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Changing Patterns in Digital Network Migration in Central and Eastern Europe
Interview with Emir Halilovic, Communications Research Manager, Central and Eastern Europe
The softswitch and media market of Central and Eastern Europe is emblematic of the changes that are sweeping the region. Although small, the market is very dynamic and points to a number of larger issues surrounding digitized telephony and the migration from TDM (time division multiplexing) networks to next-generation networks (NGNs) and their role in 3G roll-out and convergence. Research Manager Emir Halilovic gives us a sneak preview of some of the issues addressed in IDC's soon-to-be released study Central Europe NGN Equipment Forecast and Analysis, 2007-2011. Start us off with the big picture. In terms of digital network infrastructure, what is happening in the market right now? In our research we are seeing a shift in the nature of infrastructure projects. The majority of them have moved from direct conversion of TDM networks to NGN to a more gradual migration process that might include several steps and which varies by operator. In general they all include IMS as the end-point technology. While straightforward replacement is occasionally woven into the fabric of a strategic vision, it involves systematically replacing TDM legacy switches with softswitches and media gateways along a prescribed timeline that can be hard to keep to, expensive, or both. The more typical approach of gradual migration involves a "cap and grow" strategy and might be characterized as casual, in that operators see the need to replace the technology but they are not in a hurry. In some cases, this might also include the modification of existing CO switches. There is a lot of hype associated with next-generation networks, some of it is well founded. Also, VoIP technology and alternative service providers are a disruptive force to traditional telcos. Looking to the very long term, it seems inevitable that we will eventually see a full scale move to NGN technology. To what degree are Central European operators embracing the future and going all out with new networks? There have been isolated examples of "leapfrogging," where an operator has made a large-scale change. For instance, in 2003-2005 Slovak Telecom replaced its remaining analog switches, which accounted for around 20% of its network capacity, with NGN equipment. Operators wrestling with both fixed and mobile networks have a great deal to gain by migrating both to a single platform, usually an IMS-compliant 3G core. However the gradual approach is by far the most common and TDM networks in Central and Eastern Europe are not going to be shut off anytime soon. The agile and paradigm-breaking group of non-traditional service providers, most notably Google, eBay/Skype, Microsoft, and Yahoo!, are employing highly disruptive approaches to VoIP and next-generation services, and these players will have some limited involvement in PSTN markets (i.e., Microsoft with CSF service delivery platforms). For the most part, however, IMS and traditional PSTN activity is simply not what they are focused on. Rather, their focus in many cases is on developing VoIP and other related applications that ride transparently over IP transport networks and the Internet to support their existing business models. Still, they are cash rich and always looking for new opportunities so may change their approach or expand into other areas. As was the case last year infrastructure conversion is not the only trend within this industry. IDC believes that the following trends with regards to softswitches are continuing to influence decision-making across the industry. All this speaks to the rapidly changing nature of technology and the problem with defining terms. You seem to get different definitions for "softswitch" depending on where you look or who you ask. Certainly this must affect operator decisions about deployment. That's true, and the issue gets very complicated very quickly. The definition for softswitch has been and continues to be a moving target. There is now less emphasis on the softswitch as the single controlling element in next-generation architectures and more emphasis on the complex fabric of other network elements such as session border controllers and application servers. In addition, emerging architectures such as IMS have contributed to a re-examination of the role of the softswitch in the network and how it should be defined. Many vendors now argue that the "classic" softswitch has been dethroned as the centerpiece of the three-layer model. To some extent, this has to do with the further disaggregation of network elements and the success that the best-of-breed model has had to date. This will not stop operators from investing in NGN equipment. The Central European market is lagging behind Western Europe in implementing NGN, however the market trend is the same and the migration is likely to continue. The top buyers, so to speak, will be incumbent-fixed operators and mobile operators, with alternative operators also making a small but important showing, further putting pressure on the main players. How will this affect competition on the NGN equipment market itself? The nature of the mobile equipment market usually prevents completely free and open competition, as the system of preferred vendors and single-vendor arrangements is dominant. Things are different in the fixed-line market, where alternative operators are on fairly level ground with incumbents, which favors non-traditional equipment vendors. -- -- -- -- -- -- -- -- For more information about purchasing Central Europe NGN Equipment Forecast and Analysis, 2007-2011 or other IDC studies, please contact: Tatiana Hinova |
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