| ID Number: SPA-21-5219 |
Next-Generation Switching: Full Steam Ahead
12 November 2003 Bettina Tratz-Ryan Lily Yu Jennifer Liscom Investment in next-generation switching gear in 2004 will be guided by the need to extend IP networks from the core to the edge, to offer services that drive revenue while maintaining operational efficiency and a competitive edge.
* | Recipients who do not own this document will receive a summary only.
| Browse Topics
| Advanced Search
| Ask an Analyst
| Rate This Document
| Downloads:
|  | 118424.pdf (54.3KB) |

| What You Need to Know
While it will take a long time until the entire switching architecture in carrier networks will be fully IP, there are many revenue-generating opportunities and operational and maintenance benefits of deploying next-generation switching technology. Vendors need to understand those issues to be able to accommodate the requirements of their customers. Figure 1 shows anticipated developments in the future of the next-generation switching market. Figure 1 Next-Generation Switching Predictions
Source: Gartner Research (November 2003)
| Analysis
Since the telecom bubble burst in 2002, operators have been preoccupied with the question of what the road map will be for their switching equipment for existing and newly deployed network architecture. While most of the next-generation network (NGN) switching deployments occur in new networks, some incumbent operators have announced aggressive plans to upgrade their existing networks with new technology. Gartner's predictions highlight some of the fundamental trends that players in the switching segment need to understand to successfully create viable strategies for 2004 and beyond. Prediction: Service provider routers (SPRs) carry NGN switching market going forward The overall economic climate has impacted the carrier's decision-making process toward deploying next-generation switching solutions into its network. For a large number of softswitch deployments in the next year, capacity constrains of the legacy network will drive upgrades to new technology. The next priority will be deployments based on business plans that include a smooth network convergence as well as incremental revenue service opportunity, in conjunction with operational cost savings. SPRs in core and edge network applications will, however, continue to expand in 2004 as the need for core network build-out and edge service enablement is expected to remain a growth market. Multiservice capabilities, including pure Internet Protocol (IP) or Multiprotocol Label Switching (MPLS) in multiservice switches and Ethernet switches, will allow the operators to streamline their network architecture and efficiently offer a variety of quality of service (QOS) bundles to end users. Strategic Planning Assumption: SPR deployment will fuel integration of NGN and MPLS by 2007 (0.8 probability). Recommendation for 2004 Equipment vendors should closely track operator network requirements for switching technology and offer systems solutions to constraints and service delivery problems rather than merely box solutions. Operators need to evaluate network inefficiencies and assess how selective integration of next-generation technology would offer them service revenue opportunities and operational cost savings. Prediction: Capital expenditure (CAPEX) and operational expenditure (OPEX): end of "watering can" spending approach Carriers have already announced plans to fully integrate MPLS within three to seven years for traffic management and service creation. They are willing to invest in their network to streamline and collapse multiple network architecture layers that run below capacity, as well as cooperating with other carriers to extend their network hand-off internationally and globally. Other drivers that will stimulate investments are efforts to enforce billing and transaction mechanisms around QOS guarantees and service level agreements (SLAs). For advanced IP consumer services, especially in Asia/Pacific and Western Europe, investments will be focused on delivering video and entertainment. For example, in Italy, FastWeb is offering video service over an NGN fiber infrastructure. Strategic Planning Assumption: Advanced IP service requirements will drive CAPEX and OPEX by 2005 (0.8 probability). Recommendation for 2004 Vendors should focus on implementing different revenue-generating service features into their equipment or alternatively seek partnerships with third parties to develop these to be successful in the carrier market. For operators, it will be critical to understand where they could streamline operations and management by collapsing network layers. They will need to consider new service bundling opportunities for business and residential subscribers to generate revenue and growth. They will also need to evaluate how additional new technology and IP infrastructure will facilitate and simplify the delivery of those bundles. Prediction: The road to IP called network convergence For "greenfield" network roll out, all-IP network infrastructure will be the predominant choice. However, for installed networks with an embedded traditional switching architecture, the plan for convergence toward NGN-type networks will be critical. Carriers will first upgrade capacity-constrained switching centers and implement new technology to streamline network management and service provisioning. The short-term market opportunity for NGN applications will be IP virtual private network (VPN) and other revenue-generating applications that can be accomplished with limited network investment. Business customers will be the initial primary targets, as IP services such as presence-type applications and IP Centrex fulfill an immediate need. In the midterm to long term, next-generation switching deployments will encompass fully distributed switching architectures, with call control and critical applications geographically dispersed to ensure most efficient network design. Strategic Planning Assumption: Software components in NGN switching solutions will drive Voice over Internet Protocol (VoIP) network design by 2005 (0.8 probability). Recommendation for 2004 Product portfolios need to incorporate a clear road map toward deployment in converged networks and new IP networks. Vendors have to ensure that they include technology options for the most predominant IP implementations. Core competencies in technical knowledge and software development have to be evaluated to guarantee that R&D efforts are focused. Partnerships should be considered where efficiencies make it a valuable proposition. Prediction: Broadband opportunities generated by service bundling Carriers are looking to offer new applications over the broadband pipes that they have either rolled out recently or are deploying. The number of applications and content providers are increasing, as the reliability of the delivery of broadband services has increased. Thus, operators are becoming more comfortable deploying them in their network. Operators will utilize differentiated service bundling to alleviate the initial cost burden of delivering voice, data and video services to residential subscribers. Next-generation switching will allow those operators to realize economies of scale by delivering those services on a combined network architecture. Carrier deployments that also include wireless services in Italy, South Korea and Japan will be good indicators of the revenue-generating opportunities of broadband. Strategic Planning Assumption: Competition among service providers will boost flexible service bundling by 2005 (0.9 probability). Recommendation for 2004 Vendors of next-generation equipment need to realize that offering product in this market means offering a value chain proposition that must include an in-depth understanding of business case models for differentiated broadband services. Depending on the region, video will become a strong driver for IP infrastructure and the equipment needed to facilitate the QOS and SLA requirements to deliver those services. Operators should to involve vendors in their business strategy for service delivery to make sure they are getting the best and most flexible solution for their needs. Vendors must also consider the needs of alternative operators entering the voice market as they will also drive the IP market. Prediction: Vendors to build ecosystems and partnerships — or else Operators should be careful in selecting vendors for their next-generation switching gear, benchmarking product portfolio, interoperability, corporate governance and longevity of the business model. It is critical to evaluate the interoperability with the existing operational support systems and the level of required customization to successfully interface. Vendors need to offer references, provide network simulation, and verify performance benchmarks and interoperability with third-party vendors through independent third-party testing labs to establish credibility in the carrier market. The product portfolio should include new technology approaches for new network deployments, as well as migration and convergence products to facilitate the upgrade of the exiting legacy networks. Major vendors need to build ecosystems and include smaller vendors. Strategic Planning Assumption: Successful vendors will become strategic partners by 2004 (0.9 probability). Recommendation for 2004 Equipment vendors should quickly realize that their carriers will focus on vendor-operator partnerships. New vendors that cannot provide everything for every client need to establish “ecosystems” that include suppliers, software and applications providers. They need to provide customer care, maintenance and technical support by establishing partnerships, and they must use independent testing facilities to ensure the performance and reliability of the equipment before carriers are likely to deploy it in core networks. To supply international and global customer support, a comprehensive 24x7x52 service system — either through regional companies or partnerships — needs to be established. Prediction: Mobile and wireline integration at a network near you Mobile operators that are building out 2.5-generation (2.5G) and third-generation (3G) networks face the problem of efficiently connecting to wireline packet data networks and the public switched telephone network (PSTN). Efficiency issues, together with migration of service bundling opportunities that involve billing, service provisioning and monitoring, will push the deployment of either backbone multiservice platform (BMSP) or softswitch architecture at the hand-off point between mobile and wireline network. Strategic Planning Assumption: Wireline and wireless IP networks will be combined by 2008 (0.8 probability). Recommendation for 2004 As build-out of 2.5G and 3G networks emerge, vendors need to closely watch the dynamics and issues facing operators, especially interoperability with standards. They will need to establish a product road map to ensure that they will be addressing this opportunity either through dedicated products or some enhancements and upgrades on an existing platform used in wireline networks.
Key Issues How will developments in switch technology affect network evolution? What factors will shape service provider capital expenditure plans? What is the most likely next-generation "network vision" scenario? What revenue-generating applications will be enabled or supported by next-generation technology?
This research is part of a set of related research pieces. See Predicts 2004: Public Network Infrastructure (AV-21-6250) for an overview.
| Strategic Planning Assumptions
SPR deployment will fuel integration of NGN and MPLS by 2007 (0.8 probability). Advanced IP service requirements will drive CAPEX and OPEX by 2005 (0.8 probability). Software components in NGN switching solutions will drive VoIP network design by 2005 (0.8 probability). Competition among service providers will boost flexible service bundling by 2005 (0.9 probability). Successful vendors will become strategic partners by 2004 (0.9 probability). Wireline and wireless IP networks will be combined by 2008 (0.8 probability).
| Acronym Key
EAM | backbone multiservice platform
IAM | capital expenditure
IP | Internet Protocol
MPLS | Multiprotocol Label Switching
NGN | next-generation network
OPEX | operating expenditure
PSTN | public switched telephone network
QOS | quality of service
SLA | service-level agreement
SPR | service provider router
VoIP | Voice over Internet Protocol
VPN | virtual private network

| Browse Topics: Business Alliances and Partnerships IT Spending Service Provider Routers Next-Generation Switching IP Infrastructure Wireless Carrier Infrastructure Equipment Traditional Voice and Data Communications Services |
| © 2004 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice. |

Resource Id: 415097