Cloud & Data Center

Carrier Voice: Ditching Boxes for Clouds

By TMCnet Special Guest
Kevin Mitchell
  |  June 10, 2013

While the overall ARPU and usage trends are making data services heir apparent, voice is still king.  Chetan Sharma Consulting (News - Alert) recently reported that 56 percent of the U.S. wireless revenue is derived from voice services. While that voice-data share flip has occurred in some countries (Japan for example), the GSMA (News - Alert) is projecting that voice will remain the majority of mobile service revenue globally until 2018.

This fact contrasts with the primary focus today: Given the demand for broadband speed and ubiquity, service provider investments are aimed at upgrading data networks. Yet service providers are still getting paid for delivering voice.

Voice service revenue is in decline as price competition intensifies with over-the-top providers, and usage patterns change as consumers use multiple modes – e-mail, messaging and social networking – to communicate. Multi-modal and multimedia communications have become prevalent, but voice is still expected and essential – do you want to ask your sales person to go data-only and rely on OTT to close business? There is money to be made in voice, but the way providers manage and deliver it needs to change.

Today’s fixed and mobile broadband networks are more efficient than legacy circuit-switched ones. Yet that migration to IP does not directly lead to efficiency in next-generation voice over IP networks. There is a reason why IMS is always on the horizon: The infrastructure required is expensive (net new capex needed) and, more problematic, it is complex to manage. The requirements for technical staff, ongoing training and maintenance costs for the vendor gear plus back-office integration add significant cost over the life of the network. The upfront and ongoing costs do little to justify the business case and often lead to a return on investment numbering in years as service providers transition or acquire subscribers on the new VoIP platform. Some Greenfield broadband operators (e.g., satellite or LTE (News - Alert)) do not have the VoIP/IMS expertise or staff to begin with, further impeding the prospects of offering triple play service.

Vendor offerings are primarily architected based on the largest of the large providers. And yet, one size infrastructure does not fit all service providers. Replicating these tier 1 architectures and using those blueprints for implementing next-generation voice networks is risky. Some service providers simply do not have the same scale – in terms of subscribers, footprint, budget or technical resources – so the same dynamics may not apply.

For example, a small, island-based service provider with fewer than 20,000 subscribers was recently presented with a bill to add voice over LTE to its 4G network totaling $2 million just for the IMS core. They will be faced with a daunting business case: a lengthy design, test and deployment schedule (likely exceeding a year, which elevates risk of lost voice business to OTTs), voice infrastructure cost of more than $100 per subscriber (plus other capex and associated opex), coupled with an inability to charge its subscribers more for VoLTE services.

New paradigms are being set by OTT providers. Yet in most cases traditional service providers have yet to find ways to more effectively deploy and manage voice. Managed solutions by the big vendors are not an answer; they address the expertise requirements, but do not deliver breakthrough savings. This managed model still requires the service provider to buy the equipment and then pay the outsourced opex. Now is the perfect time to exploit the convergence of mobile broadband, cloud and VoIP and adopt a cloud-based voice platform.

First, a word about cloud: by this I mean an end-to-end hosted/SaaS (News - Alert) solution that is multi-tenant, turnkey and lives in a fully managed private cloud. The industry focus has been on this model for computing, communications and other services direct to consumers and businesses. However, this SaaS model can also be used by broadband providers to deliver voice to their customers. The wholesale solution uses a cloud-based voice platform that eliminates on-site hardware requirements, trained staff and ongoing management, resulting in a pure pay-as-you-grow opex model with a much clearer business case. It is also tightly integrated into the business processes so service providers can scale and monetize the service.

This approach allows fixed, mobile service providers to focus on core business and leverage their strengths, be it the best broadband network or slickest marketing and customer acquisition programs. It means the latest features and upgrades are delivered on a regular basis. This model maximizes net margin contribution starting with customer number one. With integration into the network significantly streamlined, a cloud-based voice platform accelerates time to revenue; progression from concept to commercial service launch can be as little as 60 days.

That island-based service provider that chooses to deliver voice via a cloud-based solution can reduce capex by approximately 95 percent and can realize 20-30 percent savings on opex. And the time to market is two to four months, rather than 12 to 18 months. Now the shift to VoLTE and the shutdown of the legacy network looks more attractive.

Even in the face of price pressure and maturation, voice service profitability is possible and sustainable. Service providers need to ditch the vendor boxes and look to the cloud.

Kevin Mitchell is vice president of marketing of Alianza (News - Alert) (

Edited by Stefania Viscusi