and France Telecom. 14

Market Share

The Oracle acquisition of BEA will make IBM a more attractive partner for ISVs threatened by Oracle’s telecom application business. A strength for IBM is the broad support it provides for service creation. With its Rational product line IBM provides full life cycle support for service creation. This includes a SIP modeling toolkit. IBM has an ISV partner program that provides a range of telecom applications. It is also a major system integrator for telecom applications. Comverse is a major provider of billing, real-time charging, messaging and telecom application server solutions. Comverse acquired VoIP platform provider NetCentrex in 2006. This provided a next generation feature server supporting SIP and IMS protocols. Comverse already had a strong IN business supporting VAS and pre-paid services. A major strength for Comverse is the portfolio of supporting platforms for messaging, content and media. jNetX is a specialized TAS ISV and the leading supplier of JAIN SLEE platforms. It has more than 28 deployments including a number of Vodafone operating companies, BT, mobilkom Austria, Telefonica, BSNL and OPTUS. Its success has been driven mainly by the requirement to replace or extend existing IN platforms. It has also had success in IP environments as a SIP/IMS application server platform. The jNetX platform has proved very attractive to CSPs that prefer an application server with telecom specific capabilities, but would like to limit lock-in to the large NEMs.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

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Technology Share

Technology share An initial breakdown of platforms related to telecom application servers was provided in figure 2. This section provides more detail on the next generation telecom application servers. Next generation TAS’ are implemented using a variety of technologies and standards. The market definition section provides details. This section provides a summary and quantifies the relative market share of the main technologies. This is not normally part of an OSS Observer Outlook report. It has been included here because the choice of service layer technology is a strategic choice for a CSP and will have a long-term consequence on the flexibility, time to market and costs for introducing new services. Figure 6: Positioning of telecom application server standards and technologies

Source: OSS Observer part of Analysys Mason

The main technology platforms are summarized in figure 6. The three main platform types defined as follows:

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

•

Legacy IN platforms: intelligent network (IN) products deployed mainly in the 1990s and supporting only SS7 and other legacy protocols. It includes a service creation environment and the service control point.

•

Evolved IN platforms (EIN): The next-generation of IN platforms deployed in the 2000s providing some support for IP signalling protocols (e.g. SIP, Diameter), improved service creation environments and some support for open interfaces (CORBA, Web Services). A major consideration with these new platforms has been the need to support existing IN customers.

16

Technology Share

•

Next-generation telecom application servers (NG TAS): Products developed on standard IT platforms using predominantly Java environments for service creation and execution. These products have mainly been developed by new entrants to the market intent on taking advantage of the transition to IP based signalling and COTS IT platforms.

The key difference between evolved IN platforms and next-generation TAS is that the evolved IN platforms were developed to accommodate the needs of an existing installed base of legacy IN platforms. The applications in figure 6 have been broken out in two columns as follows: •

Legacy applications: provide services over PSTN, GSM and other circuit switched networks. Services are controlled using SS7 and other legacy signaling protocols.

•

Next-generation applications: provide services over IP networks using IP-based signaling protocols such as SIP, Diameter and other VoIP/IMS signaling protocols.

The major technologies and platforms are positioned according to the technology generation and the types of services supported: •

SIP Servlet: an open Java standard for execution of SIP based telecom services. Next-generation feature server: a proprietary service execution software platform supporting IP-based services and providing prepackaged telecom applications.

•

JAIN SLEE platform: an open Java standard for service execution of telecom services supporting both SIP and legacy SS7 signaling protocols.

•

Network and service gateways: a diverse collection of platforms including Parlay and Parlay X that manage access to service enablers and network enablers.

•

Evolved IN platforms: second-generation IN platforms supporting both legacy and IP signaling and built on standard IT platforms.

•

Legacy IN platforms: first-generation IN platforms supporting only legacy signaling and built on proprietary telecom platforms.

Another significant addition is the analysis of five separate deployment scenarios for telecom application servers. Each of the following reflects a particular CSP opportunity. Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

1. Partner enablement: build an ecosystem of partners using CSP service enablers to offer innovative new services. 17

Technology Share

2. Service creation: develop a platform to reduce the time to create and deliver CSP owned services. 3. IMS/VoIP services: the CSP wants a set of configurable services that deliver immediate revenue on its VoIP or IMS deployment. 4. IN evolution or replacement: the CSP wants to replace or evolve existing IN infrastructure to support new IP signaling protocols or because the products are reaching end of life. 5. Prepaid scenarios: the CSP requires a session control platform that integrates with real-time charging systems. Figure 7: Next generation telecom application server technology share

Propriatory NG AS platform 4% JAIN SLEE platform 7%

NG prepaid applications 3%

NG Feature Server 38%

NG VAS applications 8%

Network & Service Gateways 17%

SIP Servlet platform 23% Source: OSS Observer part of Analysys Mason

The relative market share of these platforms in 2007 is broken out in figure 7. An additional category of proprietary next-generation platforms is included. In addition to the platform spending, the spending on prepackaged applications is quantified for the following categories:

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

•

Next-generation pre-paid applications: some CSPs are using next generation telecom application servers as part of their pre-paid all real-time charging deployments.

•

Next-generation value-added applications: this includes spending on support for all other services.

The ability to deliver next generation applications should be improved by the rich communications suite (RCS) initiative supported by Orange, Telecom Italia, Telefonica, TeliaSonera, Ericsson, Nokia Siemens 18

Technology Share

Networks, Nokia, Sony Ericsson, Samsung and Alcatel-Lucent. This standardizes the client interface at the service level making it easier to develop applications that work across multiple devices. Next generation feature servers have the largest market share at 38%. These have benefited from the growth in business and residential VoIP and are attractive because they provide prepackaged applications and an immediate revenue stream. Companies such as BroadSoft, Sylantro, Comverse and Alcatel-Lucent have benefited from this opportunity. SIP Servlet platforms have benefited from the same opportunity and have 23% share. They provide a different value proposition because they provide a full service creation capability and integration into the IT infrastructure. BEA/Oracle and IBM have been the main beneficiaries of this opportunity. Network and service gateways are next with 17% market share. These include Parlay X and Parlay products that provide a service exposure layer and partner management capabilities. It also includes a variety of products that enable access to service enablers using proprietary approaches. Most of the major NEMs have Parlay gateway products, but are no longer actively developing these platforms. Aepona is a successful specialist Parlay gateway provider who has diversified by acquiring the Appium application server. JAIN SLEE has 7% market share. Its strength is that it is a standard platform that has broad support for both legacy and next generation signaling protocols. It has been deployed by a number of CSPs to replace IN platforms. jNetX and OpenCloud are the main JAIN SLEE vendors.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

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Forecast

Forecast OSS Observer forecasts that the combined market for IN platforms and telecom application servers will grow from $1.83 billion in 2007 to $2.04 billion in 2012 at a CAGR of 2% (see Figure 8; note that this includes the legacy IN spending to support applications other than pre-paid). The modest growth rate reflects the transition that is occurring from high cost legacy IN platforms to lower cost evolved IN (EIN) and next-generation telecom application server platforms (NG TAS). The EIN and NG TAS forecast is shown in figure 1 and has a significantly higher growth rate of 9%. (Note that in the following forecasts the spending on dedicated IN prepaid platforms is excluded. See the discussion on figure 2 in the market share section.) Figure 8: Global legacy IN and telecom application server forecast 2007-2012 $2,500

$ Millions

$2,000

$1,500

$1,000

$500

$IN + TAS (CAGR 2%)

CY2007

CY2008

CY2009

CY2010

CY2011

CY2012

$1,826

$1,867

$1,863

$1,862

$1,932

$2,035

Source: OSS Observer part of Analysys Mason

The three product categories that contribute to the revenue in figure 8 are described in more detail in figure 6 in the technology share section:

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

•

Legacy IN platforms: intelligent network (IN) products deployed mainly in the 1990s and supporting only SS7 and other legacy protocols. It includes a service creation environment and the service control point.

•

Evolved IN platforms (EIN): The next-generation of IN platforms 20

Forecast

deployed in the 2000s providing some support for IP signalling protocols (e.g. SIP, Diameter), improved service creation environments and some support for open interfaces (CORBA, Web Services). •

Next-generation telecom application servers (NG TAS): Products developed on standard IT platforms using predominantly Java environments for service creation and execution.

The key difference between evolved IN platforms and next-generation TAS is that the evolved IN platforms were developed to accommodate the needs of an existing installed base of legacy IN platforms. Suppliers such as Ericsson and Alcatel-Lucent recognized that the migration of their installed base to the evolved IN platform was the largest single opportunity and therefore a key product requirement. In contrast, next generation telecom application servers have mainly been developed by new entrants and have focused more on new opportunities such as partner enablement, next-generation VoIP and IMS services and standards-based service creation environments. In this report we will use TAS to refer to the combined evolved IN and next-generation telecom application server market. The revenue from the three product categories is broken out in figure 9. Next generation TAS is the fastest growing, with spending of $498 million in 2007 growing to $937 million in 2012 at a CAGR of 13%. Some of this growth will come from the replacement of legacy IN platforms, but the majority will come from addressing the new opportunities for partner enablement, accelerated service creation and next-generation VoIP/IMS services. Figure 9: Breakout of IN and telecom application servers forecast 2007-2012 $1,000 $900 $800

$ Millions

$700 $600 $500 $400 $300 $200 $100 $-

CY2007

CY2008

CY2009

CY2010

CY2011

CY2012

NG TAS (CAGR 13%)

$498

$598

$640

$691

$801

$937

Evolved IN (CAGR 5%)

$694

$763

$768

$784

$821

$881

Legacy IN (CAGR -19%)

$633

$506

$456

$387

$310

$217

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

21

Forecast

Evolved IN (EIN) platforms will grow at a more modest 5% CAGR from $694 million in 2007 to $881 million in 2012. This will principally be driven by the replacement of legacy IN platforms, though there will be some opportunities to extend the EIN deployments to support business and residential VoIP services. Legacy IN spending is mainly on maintenance contracts to support existing infrastructure. This spending will decrease rapidly from $633 million in 2007 to $217 million in 2012 at a CAGR of -19%. The decrease is driven by the termination of maintenance contracts as equipment that has reached end of life is replaced by NG TAS and EIN deployments.

Forecast by communications service Figure 10 shows the telecom application servers forecast in each major communications service segment. This forecast includes evolved IN and next generation telecom application server spending, but excludes spending on legacy IN. Figure 10: Telecom application servers (NG TAS & EIN) forecast by telecommunication service 2007-2012 $1,200 $1,000

$ Millions

$800 $600 $400 $200 $-

CY2007

CY2008

CY2009

CY2010

CY2011

CY2012

$787

$884

$901

$929

$1,006

$1,109

$83

$82

$70

$59

$49

$36

Business (CAGR 12%)

$185

$218

$232

$251

$284

$327

Res BB

$137

$177

$204

$236

$284

$346

Mobile (CAGR 7%) PSTN

(CAGR -15%) (CAGR 20%)

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Mobile telecom application servers spending will grow at 7% CAGR driven by the need to deliver new capabilities and services and by the replacement of legacy IN platforms as they reach end of life. Evolved IN platforms will benefit most from the replacement opportunity while nextgeneration TAS will benefit most from the new services opportunity. Next-generation telecom application servers will benefit from the opportunity to expose open interfaces to new and existing service enablers. Location, presence, messaging, video sharing and charging 22

Forecast

are particularly important to Mobile CSPs. The telecom application server provides a platform to create and orchestrate new services using these enablers. With a network gateway, it also provides the policy control and partner management capabilities to support a partner program. This is particularly important in promoting innovative new services that combine Internet capabilities with telecom service enablers and compete with the likes of Google, Yahoo, Microsoft, Apple and Nokia. It also opens up the long tail of niche services. PSTN telecom application server spending will decline rapidly over the forecast period. Nearly all spending will be on the replacement of legacy IN platforms by evolved IN platforms. The spending on converged services that combine PSTN with VoIP is only allocated to the PSTN segment if it includes replacement of existing PSTN IN platforms. Spending on telecom application servers to support business services will grow from $185 million in 2007 to $327 million in 2012 at a CAGR of 12%. Investment in telecom application servers in the business services segment is enabled by the continuing shift to VoIP in many enterprises. Telecom application servers can be used to deliver the traditional PBX and Centrex capabilities expected by enterprise customers using VoIP. In addition, they will enable new converged services with mobile capabilities such as location and presence combine with enterprise address books and enterprise applications to support new business services. Spending on telecom application servers to support residential broadband services will grow from $137 million in 2007 to $346 million in 2012 at a CAGR of 20%. Spending on telecom application servers in the residential broadband segment is driven by the growth in VoIP, IPTV and converged services. CSPs need to deliver similar capabilities over broadband VoIP as the IN infrastructure currently delivers over the PSTN. More importantly CSPs will invest to enhance VoIP services by integrating with other Internet services. The integration of VoIP and mobile with IPTV will also drive investment.

Forecast by region

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Figure 11 shows the telecom application servers forecast in each of the three major regions. Spending on telecom application servers in North America will grow from $297 million in 2007 to $385 million in 2012 at a CAGR of 5%. North America is a mature telecom services market and investment will be driven by competitive threats and the search for new services. AT&T, for example, is investing heavily in IMS and IPTV to compete with the cable operators and other incumbent telcos. Its Common Architecture for Real-Time Services (CARTS) is AT&T’s project for a common IMS platform and converged services. This will include 23

Forecast

major investments in telecom application servers and network gateways to support the creation and deployment of converged multimedia services. Spending on telecom application servers in EMEA will grow from $586 million in 2007 to $819 million in 2012 at a CAGR of 7%. The mature markets of Western Europe are pursuing similar strategies to North America. BT, for example, is investing in its Ribbit platform to deliver open web services interfaces to telecom enablers such as call control, customer profiles and billing. In Eastern Europe, Middle East and Africa investment in telecom application servers and network gateways are more driven by subscriber growth and conventional voice, messaging and value-added services. Investment in these regions is more as an alternative to purchasing legacy IN platforms. Figure 11: Global telecom application servers forecast by region 2007-2012 $900 $800 $700

$ Millions

$600 $500 $400 $300 $200 $100 $-

CY2007

CY2008

CY2009

CY2010

CY2011

CY2012

(CAGR 5%)

$297

$327

$330

$337

$357

$385

EMEA (CAGR 7%)

$586

$656

$670

$690

$745

$819

ROW (CAGR 15%)

$309

$378

$408

$448

$520

$614

NA

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Spending on telecom application servers in ROW will grow from $309 million in 2007 to $614 million in 2012 at a CAGR of 15%. This is the fastest growing market, driven by high subscriber growth rates in countries like China, India and Brazil. In mature markets such as Japan, Australia and Singapore, CSPs are investing in telecom application servers and network gateways to deliver innovative new services or to open service enablers to third parties, but these mature markets make up a smaller percentage of the telecoms spending than in other regions. In the emerging and developing markets investment in telecom application servers and network gateways will be as an alternative to legacy IN investment and be focused on delivering mobile voice, messaging and value-added services. 24

Market Drivers

Market drivers The value of telecom application servers is in helping CSPs to create and deliver new services more quickly and at a lower cost than was previously possible. The TAS hides the complexity of the rapidly changing control layer by providing standardized application programming environments for developers. As a result the TAS provides a common service development environment for an IMS or VoIP control layer and a legacy PSTN control layer. The TAS is the essential platform for opening the CSPs service enablers to third parties who can provide the innovation engine to participate in the internet ecosystem and exploit the long tail for telecom services. The difficult economic climate that we expect to persist through 2009 and most of 2010, will change CSP spending priorities; shifting the emphasis to cost reduction business cases and away from risky new revenue streams. However, the attractiveness of new revenue opportunities will reassert themselves in 2011 and 2012.

Drivers • • • • • • • •

Competition Legacy IN replacement and evolution Emerging markets with high subscriber growth Partner enablement and new business models Convergence of internet, mobile and wireline services Reduce cost of developing new services IMS deployment IPTV deployment

Inhibitors • •

Increasing complexity of mobile devices and the service layer CSP organizational and system integration challenges

Drivers Competition

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

In mature markets, such as North America, Western Europe, parts of the Middle East and parts of Asia competition will continue to put increasing pressure on CSPs to deliver new innovative services at reasonable costs. In these markets there are normally three or more CSPs to choose from when purchasing mobile or broadband services. The entry of nontraditional competitors from adjacent industries into telecom services has further increased the competitive pressure. Media companies are 25

Market Drivers

entering the market to offer more flexibility in the distribution of content. Search and information portal providers such as Google and Yahoo are aggressively exploiting the shift of advertising dollars from traditional media outlets to the web. Device manufacturers such as Apple and Nokia are also offering mobile services that limit the opportunity for existing CSPs. These companies are a strategic threat because of their ability to disrupt the value chain. CSPs are responding by offering new services that combine existing capabilities such as voice, messaging and data, with new services such as content, presence and location. CSPs will invest in TAS to gain a competitive advantage by being able to deploy new services more quickly and improve responsiveness to competitive moves. The reduction in cost of new services introduction will enable them to test out riskier ideas. The partner enablement will allow them to offer a broader set of niche focused services that will increase the stickiness of the overall service offering. Legacy IN replacement and evolution Many CSPs will face end of life for part of their IN infrastructure during the forecast period. They will have to balance the requirement to have a future proof next-generation TAS platform with the requirement of minimum disruption to existing services. Most CSPs faced with this challenge in the early years of the forecast period will choose an evolved IN platform as the least disruptive approach to meeting their needs. However, we are already seeing a number of CSPs turning to NG TAS platforms especially JAIN SLEE, to meet this need. This trend will accelerate in the forecast period as IMS and VoIP continue to grow in importance. All categories of NG TAS will benefit. Emerging markets with high subscriber growth In emerging markets, particularly in the Middle East, Africa, Latin America and Asia, CSPs’ strong subscriber growth, despite current economic conditions, provides the promise of future revenues. Many of these CSPs have limited service delivery capabilities that cannot handle the new subscribers and support new services. Some will choose to purchase entirely new systems to take them into the future. This will drive spending on TAS platforms. Some of these will be evolved IN platforms, but more forward looking CSPs will choose NG TAS platforms. This will become increasingly true as IMS starts to roll out in mobile networks towards the end of the forecast period. Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

26

Market Drivers

Partner enablement and new business models CSPs will increasingly recognize the importance of third parties in delivering new and innovative services. Internet companies such as Google, Yahoo and eBay have demonstrated that a business model based on frequent service improvements and a high productivity development environment can lead to new innovative new services. They are also enabling “mash-ups” where a third party develops a new service by combining existing services such as Google Maps with real estate prices. CSPs have struggled to match this rate of innovation. Enabling third parties to create and deliver services using enablers within the CSP network is one approach to the competitive threat of the Internet companies. Leading edge CSPs will invest in NG TAS to support this new business model. Convergence of internet, mobile and wireline services Consumers and businesses will increasingly demand better integration between the services they use on the Internet, their mobile phone and their fixed line phone. They will expect common approaches to messaging, presence, contacts, media and other service components. No single company is in a position to deliver this, so partnering, cooperation and open standards will be important. CSPs recognize the power of internet brands such as Google and Yahoo. The Internet companies understand the importance of mobile CSPs in gaining access to mobile subscribers and service enablers such as presence and location. The result is an increasing willingness to partner and share revenues. This will drive spending on NG TAS to support partner enablement and provide a platform for delivering services that integrate Internet, mobile and wireline services. Reduce cost of developing new services CSPs will be under pressure to improve margins and control costs throughout the forecast period. This will be particularly important in 2009 and 2010 while the global economic recession puts CSP margins under additional pressure.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

A significant driver for TAS investment will be the reduction in cost of developing new services. It will achieve this by reducing the cost of software development and enabling the use of standard IT technologies. Some CSPs will also take the opportunity to provide a common TAS layer across multiple OpCos. 27

Market Drivers

IMS deployment IMS provides a more flexible and lower cost control layer for both wireless and wireline services. It provides access to a rich set of service enablers. This increases the value of a TAS by enabling new services that could not be delivered over a legacy environment. The number of IMS deployments will increase steadily over the forecast period and this will drive spending on TAS solutions. IPTV deployment CSPs are introducing IPTV services and triple play to gain new revenue streams and compete with cable companies. To differentiate these services they will offer integration between service capabilities. An example is the integration of voice, presence and IPTV to enable communication with a “buddy list” during sporting events. TAS is the ideal platform for the rapid development of these types of services. The growth in IPTV will drive spending on SDP solutions for this reason.

Inhibitors Increasing complexity of mobile devices and the service layer Mobile devices will continue to increase in capabilities and complexity. Smart phones will take an increasing share of the market. Capabilities such as Mobile TV, GPS, video sharing, WiFi access and SIP clients are already available. The penetration of these device capabilities is an essential enabler for many TAS based services, but the complexity and diversity of devices poses serious challenges to the CSPs operational organization. CSP organizational and system integration challenges A significant inhibitor for NG TAS projects is the organizational challenges they face. To gain full value from TAS implementation the CSP will require close cooperation between operations, marketing and IT organizations. Tier-1 CSPs will achieve the greatest benefit where they standardize TASs across operating companies.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

28

Business Environment Business environment The most important role for telecom application servers is to enable the rapid creation and delivery of new services at a reasonable cost. In a narrow telecom sense they are the next generation of IN platforms. In a wider context they bring services, technologies and business models from adjacent industries into the telecom vertical and support the convergence of voice, data, mobility, presence, advertising, search, social networking and many other services. Figure 17 puts TAS in the context of the telecom network. TAS’ exist at the service layer, but are dependent on the capabilities of the lower layers, especially the control layer. The evolution of TAS has been heavily influenced by the control layer. It will be increasingly influenced by the capabilities of the end user devices. Figure 12: Telecom architecture functional layers

Source: OSS Observer part of Analysys Mason

Telecom application servers have their origin in the IN concepts of the 1990s. These promised a centralized platform for executing services with a highly productive service creation environment. These platforms had big successes with mobile pre-paid, but failed to deliver on the full promise. IN platforms proved to have much greater dependence on the underlying switched network than expected. The service creation environments proved less productive than hoped and required a high level of telecom expertise. Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

29

Business Environment

The next step was the drive to open the telecom network to third parties with the aim of driving more rapid innovation. Parlay and later Parlay X are the telecom standards that came out of this project. These met with some success, but have failed to transform the telecom business model in the way that was originally conceived. The stumbling block was the complexity and cost of using the open interfaces provided. The eco-system remained small because there was not a critical mass of developers with the telecom skills to develop new services and applications. A separate thread in the TAS story was the development of IP based signaling protocols during the late 90s. Protocols such as SIP were being developed to support a rich set of communication services in an IP network. These IETF standards were driven by the needs of VoIP in enterprise and CSP IP networks. In the telecoms world SIP and Diameter got a huge boost when they were adopted for the 3GPP IMS standards. The IMS application server was envisaged as a next generation telecom application server that would bring all the benefits of IP and run on COTS IT platforms. Unfortunately IMS deployment has been slow, especially in mobile networks where it will not bring major benefits until LTE delivers an all IP mobile network. In the IT world Java had established itself as the de facto standard for developing enterprise applications. J2EE platforms from companies such as BEA and IBM provided an application server platform for development of these applications. In the telecom world the value of this approach was recognized. Two standard approaches, JAIN SLEE and SIP Servlet, have evolved for building Java based telecom applications. SIP Servlet focused on all IP signaling environment and is modeled on the HTTP Servlet approach. JAIN SLEE defined a telecom specific Java environment directly supporting IP and legacy signalling. This evolution leads to the current vendor business environment were the IN providers compete with the various NG TAS platforms. Each has strengths and weaknesses. The SIP Servlet approach may have dominated if IMS had been rapidly deployed in mobile networks. The slow transition in the control layer has given time for the IN vendors to evolve their platforms and made legacy support more important than expected three years ago. In figure 18 there are many choices for CSPs in selecting the platforms that will fulfil the role of telecom application server at the service layer.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

30

Business Environment

Figure 13: Delivering converged services with a telecom application server 3rd Party CSP

Service Provider

Internet Portal

Web developer

IT middleware Telecom Service Exposure Layer CSP aplns

Service Layer

Telecom SCE

Pre-built aplns OSS/ BSS i/f

Subscriber Data Telecom SLEE

Control Layer

Network Abstraction Layer

HLR SS7 Network

HSS

S- CSCF

IMS Network

P-CSCF

Network Layer

MSC

MSC

GSM Network BSC/BTS

P-CSCF

IP Network

BSC/BTS

Source: OSS Observer part of Analysys Mason

A number of major changes over the last few years have created the CSP business environment. The most important has been the success of Internet services. The Internet began as a collection of viewable linked pages. It has evolved to provide an enormous range of information and communication services. Successful services include Web browsing, e-mail, shopping, advertising, presence, chat, VoIP, information search, music downloads and news. In the last few years, VoIP has grown rapidly as an Internet service facilitated by the rapid growth of residential broadband access. The major Internet companies have successfully combined services into products like MSN Messenger, Yahoo! Messenger and Skype. The success of these products demonstrates the attractiveness of combining presence, chat, voice calling, video calling, e-mail, file transfer and a network address book into a single service offering.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Equally important are the marketing and development models used to produce them. Internet companies rapidly develop and upgrade products using the latest development environments and methodologies in combination with Internet protocols and standards. They test market these in beta versions with end users and get immediate feedback on product features and robustness. In effect, the Internet companies have already achieved the service delivery platform vision of rapid low-cost 31

Business Environment

development and deployment of new services. This has served as the threat and the inspiration that has stimulated the telecom TAS market over the last three years. Currently the major differences between the Internet service delivery model and the telecom service delivery model are: •

Internet services are “best effort” services. If there is a problem, go have a cup of coffee and try again later.

•

Generally, Internet services are funded by advertising and are free or have a simple flat rate billing model.

•

Internet companies have been slow to understand the value of interconnecting communication services. For example, it was only two years ago that MSN and Yahoo interconnected their messenger services.

•

Internet companies have not had to deal with legacy services. Telecom companies need to deal with the customer base and technology base that remains their main source of revenue.

Overall, the Internet service delivery model has demonstrated the viability of the vision of rapidly building a large customer base by offering increasingly sophisticated combinations of communications services. However, it leaves open the question of whether the CSPs can do the same and deliver a profitable revenue stream from it. The result is that CSPs are now starting to provide open APIs and deploying architectures similar to that of Figure 13. Mobile CSPs are furthest along with their support for messaging APIs, but these are being expanded to support call control, presence, location and other enablers.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

32

Market Definition

Market definition OSS Observer uses the buying behavior of CSPs to define market segments. CSPs are purchasing telecom application server solutions to increase the speed of delivering new services to market, to enable new services by combining different service enablers and to reduce development costs. The approach to achieving this is to enable IT platforms to access and control the telecommunications service enablers. Figure 14 below illustrates the 25 functional categories of telecom software analyzed by OSS Observer grouped under their major segments: Service Assurance, Service Fulfillment, Billing, Customer Care, Service Delivery Platforms and Network Management Systems. The telecom application server segment is in the SDP category along with Mobile Content Management, Mobile Device Management and Real-time Charging. Figure 14: Telecom application server in OSS Observer segmentation Service Delivery Platforms Charging

Content Mgt Telecom Apps Server Device Mgt

Billing

Customer Care

Rating & Pricing Partner & Interconnect

Service Fulfillment Order Mgt

Customer Interaction

Fault & Event Performance Activation

Workforce Automation

Eng Tools

Probe Systems

Subscriber Mgt

Mediation

Service Mgt

Inventory

CRM Business Optimization

Service Assurance

Network Management Systems Mobile

Residential Broadband

Business Data Services

PSTN

Middleware

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

In this report, we focus on telecom application server products, but the solutions implemented by CSPs include a significant proportion of IT middleware and integration services. These have been covered in the SDP Market Review published in August 2008. The major middleware suppliers, BEA (now part of Oracle), IBM and Oracle, have developed specific telecom capabilities on their middleware platforms. We allocate the revenue from these telecom capabilities to the telecom application server segment, but include the revenues from the base IT platform in the middleware segment. 33

Market Definition

Telecom application server definition The major functional areas included in the telecom application server segment are illustrated in figure 15. Telecom application servers are IT platforms designed for a telecom environment. They provide capabilities such as; service creation, service execution and network interfaces for call control, messaging, location, presence and other telecoms services. Telecom application servers can be deployed in an IMS, SIP, VoIP, legacy or hybrid environment. The telecom applications server is at the core of creating and executing real-time session based services. There are a number of approaches to providing this including: SIP Servlets, JAIN SLEE and proprietary solutions. We include network gateways in this segment. These provide a common API to access the control layer. We also include next generation feature servers that provide pre-packaged services, but do not provide an open service execution environment. Enabling third parties access to service enablers allows a CSP to generate additional revenue and increase the supply of innovative new services to attract and retain customers. The partner access capability must address the security issues of allowing access to the network. It must also support real-time SLA management to ensure that the third party is staying within the contracted capacity and that the CSP is providing the required quality of service. Many telecom application servers and network gateways support third-party access using Web services. Parlay X is one standard approach to doing this. Figure 15: Telecom application server functional components

Telecom Service Exposure Layer

Telecom Service Creation Environment

CSP applications

Pre-built applications

Subscriber Data

OSS/BSS Interfaces and support

Telecom Service Execution Environment

Network Abstraction Layer

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Source: OSS Observer part of Analysys Mason 34

Market Definition

Key restrictions on full telecom application server definitions are: •

Exists at the service layer (see figure 12) and provides a centralized platform to support network wide services. This excludes network elements such as switches and media gateways that provide services locally.

•

Provides session based services and participates in the service using telecom control protocols such as SS7 or SIP (this excludes e-mail servers and other generic IT platforms).

•

Delivers value added services that are enhancements to basic call services.

•

Provides a service execution environment

•

Provides a service creation environment

Examples of full telecom application servers: •

Evolved IN SCP plus service creation environment

•

JAIN SLEE platform

•

SIP servlet platform

As we will discuss later, we include next generation feature servers and network and service gateways in the segment even though they do not have the full set of features. The key components of the telecom application server are (see figure 15): Telecom service exposure layer An essential feature is to support rapid development of new services. TAS’ support different levels of service creation to meet the skill levels available. At the simplest level new services can be orchestrated using BPEL based graphical tools and the web services exposure layer provided by the TAS. These are highly productive and do not require software development skills, but are limited in the level of control they provide and in performance and scalability. Telecom service creation environment

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Another approach is to use graphical service creation tools that enable a developer to construct service logic that executes on the TAS. This requires a much higher level of telecom knowledge, but not programming 35

Market Definition

skills. It enables the creation of services requiring complex call control. The most flexible and potentially most costly approach is to develop the applications in Java. A number of environments have been developed for Java, which provide reusable code for service creation. Examples are JAIN SLEE and SIP Servlets. These require Java developers with a good understanding of telecom. These alternatives enable CSPs to make intelligent trade-offs between the development cost, time to market and complexity of the service. Service execution environment This is the environment in which call and session control applications execute. It is closely linked to the service creation environment. Proprietary environments exist, which have evolved from legacy IN platforms. Standards-based environments exist for Java such as JAIN SLEE and SIP Servlets. Network abstraction layer The network abstraction layer provides access to the service enablers and service capabilities in the control layer of the network. It encapsulates many protocols for control of the network and provides an API that hides the complexity of these protocols. Protocols include proprietary protocols and standard protocols such as SS7, INAP, SIP and MM7.

Related product categories In addition to the full telecom application servers we include two other related product categories in our market definition. These provide part of the TAS functionality, but specialize in certain functions. Network gateway definition Network gateways are a subcategory of telecom application servers that focus on exposing telecom service enablers and managing third-party access. Parlay was the original industry standard for this; providing CORBA-based services exposure. This met with limited success. Parlay X is a web services interface supporting similar capabilities that has met with some success in the market.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

The Parlay group developed standard APIs to support access to network capabilities and as part of OSA these have been extended to support Web services (Parlay X) and adopted by 3GPP as part of IMS. Parlay supports an extensive range of call control, session control, messaging, location and charging functions. 36

Market Definition

Figure 16: Network gateway functional components Telecom Service Exposure Layer Focus on policy management and control for service exposure

Focus on breadth of support for network abstraction layer

OSS/BSS Interfaces and support

Network Abstraction Layer

Source: OSS Observer part of Analysys Mason

Feature server definition We define a telecom application server that does not have an open service creation environment and provides predominantly prepackaged applications as a feature server. This has the advantage of providing an immediate revenue stream from the services that are supported out of the box. Increasingly feature servers have provided a capable service exposure layer to enable CSPs to customize their service offering. These do not support the level of granularity that a network gateway provides. Figure 17: Feature server functional components Telecom Service Exposure Layer Focus on policy management and control for service exposure

Focus on breadth of support for network abstraction layer

OSS/BSS Interfaces and support

Network Abstraction Layer

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Source: OSS Observer part of Analysys Mason 37

Market Definition Deployment scenarios CSPs are deploying telecom application server and network gateway products in a number of different scenarios. The market drivers section will provide a more detailed view on the business drivers behind these scenarios. The most important deployment scenarios: 1. Partner enablement: build an ecosystem of partners using CSP service enablers to offer innovative new services. 2. Service creation: develop a platform to reduce the time to create and deliver CSP owned services. 3. IMS/VoIP services: the CSP wants a set of configurable services that deliver immediate revenue on its VoIP or IMS deployment. 4. IN evolution or replacement: the CSP wants to replace or evolve existing IN infrastructure to support new IP signaling protocols or because the products are reaching end of life. 5. Prepaid scenarios: the CSP requires a session control platform that integrates with real-time charging systems. These scenarios are not mutually exclusive. A CSP may implement a project that delivers on multiple scenarios; for example providing a platform for partner enablement and internal service creation. The market definition section provides more detail on the components in the diagrams of this section.

Partner enablement Partner enablement is aimed at creating an ecosystem of innovative partners that can provide new services to the CSP’s customer base using the service enablers from the CSP’s telecom infrastructure. This holds the promise of new revenue streams, parts of which will flow to the CSP and of a differentiated service offering that will increase customer stickiness. The competitive threat of Internet companies such as Google, Yahoo, MSN et cetera has been the biggest driver for this scenario. Other drivers include exploiting the “long tail” of niche services that a CSP cannot address directly, enabling strategic partnerships to address enterprise customers and reducing the cost of managing partner relationships. Examples of CSP projects in this category are: •

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

BT acquired Ribbit in August 2008. Ribbit had developed a platform to enable third party developers to build telecom applications using a Flash environment. This has been more successful than BT’s Web21C project aimed at a similar requirement. BT has recently announced that the Ribbit platform will replace Web21c as BT’s partner enablement platform.

38

Market Definition

•

The TELUS Service Delivery Framework (SDF). The focus of the project has been enabling partners to deliver services using TELUS enablers. TELUS has 14 partners using the APIs for commercial service and has reduced the cost of on-boarding a new partner by a factor of four. The cost is still in excess of $100,000 per partner. TELUS has the objective of driving down this cost to the point that hundreds of partners can be on-boarded.

•

A number of mobile CSPs provide a service exposure platform and support an eco-system of developers. This is mainly focused on messaging, but is being extended to support location and presence. It is often an extension of programs to develop partner development of device based applications. Examples include Vodafone’s Betavine, Orange partner and Telefonica’s Open movilforum.

•

Figure 18: Scenario 1: Partner enablement deployment Partner eco-system

3rd Party CSP

Service Provider

Internet Portal

Web developer

IT middleware Telecom Service Exposure Layer Policy Engine

CSP service layer

Telecom SCE

Partner Mngt

Access Control

CSP aplns

Pre-built aplns

Subscriber Data

Partner charging

OSS/ BSS i/f

Telecom SLEE Network Abstraction Layer

Source: OSS Observer part of Analysys Mason

A high-level view of a typical deployment is shown in figure 23 (see the market definition section for detail on the components). The focus is on the telecom service exposure layer and the partner management capabilities it supports. Parlay was the original technology approach to address this need, but has proved too complex for many applications. Parlay X Web Services have addressed some of these issues, but many deployments use simplified proprietary web services interfaces and IT middleware. Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

39

Market Definition

Service creation Scenario 2 is focused on providing a platform for service innovation within the CSP. It combines next generation telecom service creation environments with SOA infrastructure and service exposure capabilities. The principal driver is the competitive threat from the Internet players, but ownership of the service concept and service logic is important to many CSPs that invest in this type of deployment. In the legacy IN world CSPs were very dependent on their network equipment supplier. The NEM often owned the service logic and the CSP was often dependent on it for service enhancements and new services. A motivation for some CSP deployments is to manage this “vendor lock-in”. The promise of next generation telecom application servers is for rapid deployment of new services and service enhancements. Part of this is due to the use of modern IT development environments used in many industry verticals. This greatly expands the available base of developers reducing costs and time to market. Figure 19: Scenario 2: Service creation deployment scenario

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

This is scenario is illustrated in figure 19. The focus is on the “CSP telecom applications” shown in the center. These are developed and owned by the CSP. Deployments involve not just the telecom application server, but the IT middleware required to support IT capabilities such as SOA based orchestration. This often requires close cooperation between 40

Market Definition

development teams in the network organization and the IT organization. Typical deployment can be divided into three layers: •

Layer 3: SOA based service orchestration

•

Layer 2: IT application servers e.g. J2EE, .NET

•

Layer 1: Telecom specific platforms e.g. JAIN SLEE, Evolved IN platforms, Parlay and Parlay X.

The SIP Servlet based products offered by IBM and Oracle combine capabilities from layer 1 and layer 2.

IMS/VoIP prepackaged services Scenario 3 is focused on CSPs looking for pre-packaged services that are configurable, but can generate immediate revenue without development effort. Increasingly, service exposure is playing a part, but this is service exposure at a higher level of granularity than in scenario 2. Deployments are driven by business VoIP services and residential broadband VoIP services. Recent deployments with tier-1 and tier-2 CSPs tend to use IMS standards. Figure 20 shows a typical deployment. Here the focus is on the prepackaged telecom applications and no telecom software development effort is required. Figure 20: Scenario 3: IMS/VoIP pre-packaged services IT Development teams

IT middleware SOA Business process modeller

SOA Enterprise service bus

SOA Metadata management

SOA Registry

SOA Policy manager

SOA Business activity monitoring

Application servers

Development tools

Databases

Portal servers

Security and management

Information integration

Business intelligence

Collaboration middleware

Telecom Service Exposure Layer Telecom operations teams

Pre-built telecom applications Config

Subscriber Data

VPN

Residenti al VoIP

800/900

Call Centre

Location

Charging control

OSS/ BSS i/f

Telecom SLEE Network Abstraction Layer

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

41

Market Definition

The rapid growth in next generation feature servers from BroadSoft and Sylantro has been driven by these requirements. These are increasingly enabling the IT development teams to provide service enhancements using web services interfaces. The requirements can also be addressed using JAIN SLEE, SIP servlet and Evolved IN platforms. These offer pre-packaged services, but with the flexibility of a full service creation environment.

IN evolution or replacement Scenario 4 is focused on CSPs who are facing end of life on some of their IN infrastructure and are looking to evolve or replace it. CSPs aim to balance the requirement to have a future proof next-generation TAS platform with the requirement of minimum disruption to existing services. This scenario is particularly important to the traditional IN vendors who have a large installed base of CSP customers and see the opportunity to migrate these customers to a new platform. The evolved IN platforms are driven by this opportunity, but CSPs have also chosen JAIN SLEE platforms to address this need. Figure 21: Scenario 4: IN evolution deployment scenario Telecom Service Exposure Layer

Migration IN Applications Subscriber Data

SCE

Telecom Service Creation Environme nt

SCP

Legacy applications

New applications

Subscriber Data Telecom Service Execution Environment

OSS/ BSS Interface s and support

Network Abstraction Layer

SS7 Network

S- CSCF

HSS Class 4

Class 4

TDM Network Class 5

Class 5

Class 5

IMS Network

P-CSCF

P-CSCF

IP Network

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

An example is BT’s Project Firebird. It aims to deliver a global open applications server platform. The focus for the project is the consolidation of the service layer in BT’s non-UK operations. Each acquisition has brought in infrastructure with different technologies, different vendors and different equipment vintages. The challenge was to establish a common platform that could integrate into each of these different environments. In order to manage lock-in BT focused on well supported industry standards 42

Market Definition

with multiple suppliers and open source alternatives were possible. It selected JAIN SLEE running on carrier grade Linux as the technology and jNetX as the principal supplier. BT has successfully migrated its existing non-UK IN services to the common platform and believes it has a lower cost, higher performance solution than if it had gone to its traditional suppliers. It has ownership of the services and applications and can replace a supplier if required.

Migration of prepaid IN session control Scenario 5 is driven by CSPs who need to replace existing IN prepaid platforms. It is related to scenario 4, but has important differences because IN pre-paid platforms have already evolved significantly with the deployment of adjunct platforms to support active mediation for data services and adjunct platforms to support complex realtime rating. These are described in detail in the Real-time charging Outlook, November 2007 published by OSS Observer. Some CSPs are making the next step of migrating the session control functionality from the legacy IN pre-paid platform to a telecom application server or a dedicated session control platform. Figure 22: Scenario 5: Migration of IN prepaid session control

Source: OSS Observer part of Analysys Mason

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

43

Vendor Summaries

Vendor summaries The following provides short summaries of the market position and products of selected telecom application server vendors.

Aepona Aepona is an ISV that had initial success with its Parlay gateway product and has successfully migrated its strategy to address the telecom web services opportunity. It has been successful in addressing the partner enablement requirements of tier-1 operators such as Sprint Nextel and TELUS using its web services offering. Aepona added a telecom application server offering to its product line with the acquisition of Appium. It provides an integrated platform combining telecom web services with the application server, network gateway and service broker. It has also developed applications such as voice call continuity and support third-party application development. Aepona has proven the carrier class capabilities of its platforms with successful large-scale deployments at tier-1 operators. Notable deployments include France Telecom/Orange, BT, TELUS, Sprint Nextel, VimpelCom, Bharti, TeliaSonera, KPN, E-Plus, Eircom, Bridge Mobile Alliance.

Alcatel-Lucent Alcatel-Lucent provides a broad product line in the telecom application server segment. It has presence in the legacy IN, evolved IN and next-generation TAS segments. The legacy IN deployments are still a significant source of maintenance revenue, but the 8690 OSP evolved IN platform has been the main IN offering for more than four years. It supports both SIP and legacy signaling protocols and a Java service creation environment. The 5400 IAS is the core of its next-generation TAS offering. This was developed by Alcatel as an IMS application server and provides a Java service creation environment to support SIP applications. It supports RCS (rich communications suite) clients. Alcatel-Lucent also provides the 5400 ISG service gateway, a presence server, and a number of specialized feature servers to support specific applications.

Amdocs

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Amdocs acquired SigValue in early 2007 to provide a pre-paid platform in emerging markets. The SigValue platform included support for value added services. Amdocs renamed the SigValue platform as the Amdocs 44

Vendor Summaries

Compact Convergence platform. A few customers have deployed SigValue as a pure TAS solution, but most have deployed it as a pre-paid platform with some VAS capability. There are more than 25 customers for the SigValue platform mainly in emerging markets.

Avaya Avaya is a leading provider of voice solutions to enterprise customers originally spun out of Lucent in 2000. Avaya acquired Ubiquity; a leading provider of SIP based telecom application servers, in early 2007. Ubiquity had revenues of approximately $30 million in 2006 and significant deployments with tier-1 CSPs including BT and Bell Canada. It also has productive partnerships with HP, Siemens, Nokia and Motorola. Avaya’s motive for the acquisition was to use Ubiquity’s technology as a common platform across its enterprise product offerings. Not surprisingly, the Ubiquity product line has not won any significant business with CSPs since the acquisition.

Broadsoft BroadSoft’s BroadWorks platform enables CSPs to offer business trunking, residential broadband, hosted IP PBX and Mobile PBX services. BroadWorks is a VoIP applications platform that provides voice features for fixed-line and wireless service providers. BroadWorks offers an array of applications from a single platform, including Hosted PBX, Mobile PBX, Business Trunking, and Residential Broadband. BroadSoft has deployments with most tier-1 CSPs around the world. Key customers include BellSouth, Korea Telecom, SingTel, Telefonica, Telstra, T-Systems, Verizon, Sprint Nextel, Vodafone and Telefonica. BroadSoft works with numerous partners including Alcatel-Lucent, Huawei, Ericsson, Nortel and Siemens. The majority of BroadSoft’s revenues come from CSPs offering business services such as Hosted VoIP. A lesser amount comes from providers selling VoIP services to residential customers. Mobile is currently a small portion of its business, but BroadSoft anticipates this being the area with the most growth in the coming years. BroadSoft acquired the GENBAND application server business in August 2008. It claimed that this would grow its customer base to 435 customers.

Comverse Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Comverse provides products and services for messaging and content value-added services, converged billing and IP communications. Overall 45

Vendor Summaries

it claims more than 500 CSP customers. Its main SDP offering is the InSight Open Services Environment. It is also a major billing provider with the Comverse Converged Billing Suite, which was officially launched in September 2006. This suite contains real-time rating and charging as well as order management, partner management, network interaction and financial management capabilities. Comverse pre-paid billing business is the largest among non-equipment vendor suppliers. Overall they trail only the three major NEMs suppliers. Comverse acquired VoIP platform provider NetCentrex in 2006. This provided a next generation feature server supporting SIP and IMS protocols. Comverse already had a strong IN business supporting VAS and pre-paid services. The NetCentrex product line has been particularly successful with residential VoIP in Europe. Major customers include France Telecom, Fastweb and Tele2. Comverse claim more than seven million live voice over IP subscriptions for the NetCentrex platform.

Convergin Convergin provides a service broker that supports SCIM (service capability interaction management) for network-based services. Its Accolade WCS platform supports orchestration of legacy and nextgeneration services. Convergin claims deployment in more than 15 CSP networks. An important capability for Convergin is to mediate between a SIP servlet environment and a legacy signaling environment. This enables the SIP Servlet platform providers to support services across legacy and next-generation networks. Convergin has a successful relationship with Oracle/BEA based on this capability.

Ericsson Ericsson has product offerings in all three sub segments; legacy IN, evolved IN and next generation telecom application servers. It’s AXE based legacy IN platform still has over 100 deployments generating maintenance revenues, but it was replaced as Ericsson’s IN platform nearly eight years ago by the INS product. The INS product is an evolved IN platform with more than 130 deployments mainly with mobile CSPs. It has a Java-based service creation environment. In addition to full support for legacy IN protocols it also supports SIP/ISC protocols for IMS deployment. Ericsson continues to migrate the legacy IN installed base to the INS platform.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Ericsson is close to delivering its next-generation TAS product. This is a SIP servlet based software product that will compete directly with NG TAS products from Oracle, IBM and the specialized TAS ISVs. Ericsson has taken the very interesting approach of basing the product on Sun’s 46

Vendor Summaries

open source Glassfish JavaEE platform. Ericsson provides a service creation environment that supports the open source implementation of SIP servlets (project SailFin) on the GlassFish platform. It has also donated code to the project and is providing developer support from the Ericsson Mobility World portal. The approach of using an open source platform will undercut the license model of Oracle and IBM, the dominant JavaEE providers. It fits well with Ericsson’s growing services business, but it will be a challenge to take on Oracle and IBM in this space. Ericsson has a number of platforms available within its services organization supporting network gateway and service broker functionality.

HP HP provides two separate evolved IN platforms, the HP Intelligent Network Server running on the high availability NonStop platform and the HP OpenCall Service Controller running on the HP UNIX platform. Both platforms, developed in the 1990s, have a large installed base. The NonStop based product came with the acquisition of Compaq and the UNIX based platform was the original HP IN platform. Both have been evolved to support IP and SIP based signaling. HP provides a Java service creation environment. HP also provides a broad range of solutions at the service layer including HLR/HSS (also delivered on the Nonstop platform), media servers, signaling platforms and signaling gateways.

IBM IBM offers a next generation TAS product based on its WebSphere JavaEE application server. This supports SIP Servlets with a fully integrated HTTP/SIP container out-of-the-box. IBM has developed telecom specific capabilities on top of this platform including an IMS Connector, Parlay X Gateway, Presence Server, XML Data Management Server and TCAP Connector. It has addressed CSP requirements for availability and scalability and support for IMS deployments with SIP and Diameter. IBM has deployments worldwide including Sprint Nextel, AT&T, Bharti and France Telecom. The most recent development is the WebSphere TCAP Connector that provides a Java TCAP API for application development using legacy IN protocols. This enabler works with partner SS7 gateways. TCAP Connector helps service providers bridge their existing IN with nextgeneration applications. Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

IBM provides full life cycle support for service creation with its Rational product line of software development platforms. This includes a SIP 47

Vendor Summaries

modeling tool kit. IBM has an ISV partner program that provides a range of telecom applications. It is also a major system integrator for telecom applications.

jNetX jNetX is a specialized TAS ISV and the leading supplier of JAIN SLEE platforms. It has more than 28 deployments including a number of Vodafone operating companies, BT, mobilkom Austria, Telefonica, BSNL and OPTUS. Partners include Atos Origin, Nokia Siemens Networks, Motorola, Ericsson, Tech Mahindra and Kapsch. Its success has been driven mainly by the requirement to replace or extend existing IN platforms. It has also had success in IP environments as a SIP/IMS application server platform and is looking to broaden its platform beyond JAIN SLEE. JNetX claims to have more than 100 applications available on its current platform from third-party developers. The jNetX platform has proved very attractive to CSPs that prefer an application server with telecom specific capabilities, but would like to limit lock-in to the large NEMs.

Microsoft Microsoft originally offered their Connected Services Framework to support the orchestration of telecom services. This met with some success, but Microsoft terminated development of the product in December 2008. It will continue to support existing customers.

Nokia Siemens Networks Nokia Siemens Networks has a large installed base of IN customers using both its evolved IN platform and its legacy IN platform. The original Siemens IN platform was introduced in the mid-90s using proprietary hardware and extensively deployed with tier-1 operators. It was replaced by IN@vantage in 2001. This provided a Java service creation environment and was delivered on a Sun Solaris platform. It now supports IP signaling protocols. The majority of the installed base has migrated to the IN@vantage platform. The Nokia mCreate IN platform was released in 2001. It used the OpenCall platform and was deployed by more than 39 operators. The IN@vantage platform has replaced this and is the preferred IN solution from Nokia Siemens Networks.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

In the next generation TAS sub segment Nokia Siemens provides a next generation feature server, the SURPASS hiQ 4200. It supports IP and legacy networks with residential VoIP, business VoIP and fixed mobile 48

Vendor Summaries

convergence solutions. It has been successfully deployed particularly with cable operators in North America.

Nortel Nortel’s has a strong VoIP portfolio with a next generation feature server, the AS 5200. This provides CSP applications to support both business and consumer customers. Business services include IP Centrex and IP PBX. The AS 5200 supports fixed mobile convergence. Customers include Bell Canada, Rogers Communications, SaskTel, TELUS, Verizon, Embarq, Verizon Business, British Telecom, Cable & Wireless and Neuf Cegetel .

OpenCloud The OpenCloud JAIN SLEE platform is a telecom application server that supports both the existing signaling and control protocols (e.g. SS7, INAP, CAP), and the new generation of IP-based protocols (e.g. SIP, Diameter). This enables application developers to use the same standards based JAIN SLEE environment to develop applications that operate in mixed legacy and next generation networks. OpenCloud has more than 10 customer deployments including Vodafone Spain, Telefonica, Telkomsel, SoftBank.

Oracle Oracle acquired BEA in April 2008. BEA was the market leader of the NG TAS segment and a major supplier of IT middleware in the telecom vertical with its WebLogic, Tuxedo and AquaLogic product lines. WebLogic Server is BEA’s Java EE application server, which is widely used in billing, customer care, service fulfillment and service delivery solutions. Oracle had built its telecom application server offerings, called Oracle Service Delivery Platform, from the acquisition of Hotsip, a SIP server supplier, in 2006, and Net4Call, a Parlay gateway supplier. Oracle announced in July 2008 that its future telecom application server platform would be based on BEA’s WebLogic Communications Platform products. BEA’s telecom application server product line called BEA WebLogic Communications Platform, was significantly ahead of Oracle in the TAS market, and it is not surprising to see the BEA products become the core of the new combined Oracle-BEA TAS product line, which is branded Oracle Communications Service Delivery (OCSD) and the strategic platform components are: • Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

  BEA WebLogic SIP server, renamed as Oracle Communications Converged Application Server (OCCAS). This will replace the OCMS product that came from Oracle’s Hotsip acquisition. 49

Vendor Summaries

•

BEA WebLogic Network Gatekeeper, renamed as Oracle Communications Services Gatekeeper (OCSG). This will replace ONCS that came from the acquisition of Net4Call.

The main contributions from the existing Oracle SDP products are the residential telephony and presence applications. These products will be ported to the WebLogic-based OCCAS platform. BEA had significant deployments with InterCall, SingTel, O2 UK, Telecom Italia, Hutchison 3 and Vodafone Netherlands. Oracle claims more than 60 customers globally have now selected, or deployed, OCSD products. OCSD is part of the overall Oracle Communications suite of products that include Billing and Revenue Management, Service Fulfilment, and Network Assurance.

Personeta Personeta’s product, TappS, is a Next-generation TAS that supports fixed mobile convergence, IP PBX and residential VoIP. It has been deployed with over 10 CSPs including Bezeq and MTS. It partners with Cisco who is also an investor in the company.

Sylantro Sylantro provides a next generation feature server, Synapps. It supports hosted IP communication services across fixed, mobile, and cable networks. Sylantro’s Synergy multi-play platform and Synapps Web Services provide a web services interface for orchestration of existing service capabilities. Sylantro customers include AT&T, China Netcom, KT, Nuvox, Qwest, StarHub, and Swisscom.

Tekelec Tekelec is the leading supplier of signaling and control infrastructure for the telecom network. The Eagle platform is the most widely used SS7 signaling transfer point. Tekelec has invested in the next generation SIP signaling infrastructure and has a well thought through strategy of smoothing the migration for CSPs from legacy SS7 to the next generation IP network. Tekelec does not provide a telecom application server, but provides a platform for developing applications running within the network. This is a different paradigm from the centralized TAS approach and has a different value proposition. It is efficient for well-defined, stable applications that would put a heavy load on the centralized TAS. Examples of such applications include number portability, messaging offload, signaling mediation and service brokering. Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

50

Vendor Summaries

Telcordia Telcordia provides and evolved IN platform that supports pre-paid and value-added services. It has been the leading supplier of IN systems in North America for many years. As Bellcore it defined the AIN standards used by all North American operators. It has invested in evolving its IN platform to support IP-based protocols, Java based service creation and standard blade server hardware platforms. It has been particularly successful with supporting pre-paid applications for mobile CSPs in Europe, Latin America and India. It has approximately 40 CSP deployments for its converged application server (CvAS) including the tier-1 North American CSPs and some hosted implementations. Telcordia has the advantage over the major NEMs of being network equipment agnostic. It continues to invest in new opportunities such as real-time policy management and mobile advertising. With its North American installed base it has an opportunity to extend the IN platform to support IP-based services using SIP and Diameter.

Telenity Telenity provides, Canvas, a next-generation telecom application server product. It has been successful in emerging markets of Middle East, Africa, Latin America and Asia Pacific. Canvas uses a standard Java platform with its own service creation and service execution environment. Telenity also offers a portfolio of prebuilt applications to support valueadded services. A differentiator for Telenity is the cost advantage of not requiring JavaEE licenses, especially for large-scale deployments. The Canvas platform has been deployed with more than 30 CSPs including Turk Telekom, BSNL, Globecomm, Telefonica and Turkcell.

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Suppliers

Suppliers We have identified 25 telecom application server suppliers in Table 1. We believe these companies are sufficiently important to be worth serious consideration by CSPs. Leadership qualities include market penetration by region, telecom segment, and application area. Relative market strength is categorized as either ‘market leader’; ‘significant player’ or ‘present’. Vendors we have designated as leaders in a particular market segment or sub-segment are those that attract the most revenue in the segment and that we predict will continue to do so. Those we judge to be significant have recognition in the indicated segment due to significant sales. Those we have indicated as merely present offer products in the indicated segment, but we have no indication of significant sales.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

Aepona

»



»



»

Alcatel-Lucent







»



»

Amdocs





»





Avaya

»

»



Broadsoft





»

Comverse



»



Convergin







Ericsson



»



HP

»

»

Huawei

»

IBM



Italtel

Broadband

Business

PSTN

Mobile

ROW

EMEA

NA

Overall

Company

Table 1: Comparison of evolved IN and next generation telecom application server suppliers











»



»







»







»















»

»

»

»

»

»

»

»

»

»

»

»







JNETx

»



»

Microsoft







Motorola







NSN



»



»

 



»







»

 52

Nortel



OpenCloud



Oracle/BEA



Personeta





Redknee





Sylantro

»

Tekelec



Telcordia

»

»

»

Telenity











Broadband

Business

PSTN

 



Mobile

ROW

EMEA

NA

Overall

Company

Suppliers







»

» 









»

»



»



»

Source: OSS Observer & company briefings

»



»



 = has a presence in the market  = has a notable presence in the market  = market leader

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

53

Recommendations

Recommendations CSPs face some difficult decisions in deciding when and where to invest in telecom application server platforms. Each CSP faces a different decision based on its position in the market, its overall strategy, its IMS and NGN plans, and existing investments in IN platforms and telecom application servers. CSPs should look carefully at their plans to offer new services particularly where these must integrate capabilities from multiple service environments such as mobile, IMS, the Internet, IP and wireline. The requirement for flexibility and agility in responding to competition is a key consideration. CSPs should also review their existing infrastructure investments and the ongoing need to support existing services. There are three fundamental options: 1. Evolve the existing IN infrastructure to support new service requirements. 2. Use a hybrid approach of evolving the IN infrastructure and deploying next-generation TAS platforms. 3. Move to next-generation TAS platforms. Most CSPs will pursue option two, but choices will vary depending on circumstances. Established CSPs in mature markets should pursue option two. The investment in IN infrastructure and the importance of the revenue stream from existing services makes the evolution of the IN platform the lowest risk option. End of life for legacy IN platforms will continue to force decisions on how best to support existing services. However, for new services with IP signaling requirements CSPs should evaluate nextgeneration TAS platforms even where this requires close integration with the existing IN infrastructure. An important consideration is the lifetime cost of developing and maintaining services on the platform. Nextgeneration TAS platforms have a significant advantage in this area. They also help manage vendor lock in two incumbent IN platform vendors. In general CSPs should choose to evolve IN platforms where existing services are a key consideration, but invest in next-generation TAS where new services and new business models are the driver.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

New challenger CSPs in mature markets should pursue option three where possible. This will provide major advantages in the overall cost of the solution and in the flexibility and agility to deliver new services. Until recently there were concerns about the maturity of next-generation TAS platforms, but the leading vendors have now had enough exposure to large-scale deployments and meet the requirements for tier-1 CSPs. CSPs in emerging markets should evaluate option two and three. Rapid 54

Recommendations

subscriber growth rates and a smaller legacy of complex services make the existing IN infrastructure less important than in mature markets. The rapid subscriber growth rate also makes the cost of purchasing new infrastructure critical to the profitability of services. As a consequence, next generation TAS platforms should be considered for existing services as well as new services in emerging markets. CSPs with multiple operating companies in a given region have the opportunity for considerable cost savings from centralizing service platforms. Companies such as Vodafone, Telefonica, Telenor and SingTel could deploy telecom application servers that provide common services across multiple operating companies. This has met with organizational resistance in the past, but with current economic conditions it may be less of an issue. We recommend that CSPs look at opportunities to incrementally consolidate telecom application server platforms especially when investing in new infrastructure. Over the last year, we have seen an increasing number of CSPs providing web services access to service enablers to enable third-party service providers to offer new services. This is strategically important because of the potential for stimulating an ecosystem of innovative partners that will help CSPs compete with Internet players such as Google, Yahoo, Microsoft and the myriad of smaller Internet innovators. However, in 2009 and 2010 CSPs will focus more on the cost savings that partner enablement can deliver to the process of bringing on board strategic partners. Many of these will be focused on delivering mobile solutions to specific industry verticals. We recommend CSPs to invest in this area for the immediate benefits, but also have plans to achieve the longer-term strategic goal. The growth opportunities in the TAS segment have attracted a diverse set of suppliers; including the network equipment manufacturers, the major IT suppliers and specialist ISVs. The market is increasingly competitive. As a consequence, suppliers must define their position in the value chain very clearly and focus on achieving leadership there.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

The leading NEMs have focused more on the services opportunity of large-scale service layer deployments than on developing nextgeneration TAS platforms. This fits well with their strategy of growing their services revenue to compensate for price erosion in the equipment market, but there are risks with this. Three years ago there was an expectation of rapid deployment of IMS and that telecom application servers would simply be IT application servers with a few enhancements. As ever in telecoms the industry has moved more slowly than predicted and legacy infrastructure has proved much more significant to strategic choices. The success of telecom specialists such as BroadSoft, jNetX, Telenity and Sylantro is an indicator that IT application servers will only 55

Recommendations

be part of the story. The NEMs should have a credible next-generation TAS product offering to benefit from the telecom specific opportunities. Ericsson’s approach of using an open source IT application server and focusing on the service creation and application opportunity is innovative but risky. Alcatel-Lucent has continued to develop its 5400 IMS application server as a next-generation TAS. Another alternative that NEMs should consider is to acquire TAS specialists to fill out their portfolio. NEMs have shown a renewed interest in acquiring ISVs and building up their software product portfolio. Ericsson’s acquisition of Drutt, Nokia Siemens Networks acquisition of Apertio, NEC’s acquisition of NetCracker and Alcatel-Lucent’s acquisition of Motive are recent examples. This is principally driven by the need for a new profitable source of growing revenue to compensate for the increasingly commoditized equipment business. It is also a recognition that NEMs can compete with IT companies at the service layer. ISVs considering their eventual exit strategy should consider how they would enhance the NEMs expanding software portfolios. The leading IT middleware suppliers have an important role in the TAS segment. BEA, IBM and Oracle continued to enhance their platforms to provide carrier-class TAS capabilities. Sun is following the same path with its Ericsson partnership. Oracle’s acquisition of BEA will reduce the choices for CSPs, but with good execution Oracle’s offerings will be much improved. Oracle/BEA and IBM have established ecosystems of telecom partners. This strategy makes sense and allows them to take a slice of the TAS opportunity, but care must be taken not to compete with telecom partners. The NEMs and major IT companies are addressing somewhat different opportunities and are frequently not competing head-to-head. The IT companies, such as IBM, HP, Oracle/BEA and Accenture, are well connected with the IT Department of the CSPs. TAS projects owned by IT Department are likely to go to and IT company and have a bias towards IT platforms. The NEMs, such as Ericsson, Nokia Siemens and Alcatel-Lucent, are well connected to the CTO organization. TAS projects owned by the CTO organization are likely to go to the NEMs and have a bias towards telecom platforms. There are significant overlaps in the services supported and these are growing as NEMs expand their use of IT technology and IT companies expand their support for telecom services. ISVs looking at partnering opportunities should be clear about how they align with these two different approaches.

Telecom Application Servers Outlook © 2008 Analysys Mason Ltd

ISVs have some very attractive opportunities in the TAS market. The overall market is growing and will continue to grow through the economic challenges of the next two years. The next generation TAS is the most attractive sub segment with next generation feature servers being the 56

Recommendations

most attractive growth opportunity so far. This reflects the ability for NG feature servers to deliver early revenue and meet telecom requirements. ISVs with more of a platform approach must focus on how their CSP customers get immediate revenue from applications available out of the box. In the long run the market will consolidate with the most likely scenario being the IT companies acquiring the successful platform focused ISVs and the NEMs acquiring the successful application focused ISVs. However, there are some years of very attractive opportunities and growth before consolidation takes place. ISVs must be focused on their unique value, and how they partner with the NEMs, SIs and IT companies as channels to a global market opportunity. A variety of ISV business models will succeed, but the lowest risk is to focus on welldifferentiated applications that deliver early revenue to the CSP.

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