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IMS Analyst Corner
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A Sip of the IMS Kool-Aid

By Ronald Gruia

IMS Magazine

IMS Defined

But what is exactly IMS? IMS, or IP Multimedia Subsystem, is a next-generation core network specification designed to allow wireline, wireless, and cable operators to offer a new generation of rich multimedia services across both legacy circuit-switched and new packet-switched networking infrastructures. IMS will enable the rapid creation and deployment of enhanced multimedia services such as video IP telephony, interactive gaming, IP Centrex, push-to-talk/video and instant multimedia messaging, among others.

A nyone attending events such as 3GSM, CTIA, and Internet Telephony must have surely noticed all the headlines that IMS has been getting recently. In fact, “IMS” has been one of the buzzwords most often mentioned at telecom industry tradeshows, with almost all equipment vendors mentioning their IMS offerings and compliance, application developers delivering “IMS-ready” offerings, and even service providers joining the fray by announcing IMS services. Early adopter service providers embracing IMS include Tier-1 carriers in both the U.S. and Europe, including players such as AT&T, BellSouth, Cingular, KPN, Telecom Italia and Telefonica, among others. Originally born in the mobile world as a 3GPP (define - news - alerts) standard, IMS has become much more than just a wireless spec, with the IETF and now even Cable Labs using it as a blueprint for an IP multimedia and telephony core network system consisting of logical functions such as session control, connection control, and applications or services that can deliver voice and data services. IMS is a framework of logical (not physical) entities that defines a three-layered approach to services: access/transport, core/control, and application/services. Vendors may opt to implement these functional blocks on existing next-generation core network elements, such as softswitches and media gateways, or on new server-based platforms.

IMS Figure 1 The IMS architecture is standards-based, using packet technologies for underlying transport and relying on SIP for call signaling between the entities. One of the central ideas of IMS is the concept of reusing common functions (e.g., location, presence) and then integrating them horizontally. These modules can be reutilized for many different applications, as shown in Figure 1.

Why Are Carriers Interested in IMS?

Service providers will adopt IMS for various reasons depending on factors such as their competitive landscape and market dynamics.

Wireline Carriers

Approximately 17 percent of global wireline usage in 2005 was lost due to wireless erosion. Moreover, fixed carriers have also been facing a margin squeeze from new VoIP providers, whose low-cost model is enabling them to be more aggressive against the ILECs. Therefore, for the incumbent fixed line carriers, an IMS FMC (fixed/mobile convergence) solution represents an ideal strategy to stop the loss of telephone traffic and revenues to wireless operators and to deliver the best service bundle to their subscribers.

In addition, an FMC offering can enhance the uptake of broadband and VoIP applications, thereby lowering the pace of revenue loss and softening margin squeeze. Hence, it is not surprising to see operators such as AT&T, Telecom Italia, and Verizon seeking to converge their disparate networks and service portfolios and instead offer services that are access and location agnostic.

Mobile Operators

As they evolve to 3G, the mobile carriers have been searching for the simplest and most cost effective way to implement a new breed of value-added multimedia applications. Furthermore, wireless operators are also faced with near-saturation levels in some regions such as Europe, margin erosion from VoIP, and the introduction of WiFi as a replacement for some wireless calls.

They also need to offer something new, since commoditized voice and simple data services are not substantial enough to offset the ARPU decline and the increase in subscriber churn. Hence, the most crucial aspect of their operation is how to increase ARPU with compelling next-gen “killer applications.” IMS can be a great way to deliver these new services, or to help operators to quickly create and identify some of these killer apps that can cater to specific subscriber segments.

MSOs/New VoIP Service Providers

Finally, even the new entrants (cable and standalone VoIP operators) will require a few extra capabilities once they reach a more critical mass in order to fight the competitive threat of new bundle offerings from the incumbent carriers. Cost arbitrage alone will not be enough in order for them to win their battle against the wireline service providers, as they will also need to offer more value-added applications to entice new subscribers.

A Promising End-User Experience

One of the fundamental value propositions of IMS is its access agnostic nature. In other words, IMS subscribers should be able to access and utilize services regardless of their underlying access, device, or location. For instance, an IMS user might initiate a voice call from his home landline, seamlessly hand the call off to his cell phone as he begins his journey to work, and then seamlessly roam on to his office WLAN.

Another key IMS benefit is that carriers are able to introduce new “blended lifestyle services” that can be policy driven, target specific subscriber segments, or even be combined with other applications. The ability to achieve a quick service setup and teardown allows carriers to experiment with new offerings and to reduce the cost of introducing a “lukewarm” service.

IMS Adoption Timeframe

The IMS framework still represents a work in progress, so the time frame for full-blown deployment is likely to span a few years. If 2005 was the “year of the trial,” 2006 will be the year in which some of the early adopters begin deploying IMS, albeit the size and scope of many of these contracts are still unknown. The initial commercial IMS deployments are expected to begin in late 2006 and early 2007, with the latter representing the first year of meaningful revenues for vendors in this space.

Despite that, IMS has a great potential, since it is a key enabler of FMC and can potentially be a catalyst to a next-generation of “killer apps.” One of the promises of IMS is that open-based programming models (SIP, XML/VXML, etc.) (define - news - alerts) are well known to most developers, and in case they are not, it would not take them more than three to six months to become savvy programmers. By contrast, the proprietary languages of traditional intelligent networking (IN) would take a lot longer time commitment (at least 12 to 18 months until a developer would become fully proficient).

A Few Words of Caution

IMS represents another instance of the “IT-ification” of the telecom industry. This means that in the future, applications and services will represent growing opportunities, while the hardware will figure less prominently in a vendor’s revenue equation. More importantly, the implication is that the business model will also change from the big, single monolithic investment, to a software-centric, subscription-based type model.

In order for IMS to really deliver all its benefits, it is sine-qua-non for carriers to flatten their organizational structures, creating horizontal groups focused in specific areas rather than the current status-quo vertical silos. This shift represents a profound change in strategic management, and might require some time for service providers to implement. Moreover, it is yet another manifestation of the disruptive nature of IMS, a technology that undoubtedly will cause the redefinition of industries and business models.

Ronald Gruia is Program Leader and Senior Strategic Analyst at Frost & Sullivan covering Emerging Communications Solutions. For more information, please visit www.frost.com. (news - alerts)

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