Playing in the new digital value chain

Michael Carroll
Mobile Internet Supplement

BRIC web user growth, China, India, Brazil, Russia, Indonesia, US, Japan, Boston Consulting GroupIP networks are clearly best positioned to handle the booming demand for digital content, and new markets including utility and health issues, right?

Well, not necessarily, with Nokia Siemens Networks last month joining a growing list of vendors trialing Phantom DSL - a technology the firm claims can boost the bandwidth of copper lines by up to 75%. In September Huawei tested a solution combining SuperMIMO technology with four twisted pairs of copper, achieving 700 Mbps.

The key selling point is that these offer a cheaper way for carriers to upgrade subscriber access speeds than fiber networks. That could have implications for next-generation network projects in countries including Australia and the UK, where the burden of network rollout costs has been placed firmly at the door of incumbents Telstra and BT.

However, the problem is that these copper upgrade technologies are a couple of years away from becoming a commercial reality.

IP networks are here, now, and also offer cost efficiencies, Jayesh Easwaramony, vice president of Frost & Sullivan, ICT practice says.

He noted that IP networks are more flexible and offer the ability to embed intelligence at the edge of the network key elements in delivering content like video.

"With over 60% of the network traffic moving to video and also video having its own viral effect on consumers, the video traffic and hence content is only expected to explode as broadband growth permeates emerging and developed markets," Easwaramony says.

The key for operators, though, is how to make money from delivering video over their IP network. 

Easwaramony believes there is little in the way of direct revenue opportunities for carriers from video content, but said there are indirect opportunities "through partnerships and offering downstream services like CDNs and microbilling to other players who can monetize better through advertising." 

His view is echoed by Paolo Pellegrineschi, head of sales for voice and IP transformation at Nokia Siemens Networks.

He told Telecom Asia that operators can use the IP cloud to offer combined services in a multimedia ecosystem as the technology offers flexibility that brings "the telco to the web environment."

IP networks enable carriers to offer a "converged experience," Pellegrineschi said.

"The beauty of entering the IP cloud is that it will create a seamless opportunity to consolidate and converge access and services by enhancing the overall value for the end-user. " 

In turn, operators gain the opportunity to grow ARPU by providing innovative services, he said.

Nokia Siemens concedes that switching to IP is a challenging procedure, with Bernd Hildebrandt, head of strategic marketing for network systems, noting that it requires more than just modernizing networks. "Processes and IT landscape also change.  

Hildebrandt says that makes it vital that carriers protect their voice revenues while migrating to IP to "keep paying the bills," but notes that the long-term benefits will make any short-term pain worthwhile.

"IP provides an incredible amount of new opportunities," he said.

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