leading performance drives growth

In a world increasingly dominated by high-performance mobile devices, ubiquitous cloud-based

services and video-based content, connectivity has never been more important, and a whole new kind

of IP network is required to deliver the kind of quality experience that users expect.

4th Generation IP (4G IP) networks are service-aware and access-agnostic. They have the

smartness, simplicity, scalability and superior performance required to meet user expectations, build

loyalty, and deliver profitable lifetime revenue.

ericsson White paperUen 284 23-3209 | October 2013

4th Generation IP

4Th GeneraTIOn IP • MeeTInG new-GeneraTIOn needs 2

Meeting new-generation needssmart devices, broadband access and cloud-based services are a natural part of the lives of

many people and businesses. User expectations of modern devices and services have risen

dramatically, and the fact that near-ubiquitous coverage and seamless connectivity are available

is often taken for granted. People expect near-immediate access to applications and media,

including video, audio and file transfers, more or less everywhere: at home, at work, in public

spaces and while traveling.

Today’s internet-savvy users – who are

accustomed to using wi-Fi access, over-the-

top (OTT) services, social media and

internet-based tools “for free” – are

increasingly aware of the value they get from

their fixed and mobile broadband

subscriptions. Users expect services to be

reliable and adapted to their needs, tastes

and budget.

network operators are no longer in sole

charge of the services delivered to users.

Many services like video on demand (Vod)

are now provided directly by application

service providers (asPs) and content

providers – with no ties to connectivity or

subscription. however, changing demands

and increased network use by both people

and connected machines require much

closer interworking among devices,

applications and networks. This calls for

networks with evolved capabilities, and new

relationships between operators, asPs and

content providers.

To support the growth and rising expectations of consumers and enterprises, operators need

a new kind of network. Capacity expansion alone is no longer enough for IP networks, because

when everyone and everything is connected, requirements placed on the network become more

diverse. To secure the potential of mobile broadband, the shift to video- and cloud-based

applications, and machine-to-machine (M2M) and people-to-machine (P2M) communications,

the design and construction of IP networks need to be rethought. To secure profitable growth

and value for operators, 4G IP networks need to become user-experience centers – enabled by

network and business model innovation.

The guiding principles for networks are:

> smart – to support service differentiation and evolved business models

> scalable – to improve time to market and ensure economic use of resources

> simple – to manage growing technical complexity and enhance productivity.

networks need to be able to provide superior performance for every client – be it a person, a

machine or an application.

DevicesDevicesApplicationsApplications

NetworkNetwork

Figure 1: Interworking among devices, applications and networks.

4Th GeneraTIOn IP • GreaT exPeCTaTIOns 3

Great expectationsas the networked society takes shape, operators face three basic challenges:

> rising subscriber expectations – driven by the rapid adoption of broadband-enabled

smartphones, tablets and other devices

> a fast-evolving commercial landscape with new business models – enabled by connectivity

> exponential growth in data traffic – driven by rising numbers of subscribers and the increasing

popularity of video.

Overcoming these challenges impacts both technical operations and the commercial aspects

of service provision.

Users demand more

Consumer and enterprise users expect to be well connected everywhere they go. The need for

constant connectivity is becoming more critical as people use mobile broadband more, and use

more connected devices to carry out tasks like accessing work-related information and

communication, managing household appliances, implementing home security, and remotely

controlling electrical and air-conditioning systems.

a study carried out by ericsson ConsumerLab [1] shows that enhancing the user experience

is key to subscriber retention. The study showed that network performance has the greatest

influence on user satisfaction, and that

increasing the satisfaction level of a user from

medium to high reduces churn risk by more

than 50 percent.

however, as shown in Figure 2, the telecoms

industry lags behind other major industries in

terms of brand loyalty – when measured using

the net Promoter score (nPs) metric. This

loyalty gap could be attributed to increased

commoditization – or at least that subscribers

do not recognize any differentiation among

operators or their offerings.

Yet the ericsson ConsumerLab study found

that around one-third of smartphone users

encounter problems daily when browsing or

using apps, and two of the top four loyalty

drivers relate to value for money and the types

of tariff plans offered. These findings suggest that there is an opportunity for operators to increase

service differentiation and personalization based on performance and other value drivers.

Many businesses rely on access to the internet, and so performance issues have the potential

to be extremely costly in terms of lost business and reputational damage.

Fixed and mobile networks need to perform to provide just the right level of app coverage

(high probability of delivering targeted performance level anywhere in the network) to meet user

expectations and maintain loyalty. To achieve the right balance, network performance needs to

be addressed end-to-end: from content server to access network.

evolving landscape

The ICT landscape is changing – applications and services are being offered in new ways,

delivered to users directly over the network by content, IT or software providers and aggregators.

In this model, the ability for operators to create value beyond basic connectivity is limited.

Opportunities and challenges are natural consequences of change. The evolving landscape

impacts the role of the operators in terms of their position in value chains, what products and

services they offer, who will buy them, and what business models will be used.

RetailingRetailing

NPS benchmarks for US industry groups 2012. Source: Satmetrix 2012, Study of US consumers.NPS benchmarks for US industry groups 2012. Source: Satmetrix 2012, Study of US consumers.

Online servicesOnline services

TechnologyTechnology

Travel/hospitalityTravel/hospitality

Financial servicesFinancial services

InsuranceInsurance

TelecommunicationsTelecommunications

-40-40 -20-20 00 2020

26265050

7373

13134646

7676

663737

7171

-9-92828

6666

-15-152424

8383

-15-152323

7474

-21-211111

3838

4040 6060 8080 100Percent (%)

100Percent (%)

Figure 2: nPs benchmarks for Us industry groups.

4Th GeneraTIOn IP • GreaT exPeCTaTIOns 4

Future networks need to be able to generate revenue from traffic that is outside the direct

control of the operator. They need to be able to identify and capture new value chains and

additional sources of revenue, and they need to be agile – adapting quickly to new applications,

traffic patterns and charging models.

The foundation of operator-provided services will be based on more advanced connectivity

offerings, supporting differentiated services and multiple business models in a flexible way, which

will enable expansion into new areas and create new value chains.

exponential growth

In 2012, worldwide mobile subscriptions rose by 1.2 billion to 6.3 billion. Video is the dominant

segment of data traffic in mobile networks, with growth expectations of 60 percent annually up

until the end of 2018 [2]. In the same year, app downloads doubled so that more apps were

downloaded than in the previous five years combined [3].

The amount of data that users consume is also on the rise as video and music streaming

becomes more popular and the execution of applications becomes cloud-based. In 2012, total

monthly mobile data traffic doubled to 1.2GB, up from 600MB in 2011 [2].

The rising demand for access in mobile networks in turn places new demands on the

backhaul network in terms of capacity and utilization. It is not just pure bandwidth capacity

to meet users’ needs that is required; signaling capacity is also becoming a challenge. In

april 2013, ericsson tested a mobile network in asia, clocking the total number of daily

signaling transactions at 1.75 billion, with a total of 2.55 million sessions – which is equivalent

to an average of 690 transactions per user per day.

as more devices become connected, more services and applications will be constantly

connected to the network. and while not every device consumes large amounts of bandwidth,

the challenge of scale remains – to manage the huge number of additional subscriptions.

Innovative solutions like virtualization of home gateway functions expose every single device

connected in the home to the network for personalized and customized treatment. while this is

good for users and can be monetized by operators, the challenge of scaling IP networks to

manage the increase in clients will need to be overcome.

as fixed and mobile access speeds increase with the deployment of LTe and fiber-based

access systems, backhaul and metro networks may become capacity bottlenecks. For example,

10 percent of mobile broadband downloads were restricted to a maximum speed of 2Mbps in

a european operator network – a limit imposed by the legacy backhaul network, not by the radio

access network.

with the right infrastructure and business models in place, network operators have an

opportunity to boost user satisfaction, reduce churn, and to develop revenue growth by offering

performance guarantees to content providers and other partners.

4Th GeneraTIOn IP • redeFInInG IP neTwOrkInG 5

Redefining IP networking The architectures of the first two generations of IP networks were centered on host-to-host or

network-to-network connectivity. Third-generation networks were mainly built to support the

internet boom of the past decade and provide user-to-network access over a fixed connection.

Today’s users connect to networks through a multitude of devices everywhere they go.

Connectivity is now also about users connecting to users and the cloud, and machines connecting

to other machines, in more innovative and social ways. whether the connection is fixed or mobile,

the cornerstone of this transformation is a common, converged, end-to-end IP network.

To create new value and generate additional revenue streams, IP networks need to be able to

deliver more personalized services, and to be aware of different types of users, their devices,

content and locations. Value is no longer measured in terms of routers and routing, it is about

applying the appropriate packet transport technologies to reduce network costs, while adding

intelligence – such as policy control features at the edge – closer to the user.

naturally, networks need to continue to scale and grow, which involves not only increasing

raw capacity, but implementing a distributed approach for managing video traffic, as well as the

rising numbers of IP sessions, mobile apps, subscriptions and devices – a signaling challenge

that will require additional scale in the control plane.

so what is 4G IP networking? For users, it is the ability to personalize services; for operators,

it is increased revenue. 4G IP caters for the new reality of subscriber mobility – constant and

instant access to cloud-based applications – and effective monetization of capital investments.

It is essentially a new way of looking at network requirements, through the lens of the operators

and subscribers, in the face of three new realities:

> a smart world built on smart connectivity

> connectivity defined in terms of coverage, capacity and capabilities

> business model innovation to correlate value to bits.

smart ip networks

Industry direction

IP networks that incorporate smartness and awareness – in multiple dimensions – are critical to

meeting demand for improved user experience, resource optimization, security, monetization

and ecosystem enablement.

To offer personalized and differentiated treatment for subscribers and applications, networks

need to be service- and application-aware combined with policy control and charging.

evolving IP networks will be resource-aware and have the ability to optimize resource usage

based on current traffic conditions – from the content server to the access network. evolved

networks will be more device-aware, supporting personalization of the user experience and

resource optimization. networks will be aware of transport conditions for content being streamed

on a device, and will be able to transcode or optimize content accordingly. The network and

evolving business models will be able to build on and monetize location awareness.

with growing personalization and more personal content stored in the cloud, secure access

will be a major design requirement for the 4G IP network. network smartness will extend to

providing seamless access across multiple devices and technologies, whether fixed broadband,

3G, 4G or wi-Fi.

smarter architectures include cloud-based and customer-centric services placed in the

network. examples of this include network-based virtual home and enterprise gateways, content

delivery networks (Cdns) and caching functionality.

service provider software-defined networking (sP-sdn) will shorten time to market and enhance

the ability to differentiate, enabling complex services that are difficult for competitors to copy to

be deployed faster and at a relatively low initial cost. sP-sdn will also enable services to be

exposed to transform the IP network to a service enablement platform, as shown in Figure 3.

4Th GeneraTIOn IP • redeFInInG IP neTwOrkInG 6

smart networks enable operators to offer content providers and social network players

increased reach, as well as the ability to create tailored packages, with varying levels of

prioritization, advertising and data allowances.

Industry examples

some innovative operators are already finding new ways to monetize their broadband

networks, including partnerships with OTT service providers.

strategies vary and can include undifferentiated broadband access, tiered flat-rate plans,

shared plans (including parental control) and

premium (prioritized) plans; access to

popular add-on services such as on-demand

music or zero-rated unlimited access to

social networks; and pay-as-you-go

prioritized access to the internet or to a

particular media service, or unlimited access

at certain times of the day.

The ability to provide a range of services

improves network utilization and allows for

more opportunities for upselling, reduces the

risk of churn and improves user lifetime value

– while giving the subscriber more

personalized access to the services they

want matched with a willingness to pay.

For example, a southeast asian operator

has boosted mobile-broadband revenues by

providing differentiated consumer packages.

In the first phase, unlimited offers were

complemented with specific social

networking products, as well as more

granular, small denomination prepaid

offerings. In the second phase, many of the

subscribers that were introduced to internet services through entry prepaid packages signed

up for more advanced postpaid-offerings. The campaign resulted in a 45 percent increase

in subscribers and a 23 percent increase in revenue, with profitability maintained, over a

two-year period. The smart IP network was instrumental to the operator’s market success

and product packaging.

scalable ip networks

Industry direction

The ability to scale in multiple dimensions – to cater for say more traffic, increased signaling,

greater numbers of devices and subscriptions, and wider coverage – in the mobile packet

core and IP edge parts of networks is key.

In 4G IP backhaul networks, fiber will be used further into the access network, while

microwave links are ideal for small-cell deployments. This evolution of the backhaul requires

solutions that can combine microwave and fiber with the IP functionality needed for both

fixed and mobile backhaul.

The increases in the number of network elements and end points, a key network capability

will be self-reconfiguration – with efficient provisioning, self-organizing networks (sOn)

capabilities, and cost-effective maintenance.

Technologies like sP-sdn, which transform the network into a real-time programmable

entity, will enable scalability in service creation and will be the catalyst for large-scale

personalization in 4G IP networks. Virtualization of network functions will support network

scalability, primarily by distributing functionality throughout the network.

as video traffic grows exponentially, a crucial aspect of scaling will be the continued

evolution of Cdns and superior caching solutions that optimize video delivery and boost

efficiency in the transport and aggregation network. Optimizing content distribution in this

way can reduce network traffic by up to 20 percent.

3G/LTE3G/LTE Wi-FiWi-Fi TransportTransport

Open interfaceOpen interface

Software defined networking control layerSoftware defined networking control layer

Open programmable interfacesOpen programmable interfaces

Open tothird-party

networkelements

Open tothird-party

networkelements

Open to third-party

apps

Open to third-party

apps

Core appslibrary

Core appslibrary

OtherappsOtherapps

RouterRouter EdgeEdge DatacenterData

center

Service exposureService exposure

Figure 3: Transforming the network into a service enablement platform.

4Th GeneraTIOn IP • redeFInInG IP neTwOrkInG 7

Industry examples

a service provider in Oceania has

experienced an annual two-fold growth in

mobile traffic. To meet this demand, the

service provider deployed new packet core

technologies with higher capacity, triple

access and resource pooling, resulting in a

30 percent reduction in the number of nodes

needed in 2011, and a 36 percent reduction

in 2012.

In north america, several operators have

deployed large-scale IP-based LTe backhaul

using a combination of microwave and fiber

deployments. These evolved architectures

scale flexibly to cater for rapid traffic growth

as well as rising numbers of end points.

ericsson has demonstrated that features

like smart adaptive paging can help to

manage the increase in signaling

experienced by the mobile packet core as

a result of increased use of mobile apps. This feature reduces signaling load – by as much as 90

percent – compared with the traditional way of managing paging, as shown in Figure 4, and can

help reduce capital expenditure on mobile packet core components.

simple ip networks

Industry direction

In 4G IP networks, simplicity is about decoupling complexity from the expansion of capacity and

capabilities – in terms of technology, topology, operations and service creation. simplicity can

be enabled through:

> orchestrated management across multiple technologies and network domains

> seamless management of IP and optical network domains

> virtualization of functions across the network.

Using common orchestration for end-to-end

service management and operations,

administration and maintenance (OaM)

reduces opex for tasks such as provisioning,

monitoring and troubleshooting, while

improving time to market for new services

and boosting subscriber satisfaction.

end-to-end orchestration enables flexible

creation of services, cutting introduction

and modification cycles significantly and

removing innovation barriers. new

approaches to bandwidth planning, such as

intelligent capacity scheduling, user-driven

on-demand services and cost-effective

network expansion, support new business

models and help drive growth.

an end-to-end network management

system across IP and transport infrastructure

provides further efficiencies, develops greater responsiveness, and enables more reliable planning,

provisioning, turn-on, adaptation and control of new service connections.

emerging technologies like sdn and virtualization of network functions will be key to simplifying

the network. Provided with the ability to manage complexities in topology and service creation

programmatically, time to market for new services can be cut. Orchestrating networks with

advanced sdn applications such as service attachment automation will improve the user

experience, and also optimize resource utilization.

Number of eventsNumber of events

Feature activationFeature activation

Figure 4: a 90 percent reduction in paging events through the application of smart adaptive paging

NetworkNetwork

Distributed cloud execution environmentDistributed cloud execution environment

Service provider SDNService provider SDN

Orchestrationand

management

Orchestrationand

managementAppApp AppApp AppApp AppApp AppApp

DatacenterData

center

Figure 5: evolving the network and cloud for efficient service creation and delivery

4Th GeneraTIOn IP • redeFInInG IP neTwOrkInG 8

wide area networks (wan) and data center networks will be increasingly interdependent, with

overlapping architectural requirements, highlighting the need for end-to-end network and

integration expertise.

Industry examples

some vendors have already introduced evolved technology for IP service delivery, where multiple

network applications reside on a single platform. This trend is set to continue with the introduction

of virtualization technology and sP-sdn, which will create additional opportunities for innovation

in application development and execution.

an operator in Oceania has stated how applications like dynamic service chaining simplify the

entire service creation process and enable rapid time to market. This application eliminates

multiple static service chains for a number of high-touch functions – such as deep packet

inspection (dPI) – and for the intrusion detection system (Ids), which are inserted in the traffic

path after the packet gateway (PGw) or Broadband network Gateway (BnG).

replacing static service chains with flow-based switches that are controlled by a centralized

controller, and connecting the flow profiles to subscribers and applications, makes service

introduction a more agile process and introduces flexibility in the service control domain along

with increased efficiency in the data plane.

high performance ip networks

Industry direction

as connectivity in the world grows, the

network will become a significant

differentiator for bringing subscribers and

applications together, and delivering a

superior user experience.

The aim is to build superior-performing

end-to-end networks that are driven by

common orchestration and management

throughout the heterogeneous access

network (including small cells), the 4G IP

network and the cloud.

4G IP is critical to guarantee end-to-end

delivery. networks will evolve and improve

in terms of their ability to provide premium

and differentiated delivery for certain

content, applications or subscribers based

on smart capabilities. These capabilities will be scaled to be offered to the mass-market, on

account of the ability to remove the complexities of service personalization and creation.

Industry examples

some frontrunners are already capitalizing on the application of smart capabilities. By focusing

investment on superior network performance, these operators have been able to create substantial

gaps between their offerings and those of their competitors, along with improved financial returns.

The dramatic growth of video traffic has required optimization in the delivery of application-,

service- and screen-aware video. distributed Cdns are increasingly being deployed as are

acceleration features for applications such as video optimization, prioritization of paid content,

and zero-rated content for business applications.

In one carrier network in southeast asia, ericsson measured the time it took to load an

e-commerce website under three scenarios:

> directly from the origin server

> using traditional content acceleration methods

> combining traditional content acceleration techniques with end-to-end Qos enforcement in

operator networks – from the content servers to the user terminal.

as Figure 6 shows, the combined solution results in page load times that are almost 10secs

lower during peak hours.

Web page load time (s)Web page load time (s)

112233445566778899

101011111212131314141515

07:0007:00 11:0011:00 15:0015:00 19:0019:00 23:0023:00

QoS enhancedcontent accelerationQoS enhancedcontent acceleration

Directly fromorigin serverDirectly fromorigin server

Traditionalcontentacceleration

Traditionalcontentacceleration

Figure 6: Improving page load times through dynamic site acceleration and mobile content acceleration.

4Th GeneraTIOn IP • COnCLUsIOn 9

CONCLUSIONThe new era of 4G IP networking is founded on the creation of a network with the scale and

scope required to satisfy the demands of an increasingly connected world. superior-performing

networks that are smart, scalable and simple enable operators to adapt to new usage patterns

easily, and meet the performance requirements that result from changing subscriber behavior.

By delivering a highly personal, reliable and consistent user experience 4G IP networks will help

operators to create value and new revenue streams

By reassessing IP network design plans based on the expected demands and thinking beyond

capacity expansion, operators are in a prime position to benefit from the open opportunities of

the networked society, creating and monetizing new forms of differentiation.

4Th GeneraTIOn IP • GLOssarY 10

GLOSSARYasp application service provider

bng Broadband network Gateway

cdn content delivery network

dpi deep packet inspection

ids intrusion detection system

m2m machine-to-machine

nps net Promoter score

oam operations, administration and maintenance

ott over-the-top

p2m people-to-machine

pgw Packet data network Gateway

sdn software-defined networking

son self-organizing networks

sp service provider

vod video on demand

wan wide area network

4Th GeneraTIOn IP • reFerenCes 11

References1. ericsson, June 2013, keeping smartphone Users Loyal – assessing the impact of network performance on

consumer loyalty to operators. available at:

http://www.ericsson.com/res/docs/2013/consumerlab/keeping-smartphone-users-loyal.pdf

2. ericsson, June 2013. ericsson Mobility report. available at:

http://www.ericsson.com/ericsson-mobility-report

3. Portio research, 2013, Mobile applications Futures 2013-2017. available at:

http://www.portioresearch.com/en/major-reports/current-portfolio/mobile-applications-futures-2013-2017.aspx

4Th GeneraTIOn IP • addITIOnaL readInG 12

Additional readingericsson, 2013, Growth Codes – how operators turn data growth into profitable revenue growth.

available at: http://ericssonfilm.com/unplug/erICssOn_discussion_Paper_Brochure.pdf

ericsson, 2013. app Coverage – rethinking network performance for smartphones.

available at: http://www.ericsson.com/res/docs/whitepapers/wp-app-coverage.pdf

© 2013 ericsson aB – all rights reserved