2011 Infonetics IMS Service Pro: 2011-Infonetics-IMS-Service-Provider-Survey-06-22-11.vider Survey 06-22-11

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Copyright 2011 by Infonetics Research, Inc. All rights reserved. i

IMS Services Strategies, Product Features, and Vendor Leadership: Global Service Provider Survey

June 22, 2011

TABLE OF CONTENTS

TOP TAKEAWAYS.................................................................................................................................. 1

INTRODUCTION ..................................................................................................................................... 2 Methodology and demographics overview......................................................................................................2 Equipment obsolescence, converged services and LTE drive IMS ..................................................................3 IMS as a global standard for network infrastructure and services....................................................................3 Large-volume IMS to come from fixed-line VoIP.............................................................................................5 Back-end system integration and business case lead IMS issues ...................................................................6 Residential VoBB and business hosted voice are the most widely deployed IMS services................................8 RCS and VoLTE have largest gains over next 2 years .....................................................................................8

CSCF: HEART OF THE IMS CORE............................................................................................................. 11 CSCF Implementation...................................................................................................................................12 Standards-based remains most important product feature .............................................................................13 NSN leads CSCF installations........................................................................................................................14

HSS INSTALLATIONS MOVING ALONG..................................................................................................... 16 Trio of must have HSS features .....................................................................................................................17 Manufacturer selection criteria......................................................................................................................20 Nokia Siemens Networks is the leading HSS vendor ......................................................................................21

PERCEIVED TOP IMS INFRASTRUCTURE MANUFACTURERSERICSSON LEADS, ALCATEL-LUCENT FOLLOWS CLOSELY ............................................................................................................................... 23

BOTTOM LINE ....................................................................................................................................... 28

CONTINUOUS RESEARCH SERVICE



Copyright 2011 by Infonetics Research, Inc. All rights reserved. ii

METHODOLOGY AND DEMOGRAPHICS..................................................................................................... 30 Respondents are influential in the purchase decision ....................................................................................31 The sample looks similar to last years survey ................................................................................................32 Respondents represent a third of worldwide service revenue..........................................................................33 Respondent service provider types and regional distribution ..........................................................................34




Copyright 2011 by Infonetics Research, Inc. All rights reserved.

iii

LIST OF EXHIBITS

EXHIBIT 1 IMS MIGRATION DRIVERS ................................................................................................ 4

EXHIBIT 2 LARGE-VOLUME IMS DEPLOYMENT AND EXPANSION DRIVERS ........................................... 5

EXHIBIT 3 IMS MIGRATION BARRIERS .............................................................................................. 7

EXHIBIT 4 IMS-ENABLED SERVICES ................................................................................................. 9

EXHIBIT 5 SINGLE VS MULTIPLE IMS CORES .................................................................................... 10

EXHIBIT 6 CSCF INSTALLATION........................................................................................................ 11

EXHIBIT 7 CSCF IMPLEMENTATION .................................................................................................. 12

EXHIBIT 8 CSCF FEATURES.............................................................................................................. 14

EXHIBIT 9 CSCF MANUFACTURERS INSTALLED AND UNDER EVALUATION........................................... 16

EXHIBIT 10 HSS INSTALLATION ......................................................................................................... 17

EXHIBIT 11 HSS FEATURES ............................................................................................................... 19

EXHIBIT 12 HSS MANUFACTURER SELECTION CRITERIA...................................................................... 21

EXHIBIT 13 HSS MANUFACTURERS INSTALLED AND UNDER EVALUATION ............................................ 23

EXHIBIT 14 TOP THREE IMS INFRASTRUCTURE MANUFACTURERS....................................................... 24

EXHIBIT 15 SERVICE PROVIDER FAMILIARITY WITH IMS INFRASTRUCTURE MANUFACTURERS.............. 26

EXHIBIT 16 TOP VENDORS FOR ALL CRITERIA ..................................................................................... 28

EXHIBIT 17 IMS DEPLOYMENT TIMEFRAME........................................................................................ 30

EXHIBIT 18 RESPONDENT INFLUENCE ................................................................................................ 31

EXHIBIT 19 ANNUAL SURVEY SAMPLE COMPARISON.......................................................................... 32

EXHIBIT 20 RESPONDENTS PORTION OF 2010 CAPEX AND REVENUE................................................... 33

EXHIBIT 21 RESPONDENT SERVICE PROVIDER TYPES AND REGIONAL DISTRIBUTION ............................ 34





1

TOP TAKEAWAYS

IMS networks continue to be deployed by fixed-line operators and a growing number of mobile operators and cable operators (apparent in the sample makeup of this years study). In comparing the results to our 2010 and 2009 service provider surveys on IMS, the top takeaway is that little has changed. Deployments are continuing to progress, and new services are being deployed over IMS, but product requirements and overall drivers and barriers are similar.

A quick summary of the respondent demographics: 74% of respondents have deployed IMS, 79% come from EMEA (where the majority of IMS deployments exist), 57% are incumbents, and 22% are mobile operators.

Fixed-line VoIP service continues to be the mainstay of IMS deployments; 57% of respondents run residential voice over broadband and hosted business VoIP over IMS today, growing to 78% and 70%, respectively, by 2013. RCS, video telephony, and video sharing services are each planned by at least 50% of respondents over the next 1218 months. The transition from fixed-line VoIP to mobile services over IMS is reflected in the responses regarding market drivers and challenges:

Two key factors driving respondent IMS deployments are the ability to offer converged services and LTE network deployment. With the desire to move toward converged services, operators are making plans to move mobile services over IMS, including voice, data, and video.

Mobile services are growing in importance; 61% of respondents plan to offer RCS by 2013, 48% mobile messaging, 48% VoLTE, and 35% VoIP over 3G.

No single factor is considered a barrier to IMS deployment by more than 48% of respondents. The two factors rated a barrier by more than 40% of respondents are similar to those in our 2010 IMS survey: integration with existing BSS/OSS systems, and lack of compelling business case.

With increasing numbers of operators choosing IMS for fixed-line VoIP networks and mobile services, the product requirements for CSCF and HSS have not drastically changed over the past three years. However, this years survey data regarding installed vendors is closer to the market share we report in the IMS Equipment and Subscribers quarterly market size and forecast service.

Interworking with application servers and open, standards-based platforms are critical for CSCF selection.

Authentication/authorization, subscriber profile management, and rapid provisioning are critical features in HSS selection.

Nokia Siemens Networks is the leading CSCF and HSS vendor in terms of product installed and under evaluation. However, when we asked respondents who they consider to be the top three IMS infrastructure vendors, Ericsson and Alcatel-Lucent garner the most mentions, showing a divergence between perception and reality. Additionally, more respondents are familiar with Ericsson than with any other vendor (83% rate Ericsson familiar), which leads us to conclude Ericsson has done a solid job in marketing its capabilities and participating in RFPs, even if it lags behind Nokia Siemens Networks in installations.





2

Huawei poses a credible and serious threat to Ericsson, Alcatel-Lucent, and Nokia Siemens Networks. The vendor is considered a leader in certain vendor criteria and has been growing its installed base every year among our survey respondents. More and more operators are familiar with Huaweis capabilities, but Huawei continues to come in fourth in terms of perceived leadership and overall familiarity.

INTRODUCTION

The adoption and deployment of IMS core networks continues its path through fixed-line and mobile operators worldwide. In Infonetics Researchs IMS Equipment and Subscribers quarterly worldwide and regional market share, size, and forecast service, we track over 90 publicly disclosed IMS network deployments. Many of these IMS deployments are with incumbent operators, with roughly 60% of total deployment in EMEA, but expanding in Asia Pacific and the Americas, which helps explain the large number of EMEA respondents to our survey. This survey captures a strategic overview from a range of service providers, gaining insights into IMS.

Methodology and demographics overview

In April and May 2011, we interviewed 23 service providers who have IMS core equipment in their networks or plan to at some point in 2011. Respondents have detailed knowledge of the IMS equipment and services their companies use or will use to deliver voice services or transport voice traffic, and are influential in planning and making purchase decisions for IMS equipment.

The respondents in this study represent more than 29% of worldwide capex and 30% of revenue in our Service Provider Capex, Opex, ARPU, and Subscribers report. Our respondents are geographically diverse, with a heavy bias toward EMEA. This is a reflection of where the majority of IMS activity has beenin Infonetics Researchs IMS Deployment Tracker (part of our IMS Equipment and Subscribers quarterly market share, size, and forecast service), 59% of the operators are from EMEA. It is also a reflection of the overall telecom landscape; there are more service providers in EMEA than in any other region. Our survey sample is a strong mix of operator types; 57% are incumbents and 22% are wireless operators.

Please see Methodology and Demographics for details on the sample.





3

IMS DEPLOYMENT DRIVERS

Respondents rated factors in the migration to IMS, on a scale of 1 to 7, where 1 is not a driver, 4 is somewhat of a driver, and 7 is definitely a driver. In the next chart, we show the percentage of respondents rating each factor 6 or 7.

Equipment obsolescence, converged services and LTE drive IMS

In this years study, there is a collection of reasons driving operators to deploy IMS, and for the first time LTE is in the top group. This is indicative of the acceleration of LTE deployment plans from operators worldwide. Though converged services are once again a top driver, we find that infrastructure factors, specifically the obsolescence of legacy equipment and the move toward LTE, are important drivers. Since IMS has been chosen as the de facto standard for voice over LTE, we expect this to continue to be a top driver.

With every passing year, the issue of legacy equipment obsolescence becomes increasingly important, and for some operators, it is no longer an option to a expand on the legacy platforms. In our 2009 survey, only 30% of respondents rated it a driver, whereas in the 2010 survey it was 55%; in this years study its 52%.

The ability to offer converged services has been a top driver for the past three years, topping the 2009 list with 80% of respondents rating it a 6 or 7. It is still important (considered a driver by 50% in 2010 and 48% in 2011), but its tempered a bit by the importance of the infrastructure issues discussed above. It is rated highly relative to the entire list of drivers, reflecting the number of operators moving to deploy fixed-line and mobile voice services for business and residential and using IMS as the vehicle to deliver that convergence.

IMS as a global standard for network infrastructure and services

This continues to be a top driver for IMS, compared with 25% in the 2009 survey and 50% in the 2010 survey, but slightly less critical with only 35% of respondents indicting it is a driver this year. In discussions with operators at key conferences such as Mobile World Congress and IMS World 2.0 Forum, a common theme is that the decision to move to IMS is based on it being a globally adopted standardperiod, no debate. We anticipate this will grow in importance as a driver for fixed-line and mobile operators.





4

The other standout drivers are the ones at the bottom of the list, stark in comparison to the group of top drivers. Once again, opex and capex savings are near the bottom of this list. As we saw in our 2009 and 2010 surveys, service providers realize opex savings will not be delivered by IMS. The deployment of IMS is neither simple nor inexpensive. Additionally, nobody has demonstrated the amount of capex and opex savings achievable with IMS. The other notable driver toward the bottom is network consolidation, a driver for only 9% of respondents, down from 55% in our 2010 study. This change is two-fold: 1) operators may still be considering IMS for network consolidation, but it is not an important driver for moving to IMS, and 2) operators are looking toward deploying multiple IMS cores across their networks, or its not applicable (as shown in Exhibit 5).

Exhibit 1 IMS Migration Drivers n=23

4%

9%

13%

13%

22%

26%

30%

30%

35%

48%

48%

52%

0% 20% 40% 60%

Demand for services only available from IMS

Consolidate number of networks

Capital expenditure savings

Operational expenditure savings

Modernize networks with latest technology

Competition

Ability to reuse apps on fixed & mobile networks

Availability of new apps & services

Global std for network infrastructure & services

LTE network deployment

Ability to offer converged services

Legacy equipment obsolescence

Driv

ers

Percent of Respondents Rating 6 or 7





5

Large-volume IMS to come from fixed-line VoIP

We asked respondents what they regard as the primary factor driving large-volume IMS deployment and expansion by their companies.

We are frequently asked where well see the big growth of subscribers in IMS networks. As with the 2010 survey, the majority of respondents, 43%, cited the evolution of wireline telephony to IMS-based VoIP. This is counter to our expectation that true large volume deployments of IMS will come from the deployment of LTE, which wont reach critical mass until 2015 at the earliest. Recognizing that those volumes are long-term, 26% of respondents view LTE as the driver for large volumes. This is likely in part because we wont begin to see voice over LTE in any meaningful way until at least 2014, and that may be too far off for some respondents. However, there are an increasing number of mobile operators that are offering fixed telephony services over IMS-based networks as part of a bundle, in large part to combat Skype, which has the potential to drive wireline VoIP volumes. We are also seeing operators with parts of their PSTN networks underutilized, prompting shutdown and upgrades in parts that remain well alive.

Exhibit 2 Large-Volume IMS Deployment and Expansion Drivers n=23

4%

22%

26%

43%

0%

0%

4%

0% 10% 20% 30% 40% 50%

None

Other

Integrating mobile multimedia comms with social networking apps

Offering multimedia comms over 3G (e.g., RCS)

Offering converged fixed/mobile service bundles covering voice,

data, and multimedia

Evolving mobile telephony for LTE to IMS-based voice

Evolving wireline telephony to IMS-based VoIP

Fact

ors

Percent of Respondents





6

DEPLOYMENT BARRIERS

Back-end system integration and business case lead IMS issues

Respondents rated factors in the migration to IMS on a scale of 1 to 7, where 1 means not a barrier, 4 means somewhat a barrier, and 7 means definitely a barrier. The next chart shows the percentage of respondents rating each feature a 6 or 7, or a barrier.

The top two barriers to IMS are identical to responses in our 2010 survey, with 48% of respondents this year considering the integration with back-end BSS and OSS systems to be a barrier to IMS deployment. Integrating new networks and services with existing back-end systems is a life-long challenge for operators. The relative importance it has in this survey suggests that vendors with strong professional service/system integration capabilities will be well positioned. We dont anticipate service providers not deploying IMS because of back-end integration, but rather believe it will be a key requirement.

Having a lack of compelling business case is a challenge we have heard of repeatedly over the past two years; it is a problem particularly when IMS is being used to deploy replacement or similar services that operate over existing networks today. And it can be challenging to clearly demonstrate to executive management the business case for using IMS for new services.





7

Availability of IMS-compliant CPE rounds out the top three barriers, with 35% of respondents, which is not overwhelming, but its still on some operators minds. The major handset manufactures have a limited number of IMS-compliant handsets available; however, large operators are pushing handset manufacturers to have a wide range of devices IMS/RCS-compliant by 2013. We expect this to continue to be a barrier for IMS services, particularly for mobile voice services over the next several years. Operators such as Verizon Wireless are pushing heavily on this by putting an IMS device framework from Ecrio on LTE handsets rather than waiting for native capabilities from the handset manufacturers. NTT DoCoMo and SK Telecom have used this solution for years with their mobile handsets.

Exhibit 3 IMS Migration Barriers n=23

13%

17%

17%

17%

17%

26%

26%

30%

30%

35%

43%

48%

0% 10% 20% 30% 40% 50%

Integration with legacy networks

Voice quality

Interop issues between IMS cores

Interop between legacy and IMS equipment

Economic conditions

SR VCC

Capital requirements

Standards and product maturity

Support for legacy feature sets

Availabili ty of CPE

Lack of compelling business case

Integration with existing BSS/OSS

Barr

iers






8

FIXED TELEPHONY CONTINUES TO DOMINATE IMS SERVICES

We asked respondents which of the retail services they offer are IMS-based now, and which will be by April 2013. For the fourth year running, fixed telephony services dominate the list.

Residential VoBB and business hosted voice are the most widely deployed IMS services

Residential voice over broadband and business hosted VoIP services are run over IMS by 57% of respondents, rising to 78% for residential and 70% for business by 2013. This is in line with what we see in EMEA deployments (and most of our respondents are from EMEA). These two services have consistently been the most widely deployed over IMS networks since we started conducting this survey. We do not expect this to change, due to the number of existing service providers with IMS networks in operation.

RCS and VoLTE have largest gains over next 2 years

Despite all the debate regarding RCS and operators wavering commitments to the service, 61% of respondents plan to offer RCS by 2013, and17% offer it now. Some operators who have deployed RCS-like services are included in the 17%; though a service may not be to the full specification of the GSMA-led RCS, the capabilities are close. Additionally, many operators are building RCS into their VoLTE plans, similar to Verizon Wirelesss, for which every handset that ships will have the RCS network address book. Of the respondents who plan to offer RCS by 2013, only four plan not to have VoLTE.

We surveyed providers about VoLTE for the first time in our 2010 survey, and 27% of those respondents planned to offer the service by 2012. This has increased to 48% of respondents by 2013. We still dont expect large-scale VoLTE deployments in 2013, but an increasing number of mobile operators are putting plans for VoLTE up front in their LTE network builds.

There are a few noteworthy IMS-based services not as widely deployed by respondents:

Video telephony remains a second-tier service, but the growth, with 57% of respondents deploying it by 2013, is in line with last years survey. Most video telephony services today are offered via a client application for fixed-line services, or via a mobile handset (by some mobile operators). However, IMS is not necessary to deliver video telephony, as we see with popular services such as Face Time and Skype.

Video sharing over IMS is offered by several operators in North America and Asia Pacific. The growth in video sharing services over IMS will expand through the launch of RCS over the next two years.





9

Exhibit 4 IMS-Enabled Services n=23, 23

0%

4%

9%

9%

4%

26%

22%

35%

17%

48%

48%

57%

57%

61%

65%

65%

70%

78%

48%

17%

35%

35%

4%

57%

57%

48%

0% 20% 40% 60% 80%

IP-based VOD/unicast

IPTV/multicast video

VoIP over 3G

Converged mobile/fixed voice & messaging

VoLTE

Mobile messaging

Video sharing

Video telephony

RCS

SIP trunking

Class 5 replacement voice

Business-hosted IP voice

Residential VoBB

Reta

il Se

rvic

es

Percent of Respondents

2013

Now





10

SINGLE VS MULTIPLE IMS CORES

We asked respondents whether they are using a single IMS core across multiple networks (e.g., mobile, fixed-line) or deploying multiple cores.

The promise of IMS has always been to collapse networks into one, regardless of the end-users access method, to deploy services over a common core. Though most IMS networks today are for fixed-line services, a growing number of operators are beginning to expand into wireless services or are in the evaluation phase. We have heard of a number of operators choosing to build out a completely new IMS core for the wireless side, and added this question to this years study to get a better understanding of operator plans.

For 13% of respondents, this is not applicable because they operate only a fixed or mobile network or have no immediate plans to expand IMS into another network domain. However, 52% of respondents are using a single IMS core as envisioned by the original proponents of the infrastructure. These respondents comprise a wide cross-section of service providers including large and small incumbent operators with fixed and mobile operations, mobile-only operators deploying fixed-line services over IMS, and competitive carriers with fixed and mobile networks.

Exhibit 5 Single vs Multiple IMS Cores n=23

Single IMS core

52%

Separate IMS cores

35%

Not applicable 13%





11

CSCF: HEART OF THE IMS CORE

In our IMS Equipment and Subscriber quarterly worldwide market size and forecast service, we saw the CSCF market grow from $135.4M in 2009 to $187.4M in 2010, a 38% increase year over year. As the core of the IMS network, CSCFs are the essential network element deployed. In the past year we have seen an increasing number of deployments of IMS networks for services beyond fixed-line VoIP. Seventy-four percent of respondents have a CSCF installed today.

Exhibit 6 CSCF Installation n=23

Already installed

74% By 201222%

After 2012 4%





12

CSCF Implementation

The next three charts include only respondents who have CSCF installed or who plan to install it by 2012, referred to as CSCF respondents.

We asked CSCF respondents how they have implemented the CSCF core today and how they will by April 2013, to get a sense of how widespread specific implementations are. CSCF is being centralized, with three primary components (the I/S/P), by 59% of respondents today. However, that changes over the next two years as more operators look to decouple the P-CSCF and put it at the edge either with a combined I/S-CSCF or even a centralized but separate I-CSCF and S-CSCF. We suspect this shift is the result of more SBCs becoming P-CSCF compliant and of operators growing familiarity with having that functionality at the edge of the network.

Exhibit 7 CSCF Implementation n=22, 22

5%

5%

32%

59%

5%

45%

41%

9%

0% 20% 40% 60%

Other

Centralized but separate I-CSCF & S-CSCF with

P-CSCF distributed at theedge

Combined and centralized I-CSCF/S-CSCF with

P-CSCF distributed at theedge

Centralized P-CSCF/I-CSCF/S-CSCF

CSC

F C

ore

Impl

emen

tatio

n

Percent of CSCF Respondents

2013

Now





13

Standards-based remains most important product feature

CSCF respondents rated the importance of various CSCF features in the purchase decision on a scale of 1 to 7, where 1 means not important, 4 means somewhat important, and 7 means critical. The chart on the next page shows the percentage of respondents rating each feature a 6 or 7, or very important.

An overwhelming majority (86%) consider an open, standards-based platform adhering to specifications laid out by the leading standards bodies to be a very important CSCF product feature. This was also the most important feature in our 2009 and 2010 IMS service provider surveys, in which 85% and 90% rated it a 6 or 7, respectively.

As in our 2008, 2009, and 2010 surveys, interworking with application servers (ASs) was rated highly as a CSCF product feature by more than three-quarters of respondents. This year the feature ties with standards-based platform for the top spot on the list. This remains an absolutely critical component of the CSCF. As the S-CSCF (which makes use of the service profile to route SIP requests to application servers) may have to forward SIP messages to several ASs, the finding does not come as a surprise. The SIP-based communication procedure between the CSCF and both AS and HSS is clearly defined in 3GPP specification TS 24.229, but it is complex; the best way to avoid major issues is to ensure adequate interworking between AS and the S-CSCF.

Multivendor interoperability is again the third-highest feature, rated highly by 77% of respondents, slightly more than in 2010 (71%). In ongoing discussions with operators, we are seeing a growing number moving to multi-vendor IMS deployments, which is in line with the growing importance of multivendor interoperability over the past four years of our IMS deployment surveys. However, after six years of deployments, not everyone is convinced that using CSCFs from various vendors will work, because each vendor has its own interpretation of the standard. We believe part of this is early IMS adopters still operating legacy IMS equipment.

High performance, high density, scalable server blades are rated highly by 64%, similar to the 2010 survey (62%). As IMS networks begin to scale with increasingly more subscribers, scalable solutions remain a leading product capability.





14

The integration of BGCF and signaling gateway into the CSCF remain low on this list. Integrated BGCF was rated very important by only 14% or respondents. We expect this s not because operators are looking for standalone solutions for these elements, but rather they are already receiving an integrated CSCF/BGCF that fits their need and are not actively seeking such a solution.

Exhibit 8 CSCF Features n=22

14%

14%

14%

18%

36%

45%

59%

64%

77%

86%

86%

0% 20% 40% 60% 80% 100%

Integrated call signaling gateway (SS7)

Integrated BGCF

Support for non-IMS endpoints and services

Purpose-built, integrated platform

Network agnostic

Integrated voice features

Low latency routing

High performance, high density, scalable server blades

Multi-vendor interoperability

Open, standards-based platform

Interworking with application servers

Feat

ures

Percent of CSCF Respondents Rating 6 or 7

NSN leads CSCF installations

In an open-ended question, we asked CSCF respondents to name the manufacturers of CSCF equipment currently installed in their networks, and those they are evaluating for purchase by 2012.





15

Nokia Siemens Networks (NSN) has been steadily growing its leadership in IMS and is the leading manufacturer of installed CSCF products, and those under evaluation. Based on our IMS Equipment and Subscribers quarterly market share, size, and forecast report, NSN led worldwide revenue market share for CSCFs in CY10 with 20.2%, and Huawei, Ericsson, and Alcatel-Lucent had 19.4%, 17.3% and 15.4%, respectively. It continues to be a tight battle between these four vendors.

Current installations by respondents line up with the market share order noted above. After NSN, Huawei and Ericsson are deployed by 32% of respondents each, followed by Alcatel-Lucent at 27%. Huawei has made inroads in the IMS market over the past three years, in China and internationally. After no mention in our 2008 survey, Huawei has steadily grown each year as a vendor installed and under evaluation, showing it has not only become a viable competitor but a key vendor in the space.

Three other vendors of note include:

Acme Packet, whose session border controller acts as a P-CSCF for enabling secure transport layer security (TLS) or IPSec connections, continues to raise its profile in this space. One respondent currently has them installed.

After a presence for the first time in 2010, ZTE continues to make inroads in IMS. Primarily considered an IMS vendor to the Chinese market, they have had notable customer wins in EMEA and are making continued investments in IMS. This is a vendor to keep an eye on.





16

The leading vendors of current installations tend to lead in evaluations for future purchase as well, and this is the case here; it is due in part to the fact that many respondents are reluctant to change vendors.

Exhibit 9 CSCF Manufacturers Installed and Under Evaluation n=22, 22

5%

5%

5%

5%

32%

32%

27%

36%

18%

0%

0%

5%

5%

32%

27%

23%

0% 10% 20% 30% 40%

Acme Packet

IBM

Telcoware

ZTE

Ericsson

Huawei

Alcatel-Lucent

NSN

Man

ufac

ture

rs

Percent of CSCF Respondents

Under evaluation

Installed

HSS INSTALLATIONS MOVING ALONG

The HSS is a key component of IMS, and is an evolved version of the HLR, its equivalent in the wireless world. The HSS provides a much wider range of features and is meant to act as a master repository of all subscriber and service-specific information.





17

In our IMS Equipment and Subscribers quarterly worldwide market share, size and forecast service, we are seeing growth of HSS deployments worldwide, spurred by LTE later in our forecast period. We expect the HSS market for IMS networks to grow from $156.5M in 2010 to $257.5M in 2011, up 65%. The demand for HSS is in line with CSCF deployments; 70% of respondents have an HSS already installed.

Exhibit 10 HSS Installation n=23

Already installed

70%By 2012

26%

After 2012 4%

Trio of must have HSS features

The next three charts include only respondents who have HSS installed or who plan to install it by 2012, referred to as HSS respondents.

HSS respondents rated the importance of various HSS features in the purchase decision, on a scale of 1 to 7, where 1 is not important, 4 is somewhat important, and 7 is critical. In the next chart, we show the percentage of respondents rating each feature 6 or 7, or very important.

The three most important HSS product features, with 73% of respondents rating each very important, include subscriber profile management, authentication and authorization, and rapid provisioning. Subscriber profile management and authentication and authorization have been consistently rated highly in our past surveys. Rapid provisioning continues to jump in importance, going from 29% in the 2008 study to 73% and a tie for the top position in 2011. This is a clear reflection of the larger number of IMS-based subscribers being provisioned and the need for systems that can manage high volumes of new and existing traffic hitting the HSS on an ongoing basis.





18

One of the important advantages of the HSS is that it is a consolidated repository of end-user information. In current networks, each application service module maintains its own version of the subscriber database. Though carriers have been required to execute well-defined and complex mechanisms to maintain consistency between the application modules and the HSS, the expectation is that all subscriber data will migrate to the HSS. We believe the increase in importance is the result of operators beginning to deploy multiple applications and services over their IMS networks, escalating this requirement.

As the HSS combines HLR/AuC (authentication center) functionality of GSM networks and provides information specifically required by the IMS network, authentication/authorization is a key HSS feature for anyone who does not have an AAA server or does not want to use an existing HLR.





19

A clear set of second tier of HSS product featuresmulti-vendor interoperability, CSCF and application server access support, and 3GPP and 3GPP2 interfaceswere rated very important by 68% of respondents. The 3GPP and 3GPP2 interfaces and multi-vendor interoperability were rated highly in previous surveys and point to operators requirements for standards-based products and an increasing utilization of multi-vendor environments across IMS network elements.

Exhibit 11 HSS Features n=22

9%

23%

50%

59%

68%

68%

68%

73%

73%

73%

0% 20% 40% 60% 80%

Flexible architecture (UNIX,Linux)

Easy-to-use Web-based GUI

Single d/b across 2G/3G CS networks & IMS core

Data handling andsynchronization

3GPP and 3GPP2 interfaces (Cx and Sh)

CSCF and app server accesssupport

Multi-vendor interoperability

Rapid provisioning

Subscriber profilemanagement

Authentication andauthorization

Feat

ures

Percent of HSS Respondents Rating 6 or 7





20

Manufacturer selection criteria

HSS respondents rated criteria for choosing an HSS vendor on a scale of 1 to 7, where 1 is not important, 4 is somewhat important, and 7 is critical. In the next chart, we show the percentage of HSS respondents rating each feature 6 or 7, or very important.

There are no overwhelmingly highly rated selection criteria for choosing an HSS manufacturer. The top two criteria, each very important to 41% of the respondents, are HLR/HSS support for Data Layer Architecture (using Centralized User Database) and a single integrated HLR/HSS platform. Support for Data Layer Architecture illustrates a challenge for operators that have subscriber data stored across multiple application servers. By supporting Data Layer Architecture in the HSS, operators can manage the data stored across application servers and the HSS. Having an integrated HLR/HSS platform is a key requirement that narrows the field of eligible vendors to the top IMS vendors.

In our 2010 survey, a single vendor IMS solution was the top criterion; it has fallen in this years survey and is rated highly by only 32% of respondents. This is indicative of what we are seeing with new IMS deployments; more and more operators are choosing multiple vendor products across the various network elements.





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Being the incumbent HLR vendor does not guarantee an upper hand in HSS vendor selection. Some respondents are focused on the fixed-line operation, with no existing HLR and no first-hand HLR vendor experience.

Exhibit 12 HSS Manufacturer Selection Criteria n=22

9%

32%

36%

41%

41%

0% 10% 20% 30% 40% 50%

Existing HLR vendor

Single vendor IMS solution

HSS specialist

Single integrated HLR/HSS platform

HLR/HSS support for Data Layer Architecture (using Centralized

User Database)

Crit

eria

Percent of HSS Respondents Rating 6 or 7

Nokia Siemens Networks is the leading HSS vendor

In an open-ended question, we asked respondents to name the manufacturers of HSS equipment currently installed in their networks, and those they are evaluating for purchase by 2012.

The HSS market is dominated by the four large IMS equipment vendors, but unlike in the CSCF market, there is more willingness to use and evaluate HSS specialists such as HP. The installed base of HSS vendors tracks fairly closely with the CSCF vendor breakdown, but in HSS Huawei has a slight edge over Alcatel-Lucent and Ericsson. Nokia Siemens Networks leads installed HSS vendors (41% of respondents), as they have a heavy product focus in this area through their Apertio assets. One operator actually listed Apertio as the installed manufacturer (we count it under Nokia Siemens Networks), which is no surprise given that Apertio was a pioneer and front runner in HSS.





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With 27% of respondents, Huawei edges out Alcatel-Lucent and Ericsson (23% each) in current installations. Among these three vendors, the number of respondents evaluating their HSS products is also very close, showing what a competitive market it is among the top vendors.

As with the CSCF, the big four vendors lead with HSS installations and evaluations. A few interesting data points:

As in our 2010 survey, HP is represented by installations, albeit a small percentage, illustrating that there are operators willing to go with HSS specialists rather than a single-vendor IMS solution. For the smaller vendors with only a handful of deployments, the results are impacted by the mix of survey respondents in any given year relative to the larger manufacturers that have broader customer representation.

As in CSCF vendor evaluations, we see ZTE gaining some customer traction with its IMS solution, although nobody indicated they are under evaluation for future purchase.





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In our 1Q11 Mobile Infrastructure and Subscribers quarterly market share, sized, and forecast report, Ericsson, Nokia Siemens Networks, and Huawei are the leading HLR vendors in terms of revenue, followed by Alcatel-Lucent, HP, and ZTE, which is similar to the list of HSS vendors under evaluation.

Exhibit 13 HSS Manufacturers Installed and Under Evaluation n=22, 22

5%

5%

5%

23%

23%

27%

41%

27%

0%

0%

23%

5%

50%

27%

0% 10% 20% 30% 40% 50%

HP

Telcoware

ZTE

Ericsson

Alcatel-Lucent

Huawei

NSN

Man

ufac

ture

rs

Percent of HSS Respondents

Under evaluation

Installed

PERCEIVED TOP IMS INFRASTRUCTURE MANUFACTURERSERICSSON LEADS, ALCATEL-LUCENT FOLLOWS CLOSELY

In an open-ended question, we asked respondents who they consider to be the top three IMS infrastructure manufacturers, a measure called unaided brand awareness, which provides a good view of overall brand strength. Typically, the larger a vendor (e.g., broad product portfolio) and the more visible their brand (e.g., TV commercials, product placement), the better they fare in this question.





24

Though Nokia Siemens Networks topped the lists of vendors whose CSCF and HSS products are currently installed by respondents, it is interesting to note that Ericsson is perceived as a top-three IMS infrastructure manufacturer by the most respondents. In fact, Nokia Siemens Networks is in third, behind Alcatel-Lucent and only slightly ahead of Huawei. Ericsson was the first large vendor to put its weight behind IMS, and as a result has momentum in terms of perceived leadership in the IMS market.

Vendors such as ZTE and Telcoware received mentions from operators using their IMS solutions. However, three other vendors, Acme Packet, BroadSoft, and Nortel, received mentions as leaders in the IMS market. Nortel, now owned by GENBAND but still identified as Nortel, is interesting since they have little play in the IMS market but are leaders in the softswitch market, which is seemingly transposed onto the IMS space. BroadSoft and Acme Packet, through voice application servers and SBCs respectively, have a number of deployments in IMS networks and are highly valued by a small percentage of respondents.

Exhibit 14 Top Three IMS Infrastructure Manufacturers n=23

4%

4%

4%

4%

4%

52%

57%

74%

78%

0% 20% 40% 60% 80%

Acme Packet

Broadsoft

Nortel

Telcoware

ZTE

Huawei

NSN

Alcatel-Lucent

Ericsson

Man

ufac

ture

rs






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SERVICE PROVIDER FAMILIARITY WITH IMS INFRASTRUCTURE MANUFACTURERSERICSSON LEADS THE PACK

Though familiarity with a manufacturers offering does not necessarily translate into contract wins, vendors need buyer awareness to be evaluated as potential suppliers. Without a degree of familiarity, suppliers dont even get invited to the table. Respondents rated their familiarity with each of a list of IMS infrastructure manufacturers on a scale of 1 to 7, where 1 is not familiar and 7 is definitely familiar, a measure called aided awareness.

The percentage of respondents rating each supplier a 6 or a 7 or familiar, is shown in the next exhibit.

Similar to the perceived IMS equipment manufacturer leaders, Ericsson has a strong lead in overall familiarity in this space, with 83% of respondents rating them familiar, an increase from 76% in the 2010 survey. Ericsson has been able to turn its first mover advantage into strong brand awareness.

Nokia Siemens Networks places second, at 61%, which we expected since they have CSCF and HSS products installed by the most respondents. Alcatel-Lucent is exactly where they were in our 2009 and 2010 surveys, with a little over 50% of respondents familiar with them. Interestingly, in the previous chart they are perceived as a leader in the IMS market by 77% of the respondents, but fewer are actually familiar with their products; Alcatel-Lucent has done a good job of marketing their IMS portfolio. Lastly, respondent familiarity with Huaweis IMS products continues to increase, growing to 52% this year from 43% in 2010 and 37% in 2009.

Over the past three years, Acme Packet and BroadSoft, both product specialists, have rated highly in terms of familiarity, especially relative to bigger vendors such as Nokia Siemens Networks, Alcatel-Lucent, and Huawei. In this years survey, Acme Packet came out third, familiar to 57% of respondents, which illustrates the success it is having penetrating IMS networks. Both vendors have a strong presence in IMS through work with the tier 1 network equipment vendors as distribution channels.

Acme Packet benefits from the leading revenue share position in SBCs in VoIP networks and a growing position in P-CSCF and BGW network element deployments. The third highest-rated vendor after Ericsson and Nokia Siemens Networks, Acme Packet has done a good job positioning itself as an IMS vendor with a more niche position relative to the larger, full-portfolio manufacturers. Similar to BroadSoft, though a number of other vendors resell Acme Packet for IMS, its brand remains strong, independent of partners.

Given that BroadSoft is the leading independent manufacturer of voice application servers and is heavily focused on IMS-based VoIP services, the awareness level is no surprise. Though BroadSoft works through partners for many of its IMS deployments, it has developed a strong recognition as the leading IMS VoIP application server.





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No respondent rated NEC a 6 or 7 in familiarity, and this is most likely because NECs IMS solutions are strong in the Japanese market but have not achieved the same level of deployment or familiarity outside its home marketour sample includes no Japanese respondents.

Exhibit 15 Service Provider Familiarity with IMS infrastructure Manufacturers n=23

4%

9%

43%

52%

52%

57%

61%

83%

0%

0% 20% 40% 60% 80% 100%

NEC

ZTE

GENBAND

BroadSoft

Huawei

Alcatel-Lucent

Acme Packet

NSN

Ericsson

Man

ufac

ture

rs






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LEADING IMS EQUIPMENT SUPPLIERSBUYING CRITERIA

We asked respondents to name the top three IMS equipment suppliers for each of eight important buying criteria (this is a prompted questionrespondents could only choose from a provided list of eight vendors). The next chart shows the percentage of respondents who consider each vendor to be among the top three for each criterion.

Across most categories there is a natural cluster of three groupsthe four large IMS vendors, then BroadSoft and Acme Packet, then GENBAND and ZTE (the two vendors toward the bottom in terms of percentage of respondents familiar with their IMS products). Key findings include:

Ericsson and Huawei stand out as the leaders across the eight criteria. Ericsson leads in technology, product roadmap, service and support, and solution maturity. They came in a clear second for financial stability behind Huawei, and tied Nokia Siemens Networks for the lead in system integration capabilities. Huawei stands out as the leader in pricing, price-per-performance, and financial stability. Huawei is second in IMS product roadmap, along with Alcatel-Lucent and Nokia Siemens Networks, and second in system integration capabilities.

Though neither Alcatel-Lucent nor Nokia Siemens Networks stand out as clear leaders in any single category, they are tightly clustered with Ericsson and Huawei. Nokia Siemens Networks ties Ericsson for the lead in system integration capabilities and is second in technology, product roadmap, price-to performance-ratio, and solution maturity. Alcatel-Lucent is second in technology, product roadmap, and service and support.

Acme Packet and BroadSoft stick together across the categories, just below the top group of four IMS vendors. The fact that they are considered to be among the top three vendors in many categories (albeit by fewer respondents than the four large vendors) is a testament to their leadership within their respective product categories.





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Exhibit 16 Top Vendors for All Criteria n=22

0%

20%

40%

60%

80%

100%

Technology Productroadmap

Systemintegrationcapability

Price-to-performance

ratio

Pricing Financialstability

Service andsupport

Solutionmaturity

Acme Packet Alcatel-Lucent BroadSoft Ericsson

GENBAND Huawei NSN ZTE

BOTTOM LINE

Our 2011 survey results show that fixed-line VoIP continues to dominate deployments. Over 90% of respondents will have Class 5 replacement, business, and/or residential VoIP services running over IMS by 2013. However, there is a shift to IMS continuing in the mobile world; this shift is clear when seeing the rise of mobile services over IMS by 2013. Seventy-eight percent of respondents will have a mobile-specific service such as mobile messaging, VoLTE, RCS, and/or VoIP over 3G by 2013, up from 35% today





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More operators, particularly incumbent providers, are moving forward with IMS deployments for multiple areas of the network and service offerings. This is understandable when considering most started with fixed-line VoIP and will eventually progress to mobile services over IMS. This transition is reflected in the responses regarding market drivers and challenges.

The top drivers for deploying IMS are legacy equipment obsolescence (rated a driver by 52% of respondents, and the ability to offer converged services and LTE network deployment (48% each).

This years data reconfirms what we found last yearthere are no longer big barriers to IMS deployment. Integration with existing back-end systems tops the list (a barrier for 48% of respondents), followed by lack of compelling business case (43%). So, though operators are driven toward IMS due to legacy equipment obsolescence, the business case for new and enhanced services is still lacking.

More operators are moving forward with IMS deployments, and the deployments are beginning to scale, with larger bases of subscribers supported, which factors into the data on product features and capabilities.

Interworking with application servers, open standards-based platform, and multivendor interoperability are all key product considerations for CSCF; these have been the top three for the past three years.

Authentication and authorization, subscriber profile management, and rapid provisioning are tied for the most important HSS product features, which is in line with growing subscriber bases over IMS networks and the need to support them with the HSS.

The one big stand-out in this years survey is in the IMS vendors. Nokia Siemens Networks is the strikingly clear leader in terms of installed base and evaluation of CSCF and HSS, which is consistent with the market shares we saw throughout 2010 in our IMS Equipment and Subscribers quarterly market share, size, and forecast report. However, despite Nokia Siemens Networks installed base, Ericsson leads the list of vendors respondents consider to be among the top three, and is familiar to the most respondents. This leads us to conclude that, though they lead in deployments of IMS and are strong in system integration capabilities, Nokia Siemens Networks has fallen short in effectively marketing its successes in the IMS market.

It should be noted that the top four vendors, Alcatel-Lucent, Ericsson, Huawei, and Nokia Siemens Networks, are very close in terms of market share and deployments we track, and it is a hard fought battle between them. Huawei in particular has made noticeable strides over the past three years in terms of leadership consideration, installed base, and overall perception.





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METHODOLOGY AND DEMOGRAPHICS

In April and May 2011, using online, telephone, and in-person survey methods, we interviewed 23 service providers who have IMS core equipment in their networks or plan to at some point in 2011. The vast majority (74%) have IMS core network equipment currently deployed.

Exhibit 17 IMS Deployment Timeframe n=23

Already deployed

74%

201126%





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Respondents are influential in the purchase decision

To qualify, all respondents had to have detailed knowledge of their companies IMS equipment and services their companies use or will use to delivery voice services or transport voice traffic, and have influence in planning and making purchase decisions for IMS equipment. The majority of respondents (61%) are either the primary decision-maker or have a lot of influence.

Exhibit 18 Respondent Influence n=23

Primary decision-

maker26%

A lot of influence

35%

Some influence

39%





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The sample looks similar to last years survey

The respondent profile is similar to that of our previous two editions of this survey, with 45% of last years respondents participating again this year. This is important to consider when comparing data year over year. Also, note that all the incumbent operators and one competitive operator in the study also have mobile operations, and this is clearly reflected in many of the answers provided.

Exhibit 19 Annual Survey Sample Comparison

Sample 2009 Survey 2010 Survey 2011 Survey

# of respondents 20 22 23

EMEA operators (% of respondents)

75% 77% 79%

Incumbents (% of respondents)

65% 64% 56%

Mobile operators (% of respondents)

25% 27% 22%





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Respondents represent a third of worldwide service revenue

Respondents in this study represent more than 30% of worldwide revenue and 29% of capex in our Service Provider Capex, Opex, ARPU, and Subscribers report.

Exhibit 20 Respondents Portion of 2010 Capex and Revenue n=23

29%30%

0%

10%

20%

30%

40%

Capex Revenue

Perc

ent o

f Wor

ldw

ide

Publ

ic C

arrie

r Tot

al

Source: Infonetics Research, Service Provider Capex, Opex, ARPU, and Subscribers:

By Provider Actuals and Short-Term Forecasts, Worldwide, June 2011





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Respondent service provider types and regional distribution

Respondents are geographically diverse, with a heavy bias toward EMEA. This is a reflection of where the majority of IMS activity has beenin our IMS Deployment Tracker (part of our IMS Equipment and Subscribers quarterly market share, size, and forecast service), 59% of operators are from EMEA.

Our sample is weighted toward incumbents, all of which also have a mobile operation. One of the competitive operators also has a mobile operation. The mix of carrier types reflects the market in EMEA, where incumbents have been on the leading edge of IMS adoption.

Exhibit 21 Respondent Service Provider Types and Regional Distribution n=23, 23

Cable operator

9%

Mobile22%Incumbent

56%

Competitive13%

North America

4%

EMEA79% Asia Pacific

17%

As always, I welcome your comments. Diane Myers Directing Analyst, VoIP and IMS +1 (408) 583.3391 [email protected]

Documents

2011 Infonetics IMS Service Pro: 2011-Infonetics-IMS-Service-Provider-Survey-06-22-11.vider Survey 06-22-11