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Research

Publication Date: 30 July 2010 ID Number: G00205256

© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution o f this publication in any formwithout prior written permission is forbidden. The information contained herein has been obtained from sources believed tobe reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. AlthoughGartner's research may discuss legal issues related to the information technology business, Gartner does not provide legaladvice or services and its research should not be construed or used as such. Gartner shall have no liability for errors,omissions or i nadequacies in t he information contained herein or for interpretations thereof. The opinions expressed hereinare subject to change without notice.

Hype Cycle for Communications Service Provider Infrastructure, 2010

Peter Kjeldsen

This report covers key technologies for communications service provider networks in thelight of the austere economic conditions under which continued innovation toward higher bandwidth, more mobility and increased use of video must be realized.



Publication Date: 30 July 2010/ID Number: G00205256 of 84

© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved.

TABLE OF CONTENTS

Analysis ......................... ........................ ......................... .......................... .......................... ......... 4 What You Need to Know .......................... ......................... ........................ ....................... 4 The Hype Cycle ............................................................................................................... 5

Major Changes to the 2010 Hype Cycle ......................... ........................ .............. 6 Notable Positioning Changes ....................... ......................... .................. 6 New to the Hype Cycle............................................................................ 7 Deleted from the Hype Cycle ............................ ........................ .............. 8 Renamed Entries .................................................................................... 8

The Priority Matrix ....................... ........................ .......................... ......................... ........ 10 Off The Hype Cycle........................................................................................................ 11 On the Rise ................................................................................................................... 12

WiMAX 802.16m ............................................................................................... 12 3D TV Services ................................................................................................. 13 LTE-A ............................................................................................................... 15 CMTS Bypass ................................................................................................... 16 Smart Antennas ................................................................................................ 17 100 Gbps Transport .......................................................................................... 18 802.22 ............................................................................................................... 19 WDM PON ........................................................................................................ 19 White Spaces: Unlicensed Spectrum TV............................................................ 20

At the Peak ......................... ........................ ......................... .......................... ................ 21 RF Over Glass .................................................................................................. 21 Rich Communication Suite ................................................................................ 23 Self-Organizing Networks ........................ ......................... ......................... ........ 26 VoIP Wireless WAN .......................................................................................... 27 4G Standard ...................................................................................................... 28 Convergent Communications Advertising Platforms ....................... .................... 29

Addressable TV Advertising .................................... ........................... ............... 32 Public Cloud Computing/the Cloud .................................................................... 34 Network Sharing .......................... ......................... ........................ ..................... 35

Sliding Into the Trough ................................................................................................... 37 10G PON .......................................................................................................... 37 TD-LTE ............................................................................................................. 38 Next-Generation Service Delivery Platforms .......................................... ............ 39 Long Term Evolution ......................................................................................... 42 Femtocells......................................................................................................... 44 IMS ................................................................................................................... 46 MPLS-TP .......................................................................................................... 47 40 Gbps Transport ............................................................................................ 48 Broadband Over Power Lines ........................... ......................... ........................ 49 802.11r-2008 ..................................................................................................... 50 WiMAX 802.16e-2005 ....................................................................................... 50 IPTV.................................................................................................................. 52 802.11n ............................................................................................................. 53 HSPA+ .............................................................................................................. 55 Mobile Application Stores .................................................................................. 56 VDSL2 .............................................................................................................. 58

Climbing the Slope ......................................................................................................... 60 DOCSIS 3.0 Cable ............................................................................................ 60 Network DVR .................................................................................................... 61





Switched Digital Video ......................... ......................... ......................... ............ 63 FTTH ................................................................................................................ 64 MPEG-4 Advanced Video Coding ......................... ......................... .................... 66 TD-SCDMA ....................................................................................................... 68 High-Speed Uplink Packet Access ........................ ......................... .................... 69 Mobile TV Broadcasting .................................................................................... 69 GMPLS/ASON .................................................................................................. 71 Interactive TV .................................................................................................... 72 Mobile TV Streaming ......................................................................................... 74 Next-Generation Voice ...................................................................................... 75 ROADMs ........................................................................................................... 76

Entering the Plateau ...................................................................................................... 77 Residential VoIP .......................... ......................... ........................ ..................... 77

Appendixes ......................... ........................ ......................... .......................... ................ 80 Hype Cycle Phases, Benefit Ratings and Maturity Levels ..... ........................... .. 82

Recommended Reading ............................................................................................................. 83

LIST OF TABLES

Table 1. Hype Cycle Phases....................................................................................................... 82 Table 2. Benefit Ratings ............................................................................................................. 82 Table 3. Maturity Levels ............................................................................................................. 83

LIST OF FIGURES

Figure 1. Hype Cycle for Communications Service Provider Infrastructure, 2010........................... 9 Figure 2. Priority Matrix for Communications Service Provider Infrastructure, 2010 ..................... 11 Figure 3. Hype Cycle for Communications Service Provider Infrastructure, 2009......... ................ 80





ANALYSIS

What You Need to Know

The world of communications service providers (CSPs) has been changing fast, with these

companies and their suppliers trying to reposition themselves in the light of shifts in thecompetitive landscape and trends in end-user behavior associated with the rise of mobile andfixed broadband services.

An apparent disconnect exists between the CSP investment climate and the traffic growth thatnetworks are facing. CSPs do realize the imperative of transforming their networks, businessmodels and organizations. However, in the current economic climate CSPs, like most other organizations, focus more on near-term risk than on longer-term risks and opportunities. In thecurrent climate the imbalance between short- and long-term investments is even stronger thanusual. Most CSPs are focusing on short-term impact, which offers limited room for truedifferentiation. Those CSPs that in the current climate can make the right long-term investmentsthat align services, network and underlying business models to a durable long-term vision withsustained differentiation— taking into account the threats and opportunities related to theemerging public cloud — stand a real chance of breaking away from their competitors.

With CSPs hesitating to invest, especially in developed markets, uncertainties relating toadvanced technology adoption are increasing, putting some technologies in a limbo that presentsserious challenges for technology providers. New business models centered on network sharingcan reduce CSPs' spending in certain segments, adding to the pressure that technologyproviders are facing. These providers' long-term success, perhaps even survival, will depend onhaving the right next-generation solutions ready at the right time. However, in the short term theymust rely largely on CSPs' incremental investment in established technologies, as thesecustomers still haven't fought off the effects of the financial crisis.

Most technologies have been subject to less hype over the past couple of years than what wouldhave been the case in healthier economic conditions. But one group of technologies has actuallybenefited from the financial crisis, at least in relative terms when compared with other technologies. These are the technologies either climbing the Slope of Enlightenment or taking

their first steps on the Plateau of Productivity, and which offer CSPs a quick return on their investment. They include High-Speed Uplink Packet Access (HSUPA), network digital videorecorder (DVR) and mobile application stores.

One result of the financial crisis is that many technologies are piling up at the Trough of Disillusionment. Investors, technology providers and CSPs should position themselves tocapitalize on these technologies.

CSPs' adoption of any new technology is determined by how well it offers solutions to one or more of the tough challenges that CSPs face:

Austere economic climate. Across regions CSPs are favoring investments in near-term opportunities with acceptable financial exposure rather than more risky longer-termstrategic investments (for example, very-high-bit-rate DSL [VDSL] versus fiber to the

home [FTTH]). This pragmatic shorter-term focus ripples through the value chain, withvendors generally responding by focusing on low-risk, in-demand technologies.

Changing competitive landscapes. CSPs and technology providers face changingcompetitive landscapes, driven by consolidation, globalization, innovation, evolvingconsumer behavior and a changed financial environment. Competition is arriving inmany forms and from all directions — both traditional and nontraditional competitors





(such as Google and Skype) are seeking a share of the fast-changing market for communications, entertainment and information services.

Network and business model transformation. Most CSPs are transforming both their business models and their networks to become more cost-effective, prevent customer churn and increase revenue by offering new types of service. CSPs that fail to innovatemay not survive— but CSPs that decide on the wrong type of transformation, or that get

the timing wrong, may find themselves in equally dire straits, even before more passivecompetitors do.

Bit-wise economies of scale. To succeed, CSPs will have to implement networkarchitectures that enable them to achieve competitive levels of "bit-wise economies of scale." That is to say, networks must be built and operated in ways which ensure that,year after year, as more traffic is handled, the cost per transmitted bit decreases,keeping a cap on the total network cost. CSPs that fail to do this will gradually becomeless competitive as a result of higher network costs and inferior network performance.Bit-wise economies of scale represent a key factor in making cloud computingeconomically feasible.

Network ecology of scale. CSPs will also have to consider how environmentallyfriendly their network architectures are, defined in terms of energy efficiency and carbonfootprint

—not only in terms of where they are today, but also in terms of where they are

heading as the bandwidth requirement for networks continues to grow. They mustassess which technologies, architectures and solutions will deliver the right "ecology of scale" as network capacity increases.

Emerging market opportunity. Emerging markets are responsible for an increasingpercentage of worldwide spending on CSP infrastructure (spending outside North

America, Western Europe and Japan accounts for an estimated 55% of the globalcarrier network infrastructure market in 2010, compared to 47% in 2005). This situationcreates opportunities for technology providers, but also presents them with challengesthat they need to address.

When addressing the issues listed above, technology providers will increase their emphasis on

developing the software and service aspects of their product portfolios.

The Hype Cycle

Gartner's 2010 Hype Cycle for CSP infrastructure features both fixed and mobile carrier infrastructure technologies, as the technological underpinnings of both are increasinglyintertwined.

It is perhaps easiest to understand the technologies on the Hype Cycle and their potential impacton CSP infrastructure by categorizing them according to whether CSPs introduce them for reasons of cost, revenue, or both:

Technologies introduced based on cost-center considerations (includingperformance vs. cost). 100 Gbps transport, 40 Gbps transport, network sharing,

Multiprotocol Label Switching Transport Profile (MPLS-TP), 802.11n, GeneralizedMultiprotocol Label Switching (GMPLS)/Automatically Switched Optical Network(ASON), and self-organizing networks.

Technologies introduced to drive up revenue. Rich communication suite, voice over Internet Protocol (VoIP) wireless WAN, convergent communications advertisingplatforms, mobile application stores, addressable TV advertising technologies, next-





generation service delivery platforms, network DVR, IPTV, mobile TV broadcasting,mobile TV streaming, interactive TV and 3D TV services.

Technologies introduced for reasons of both cost and revenue. Cable modemtermination system (CMTS) bypass, Long Term Evolution Advanced (LTE-A), smartantennas, radio frequency (RF) over glass, 10G passive optical network (PON),wavelength division multiplexing (WDM) PON, fourth-generation (4G) standard,

femtocells, HSUPA, reconfigurable optical add/drop multiplexers (ROADMs), Long TermEvolution, very-high-bit-rate DSL 2 (VDSL2), WiMAX 802.16e-2005, IP MultimediaSubsystem (IMS), 802.11r-2008, MPEG-4 Advanced Video Coding, switched digitalvideo, Time Division-Synchronous Code Division Multiple Access (TD-SCDMA), Data-Over-Cable Service Interface Specification (DOCSIS) 3.0 Cable customer premisesequipment (CPE), FTTH, next-generation voice, residential VoIP, broadband over power lines, WiMAX 802.16m, TD-LTE, High-Speed Packet Access Evolution (HSPA+), white

The technologies that have progressed most on the Hype Cycle, despite the tough economicclimate, come from all three of the above categories: new revenue streams (network DVR andmobile application stores), improved performance vs. cost (MPLS-TP and 40 Gbps transport),and a combination of both (femtocells, WiMAX 802.16e-2005 and HSUPA).

Major Changes to the 2010 Hype Cycle

Gartner's "Hype Cycle for Communications Service Provider Infrastructure, 2010" replaces the2009 report of the same name. As is always the case, some technologies have been deleted andsome added— both sets are listed below. We also list those technologies that have seennoticeable change since last year's report.

Notable Positioning Changes

Most of the technologies have changed position since the 2009 iteration of the Hype Cycle,though most of them only slightly. Some, however, have changed position more substantially:

WiMAX 802.16e-2005. Now at the Trough of Disillusionment (last year it was halfwaybetween the Peak of Inflated Expectations and the Trough of Disillusionment). This

technology has potential as a "last mile" access technology in emerging countries,especially where third-generation (3G) and next-generation communications or mediaservices have yet to be launched— this is the reason behind its change in position.

Network DVR. Now entering the Slope of Enlightenment (last year it was halfwaybetween the Peak of Inflated Expectations and the Trough of Disillusionment). IPTV andcable operators are interested in this technology as a way to provide value-addedservices to their customer base.

Femtocells. Halfway between the Peak of Inflated Expectations and the Trough of Disillusionment (last year it was close to the Peak of Inflated Expectations). Femtocellscould make mobile communications more pervasive and encourage more users toswitch over to mobile as their main means of communication. With cost-consciousconsumers in mind, CSPs around the world have been toying with the idea of femtocells, trialing or actually deploying them.

Mobile application stores. On their way out of the Trough of Disillusionment (last year they were at the Peak of Inflated Expectations). Application stores offer downloadableapplications to mobile users, mostly consumers, via a storefront that is either embeddedin the mobile handset or found on the fixed or mobile Web. Due to expectations that the





adoption of smartphones and high-end feature phones will increase, along with thepopularity of applications, we expect application stores to accelerate rapidly to thePlateau of Productivity in less than two years.

MPLS-TP. Approaching the Trough of Disillusionment (last year it was at the Peak of Inflated Expectations). CSPs are expected to welcome MPLS-TP as a standardizedtechnology for cost-effective transport solutions for carrier Ethernet services. MPLS-TP

is being standardized as a joint effort between the International TelecommunicationUnion (ITU) and the Internet Engineering Task Force (IETF).

40 Gbps transport. Approaching the Trough of Disillusionment (last year it was not yetat the Peak of Inflated Expectations). CSPs are rapidly adopting 40 Gbps transport asone of the key components in their efforts to cater cost-effectively to the continuedincrease in network traffic.

HSUPA. Now on the Slope of Enlightenment (last year it was halfway between the Peakof Inflated Expectations and the Trough of Disillusionment). HSUPA complements High-Speed Downlink Packet Access (HSDPA) by increasing upstream data bit rates andimproving latency on 3G cellular networks. The increased use of mobile data is the keydriver behind the position change of HSUPA.

In addition, it should be noted that two technologies have not moved since last year's report:

Convergent communications advertising platforms. A convergent communicationsadvertising platform is a scalable, multichannel set of interrelated applications andtechnologies used by CSPs to deliver targeted advertising services. Adoption of thistechnology in 2009 was poor, because of the retraction of the advertising market as wellas reduced investment by CSPs.

RF over glass. This standard is proposed as the cable network equivalent of FTTH. After build-outs of FTTH slowed in 2009 and 2010, the pressure for multiple serviceoperators to move beyond hybrid fiber-coaxial (HFC)-based technologies lessened inNorth America.

Further details of the reasons for the revised positions, and the reasons behind shifts since the

last report, are given in the individual entries in this Hype Cycle.

New to the Hype Cycle

The following technologies are new to the Hype Cycle:

WiMAX 802.16m. A proposed technology for next-generation high-speed services whichis being prepared and submitted to the ITU as a candidate for standardization for 4Gwireless communications.

TD-LTE. A cellular technology which is a time-division duplexing (TDD) version of LTE,and a successor to TD-SCDMA.

HSPA+. A cellular technology also known as HSPA Evolution and Evolved HSPA; the

abbreviation "HSPA" standing for High-Speed Packet Access, defined in The ThirdGeneration Partnership Project's (3GPP's) Release 7 specification.

802.22. An Institute of Electrical and Electronics Engineers (IEEE) standard for wirelessregional area networks using "white spectrum" in the unused guard bands in the TVfrequency spectrum.





3D TV services. Included because of the significant bandwidth implications that theseservices will eventually have on CSP networks.

Broadband over power lines. Included instead of wireline home networking (coaxialand power line) from last year's Hype Cycle. Deemed relevant as it is part of the solutionspectrum in the fixed broadband access landscape.

Mobile TV streaming. The popularity of YouTube and services such as MobiTV makesmobile TV streaming an important capability in CSP networks.

Self-organizing networks. A key feature of LTE networks — in the extreme, this wouldbe the network running and managing itself, while in practice it is likely to be usedgradually as an adjunct to human operators, starting with planning tasks.

Deleted from the Hype Cycle

The following technologies no longer appear on the Hype Cycle:

Cdma2000 1x EV-DO Rev. B. Obsolete before plateau on 2009 Hype Cycle, and notdeemed relevant for this year's report.

PBB-TE and T-MPLS. Obsolete before plateau on 2009 Hype Cycle, and not deemedrelevant for this year's report (see the section on MPLS-TP for additional backgroundinformation).

Wireline home networking (coaxial and power line). Deleted due to a change of scope— broadband over power lines is included instead.

Carrier Ethernet. Off the Hype Cycle as a result of technology maturity.

HSDPA. Off the Hype Cycle as a result of technology maturity.

MPLS infrastructure. Off the Hype Cycle as a result of technology maturity.

Next-generation SDH/SONET. Off the Hype Cycle as a result of technology maturity.

WDM. Off the Hype Cycle as a result of technology maturity.

Renamed Entries

No entries have been renamed on this year's Hype Cycle.





Figure 1. Hype Cycle for Communications Service Provider Infrastructure, 2010

Source: Gartner (July 2010)





The Priority Matrix

A characteristic feature of the Priority Matrix is that there are no transformational technologieswith less than two years to mainstream adoption. This reflects the strong momentum of the CSPinfrastructure market and the inherent difficulty in transforming networks quickly.

As the Priority Matrix shows, seven of the included technologies are transformational in nature.Their transformational aspects relate to network performance (FTTH, LTE and TD-LTE), theability to create new services (next-generation service delivery platforms) and changed businessmodels (network sharing and VoIP wireless WAN). These are technologies that will make thenetworks of 2015 to 2020 very different from those we know today.

The Priority Matrix also shows a number of technologies that are expected to have a high impactthat will reach the Plateau of Productivity in less than two years. These technologies relate tobasic network cost and performance (HSUPA), or enable new services and revenue streams(mobile application stores, MPEG-4 advanced video coding, next-generation voice and residentialVoIP). These technologies will have a noticeable impact on CSP networks by 2012.

Further details of the reasons for the technology positions in the Priority Matrix are given in theindividual entries in this document.





Figure 2. Priority Matrix for Communications Service Provider Infrastructure, 2010


Off The Hype CycleMature technologies and standards that are off the Hype Cycle include cdma2000 1 x EV-DORev. B, PBB-TE and T-MPLS, wireline home networking (coaxial and power line), carrier Ethernet, HSDPA, MPLS infrastructure, next-generation SDH/SONET and WDM.





On the Rise

WiMAX 802.16m

Analys is By: Phillip Redman; Joy Yang

Definit ion: WiMAX 802.16m is a proposed technology for next-generation high-speed services. It

is being prepared and submitted to the International Telecommunication Union as a candidate for standardization for International Mobile Telecommunications-Advanced (IMT-Advanced), or fourth-generation (4G), wireless communications. The specification continues to evolve, butcurrently includes a 100 Mbps downlink in mobile situations and a 1 Gbps downlink in nomadicsituations. The group behind the proposal— the Institute of Electrical and Electronics Engineers(IEEE) 802.16 broadband Wireless Access Working Group— has defined the main principles for ".m." These include backward-compatibility with the WiMAX 802.16.e-2005 standard, support for spectrum up to 100MHz, multiple input/multiple output (MIMO), and time divisionduplexing/frequency division duplexing (TDD/FDD) mode. A final vote planned for 4Q09 wasdelayed until 2H10. However, proposals leading toward backward compatibility and a newdesignation of 802.16m to be called "WiMAX 2" were announced in April 2010, with targetedproducts to become available by 2011.

As well as meeting the requirements for 4G mobile networks and ensuring backward compatibilitywith existing WiMAX technology, the WiMAX 802.16m working group aims to achieve:

High spectral efficiency and voice over Internet Protocol (VoIP) capacity, leading to datathroughput rates of up to 1 Gbps.

Improved cell coverage, with "optimized" performance within 5 km, "graceful"performance at 5 km to 30 km, and "functional" performance at 30 km to 100 km.

Better handover capabilities than 802.16e when users are on the move — thetechnology should be able to maintain connections even when people are traveling invehicles at speeds of 120 km/h to 350 km/h.

The key technologies used in WiMAX 802.16m are orthogonal frequency division multiple access(OFDMA), MIMO, smart antennas, carrier aggregation, relay and intercell interference

coordination. WiMAX 802.16m is being developed to support TDD, FDD and half-duplex FDD (H-FDD) schemes, and to operate in licensed spectrum allocated for mobile and fixed broadbandservices and future IMT-Advanced services.

Posi t ion and A dopt ion Speed Jus t i f icat ion: WiMAX 802.16m continues to be delayed, even asits precursor, 802.16e-2005, experiences limited rollout and support. As many WiMAX operatorsare already indicating a migration to Long Term Evolution (LTE), there is a decreasing chancethat WiMAX 802.16m may ever be implemented, even if it is considered a true 4G alternative.During the past year, the industry has moved very little in finalizing the plans for the nextgeneration of WiMAX, as interest in third generation (3G) and 3G upgrades (sometimes known as"fourth generation" ["4G"]) take center stage, pushing off demand for true 4G technology tobeyond 2015.

User Advice: WiMAX technology will become more broadly available in some countries beforeLTE is rolled out. In the midterm, WiMAX technology likely will be subsumed by global LTEavailability. WiMAX 802.16e has appeal as a last-mile access technology for fixed broadbandnetworks in emerging markets; however, the business case for WiMAX 802.16m as a mobilesolution is not clear, unless it is chosen as the sole 4G technology, which is unlikely today assupport wanes and moves closer toward LTE Advanced.





Bus iness Impact: The IEEE plans to add features to WiMAX 802.16m to meet operators'requirements for quality-of-service management, location-based services, self-organization,security and interoperability with Wi-Fi networks and femtocells, among other things. This willimprove WiMAX's ability to advance from current IT-grade services to telco-grade services, whichwill help WiMAX's market position.

Assuming that the standard also supports full backward-compatibility, including network and

device support, for 3G cellular systems, WiMAX 802.16m could become a competitive alternativeto LTE Advanced systems and could be used as a wireline replacement in many cases.

Benefi t Rating: Moderate

Market Penetrat ion: Less than 1% of target audience

Maturi ty: Embryonic

Sample Vendors: Alvarion; Huawei; Intel; Motorola; Samsung; ZTE

3D TV Services

Analys is By: Fernando Elizalde

Definit ion: Three-dimensional television (3D TV) services deliver 3D images to television setsusing stereoscopic imaging, where two slightly different images are superposed and transmittedto each eye. There are several technologies currently used to deliver 3D images on televisionsets. They fall into two broad groups: the ones that require glasses and the ones that don't.

Posi t ion and A dopt ion Speed Jus t i f icat ion: The resurgence of 3D screening and theenormous commercial success of some recent 3D films have generated expectations around thedelivery of 3D content to the home television. Hollywood studios are interested in extending thereach of the cinema experience to the home, as this will create an additional pay-TV revenuestream for their growing portfolio of 3D content. For example, Walt Disney's Pixar subsidiaryannounced that it will produce all future content for 3D release. Similarly, Sony Pictures hasannounced several releases in 3D format, and other studios are talking about converting titles to3D and re-releasing them.

At the same time, TV service providers are looking for the next premium television experienceafter high-definition television (HDTV). Several broadcasters and pay-TV operators have beentrialling 3D TV services since mid-2009, with plans to go live sometime in 2010 (most noticeableamong these are U.S. sports broadcaster ESPN and British satellite TV operator Sky). The BBC,the U.K.'s public broadcaster, has also announced that it will film the 2012 London Olympics in3D. The agreement between FIFA (soccer's world governing body) and Sony, which provides themedia rights to film and broadcast up to 25 matches of the 2010 FIFA World Cup in South Africa,will have a more immediate impact.

Current 3D TV technologies present pay-TV providers with a relatively easy setup to deliver thenext significant consumer experience, compatible in some cases with 3D-ready HDTV set-topboxes already deployed in some consumers' homes. However, the ready to deploy technologiesrequire either the use of special glasses to view the content in 3D, or special glasses and a filter for the television screen (or even a new set), for an experience that ultimately may not be optimal.In any case, the lack of industry standards means that there will be only limited deployment onfragmented, proprietary platforms.

Understandably, consumer electronics vendors are heavily advocating 3D TV services so thatthey can introduce equipment to capture 3D content and products for the consumer household.





Several manufacturers have started to commercialize 3D-ready TVs in selected markets in timefor the 2010 FIFA World Cup and the planned launch of 3D TV services.

Most 3D services will consist of a single 3D channel for linear television, showing mixed contentrather than genre-dedicated channels. Broadcasters and pay-TV providers in geographies other than the U.S. and selected markets in Europe and Asia/Pacific will continue to concentrate onintroducing HDTV for the next three to five years at least.

Perhaps the biggest issue holding back anything like mass-market adoption is the need to wear special glasses to see the 3D effect, and the limited viewing angles at which one can appreciateit. 3D TV sets that don't require glasses won't be available at mass-market prices for many yearsto come.

User Advice: Early trials in the U.S., the U.K., France and a few other countries will provide agood early insight into how well consumers receive 3D TV services. Vendors and serviceproviders interested in this market must set up a process to keep track of how these trialsprogress, and remember that successful early trials do not always translate into commercialmass-market opportunities.

Industry players must set up industry standards quickly and avoid creating a market withfragmented technologies for 3D TV services.

Currently, the 3D content available for TV viewing is restricted to films, and is limited. There is astrong drive from film studios to release 3D content in the near future. The genres most suitablefor 3D viewing are horror, sports, action and children's animation, plus certain types of performance such as music and dance. These types of content are very suitable for video ondemand (VOD). The appeal of 3D for soap operas, situation comedies, reality shows and newsremains questionable.

Bus iness Impact: Until the adoption of industry standards, satellite TV operators will be bestplaced for 3D TV services, and will achieve the largest audiences. Since they are more likely tocontrol the satellite network to set-top boxes, they can decide on the type of 3D technology thatworks best with their installed base of HD set-top boxes, extending their life cycle in thosehouseholds with a 3D-ready HDTV set.

Consumer electronics manufacturers will rapidly introduce 3D-ready equipment and increaseproduction of this product type in the coming years. However, demand will be concentrated inmarkets where multi-TV-set households are starting to replace their second TVs and wheresports bars are popular.

Despite the hype, it is not clear that the consumer market is ready for 3D TV yet. However, for more specialized, less family-orientated content, for which people are willing to pay for better quality experiences (such as sports TV), 3D offers a chance for service providers to differentiatetheir services from their competitors and drive additional revenue.



Maturi ty: Emerging

Sample Vendors: ESPN; France Telecom; LG; Samsung; Sky; Sony

Recommended Reading: "Market Insight: 3D TV, Larger-Than-Life Expectations?"

"Dataquest Insight: 3-D TV; A Mass-Market Product or a Niche Technology?"





LTE-A

Analys is By: Sylvain Fabre

Definit ion: Long Term Evolution Advanced (LTE-A), the Third Generation Partnership Project(3GPP) Release 10, is supposed to be the first version that is fully compliant with the InternationalTelecommunication Union's Telecommunication Standardization Sector (ITU-T) specification for

fourth-generation (4G) systems. The targeted peak rate for downlink is 1 Gbps and for uplinkgreater than 500 Mbps for stationary devices. This should be achieved with scalable usage of upto 100 MHz of spectrum. LTE-A should support various cell types, including picocells andfemtocells, to improve uplink speeds, as well as relay technologies to improve coverage. LTE-Ashould be backward-compatible with LTE Release 8. Some functionality proposals include relaynodes, flexible spectrum usage and cognitive radio. Relays use over-the-air (OTA) links to macrobase stations as backhaul connection, so OTA backhaul will need to be taken into considerationwhen choosing between relay access and direct access. Backhaul could pose challenges, asdevices may get hundreds of Mbps— up to a theoretical limit of 1 Gbps — although noapplication today needs hundreds of Mbps per user, and most backhaul networks are not able tohandle 1 Gbps. It is also worth noting that direct access to macro base stations by user equipment in relay coverage may cause significant interference with relay base stations. Thescoping phase of LTE-A will be part of the ITU-T specification of 4G.

Posi t ion and A dopt ion Speed Ju st i f icat ion: LTE-A standardization is likely to be complete by2011 at the earliest. Therefore, certified infrastructure network equipment for LTE-A can beexpected 18 to 24 months after the standardization is complete, which means 2013. After 2013,trials, early commercial rollouts and upgrades to LTE systems will start, and mass-marketdeployment will happen during the following five years, until around 2018. However, the timelinefor LTE-A could slip and depends on the success of LTE, which may still take time, as adoption of a new wireless generation can easily take up to a decade, as was the case for Global System for Mobile Communications (GSM) and wideband code division multiple access (WCDMA).

User Advice: It is too early to plan for LTE-A for enterprises. Operators procuring LTE equipmenttoday should ensure that the equipment can be upgraded to LTE-A.

Bus iness Impact: LTE-A aims mainly for high-speed wireless data for low-mobility users.

Network sharing as a concept to save money for carriers will be part of LTE-A, and could lead tonew operational models of mobile networks. LTE-A also has some implications in relay functionsto create mesh networks and base station routing, which will minimize backhaul transport for nearby peer-to-peer traffic.

Benefi t Rating: High



Sample Vendors: Alcatel-Lucent; Ericsson; Huawei; Motorola; NEC; Nokia Siemens Networks;ZTE

Recommended Reading: "Magic Quadrant for LTE Network Infrastructure"

"Dataquest Insight: LTE and Mobile Broadband Market, 1Q10 Update"

"Emerging Technology Analysis: Self-Organizing Networks, Hype Cycle for Wireless NetworkingInfrastructure"

"Dataquest Insight: IPR Issues Could Delay Growth in the Long Term Evolution Market"





CMTS Bypass

Analys is By: Ian Keene; Juan Fernandez

Definit ion: Cable modem termination system (CMTS) bypass is an architecture that enables thedeployment of Internet Protocol television (IPTV) technology on a cable network. Thisarchitecture redirects video traffic away from the CMTS unit that handles the Internet Protocol (IP)

data traffic, and instead routes it through edge quadrature amplitude modulation (EQAM) unitsthat are significantly less expensive. As multiple service operator (MSO) architectures evolvetoward a converged model, the debate over the role of different elements is heating up. CMTSsare capable of providing IP-based video services like IPTV; however, converging the video anddata services implies significant upgrades to the capacity and functionality of CMTS units. In anattempt to address this challenge, an alternative approach has emerged that redirects videotraffic in IP form through EQAM elements that are significantly less expensive. This approachmaintains separate streams for video and data even if the video is delivered as IP-based video.

CMTS bypass delivers the video stream in IP form to Data-Over-Cable Service InterfaceSpecification (DOCSIS) 3.0 modems on a separate stream.

Posi t ion and A dopt ion Speed Jus t i f icat ion: There are a small number of deployments of CMTS bypass-based IPTV in existence as of mid-2010. None of these are by large cable

providers. The concept of delivering IPTV via cable networks is one of the approaches beingconsidered for the evolution of MSO architecture into a converged IP-oriented model. MSOs arefacing a dual challenge to their business models; on the one hand demand for high-definitioncontent is increasing and taxing the capacity of MSOs' broadcast video delivery architectures,and on the other hand competition from fiber to the x (FTTx)-based competitors is raising the bar in regard to consumers' expectations for data bandwidth delivery. CMTS bypass offers apotentially cost-effective alternative to addressing these issues. Large-scale implementations willlikely take a while to begin, and references from the leading-edge smaller service provider deployments will determine the ultimate success of this technology. In 2010, MSOs findthemselves still in the analysis stage for what eventual IPTV strategy evolution to pursue. So, it islikely that CMTS bypass will be limited to trials, a situation that may evolve very gradually duringthe next two to four years.

User Advice: Larger service providers should examine reference points from early adopters asthey consider CMTS bypass as one of a number of existing solutions for solving the challenges of bandwidth optimization and video delivery. While there may be some benefits to deploying CMTSbypass, the implementation and management process demand caution. Smaller players can bemore aggressive in deployment of the technology, since it offers some potential benefits at areasonable price point, and, with smaller footprints, integration and implementation risks are moreeasily mitigated.

Bus iness Impact: Smaller players will benefit from a strategy of service expansion that is cost-effective, as well as gaining mind share for deploying cutting-edge technology. In the mediumterm, this architecture may prove very beneficial in reducing costs by optimizing network capacityby offloading video traffic in IP format from the CMTS platforms. However, this offload does notapply to over-the-top (OTT) video which is the fastest growing type of video traffic in broadbandnetworks. Additionally, MSOs (as well as telcos) are looking at OTT video as a complementary

delivery tool for video programming as well, mostly as part of a convergence strategy. Thislimitation looms large as MSOs analyze their alternatives for moving to an IPTV architecture,something that seems inevitable at some point as convergence becomes a more important factor in the evolution of video delivery business models.






Market Penetrat ion: 1% to 5% of target audience

Maturi ty: Emerging

Sample Vendors: BigBand Networks; GoBackTV; Harmonic; Motorola

Smart Antennas

Analys is By: Deborah Kish

Definit ion: Smart antennas provide the signal-processing function behind antenna arrays. Thetechnology has two basic functions: beamforming and identification of the direction of arrival of signals. Beamforming in cellular networks has advanced through the various generations of mobile technology to reach higher-density cells with higher throughput. It has played an integralpart in the migration toward third generation networks.

Based on the calculation of the direction of arrival of the signal, smart antennas are able tooptimize the transmitter antenna beam, maximize the energy directed to the subscriber radio andminimize the energy radiated to other subscriber radios. Therefore, smart antennas can increasethe signal to interference and noise ratio, and the channel capacity. Determining the direction of the signal is important, because portions of the signal are scattered and late arrival of scattered

signals causes problems such as fading, cut-out and intermittent reception. The use of smartantennas can reduce, or eliminate, the trouble caused by multipath wave transmission.

Smart antennas can be considered as a space division multiple access technology which willsignificantly increase the capacity in the same spectrum. Currently, it is becoming a keytechnology in Time Division-Synchronous Code Division Multiple Access, WiMAX and Long TermEvolution (LTE). Smart antennas have become the basis of multiple input/multiple output (MIMO),especially in WiMAX and LTE. MIMO technology places multiple antennas at both the source andthe destination; eliminating the negative effects of multipath transmission. MIMO can also beadvantageous in femtocell deployment; enabling a femtocell to switch between providing highdata rates and strong transmission. Smart antennas are positioned as a low-cost alternative todeploying additional cell sites.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Wireless communications are increasing; due to

growth in subscription, provisioning of advanced new services and an increase in data andmultimedia traffic. The adoption of Apple's iPhone, and Android-based phones, has createdservices issues— due to the increased traffic from mobile Internet usage, mobile streaming videoand application store activity; as well as normal everyday Short Message Service data trafficusage. The pressure on communications service providers (CSPs) to provide more reliableservices to subscribers from a coverage perspective, as well as increased mobile usage, isleaving them increasingly compromised. CSPs need solutions that will assist with backhaul andtraffic offload. Smart antennas have been deployed in most large wireless carrier networks toimprove capacity and tackle overall quality of service (QoS) issues caused by increasing voiceand data traffic.

User Advice: Adding more antenna arrays, with smaller beam-width antennas, would help toimprove the capacity of the channel. However, it would also significantly increase the complexityof signal processing. In other aspects of telecommunications the notion of equipment sharing has

been a point of discussion, and it could be the same for smart antennas. Over time, smartantennas have extended additional applications to sharing; they can also be found as virtualantennas embedded in various residential wireless gateways. Wireless carriers can benefit fromsmart antennas to maximize spectral efficiency and provide improved coverage and QoS;reducing customer churn and increasing subscriber levels.

Bus iness Impact:





From a network perspective, smart antennas have been very useful in increasingchannel capacity.

If handset vendors could introduce the same technology into their devices, it wouldimprove radio performance and help to reduce the power consumption of the handset.

Increased broadband penetration may also provide adoption opportunities for smart

antenna technology in relation to femtocells.



Maturi ty: Emerging

Sample Vendors: Andrew; Antenova; ArrayComm; Westell; ZTE

100 Gbps Transport

Analys is By: Peter Kjeldsen

Definit ion: Updates to optical transport systems enabling the delivery of 100 gigabits per second

(Gbps) data rates per wavelength represent a tenfold increase over commonly deployed systemsin communications service provider (CSP) networks. Some of the same developments utilized for achieving 40 Gbps throughput are being used in 100 Gbps as well, but to maintain transmissiondistances, more advanced modulation schemes are being considered for 100 Gbps, withcoherent dual polarization quadrature phase shift keying (DP-QPSK) modulation beingemphasized by the Optical Internetworking Forum (seehttp://www.oiforum.com/public/documents/OIF-FD-100G-DWDM-01.0.pdf ). With further advancesin transceiver technologies and the push for even higher per-channel line rates in densewavelength-division multiplexing (DWDM) systems, it is possible that other advanced modulationschemes can play a role in +100 Gbps transport.

100 Gbps (as well as 40 Gbps) line rates are already standardized for Synchronous DigitalHierarchy/Synchronous Optical Network (SDH/SONET) and optical transport network (OTN) bythe International Telecommunication Union (ITU). The Institute of Electrical and Electronics

Engineers (IEEE) ratified the 802.3ba standard in June 2010 (seehttp://standards.ieee.org/announcements/2010/ratification8023ba.html), which will allow CSPs tocarry 40 Gbps and 100 Gbps Ethernet directly over transport networks supporting these linerates. This allows CSPs to consider the move to higher line rate systems in the wider context of what their future optical transport architecture should look like.

Posi t ion and A dopt ion Speed Jus t i f icat ion: 100 Gbps commercial trials are reported, with 100Gbps solutions clearly leveraging advances related to the realization of 40 Gbps commercialsolutions. However, to realize 100 Gbps solutions raises the bar in terms of more advancedtransceiver designs, and cost-effectiveness (cost per bit) of 100 Gbps solutions compared to 40Gbps is likely still a couple of years away. Production and development scale is still limited, butwe now expect that 100 Gbps will reach the Plateau of Productivity within the next five years.

User Advice: Evaluate the cost-effectiveness and maturity of the 100 Gbps technology vs. theneed for addressing traffic growth challenges.

CSPs should look at 100 Gbps wavelengths as part of architecture evolution rather than a simplecapacity upgrade, especially in the context of migration to OTN and increasingly Ethernet-centricnetwork architectures.

http://www.oiforum.com/public/documents/OIF-FD-100G-DWDM-01.0.pdf


http://standards.ieee.org/announcements/2010/ratification8023ba.html








Bus iness Impact: This technology will eventually offer cost-effective addressing of traffic growthissues, acting as enabling technology for the expansion of network capacity.



Maturi ty: EmergingSample Vendors: Alcatel-Lucent; Ciena; Huawei; Nokia Siemens Networks

802.22

Analys is By: Akshay Sharma

Definit ion: Institute of Electrical and Electronics Engineers (IEEE) 802.22 is a standard for wireless regional area networks using white space (the unused guard bands in the TV frequencyspectrum)— leveraging newer cognitive radio, to reuse unused spectrum for wireless broadbandaccess, and operating in the very high frequency/ultrahigh frequency TV broadcast bandsbetween 54MHz and 862MHz. This standard could lead to devices for broadband access viawhite space spectrum, and to newer communications service providers (for example, over-the-topproviders such as Microsoft and Google) entering this arena.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Initial drafts of the 802.22 standard specify that thenetwork should operate on a point-to-multipoint basis, whereby the system has a similar topologyto a base station and customer premises equipment (CPE)—much like a cellular network. Onekey feature of the wireless regional area network is that the CPE will be sensing the spectrum todetermine if newer channels should be used.

Manufacturers and users of semiconductors, PCs, enterprise networking devices, consumer electronic devices, home networking equipment and mobile devices should follow the progress of this standard.

User Advice: It is too early to plan for 802.22 devices.

Bus iness Impact: The main aim of utilizing white space is to provide access to high-speed

wireless data for low-mobility users.Benefi t Rating: Moderate



Sample Vendors: Dell; Google; HP; Microsoft; Samsung

WDM PON


Definit ion: Wavelength division multiplexing passive optical network (WDM PON) solutions are

characterized by: (a) the use of a passive fiber tree, as found in other PON technologies, and (b)the use of dedicated wavelengths for each user. The use of multiple wavelengths increases thecapacity of WDM PON systems beyond those where multiple users share the same wavelength,and the use of WDM splitters in the fiber tree means that any user only receives the intendedwavelength, which WDM PON suppliers emphasize as a security benefit over traditional PONarchitectures with shared wavelengths. However, the use of dedicated wavelengths requiresmore advanced optical components and, therefore, WDM PON suppliers face a cost challenge





that must be overcome before WDM PONs will find widespread use. While WDM PON hasbeaten 10G PON in terms of getting non-standardized products to the market, the standardizationof WDM PON is not as far along as is the case for 10G PON and it is uncertain when finalstandards can be expected.

WDM PON is being standardized by the International Telecommunication Union (ITU), supportedby the Next-Generation Access (NGA) initiative from the Full Service Access Network (FSAN)

group. WDM PON is being included as a candidate technology in the NGPON2 work withinFSAN.

Posi t ion and A dopt ion Speed Jus t i f icat ion: The challenge facing current-generationGPON/EPON technologies is more related to deployment cost than to limited capacity. With apremium cost related to the more advanced optical components, the most likely success scenariofor widespread deployments of the more advanced WDM PON solutions is an upgrade scenariounfolding when current-generation PON deployments start to run out of bandwidth or when theadditional cost of WDM PON becomes negligible from a total-cost-of-ownership perspective.WDM PONs will, in these scenarios, compete against 10G PON upgrade solutions — with thecombination of 10G PONs and WDM PONs being a potential long-term scenario. For a moredetailed discussion of the 10G PON and WDM PON, see "Emerging Technology Analysis: 10Gand WDM PON."

Some deployments of residential WDM PONs have already taken place in South Korea, andWDM PONs also have potential applications in the backhaul and business market segments.Despite this, the time it is expected to take for WDM PONs to reach the Plateau of Productivityexceeds the corresponding estimate for 10G PONs —mainly because of the expected pricepremium related to the more advanced optical components mentioned above. Indeed, beforeWDM can pass the Trough of Disillusionment, approved standards need to be in place and thetechnology needs to further mature to reduce the component cost.

User Advice: Make sure to include WDM PONs when evaluating future network scenarios, andexpect relatively steep price erosion as the optical technology matures and crystallizes intostandard solutions.

Bus iness Impact: WDM PONs offer an upgrade path for communications service providers thathave deployed current-generation PON solutions.



Maturi ty: Emerging

Sample Vendors: Adva Optical Networking; Huawei; Nokia Siemens Networks; Tellabs

Recommended Reading: "Emerging Technology Analysis: 10G and WDM PON"

White Spaces: Unlicensed Spectrum TV

Analys is By: Akshay Sharma

Definit ion: On 12 June 2009, the U.S. moved to digital TV and the "white spaces," in the unusedTV frequencies between TV channels, can now be used to provide wireless broadband thatdelivers high-speed Internet access (at 10 Mbps and above) to fixed and low-mobility consumers.By October 2009, the first white space network was launched in Claudville, Virginia.

This development is considered important because it demonstrated the applicability of thespectrum for broadband usage, and involved an "experimental license" from the Federal





Communications Commission (FCC) and network infrastructure from Spectrum Bridge. Thepotential exists for further devices from members of the White Space Coalition, which includesMicrosoft, Google, Dell, HP, Intel, Philips, EarthLink and Samsung.

In February 2010, the city of Wilmington in North Carolina (and the surrounding county of NewHanover) partnered with companies TV Band Service and Spectrum Bridge to launch a newexperimental network that uses white space spectrum to provide wireless connectivity to

surveillance cameras, and environmental sensors, in a "smart city" deployment.

Posi t ion and A dopt ion Speed Jus t i f icat ion: In November 2008, the FCC in the U.S.unanimously granted free, unlicensed wireless access to chunks of unused airwaves on thebroadcast spectrum that had previously been used to buffer TV channels.

This access is dependent on mobile technology companies incorporating geolocation capabilitiesinto their devices, that bar interference with TV signals and have the ability to access (via theInternet) a database that confirms which white spaces are available— according to the device'slocation.

As a result of the October 2009 network deployment, the viability of this spectrum for broadbandusage has been demonstrated, although non-interference within a major metropolitanenvironment still needs to be proven.

It will be interesting to see if the Wilmington trial becomes the basis for smart city initiatives.

User Advice: It is too early to plan for white-space devices.

Bus iness Impact: The main aim of white space is to provide high-speed wireless data to low-mobility users.




Sample Vendors: Dell; EarthLink; Google; HP; Intel; Microsoft; Philips; Samsung

At the Peak

RF Over Glass


Definit ion: Radio frequency over glass (RFoG) is a standard proposed by the main cablestandards body— the Society of Cable Telecommunications Engineers (SCTE)— that willeffectively be the equivalent of fiber to the home (FTTH) for cable networks.

The SCTE Engineering Committee— which is accredited by the American National StandardsInstitute— will define the RFoG standard, also frequently referred to as "cable passive opticalnetwork (PON)" during the next few years (note that this is not Data-Over-Cable Service InterfaceSpecification [DOCSIS] PON, or D-PON, which is being proposed by Cisco). The committeeapproved the RFoG program in late 2007 and relevant subcommittees have started to meet tocraft the standard, which is expected to significantly improve overall cable network capacity. And,while there is no defined timetable so far, it is expected that work on this standard will becompleted before 2013.





The move comes at a time when cable operators are under pressure to increase the capacity intheir networks to support not only ultra-high-speed broadband (to compete with FTTH servicesbeing deployed by telcos and other carrier competitors), but also a future where everything ondemand and massive amounts of high-definition programming, over-the-top and peer-to-peer video, as well as other bandwidth-laden applications and services, are expected to become thenorm. Reduced operating expenditure (opex) is also a key aspect of the technology.

The SCTE is developing a suite of technical standards to support wider use of optical fiber in thecable plant, while also supporting the coexistence of current legacy technologies over cable'shybrid fiber-coaxial (HFC) system architecture, in which voice, video and data share the samespectrum. Any new standard must deal with DOCSIS, which is the standard for Internet Protocol(IP) data services. The work on the RFoG standard will help to ensure interoperability withexisting headend equipment, digital set-top boxes and DOCSIS modems/voice over IP (VoIP)embedded multimedia terminal adapters (e-MTAs), as well as integrated gateways' seamlessoperation on any FTTH-type architecture that emerges.

An SCTE "interface" subcommittee will examine the key issues of RFoG, including: performanceissues with existing outside plant equipment such as splitters and couplers; specifications for fiber-optic passive filters and gateway RF levels; environmental requirements for gateways; andissues and practices dealing with "midsplit" cable equipment and system operations. This last

issue is interesting, as it deals with rearranging the spectral capacity of the cable's limitedupstream path.

Posi t ion and A dopt ion Speed Jus t i f icat ion: A number of cable operators and independentoperating companies (IOCs) that use RF infrastructure are already implementing deep fiber architectures in "greenfield" build-outs, and some are also moving to FTTH in their primarynetworks. In some higher-end markets, home builders are asking for FTTH connections as a wayto increase the value of their properties and upscale buyers. As a general rule, home buildersenter into nonexclusive agreements with TV and broadband service providers, but often offer incentives, such as subsidization, for running fiber connections to their developments. As thestandard is more clearly defined and formalized during the next few years by the SCTE, and aspressure on cable operator bandwidth continues, look for RFoG to become more widespread,initially in the largest cable market, North America, but also in Europe, Latin America andSoutheast Asia. Depending on what emerges and when, there is the risk that RFoG-based

technology could face the challenge of achieving cost-effective volumes, especially given thatother fiber technologies will be ramping up significantly worldwide. However, after build-outs for FTTH slowed in 2009 and 2010, the pressure for multiple service operators (MSOs) to movebeyond HFC-based technologies lessened in North America.

Some broadband expansion initiatives, particularly in the U.S., may also help to drive RFoG. Thetechnology is well suited to extending cable footprints into surrounding rural areas, and could giveMSOs a cost-effective way to compete for subsidized rural broadband dollars.

User Advice: Cable HFC network operators need to consider opex factors as part of their competitive advantage, as well as what RFoG technologies can mean to that equation. And, interms of providing business services to enterprise and small or midsize business customers, theyneed to consider what the use of a single network, instead of separate networks, will do toimprove their operational success. Operators need to examine the benefits of the longevity of

fiber, irrespective of the electronics that are/will be attached to the end of this fiber.

Implementation of this technology will require operators to analyze their network needs andrequirements in terms of the density of homes passed versus the distance from centralheadends/hubs, and strike the right balance for bandwidth expansion and opex savings. Thecosts of deploying RFoG solutions relative to HFC, in a "greenfield" environment with medium tolow urban density, are lower by at least 18% to 25%. On the other hand, in denser urban





environments this situation is reversed: RFoG solution costs can be 15% more than HFC, so thevalue proposition of RFoG is diminished.

Bus iness Impact: Opex savings will deliver the biggest impact. Key areas are improved networkreliability and uptime. RFoG is also expected to deliver major improvements in the powering of outside plant, removing all requirements for outside plant power, such as backup power,emergency generators and so on, as well as providing more environmentally "green" solutions for

operators. Maintenance costs are also a major factor: customers with all-fiber plant have about10% to 20% of the maintenance costs of an HFC or copper plant. Altogether, vendors of thissolution estimate opex savings for their customers of up to 70% in ideal conditions. Takentogether with its bandwidth expansion properties, this means that RFoG could have a significantoverall business impact for users of service providers.

RFoG solutions can be overlaid/installed on an "as needed" basis within an existing HFCnetwork; they will be made compatible with all digital services for voice, video and data; and theywill preserve existing protocols in both the downstream and upstream paths.

There will also be a major benefit in boosting upstream bandwidth — an area of growing need for cable operators as peer-to-peer traffic and increasing video traffic in the upstream become morecommon over their platforms. RFoG lets operators use the lower 10MHz portion of the upstreamin their HFC spectrum, with the addition of 64 quadrature amplitude modulation (QAM). Estimates

are that the use of this technology could boost upstream capacity by as much as 50MHz to80MHz on a practical level, assuming that there is support for 64 QAM upstream in both the cablemodem termination system and the cable modem customer premises equipment.

As previously mentioned, RFoG can also enable MSOs to extend their footprint into rural areas,allowing them to tap into subsidies. MSOs are able to extend the footprint of their networks byusing fiber extensions into rural areas adjacent to their existing HFC networks, and by being ableto reuse their existing equipment architecture (DOCSIS); but using fiber to reach the destinationsthey would not be able to reach without having to deploy a new access layer.



Maturi ty: Early mainstream

Sample Vendors: Alloptic; Aurora Networks; CommScope; Tellabs

Rich Communication Suite

Analys is By: Deborah Kish; Charlotte Patrick

Definit ion: Rich communication suite (RCS) is a service-enabling platform for vendors, a blendedservice package for users and a business model for communications service providers (CSPs).RCS services bring together a number of different functionalities into a single place on theconsumer's device. As a competitor to RCS, the Apple iPhone address book is an early exampleof part of an intelligent address book functionality, allowing the user to start an e-mail, see anaddress in Google Maps and click on any telephone number to call or text. With Vodafone'srecent launch of its RCS-like 360 service, it offers handsets by Samsung (the H1) and Nokia(Symbian) which will come preloaded with the service.

RCS has been progressing, albeit slowly, since its inception and has seen three releases:Release 1 defining the following goals:





Enhanced Address Book— provides presence functionality. Enables users to initiatecommunications including voice calls, video calls, file transfers or messaging. Also, itallows users to integrate multimedia elements, such as photos of contacts.

Rich Call— enables users to exchange different types of content, such as video or photos, during a call.

Rich Messaging—

expands on traditional instant messaging to simplify and unifymultiple messaging mediums and provide a richer user experience

Release 2 was defined in June 2009 and finalized in February 2010. Its main purpose is toprovide the user with access to RCS service features from a wider range of devices, making itpossible to use RCS from a PC. Functionality such as having consumer's address book stored onthe network will be required for this type of multi-device approach. Release 2 will also improveprovisioning and configuration of the RCS client.

RCS Release 3, which was defined in December 2009 will allow:

One RCS user to share their location with another.

More complex network value-added services such as "content sharing enriched by

media processing" with digitized content, including voice playback and recording,advanced conferencing, high-speed fax and speech integration. This is where anoriginating user can share content enriched by media processing in the network with aterminating user when a voice call is established. "Chat enriched by media processing"is where an originating user can send and receive messages that enriched by mediaprocessing in the network.

Enhanced functionality around "rich calls"— for example, video sharing between anRCS and a non-RCS user.

Posi t ion and A dopt ion Speed Jus t i f icat ion: RCS is still in trials and due to the tough economicenvironment in 2009, there are question marks around the business case for this type of functionality and the need for all CSPs in a particular country to work together to implement aninteroperable solution.

Countries most forward in their implementations include South Korea, where the three mainCSPs have created their own RCS-like solution (although, the project is outside of the GSMARCS initiative). The pilot focused on testing the IP Multimedia Subsystem for interoperabilitybetween CSPs, devices and to identify traffic patterns between instant messaging and ShortMessage Service (times of day, demographics and so on). The CSPs will then build richcommunications on top of that. Common feature sets available to customers in March 2009included text conversation, group chatting, presence and phonebook-driven buddy lists. Another example of RCS-like solutions is Vodafone's 360 where it introduced a new set of Internetservices for the mobile and PC that gathers all of a customer's friends, communities,entertainment and personal favorites (such as, music, games, photos and video) in one place.Other countries where significant progress is being made include France — where Orange,Bouygues Telecom and SFR are currently testing interoperability. Also, Telefonica in Spain willbe testing Release 2 functionality in 2010.

User Advice: Rich communication has the potential to be an extremely competitive field withCSPs, Web 2.0 players, over the top players, device manufacturers and more involved. But only if one of the types of functionality proves especially useful to consumers or profitable for the RCSprovider; will we see this becoming a mainstream product.





2010 should be the year when CSPs monitor the progress of RCS and related services carefully.Does Vodafone continue with its strong push around its 360 product? Are the CSPs in SouthKorea moving toward a fuller roll-out? Is there continued movement in France and Spain or haveCSPs gone a bit quiet with their activities?

Equipment vendors and service developers should make interoperability and blended serviceenablement first principles in product development. CSPs will be looking at these closely during

their procurement processes. CSPs can make RCS the preferred approach, implementing a"quality of experience" policy enforcement that prioritizes bandwidth, leaving Google and other over-the-top solutions as best effort, or they can embrace Google/over-the-top solutions andcreate hybrid offerings. This will need further joint development, interoperability testing and jointrevenue sharing as well.

Bus iness Impact: It is hard to forecast the likely success of RCS with a number of unknownfactors around user experience such as whether consumers find the intelligent address bookfeatures very attractive on devices will smaller screens or whether the mass market of customersbe interested in some of the more complex pieces of RCS functionality or not. Also, whether theinitiative's road map is moving at sufficient speed to ensure commercial success.

The possible benefits which will drive trials and deployments among CSPs include:

Consumers' ability to see the status of friends, this could trigger additionalcommunication sessions, which would not have been made previously. Or encouragethem to use, currently, more niche functionality such as video. By having all thesefunctionalities, consumers will likely increase their general use of mobile data and voiceservices, therefore increasing ARPU.

The functionality may also increase subscriber stickiness.

Ownership of this type of functionality allows the operator, device manufacturer or over-the-topplayer to have a degree of influence over consumers' choice of communication service, and to actas a portal to their social contacts (rather than allowing entities such as social network sites tototally own the relationship).



Maturi ty: Emerging

Sample Vendors: Alcatel-Lucent; Colibria; Critical Path; Ericsson; Huawei; Motorola; NokiaSiemens Networks; Sony Ericsson

Recommended Reading: "Dataquest Insight: Are Carriers Leaving Money on the Table WithHalf-Deployed IMS Architectures?"

"Key Issues for Carrier Service and Control Infrastructure, 2009"

"Dataquest Insight: The Future for Telecommunications Operators in Social Networking"

"Dataquest Insight: Telecom Service Providers: Evolving Toward the 2015 Horizon"

"Dataquest Insight: Carriers Can Keep Control of LTE With IMS"

"Dataquest Insight: The Future for Telecommunications Operators in Social Networking"

"Network Operators Should Strive to Be Community Owners, Not Technology Providers"





Self-Organizing Networks


Definit ion: Self-organizing networks (SONs) are a key feature of Long Term Evolution (LTE) andnext-generation networks. In a nutshell, SON functionality resides partly in the operations supportsystem (OSS) framework and partly in the radio access network eNodeBs, and is a set of rules

and algorithms which define automatic actions to be taken by the system, upon given events. Inthe extreme, this would be the network running and managing itself. In practice, SON is likely tobe used gradually as an adjunct to human operators for planning, alarms management andmaintenance. SONs will provide a self-configuration, self-optimization, fault management andfault correction function at the base station of LTE or the next-generation mobile network. Theyshould help mobile operators to manage the coverage, capacity, traffic and backhaul of the basestation more easily.

Vendors push this feature for its operating expenditure (opex) savings: less extra head count willneed to be added to accommodate the new, additional LTE layer. In practice there will need to beexpert operations, administration and maintenance (OA&M) and radio planning personnel inplace anyway, but SONs may reduce the total numbers, or at least enable faster and moreefficient decision making; however, effective opex savings compared to traditional OA&M stillneed to be measured.

The feature requirements for SON are expected to be updated by operators as ongoing LTE trialsand early deployments continue to yield results and operators have a clearer idea of how to runtheir LTE networks. But at its most basic, SON should allow self-configuration— the ability tosimply add a cell in the network, and have it configure itself through negotiating neighbouringrelations with its peers.

SONs are a key issue for many operators, after backhaul costs and scalability, and have been akey requirement for next-generation mobile networks. Over the past two years, extra SONrequirements have been defined in Third Generation Partnership Project (3GPP) and next-generation mobile networks. The rationale behind the SON functionality is that second-generation(2G), third-generation (3G) and LTE networks will coexist for some time, so cost-optimizedoperations, maintenance and planning are needed. A SON can help achieve stable LTE networks

for operators, especially in the early stages. It is possible that femtocells may play a greater rolein wider-scale LTE; incidentally, SON is already a key feature of femtocells. Interfacespecifications and use cases for SON have been defined and are part of 3GPP specification32.500 in Release 8, with the first use cases of SON expected to appear in early deployments of LTE through 2010.

Leading operators, including Vodafone, T-Mobile UK and T-Mobile International, have indicatedthat they value SON.

SONs require specialized skills, and although all leading vendors have some ability in this area,there will be differences between them. As the quality of SON products will vary, SON willbecome a key differentiating feature in early LTE releases.

Posi t ion and A dopt ion Speed Jus t i f icat ion: While LTE has enjoyed a lot of attention and hyperecently, what constitutes the key building blocks of early LTE releases is less understood. It willtake time to mature

—to determine what level of SON is adequate in the first few LTE network

releases, and what architectures will be favored (for example, centralized versus distributed SON,or a hybrid approach).





User Advice: Operators should place requirements on vendors for valued features, and evaluatethe cost of these features based on estimated savings in operations, administration andmaintenance, as well as network planning and head count.

Bus iness Impact: SONs can provide a significant saving in operations, and greatly automate theway that future wireless networks are set up, managed and planned.



Maturi ty: Emerging

Sample Vendors: Actix; Alcatel-Lucent; Ericsson; Huawei; Motorola; NEC; Nokia SiemensNetworks; ZTE





VoIP Wireless WAN

Analys is By: Phillip Redman

Definit ion: The use of Internet Protocol (IP) in the wireless link for "packetized" voicetransmission (as compared with circuit-switched transmission) comprises a voice over IP (VoIP)wireless wide-area network (WWAN).

Posi t ion and A dopt ion Speed Jus t i f icat ion: There has been a lot of activity in VoIP WWANduring the past year. In the U.S., one of the main providers, AT&T, will no longer block thiscapability. Companies are also looking to use VoIP over third generation (3G) for internationalroaming to reduce cellular voice costs. Most communication service providers support VoIP over

Wi-Fi hotspots through VoIP clients from Truphone, Skype or fring, but don't support a handoff between the Wi-Fi and cellular networks. iPass is also supporting a capability under fixed mobileconvergence (FMC) that allows a handoff among its subscribers on Wi-Fi hotspots internationallyand the cellular networks. However, most systems that integrate quality of service (QoS) andVoIP over WWAN are not expected to mature before 2015, as next-generation broadbandnetworks, such as Long Term Evolution (LTE), mature.

To aid in this transition, industry efforts using voice over LTE via Generic Access (VoLGA) willprovide common criteria to support voice services during the 3G and fourth-generation (4G)transition. However, IP Multimedia Subsystem (IMS) is expected to be the leading technology tosupport full IP voice over LTE.

User Advice: Current high-speed networks support VoIP, but without QoS, resulting in a lower-quality and inconsistent experience. However, the next generation of wireless data technologies

have the capability to add QoS as part of the network architecture, even if it isn't currentlysupported. Some operators are using VoIP for push-to-talk over cellular services, but it is notsupported for cellular calling. See our analysis of VoIP for WLAN for information on using dual-mode phones in local-area networks (LANs). Look to third-party FMC systems to support handoff and higher-quality voice.





Bus iness Impact: Many companies have begun to support VoIP and are looking for the samesupport outside their offices. Consumer users of popular VoIP services also want to extend thatcapability to their mobile phones. VoIP could add 20% to 40% in additional capacity on all IPnetworks, which could drive costs lower to support wireless voice services. VoIP also couldsupport many softphones, which will increase the number of devices that support mobile voicecapabilities, and it can also enable the simultaneous use of voice and data on a device. It is alsothe main technology to support FMC and mobile unified communications.

Benefi t Rating: Transformational


Maturi ty: Emerging

Sample Vendors: AT&T; fring; Most cellular infrastructure vendors; Skype; Truphone

4G Standard


Definit ion: A fourth-generation (4G) worldwide standard being developed for a next-generationlocal- and wide-area cellular platform is expected to enter commercial service between 2012 and

2015. International Mobile Telecommunications-Advanced (IMT-A) is now called 4G. Thedevelopment effort involves many organizations: the International Telecommunication UnionRadiocommunication Sector (ITU-R); the Third Generation Partnership Project (3GPP) and3GPP2; the Internet Engineering Task Force (IETF); the Wireless World Initiative New Radio(WINNER) project, a European Union research program; telecom equipment vendors; andnetwork operators.

Agreement on the initial specification has yet to be reached, but discussions point to some keycharacteristics. These include: support for peak data transmission rates of 100 Mbps in WANsand 1 Gbps in fixed or low-mobility situations (field experiments have achieved 2.5 Gbps);handover between wireless bearer technologies such as code division multiple access (CDMA)and Wi-Fi; purely Internet Protocol (IP) core and radio transport networks for voice, video anddata services; and support for call control and signaling. Many technologies are competing for

inclusion in the 4G standard, but they share common features such as orthogonal frequencydivision multiplexing (OFDM), software-defined radio (SDR) and multiple input/multiple output(MIMO). 4G technology will be all-IP and packet-switched.

In addition, we believe that the network architecture will be radically different from today'snetworks. In particular, it will include all-IP, low latency, flat architecture and integration of femtocells and picocells within the macrolayer.

Posi t ion and A dopt ion Speed Ju st i f icat ion: The 4G standard is still in the early stages of development and has to incorporate a wide range of technologies. But these are not the onlyreasons why its introduction is some way off. Deployments of High-Speed Downlink Packet

Access (HSDPA), High-Speed Uplink Packet Access (HSUPA) and Long Term Evolution (LTE)technology will extend the life of third-generation (3G) infrastructure for voice and, to some extent,for data. Also, network operators will want to receive a worthwhile return on 3G investments

before moving to 4G. Then there is the problem of how to provide adequate backhaul capacitycost-effectively; this is already difficult with the higher data rates supported by High-Speed Packet Access (HSPA), and it will become harder with 4G. Ultra Mobile Broadband (UMB)— which,unlike wideband code division multiple access (WCDMA) and HSPA, is not being assessed for 4G — had been under consideration as a next-generation mobile standard in the U.S. and partsof Asia and Latin America, but it failed to gain a hold and will not be widely adopted. It appearslikely at this point that LTE-Advanced (LTE-A) is a clear leader for 4G, with 802.16m a possible





distant contender. WiMAX had been considered but is not in the race anymore, although in theU.S. Sprint has been advertising WiMAX as 4G, even though this is not quite true, and it is losingmomentum to time division LTE (TD-LTE).

User Advice: It is too soon to plan for 4G. Instead, monitor the deployment and success of 3Genhancements such as HSDPA, HSUPA, High-Speed Packet Access Evolution (HSPA+) andLTE, as these need to provide a worthwhile return on investment before network operators will

commit themselves to a new generation of technology. Carriers will also need to ensureinteroperability with today's networks, as backward-compatibility might otherwise be an issue.

Additionally, carriers should recognize that the cost of deploying and operating an entirely new4G network might be too high to justify, unless a different network business model is found,including, for example, network sharing and femtocells.

Bus iness Impact: The business impact areas for 4G are high-speed, low-latencycommunications, multiple "pervasive" networks and interoperable systems.




Sample Vendors: Alcatel-Lucent; Ericsson; Fujitsu; Huawei; Motorola; NEC; Nokia SiemensNetworks; ZTE





Convergent Communications Advertising Platforms

Analys is By: Jean-Claude Delcroix

Definit ion: A convergent communications advertising platform (CCAP) is a scalable,multichannel set of interrelated applications and technologies used by communications serviceproviders (CSPs) to deliver targeted advertising services. "Convergent" means open to severaltypes of devices, content, applications and telecom services (such as fixed voice, mobile voice,Short Message Service [SMS], Multimedia Messaging Service [MMS], fixed Internet and mobileInternet, TV/video, e-books, car displays, train displays). It may extend to machine to machineservices such as public display or public terminals. However, initially convergent platforms maybe limited to one basic type of telecom offering —mobile communications, or multichannel video,for example— as long as they handle advertising bound to several individual services anddifferent types of content in relation to user profiles managed in a unified way.

A CCAP draws on user-related and contextual data that is controlled or collected by CSPs, such

as a user's location, network presence, status and type of device. CCAPs require deepintegration with communications services data, which may be accessed through network APIs.From an architectural point of view, a CCAP should include a range of dedicated processes anddata systems but also connect to other subsystems and common data management systems toexchange relevant customer data. These include CRM, business intelligence (BI), businesssupport and operations support systems, and service delivery platforms. Although advertisingservices are seen as one of the major markets for cloud computing globally, real-time needs and





data protection regulations will also require proximity, something local CSPs can provide.Combining contextual data with specific customer demographic and service information by meansof sophisticated analytics applications and rule engines allows CSPs to deliver dynamicallytargeted advertising content, in a variety of situations, on a customer-by-customer basis or for groups.

The scope of a CCAP includes functions and data such as the following: general advertisement

processing, various types of analytics, rule engines and recommendation engines, advertisementforwarding to users, campaign management, response management, agency management,advertiser management, advertising exchanges or link to them, billing, charging and rating,advertisement content management, digital rights management, campaign metrics, gateways andinterfaces, user data, network and device data, storage, security, privacy (opt-in and opt-out).Platforms may also include self-service advertising using CSP APIs.

Today, several non-convergent telecommunications-based advertising solutions exist, withdifferent maturity levels, some being just Internet applications not specific to CSPs. Thesesolutions include online Internet advertising, and mobile advertising and Internet Protocoltelevision (IPTV) advertising, which are the least mature. They are linked to the respectivetechnologies and services of the Internet, IPTV, and mobile data, games or SMS. Theseadvertising solutions are dedicated to one type of service, such as mobile advertising or IPTV.

They do not build on a CSP's cross-service user advertising network data. Over time, CSPswanting to "monetize" their unique competitive position will need converged platforms, spanningthe different networks, devices and services they operate. Orange, to give one example, providessimilar content across fixed and mobile networks, but does not yet offer converged advertising.Orange is working on algorithms to process user profiles and announced a cooperation withOpenX, an advertising technology and service firm, to set up a European advertising exchange.

In terms of CSP architecture, the move toward a convergent advertising platform is similar to theconvergence in telecom operations management systems, which are moving away from silos intoan end-to-end environment that covers multiple services and network technologies. Such aplatform must link to advertising agencies, content distribution services (for music and IPTV, for instance), interactive services, games and social networking. It must also fully exploit Web 2.0technologies, such as mashing and user-generated content. Convergent advertising platformscan exploit IP Multimedia Subsystem (IMS) technology, and vendors offering IMS solutions are

targeting this opportunity. But non-IMS solutions are also possible and should have a broader market.

Posi t ion and A dopt ion Speed Jus t i f icat ion: CSPs started to use mobile advertising in 2001,mainly to promote their own services, not general goods and services. In 2005 and 2006, mobileadvertising gained momentum, but revenue remained — and remains— relatively low. Since thefirst appearance of convergent advertising platforms on this Hype Cycle in 2007, the need for them has become recognized. They would broaden the customer base of CSPs which iswelcome to advertisers. In particular, CIOs see the need for integration when they are faced withmultiple applications dealing with user profiles and context data. Implementation is progressingthrough narrow approaches, covering mobile advertisements, new forms of business intelligence,advertisement exchanges and the selling of aggregated user data to advertising agencies. Theconcept of rich-featured platforms for operators is progressing rapidly. Most are supporting mobileadvertising. Also progressing are solutions for video on three screens (Internet, TV and mobile)but these do not support SMS and voice. Few, if any platforms, cover both all screens and allchannels such as both video and SMS, voice and other channels.

Several vendors are emphasizing convergent solutions now through advertising platforms with arich set of features. AOL has probably the largest set of technologies and companies supportingadvertising, due to its many acquisitions. In the video world, Microsoft is also offering broad video





and TV solutions including a video-related advertising platform. Oracle and Amdocs also offer abroad solution but limited to mobile.

In 2009 Comverse, mentioned last year and which offer the Comverse HUB Mobile AdvertisingPlatform, has not made visible progress.

CSPs are slow in adopting a convergent or integrated approach to delivering content and

advertising in a massive and productive way. In mid-2010, the need for convergent advertisingplatforms is gathering pace, but still the technology is not at its peak. 2009 was a lost year for adoption because of the retraction of the advertising market as well as reduction of investment byCSPs. Neither development nor penetration will be very fast, as we see in most other integrationefforts, such as subscriber data management for instance. It appears now development will startwith integration of silo application by internal teams or integrators. Software vendors targeting thetelecom industry in the broad sense will progressively integrate their multiple applications and willlikely include CCAPs, probably through acquisitions.

Two major technology trends will boost the need for CSP advertising platforms; 1) the growth of mobile data services with location information; 2) the growth of the IPTV and mobile TV user base. We forecast moderate revenue growth through 2012. Major obstacles are regulations andconsumer trends in personal data protection, as well as the difficult business transformation of telecommunication carriers. We believe that CSP CCAPs will reach the Plateau of Productivity

between 2016 and 2019.

User Advice: CSPs should capitalize on their user information assets as a matter of urgency,and have solutions running within the next three years. The strength of service providers lies in asynergistic approach to all information in order to deliver a broad and deep advertising service.CSPs should not limit their advertising activities to mobile services. Instead they should pooladvertising services and cover mobile SMS, mobile data, Internet content and portals, as well asIPTV and new connected devices such as e-books and public digital displays. Many vendors offer partial solutions. CSPs should favor systems that; 1) build on all their services, 2) minimizeduplication with their data systems, and 3) connect well within their service-oriented architectureand business process management systems. Beyond collection of user and context data, CSPsshould consider vendors offering integration expertise and solutions in massive datamanagement and storage, security and content management. For analytics, CSPs should look for

marketing knowledge as much as tools.Bus iness Impact: Convergent advertising exploits the convergence of network services, the riseof mobile content, IPTV, multiple connected devices (mobile, PC, TV, e-books, public displays)and contextual information (such as location, presence, device, time and user profile). Serviceproviders that have direct and permanent relationships with customers through communicationstend to have better access to a range of customer data than other providers having a less directaccess to a complete user profile. However, it is unknown which CSPs will use this informationand compete in the advertising market. The competitive position of CSPs will not only depend onthe market's acceptance of CSP-based solutions. Competition in telecommunications andregulations on data protection and will also determine adoption rates.

The benefits of convergent advertising stem from better profiling of customers — includingdemographics, presence data, location data and local time, and communications, searching and

browsing history. In some cases, a shopping profile can be created (based on online andpayment data). Moreover data can be grouped to offer instant topical or local trends. It is thepooling of customer data and context that creates a CSP's profiling power. With convergentadvertising, it will be possible to improve targeted advertising, addressing the questions of "whichcustomer?," "where?" and "when?" At the same time, a CCAP should make it easier to deal withprivacy protection in a uniform way. By using different communications media (mobile data,messaging and IPTV, for example), it is possible to "follow" customers during the day and while





they are traveling. It is also possible to send information to customers at t imes when it is likelythey will have an opportunity to watch it. Real-time interactive solutions work better withconvergent solutions, as they give consumers the option to watch something on IPTV and thencomment on it or forward it via a mobile phone or the Internet. In addition, multichannel interactiveadvertising will give advertisers a better understanding of customer behavior across locations andtime slots. Social networks within wireless communities are becoming increasingly important for advertisers. When related to payments and purchases, CCAPs can offer the dream solutions for advertisers: linking advertising directly to sales results. This would bring a lot of value to providersof such solutions.

A CCAP will enable a CSP to play a new role in the online advertising and content market,particularly in mobile, IPTV and multichannel telecom-based advertising. Only a convergentplatform will enable a CSP to play to its strengths. Such convergent platforms, along withconverged services, will support new CSP business models by increasing indirect revenue — thatis, revenue beyond that related to transmission services— from at least some customer segments. However, a CCAP is not on its own a guarantee of success. A successful advertisingstrategy is also required, as well as advertising and marketing skills.

Convergent advertising platforms are growing out of Internet advertising and mobile solutions.They will cover both fixed and mobile communications. Pure wireless CSPs also need convergent

platforms that link advertising across different services, such as mobile Internet, games, instantmessaging, e-mail, location, route-planning, payment and video services.



Maturi ty: Emerging

Sample Vendors: 1SYNC (Data Pool); 2ergo; Acision; AdMob; Alcatel-Lucent; Amdocs; Apple; Atos Origin; Capgemini; Citex Software; Comverse Technology; Google; Huawei; IBM; Jumptap;MADS; Medio Systems; Microsoft; Millennial Media; Mobixell; Nokia; Openet; Oracle; SLAMobile; Smaato; Tacoda; Third Screen Media; Time Warner; Velti; Wmode; Yahoo; Zad Mobile

Recommended Reading: "Dataquest Insight: New Revenue Opportunities for Telecom Carriers,

2013"

"Emerging Technology Analysis: Convergent Communications Advertising Platforms,Communications Service Provider Operations, 2009"

Addressable TV Advertising

Analys is By: Andrew Frank

Definit ion: Addressable TV advertising technologies enable advertisers to selectively segmentTV audiences and serve different ads within a common program at geographic, demographic and(in some cases) household levels, through cable, satellite and Internet Protocol television (IPTV)delivery systems and set-top boxes (STBs). An alternate approach uses the Internet to deliver addressable ads to a broadband-connected TV or STB.

Posi t ion and A dopt ion Speed Jus t i f icat ion: In the U.S., where cable serves about 60% of television households and the largest share of TV advertising is sold, widespread addressable TVadvertising suffered a major setback in June 2009 when Canoe Ventures, a joint venture of thesix largest multisystem operators (MSOs) tasked with developing a national platform for addressable and interactive advertising on cable TV, announced that it was abandoning its firstad-targeting product on the eve of its launch. Instead, Canoe elected to focus on an interactive





direct-response lead generation product focused on request for information (RFI) and surveyapplications. That product, called SelecTV, launched in March 2010, while TV ad addressabilityremained on the sidelines, available in pockets of cable systems operated predominantly byCablevision and Comcast. Meanwhile, in a sign that competition may yet accelerate thedevelopment of nationwide addressable TV technology, in May 2010, Google led a $23 millionround of investment in Invidi, a developer of addressable TV technology. They were joined byGroupM, a unit of WPP, one of the world's largest advertising holding companies. Since 2007,Google has been supplying TV ads to Dish Network, a U.S. satellite TV provider that isdeveloping addressable ad capabilities for its network and also working with Google on GoogleTV. Also behind many of these efforts are data providers such as Acxiom and Experian.

In IPTV, the issue of household addressability is somewhat more straightforward, owing toinherent IP switching capabilities, and IPTV providers have been employing householdaddressability in cooperation with broadcasters in the U.K. for at least two years.

At least as significant as the technology issues are business issues affecting the adoption of addressable TV advertising. There are several issues to consider:

General inertia and recalcitrance of the TV advertising market, for which addressabilityrepresents a disruption to entrenched business practices.

Fragmentation of audiences, which represents a large jump in the complexity of mediapackaging and sales processes.

Uncertainty as to how much additional value advertisers will assign to targeting, andwhether this additional value will be sufficient to offset the costs.

Potential privacy concerns associated with household segmentation.

Limited subscriber base of most IPTV deployments worldwide, which makes effectivesegmentation too small to be of interest to advertisers outside of trials.

Unresolved disputes regarding the allocation of revenue and control over addressableads among broadcasters, distributors and third parties.

One thing that has become clear in the past year or so of trials is that the measurable value of addressability varies considerably among marketing sectors and objectives. Communicationsservice providers (CSPs) have found the technique to be highly effective in marketing newcapabilities to customers on their networks based on the knowledge of what they already have.

Automotive manufacturers have found value in the ability to switch the final image of an ad — referred to as an "art card" — to a screen that contains the address, phone number and Web linkof a consumer's nearest dealer. (Comcast Spotlight, the cable operator's advertising arm, refersto this capacity as "Adtag.") Consumer packaged goods companies, however, which account for the largest share of TV spending, do not appear to have discovered a compelling formula for addressable TV advertising.

Nonetheless, it is likely that the efficiencies derived from segmentation will prevail, and thepractice will become widespread, at least within certain marketing sectors. Some regions willcertainly outpace others, but the overall process of change represented by addressable TV ads is

still likely to take closer to five years than two. Finally, whether incumbent TV distributors,Internet-based challengers or the broadcasters themselves will control the most lucrative part of the value chain remains to be seen.

User Advice:





Advertisers must consider how to position their media and sales strategies as well asprivacy policies against emerging TV-ad-targeting technologies.

Agencies must offer multichannel campaign management services that include supportfor various emerging segmentation and targeting capabilities in media.

Agencies and advertisers should work with platform developers to define standard

metrics that will enable transparency and optimization in the complexity that will resultfrom addressable capabilities.

TV service providers must continue to press ahead with trials, partnerships and STBupgrades, while adhering to standards like enhanced binary interchange format (EBIF)and resisting impulses to engineer individual stopgap solutions.

Broadcasters must ensure that they preserve their direct relationships with advertisersand don't get intermediated by platforms over which they have little control. They mustbargain aggressively to minimize intermediary revenue splits and may play competitivefactions against one another to prevent lock-in to any single-provider solution.

Internet portals and ad networks can continue to exploit delays in TV addressability byengaging more with traditional video-oriented advertising agencies and advertisers to

develop online targeting and segmentation strategies and capabilities. They should alsopress for interoperability of TV standards with Internet and mobile channels, andchallenge proprietary service provider data, such as customer addresses, being used for ad-targeting purposes without explicit advance informed consent.

Bus iness Impact: Addressable TV advertising technologies affect advertising agencies, TVdistributors, TV networks and privacy advocates. These technologies also affect brandadvertisers considering media strategy and the CRM implications of new targeting capabilities, aswell as STB and related equipment manufacturers and software vendors considering how toimplement privacy controls. Addressable TV advertising represents an opportunity for mainstreamadvertisers and broadcasters to benefit from the scourge of audience fragmentation — thus,turning a big problem into a benefit.



Maturi ty: Adolescent

Sample Vendors: Alcatel-Lucent; BigBand Networks; Canoe Ventures; Invidi; Microsoft;OpenTV; Packet Vision; SeaChange International; Tandberg; Visible World

Recommended Reading: "Two Roads to TV 2.0"

Public Cloud Computing/the Cloud

Analys is By: Daryl Plummer

Definit ion: Gartner's definition of cloud computing essentially describes public cloud computing

as a style of computing where scalable and elastic IT-enabled capabilities are provided "as aservice" to external customers using Internet technologies. Therefore, public cloud computing isthe use of cloud-computing technologies to support customers that are external to the provider'sorganization. It is through public consumption of cloud services that the types of economies of scale and the sharing of resources will be generated to reduce cost and to increase choicesavailable to consumers.





Public cloud computing carries with it the concerns that security, data management, trust, controland guarantees of appropriate performance will not be sufficient to support enterprise needs.Enterprises want the value delivered through cloud-computing services, but also need to ensurethat the concept is ready for delivering services that a company can rely on over time. However,public cloud computing has proved itself time and again, in the context of the Internet and theWeb, from what is commonly referred to as a "consumer perspective." Sites such as Flickr andFacebook, and countless business sites delivering services from entertainment to healthcarerecords, have been in use for some time in the public context.

Posi t ion and A dopt ion Speed Jus t i f icat ion: The public cloud is at (and a little past) the Peak of Inflated Expectations. As enterprises get heavily into experimenting with the concept, they beginserious budgeting efforts for real projects. Evaluation of peer projects that solve actual problemsare under way. In addition, cloud providers are advertising their ability to deliver enterpriseservices and reduce cost. Customers should still be cautious about the claims of most providers,because their models are still unproved for enterprise use.

User Advice: User companies should be moving experimental projects to feasibility discussionsfor serious implementation in 2010. The year 2011 will be one of continued investment, and thehigh growth of cloud computing will exist through 2012.

Bus iness Impact: The business impact of cloud computing in the public sense can be varied, but

the basic opportunity is for businesses to consume services from other companies that will allowthem to cease providing those services themselves. This can lead to companies eliminating workthat previously might have been done in-house. It can also lead to massive changes in the waymoney is spent (for example, using operating expenses to fund external services, rather thanusing capital expenses to fund IT projects).


Market Penetrat ion: More than 50% of target audience


Sample Vendors: Amazon; Google; Rackspace; salesforce.com

Network SharingAnalys is By: Peter Kjeldsen; Joy Yang

Definit ion: Network sharing is defined as a situation in which two or more communicationsservice providers (CSPs) share network resources, either through joint ownership of networkresources or by third-party-enabled network sharing (open networks).

In principle, network sharing can happen with any technology, but it is most widely discussed inthe context of open fiber-to-the-home (FTTH) networks and the joint ownership of variousinfrastructure components of mobile networks.

Network sharing, especially radio access network (RAN) sharing, is also seriously considered inmobile infrastructure construction. The Third Generation Partnership Project (3GPP) has definednetwork-sharing scenario requirements, architectures and functions in its Release 6. This

introduces two network-sharing architectural configurations: the Gateway Core Network (GWCN)configuration and the Multi-Operator Core Network (MOCN) configuration.

In most cases it will be simpler to share passive infrastructure than active components — both interms of allocating shared costs and of the operational challenges of running the network.





Posi t ion and A dopt ion Speed Jus t i f icat ion: Network sharing as a business model has beenaround for some years:

Joint ownership of resources has been seen as a way to cap rollout costs for mobilenetworks, and the financial crisis has sharpened CSPs' focus here. Scenarios includedifferent types of sharing that involve joint ownership of backhaul infrastructure, celltowers and RAN base stations, as well as core network components like data switches

and softswitches.

Third-party-enabled network sharing via open networks has attracted regulatoryattention because of this model's ability to lower entry barriers for CSPs, while stillallowing for differentiation in the higher parts of the value chain. Until recently, opennetworks were seen mainly in FTTH rollouts involving utilities and municipalities, but theopen-network business model has experienced a renaissance as a result of governmentstimulus packages implemented to mitigate the effects of the financial crisis. FTTHinitiatives in Singapore, Australia and Greece are prime examples of this development.

In the third-generation (3G) cellular era, RAN sharing has been practiced by T-Mobileand Hutchison 3G in the U.K., Vodafone and Orange in Spain, Telus and Bell Canada inCanada, TeliaSonera and Teles in Sweden, Telstra and Hutchison 3G in Australia, andHutchison 3G and Telenor in Sweden. Ericsson, Nokia Siemens Networks and Huaweiare network infrastructure vendors that have proven able to support RAN sharing.

In 2009, Tele2 and Telenor formed a joint venture, Net4Mobility, to build a RAN-sharedGlobal System for Mobile Communications/Long Term Evolution (GSM/LTE) network inSweden. Gartner expects that RAN sharing will attract more attention for LTE than 3G,as it could prove a cost- and spectrum-efficient way to deploy LTE.

Note that the business models associated with network sharing will not appeal to all CSPs, andthat the estimated Time to Plateau applies to adoption by relevant CSPs, not to all CSPs. Itshould also be noted that some CSPs will probably pursue more aggressive network-sharingstrategies abroad than in their home market.

User Advice: Network sharing should be considered by CSPs wanting to minimize their investments in the lower parts of the value chain. These are often unattractive as CSPs arelooking for real differentiation in the higher parts of the value chain.

However, CSPs should carry out careful analyses before embarking on network-sharingschemes, especially when the sharing will have an irreversible impact on their market position.They should consider network sharing only when this approach resonates with their core strategy.

Also, the associated management overhead should be explicitly addressed in the underlyingbusiness case.

Bus iness Impact: The sharing of network infrastructure by CSPs lowers the overall investmentneeded for basic network infrastructure, thereby reducing risk factors for the individual CSPs'business cases. On the other hand, network sharing also levels the playing field between CSPs,removing differentiators that stem from superior network architecture.

The business impact of any instance of network sharing depends on the type of sharing (open or

bilateral, for example), the type of infrastructure shared, and the competitive landscape in whichthe sharing occurs.

Network sharing is sometimes associated with a return to the monopoly days that precededwidespread telecom deregulation. However, there is a big difference between the verticallyintegrated monopolies of the past, which spanned the entire value chain, and the network-sharingschemes of today, which affect only a small part of the value chain. In fact, network sharing can





stimulate competition throughout the value chain by breaking down barriers to entry in thenetwork part.



Maturi ty: AdolescentSample Vendors: Netadmin Systems; PacketFront

Recommended Reading: "Dataquest Insight: Radio Access Network Sharing Is One of the KeySuccess Factors in LTE"

"Dataquest Insight: The Devil Is in the Detail; Making Radio Site Sharing in LTE and 3GEnvironments Different"

"Australian Government Addresses Competition Problem with National Fiber-to-the-PremisesPlan"

"Governments Can Bring Moore's Law to Broadband Access (February 2006 Update)"

"A Business Model for Next-Generation Broadband Access (February 2006 Update)"

"Why Governments Should Care About Fiber-to-the-Home"

Sliding Into the Trough

10G PON


Definit ion: 10 Gbps passive optical network (10G PON) is a next-generation solution followingthe current-generation gigabit passive optical network (GPON) (ITU-T G.984) and Ethernetpassive optical network (EPON) (IEEE 802.3ah) solutions, basically offering higher bandwidthand additional features. Like its predecessors, 10G PON will allow multiple users to share thecapacity over a passive fiber optical "tree" infrastructure, where the fibers to individual users

branch out from a single fiber running to a network node. In September 2009, the Institute of Electrical and Electronics Engineers (IEEE) approved 802.3av as a 10G PON standard, includingboth 10/1 Gbps and symmetrical 10 Gbps implementations. In January 2010, the InternationalTelecommunication Union (ITU) approved the ITU-T G.987.1 and G.987.2 standards with 10/2.5Gbps and symmetrical 10 Gbps implementations.

Posi t ion and A dopt ion Speed Jus t i f icat ion: The fixed-access market is a high-volume market,and the challenge facing current-generation PON technologies is related more to deployment costthan to limited capacity. This implies that the time it will take 10G PON to reach the Plateau of Productivity on the Hype Cycle will most likely be determined by how quickly the total cost of ownership (TCO) for 10G PON comes close enough (usually within 15% to 25%) to the TCO of current-generation PON to become attractive. When it reaches this point, most "greenfield"deployments will switch to 10G PON. The evolution in the TCO for communications service

providers (CSPs) will be different from the evolution in the equipment cost for technologyproviders. The equipment cost is a relatively minor component of the fiber-to-the-home (FTTH)TCO, and the price tag that technology providers will put on 10G PON will be shaped not only byproduction cost, but also by the competitive landscape that providers of 10G PON solutions willbe facing.





Another scenario for widespread deployments of 10G PON solutions that could potentially move10G PON to the Plateau of Productivity is an upgrade scenario in which current-generation PONdeployments start to run out of bandwidth— but with CSPs struggling to fully leverage thebandwidth of current-generation GPON/EPON solutions, this scenario is less likely than the near-cost parity scenario.

In either scenario, 10G PON will likely compete against wavelength division multiplexing (WDM)

PON solutions, but with a combination of 10G PON and WDM PON being a likely long-termscenario.

User Advice: Expect the price premium for 10G PON relative to current-generation PON toerode over time, as when GPON replaced broadband passive optical network (BPON) (ITU-TG.983).

When evaluating the price premium for 10G PON, ensure you do so from a total cost perspective.With civil works and fiber installation cost typically accounting for most of the total cost, the pricedifference between current-generation PON and 10G PON is lower from a total cost perspectivethan from a pure equipment cost perspective.

When deploying or evaluating current-generation PON solutions, consider future upgrades either to 10G PON or WDM PON solutions.

Bus iness Impact: 10G PON could become the mainstream PON technology as the pricepremium relative to current-generation PON diminishes, but it also offers itself as one of thepossible upgrade paths for CSPs that have already deployed current-generation PON solutions.



Maturi ty: Emerging

Sample Vendors: Alcatel-Lucent; Huawei; Motorola

Recommended Reading: "Emerging Technology Analysis: 10G and WDM PON"

TD-LTEAnalys is By: Joy Yang

Definit ion: TD-LTE, or LTE TDD as it is called by the Third Generation Partnership Project(3GPP), is a time-division duplexing (TDD) version of Long Term Evolution (LTE). According tothe 3GPP's definition, TD-LTE will be the successor to Time Division Synchronous Code DivisionMultiple Access (TD-SCDMA).

TD-LTE will be solely a physical-layer development from LTE frequency division duplexing (FDD),which, by contrast, uses a paired frequency spectrum separated by a guarded band to provideuplink and downlink data communications in dedicated spectrum. There is no operationaldifference between LTE TDD and LTE FDD at higher layers or in the system architecture. TD-LTE has a different frame structure from LTE FDD at the physical layer and requires greater

synchronization in the system.Posi t ion and A dopt ion Speed Jus t i f icat ion: TDD technology requires unpaired spectrum,which means that transmit and receive signals use the same frequency spectrum and areseparated through time-division duplexing. Unlike FDD, in which transmitter and receiver work indifferent spectrums, TDD has the flexibility to allocate channel capacity to the uplink or downlinkdynamically, according to the demands of the traffic. Also, unlike FDD, TDD does not require a





guarded band between uplink and downlink. Therefore, TD-LTE makes more efficient use of frequency resources. TDD is also a great alternative where FDD spectrum is too costly or insufficiently available, as license fees for FDD spectrum are very expensive and FDD spectrumis quite full up across the world.

China Mobile, which owns the Global System for Mobile Communications (GSM) network with thelargest number of mobile subscribers and is the only major TD-SCDMA operator, is heavily

behind the TD-LTE ecosystem. TD-LTE is gaining momentum among technology vendors inrelation to compliance. Qualcomm has announced a plan to support both LTE TDD and LTE FDDin its new chipset. Equipment vendors Motorola, Ericsson, Nokia Siemens Networks, Huawei andZTE have cooperated with China Mobile and demonstrated their TD-LTE solutions at Expo 2010Shanghai China.

TD-LTE is also attracting the interest of WiMAX operators. WiMAX is another wireless broadbandtechnology based on TDD technology. However, not enough effort has been invested in WiMAX'ssuccessor technology, WiMAX 802.16m. With several equipment vendors having announced thattheir current WiMAX solutions could in future support TD-LTE through software upgrades, manyWiMAX operators are likely migrate to TD-LTE as their next-generation technology.

User Advice: Operators that lack the opportunity, or are unwilling, to pay the high license fees for FDD spectrum should consider TD-LTE as an alternative option for providing mobile broadband

services.

Current WiMAX operators should keep TD-LTE in mind as an alternative for technologicalevolution. When choosing a WiMAX vendor, communications service providers should evaluatethe likely ability of the solution to migrate to TD-LTE in the future.

WiMAX equipment vendors without TD-LTE offerings should consider using their experience inTDD technology and their "footprint" in the WiMAX market to break into the TD-LTE market.

Bus iness Impact: TD-LTE will emerge in 2010 to deliver high-bandwidth, high-quality mobilebroadband services to enterprises and residential users, with potential reductions in operationalcosts for operators.



Maturi ty: Emerging

Sample Vendors: Alcatel-Lucent; Ericsson; Huawei; Motorola; Nokia Siemens Networks;Qualcomm; Samsung; ZTE

Next-Generation Service Delivery Platforms

Analys is By: Martina Kurth

Definit ion: A next-generation service delivery platform (NG SDP) is a set of integrated softwarecomponents that supports the delivery of Internet Protocol (IP) and non-IP carrier services. Theaim with NG SDPs is to create the core of a network/resource-neutral service delivery system that

can automate service creation and service management. It provides more flexibility and faster service creation and enables the combination of many services and service features.

Vendors' NG SDP offerings vary according to their key competencies in networks or IT. NG SDPswill include many functions, some of which may be considered a business support system or operations support system (OSS) by other vendors. These functions may include:





Service creation:

Service element creation.

Service composition.

Service business conditions.

Service management (traditionally the domain of OSSs):

Fulfilment.

Assurance.

Service operation subsystems (traditionally the domain of network resources):

Databases/registers (centralized or distributed).

Application execution.

Integration platform and service-oriented architecture (SOA) environment (SOA serviceorchestration).

Identity management (and profile management).

Content management subsystems.

Call-processing subsystems.

Web portal technology.

Mobile portal technology.

Enablers and application programming interfaces (APIs):

A set of APIs to interact with and virtualize the carrier's network elements.

A set of APIs to connect services, including third-party content services and virtualnetwork operator services.

A set of APIs to connect to carriers' existing applications, such as billing, customer relationship management, ERP and OSS applications.

Service enablers providing presence and location data, which can be shared betweenapplications.

The underlying transmission services can be traditional telecom services (voice, data or mobile),Session Initiation Protocol services or Internet services.

Over time, NG SDPs will evolve toward an environment in which various NG SDPs, handlingspecific services are integrated and can work together through the use of common capabilities.

The concept of an end-to-end integrated service infrastructure or service network is emerging.This software and hardware infrastructure includes all service-enabling functions of a futurecommunications service provider. Therefore, it will include functions such as device management,user device clients, content management, end-user data, policies, next-generation operationsupport systems, parts of the control layer (IP Multimedia Subsystem or Internet protocols) andeven end-user applications themselves.





Posi t ion and A dopt ion Speed Jus t i f icat ion: Communications service providers (CSPs) havegone through numerous generations of SDPs and so have a complex, expensive and slowservice delivery environment. NG SDPs have an architecture that aims to simplify the complexservice delivery environment to a minimal number of SDPs that work together and utilize modernsoftware principles, such as SOA, for greater efficiency and lower costs.

CSPs understand the concept of a horizontal service delivery environment with third-party

exposure, but so far it has been implemented more in discrete areas. Implementations remaincomplex and "killer applications" have also been elusive. At present, most SDP implementationsthat support mobile services and mobile functionality are more advanced. Nevertheless, theworldwide market for NG SDP products and services has matured over the past year.

Many CSPs around the world are either evaluating or implementing NG SDP at various stages, toenable the business case for new converged services, while mitigating legacy investment intelecom networks and IT.

NG SDP infrastructures gradually mature as CSPs tend to pursue modularized, evolutionaryenhancements of their existing architectures. Additionally, SDP architectures show greater alignment with CSPs' needs.

NG SDP becomes a key business enabler as focus shifts toward new business models that entail

third-party participation, revenue generation and improvements in customer experience. A keyfactor in this context is the monetization of existing network and IT assets. Therefore, the need for application development and legacy interoperability are among the main drivers for CSPs'investments in NG SDP. This trend also leads to the acceleration of network and serviceexposure, as well as amplified partnerships with the "ecosystem" of third-party developers andcontent and application providers and next-generation intelligent network (NG IN) integration. Themain focus of CSPs is on the migration of NG IN and telco services to maximize revenue basedon existing infrastructures. We also see a lot of hype around the enablement of application store,although this still represents a relatively small source of revenue at present.

User Advice: CSPs should invest swiftly in a more agile creation and delivery environment for innovative services to be able to anticipate new value chains and sources of revenue. However,they should refrain from a risky "big bang" approach. Instead a step-by-step deployment modelshould be applied, based on a modularized, horizontal evolution and proven return on investmentfor each module.

Center your immediate efforts on pragmatic enhancements to existing telco services to leveragelegacy assets for new composite services. However, IT matters such as Web 2.0, serviceexposure and device enablers, application stores, as well as improvements to the user experience will simultaneously become more imperative.

CSPs should not wait too long to tab into new domains, such as third-party abstraction andapplication stores to gain experience of the new service delivery environment. For example,enablers such as presence and location could be exposed to third parties to build innovative ITservices, such as through social media on the Internet and consequently, charge for them.Consumers, small and midsize businesses and branch-office users could all benefit from anincreased choice of services. However, large business users can develop or source customizedservices, so the effect is likely to be less dramatic there.

To link all software components in a service delivery environment, CSPs will need to select andimplement appropriate enterprise service bus and SOA tools. CSPs must define their architectureand ensure ease of integration by minimizing the number of tools and vendors they use.





Bus iness Impact: NG SDPs will have a profound effect on the service experience of end usersin the long term. From a technological perspective, NG SDPs support the business case for newconverged services without requiring heavy network investments. Once these platforms are well-understood and embraced by major carriers, additional innovative services will become availableto users through a high-performance and highly secure "carrier-grade" service environment. Theeffect on CSPs' product creation capabilities will be significant as SDP enable new content andservices.

Flexible and open NG SDPs will also play an important role at the core of NG service networkswhere they will be crucial for enabling the "multidimensional" next-generation telco businessmodel. In this model, end users can also be "producers," additional revenue streams can comefrom non-end-user third parties (for example, from advertisers) and CSPs also work together toincrease their reach. Additionally, carriers are also enablers and wholesale providers.



Maturi ty: Emerging

Sample Vendors: Accenture; Alcatel-Lucent; Ericsson; HP; Huawei; IBM; Nokia Siemens

Networks; Oracle

Long Term Evolution

Analys is By: Joy Yang; Sylvain Fabre

Definit ion: Long Term Evolution (LTE) is a Third Generation Partnership Project (3GPP) ventureto define the requirements and basic framework for the wideband code division multiple access(WCDMA) mobile radio access network beyond third-generation (3G) technology. It is also knownas Release 8, probably the last step before fourth-generation (4G) technology. The corespecifications for Release 8 were completed by the end of 2007, and some early commercialdeployments are expected in 2010.

Objectives with LTE include theoretical data rates of 100 Mbps downstream and 50 Mbpsupstream in 20MHz of spectrum; full mobility at speeds of up to 500 kilometers per hour; supportfor 3G network overlays; and handovers between 3G and LTE.

LTE is likely to employ multiple input/multiple output (MIMO), Orthogonal Frequency DivisionMultiple Access (OFDMA) and single carrier frequency division multiple access (SC-FDMA) in thelink layers. Notably, it will not use code division multiple access (CDMA) for the radio layer, andthere is a major operator-driven effort by the European Telecommunications Standards Institute(ETSI) to cap intellectual property royalties for LTE at a maximum of 5% of the cost of theequipment. (For definitions of MIMO, OFDMA, System Architecture Evolution (SAE) and UMTSTerrestrial Radio Access Network [UTRAN], see "Glossary of Mobile and WirelessCommunications Terminology, 2009 Update.")

LTE will come in two types — frequency division duplexing (FDD) and time division duplexing(TDD)— to support deployments in FDD spectrum and TDD spectrum. Currently, most 3Gcommunications service providers (CSPs) are adopting FDD-based 3G technologies, WCDMAand cdma2000. For them, FDD LTE will be a reasonable next-step migration technology. TD-SCDMA, which has been adopted only by China Mobile, and WiMAX 806.16e are TDD-based 3Gtechnologies. China Mobile is heavily promoting TDD LTE and is likely to adopt it as soon as it isready for commercial use. The WiMAX Forum has claimed that WiMAX 16e will be able tomigrate to next-generation 802.16m technology, which will be able to provide features competitivewith LTE Advanced (LTE-A). However, several major mobile equipment vendors left the WiMAX





market in 2008 and 2009, which leaves the WiMAX ecosystem looking slim. Gartner predicts thatTDD LTE will beat WiMAX 802.16m in the TDD market.

Posi t ion and Ado pt ion Speed Just i f icat ion: LTE gained momentum in 2009. In December,TeliaSonera launched the first public LTE services in Stockholm, Sweden, and Oslo, Norway,using equipment from Ericsson and Huawei. By May 2010, CSPs had announced 97 trials andcommitments. Western European, North American and Japanese CSPs are early adopters and

will launch services commercially in 2010 and 2011. CSPs in other markets are aiming for 2012to 2013.

Some operators have chosen to extend the life of their WCDMA networks by rolling out High-Speed Packet Access Evolution (HSPA+) technology. This may delay the need for LTE by acouple of years. The evolution from High-Speed x Access (HSxPA) to HSPA+ would be lessdisruptive than going straight to LTE, and it could also be cheaper if CSPs do not add all thepossible enhancements for HSPA+, such as 2x2 MIMO, 64 quadrature amplitude modulation(QAM) and additional carriers. Although LTE's performance is better overall, on 5MHz bandsHSPA+ is just as spectrally efficient. Within LTE, the core network evolution from the generalpacket radio service (GPRS) packet core is covered by System Architecture Evolution (SAE),along with the Evolved Packet Core (EPC) network elements.

LTE still faces challenges to provide traditional voice and short message services, which rely on

circuit-based 2G and 3G technology. Options include circuit-based call fallback to 2G/3Gnetworks, Voice over LTE via Generic Access (VoLGA) and Voice over IP Multimedia Subsystem(IMS), which the One Voice organization is working on.

In the early stages of LTE, applications will focus on mobile data usage based on data cards andUniversal Serial Bus (USB) dongles.

User Advice: CSPs have been deploying WCDMA, High-Speed Downlink Packet Access(HSDPA) and High-Speed Uplink Packet Access (HSUPA), and they must carefully consider further upgrades for LTE, which will require new core and radio access networks, as well as newspectrum. End users should not wait for promises of an ideal technology, but evaluateprice/performance criteria, choose the operator with the strongest service package, andinvestigate upgrade options for higher-bandwidth packages. Users should expect better performance, but, as with each of the preceding 3GPP network releases, typical data rates for mobile users are likely to be only 10% to 20% of the maximum theoretical rate

—though this

would still provide a significantly improved experience, compared with HSxPA.

Advice for CSPs:

Evaluate the revenue potential of mobile broadband to justify the cost of investing intechnologies like LTE. Plan to segment your service portfolio and offer value-addedservices to generate more revenue.

Prepare users for device upgrades by educating them about the benefits of fast mobileaccess. Focus on the user experience improvements that come with high speeds— including lower latency for voice and better Web surfing — rather than sellingtechnology.

Set realistic expectations about bandwidth speeds and resilience. Mobile broadband willnot be a perfect substitute for fiber or very-high-bit-rate DSL.

Challenge LTE infrastructure vendors regarding the extent to which their HSxPA/HSPAequipment is forward-compatible with or "upgradable" to LTE. Upgrades from WCDMAto HSxPA have shown that "software-only upgrades" can have unexpected hardwareimpacts.





Bus iness Impact: LTE is being widely trialed in 2010, and has been deployed by several major CSPs in leading markets, such as Western Europe, North America and Japan. It will deliver high-bandwidth, high-quality mobile broadband services to enterprises and residential users, withpotentially reduced operational costs for CSPs.



Maturi ty: Emerging

Sample Vendors: Alcatel-Lucent; Ericsson; Huawei; Motorola; NEC; Nokia Siemens Networks;ZTE





"Early Commercial LTE Networks To Reach Sweden, Norway"

"Vendor Rating: Ericsson"

"Emerging Technology Analysis: Long-Term Evolution (LTE), Hype Cycle for WirelessNetworking Infrastructure, 2008"

"Dataquest Methodology Guide: Mobile and Wireless Communications, Worldwide"

Femtocells

Analys is By: Deborah Kish

Definit ion: A femtocell is a small, A5-size base station box aimed at improving indoor coverage,especially for higher-frequency services such as third-generation (3G) services. Similar topicocells, femtocells are even smaller cellular base stations, designed for use in residential or corporate environments that connect to the customer's own broadband connection using anInternet Protocol (IP) link for backhaul. Advantages include their lower cost when compared withexisting microcellular technology, their physically smaller unit size and their greater networkefficiency. Femtocells are offered in two form factors: as stand-alone units, much like a cablemodem or wireless router; and as integrated solutions, which are simply Wi-Fi routers or cablemodems with a femtocell inside.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Still in their early commercial roll-out stage,femtocells could make mobile communications more pervasive and encourage more users toswitch over to mobile as their main means of communication. However, the business caseremains in question due to the cost of femtocells and the value they provide. Consumer's recentbehavior suggests that they are more cost-conscious and less likely to want to increase their

monthly living expenses, thereby inhibiting adoption. So communications service providers(CSPs) really need to work toward lower price plans, while vendors need to work toward reducingthe bill of materials of the femtocell. With cost-conscious consumers in mind, CSPs around theworld have been toying with the idea of femtocells, trialing them or actually deploying them. Mostfemtocell initiatives are still at the trial stage and are aimed mainly at consumer markets.However, the three largest CSPs in the U.S. have set the wheels in motion, while companies in





other parts of the world, with a few exceptions, are still taking a cautious approach. The maindrivers for deploying femtocells are in rural areas, where cellular coverage is poor, and in urbanareas, where user density and the growing use of cellular data services is putting pressure on theexisting base station architecture. The latter can be dealt with by Wi-Fi as a lower-costalternative.

From a technology perspective, as CSPs worldwide begin implementing and trialing Long Term

Evolution (LTE), due to the higher spectrum used in Europe and Japan (2.6 GHz and 1.5-2.1 GHzrespectively) it is necessary to use small cells with higher density, so femtocells (that is, smallcells for macro coverage) are a necessity. LTE will see a higher usage of femtocells, not in theresidential model currently pursued for 3G femtocells, but as a coverage tool for outdoors in themacro environment.

To date, only 11 CSPs have commercially launched femtocell services, and there are anywherebetween 60 and 70 trials still in operation. T-Mobile, for example, has already conducted severaltrials and commercial pilots, but in December announced that it will test interoperability betweenUbiquisys and Huawei through mid-2010. But femtocell services are not for everyone, particularlythose that have hung their hat on Wi-Fi.

User Advice: CSPs should offer incentives — offering rebates, for example, is more likely toattract subscribers as consumers look for ways to cut their monthly living expenses. Alternatively,

femtocells could be bundled with broadband and/or mobile plans. CSPs and vendors should worktogether to develop lower-cost solutions, and should be more aggressive with integrated solutionssuch as femtocells embedded in broadband routers or set-top-boxes. Integrated solutions willincrease adoption as this will drive lower bill of materials costs, thus driving down cost andeliminating crowded desktops. Additionally, developing complementary mobile applications, suchas services like "in-house presence alert," which will offer more value per subscriber dollar, willalso increase femtocells' attractiveness.

Bus iness Impact: Recent government incentives (such as those in the U.S. and Germany) toincrease broadband in rural areas can be advantageous to CSPs offering femtocells, since abroadband connection is needed for a femtocell service. Mobile services in these areas are likelyto increase as subscribers may opt for mobile as their main means of communication, rather thanvoice over IP (VoIP), so the impact on consumer markets could be significant. From an enterprise

perspective, as technology advances and femtocells' capacity to increase the number of registered users per femtocell grows, this could prove to be a driver in this market too. While weanticipate an estimated growth rate of about 40%, the number of public switched telephonenetwork lines in the enterprise is not decreasing as fast as VoIP is growing.

Alternative technology may be an inhibitor, as Wi-Fi is femtocells' strongest competitor. For example, Orange in the U.K. announced that it will not launch a femtocell service because itbelieves that femtocells are still too expensive, and it will continue to emphasize its "Livebox" Wi-Fi residential gateways.



Maturi ty: Emerging

Sample Vendors: Airvana; Fujitsu; Huawei; ip.access; Kineto Wireless; Motorola; Nokia SiemensNetworks; RadioFrame Networks; Sagem Telecommunications; Samsung; Ubiquisys; ZTE

Recommended Reading: "Femtocells: The State of the Market"

"Emerging Technology Analysis: The Mutual Benefits of Femtocells and LTE"





"Magic Quadrant for LTE Network Infrastructure"

IMS

Analys is By: Bettina Tratz-Ryan

Definit ion: IP Multimedia Subsystem (IMS) is a standardized, open architecture based on

Session Initiation Protocol (SIP). It defines how applications and services are delivered tocustomers, regardless of the access network on which they run. IMS separates session controlfrom the actual applications for maximum flexibility, and standardizes signaling and control layer,together with network-based and Web-enabled applications and services. It helps carriers buildtheir strategy on the convergence of platforms, technology solutions and services, as well as onend-user devices and terminals, including handsets and client premises equipment. Within IMSthe Policy and Charging Rules Function (PCRF) is the policy entity that forms the link betweenthe service and transport layers. The PCRF collates subscriber and application data, authorizesquality-of-service resources, and instructs the transport plane on how to proceed with theunderlying data traffic. This function becomes interesting, especially when communicationsservice providers need to deal with traffic from over-the-top players and Web service providers.

Posi t ion and A dopt ion Speed Jus t i f icat ion: The architecture around the IMS topology and thelogic behind it has matured. However, implementation has been sparse, mostly deployed by

service providers to fulfill certain needs and requirements on a network level or a serviceenvironment, such as to build out converged data, voice and collaboration applications for specific enterprise and consumer customers. Many deployments stem from fixed-line operators intheir voice migration toward net generation voice, implementing rich communication suite inlockstep. During the past few years, the migration from an existing network topology to IMScontinued to be quite complex. There are many competing IMS offerings from vendors, andservice providers have selected vendor "ecosystems" to optimize an IMS-based networktransformation solution around their specific core network requirements. In addition, the IMSapplication enablers, together with initiatives such as IMS Rich Communication Suite (RCS), willsupport the creation of compelling new services that will provide subscribers with an end -user experience they are willing to pay for. This remains a critical issue, because many blendedservices receive only a limited return on investment. Mobile operators are pursuing the IMStopology from a home subscriber server and application layer perspective and are interested in

IMS RCS delivering a standardized set of applications (presence, instant messaging and activedirectory) using existing telephony. Wireline operators need a carrier-grade, future-proof voiceover Internet Protocol (VoIP) platform blended with IPTV, and are interested in fixed-mobileservice convergence for enterprise customers. IPTV should not be seen as a panacea for successful IMS implementation, but rather as a supplemental service capability.

User Advice: IMS is a promising long-term architecture for session control, but needsconsiderable system integration to deliver on promised results. Consider vendors that haveexperience in technology migration and have the necessary capabilities to provide the integrationand application development skills. Deploy IMS-capable softswitches and proceed with IMS-compliant service delivery platforms. Watch for new service opportunities in the RCS communityto justify mobile network development especially for long-term evolution (LTE) multimediaservices.

Bus iness Impact: Network service providers will be able to support, control and charge for differentiated session delivery for multimedia services with a standards-based architecture. Theworld's largest carriers will embrace IMS, so it will help in carrier interoperability. In the longer term, IMS will be applicable to fixed and mobile operators, as well as cable operators. Networkservice providers will also be able to collapse various network layers to gain cost savings,because IMS will be able to, in future iterations of the architecture, support both fixed and mobile





sessions. Residential and enterprise customers will be able to obtain more "carrier grade"services via a single terminal, with one authentication point for address book, voice andmultimedia mail, and value-added services. In the future, even television via IP could be linkedusing IMS. IMS will have an impact on future mobile LTE broadband network designs and,therefore, future services that will be enabled on this architecture.




Sample Vendors: Alcatel-Lucent; Ericsson; Huawei; Italtel; Metaswitch Networks; NEC Japan;Nokia Siemens Networks; Sonus; ZTE

Recommended Reading: "Magic Quadrant for Softswitch Architecture"

MPLS-TP


Definit ion: Multiprotocol Label Switching Transport Profile (MPLS-TP) is a connection-oriented

packet-switched protocol. MPLS-TP is a joint effort between the International TelecommunicationUnion (ITU) and the Internet Engineering Task Force (IETF). The network architecture andnetwork management principles behind MPLS-TP will be the same as those for SynchronousDigital Hierarchy (SDH)/Synchronous Optical Network (SONET) and Optical Transport Network(OTN), and together with its natural fit with MPLS this should be a technology that mostcommunications service providers (CSPs) will welcome.

The progress toward the standardization of MPLS-TP is captured in so-called request for comments (RFCs) issued by the IETF, see for instance "RFCs 5317, 5718, 5654 and 5860."

Posi t ion and A dopt ion Speed Jus t i f icat ion: CSPs are expected to welcome MPLS-TP as astandardized technology for cost-effective transport solutions for carrier Ethernet services. Thebattle that raged a few years ago between the Provider Backbone Bridge Traffic Engineering(PBB-TE), also referred to as Provider Backbone Transport (PBT) and Transport (T)-MPLS

camps did not encourage CSPs to adopt either technology, even though the need for innovationin this space has been evident for some time. The standardization process is still in progress, sodespite an anticipated quick uptake by CSPs due to a pent-up demand for standardized and cost-effective carrier-class Ethernet solutions, the technology is expected to be more than two yearsaway from the Plateau of Productivity.

User Advice: CSPs should have MPLS-TP on their technology radar screens. If they havealready deployed PBB-TE or T-MPLS-based solutions, a potential move to MPLS-TP should beevaluated as a likely scenario.

Bus iness Impact: MPLS-TP is expected to offer a standardized solution for cost-effectivetransport of carrier-class Ethernet traffic.

It is significant that MPLS-TP is a joint ITU and IETF effort, and that the architectural principles

are based on proven technology that is widely adopted among CSPs, partly because of thetechnology battle between PBB-TE and T-MPLS that preceded the announcement of MPLS-TP,but also because of the risk-averse climate that continues in the aftermath of the current financialcrisis.







Maturi ty: Emerging

Sample Vendors: Alcatel-Lucent; Ciena; Cisco; Ericsson; Huawei; Nokia Siemens Networks

40 Gbps Transport


Definit ion: To address accelerating traffic growth, transport systems are increasing channelcapacity from 10 Gbps data rates to 40 Gbps. To facilitate higher line rates without sacrificingtransmission reach, solution providers have had to introduce more advanced modulationschemes and thus more complex transceivers, with differential phase shift keying being the mostwidely adopted enabling technology to address this evolution.

40 Gbps (and also 100 Gbps) line rates are already standardized for Synchronous DigitalHierarchy/Synchronous Optical Network (SDH/SONET) and optical transport network (OTN) bythe International Telecommunication Union (ITU). The Institute of Electrical and ElectronicsEngineers (IEEE) ratified the 802.3ba standard in June 2010 (seehttp://standards.ieee.org/announcements/2010/ratification8023ba.html), which will allow

communications service providers (CSPs) to carry 40 Gbps and 100 Gbps Ethernet directly over transport networks supporting these line rates. This allows CSPs to consider the move to higher line rate systems in the wider context of what their future optical transport architecture should looklike.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Commercial deployments are gaining momentumin long-haul backbones and metropolitan networks alike. With large CSPs adopting thetechnology, economies of scale have kicked in to the point where the carrier cost of deploying 40Gbps technology compares favorably with alternative approaches based on 10 Gbps technology(when comparing cost per transmitted bit). A number of routing platforms utilize 40 Gbpsinterfaces, which is an important driver toward wider adoption of 40 Gbps transport solutions.

40 Gbps will be a natural step on the way to 100 Gbps transport line rates, just as 10 Gbps wasthe step that preceded 40 Gbps solutions. 100 Gbps will take a few more years than 40 Gbps to

be cost-effective, and 40 Gbps will continue as part of the solution hierarchy after 100 Gbps isintroduced (just as 10 Gbps and 2.5 Gbps are still being used).

User Advice: With major CSPs already adopting this technology, economies of scale arerealized closer to realization and the pricing barrier is being lowered. The technology is matureenough for deployment as traffic demand and price points line up.

Bus iness Impact: The relentless traffic growth is driving the demand for more capacity at lower cost per bit, both in metropolitan and long-haul networks. Traditionally, moving to a channel ratethat is four times higher only increases the cost by a factor of 2.5 to 3— so there is an economy-of-scale aspect to moving up in terms of channel rate. 40 Gbps is not quite there yet in terms of cost, but is rapidly closing the gap.




Sample Vendors: Alcatel-Lucent; Ciena; Ericsson; Huawei; Infinera; Nokia Siemens Networks;ZTE








Broadband Over Power Lines

Analys is By: Zarko Sumic

Definit ion: Broadband over power line (BPL) technology— also called power linecommunications (PLC)— is a landline means of communication that uses established electricalpower transmission and distribution lines. A service provider can transmit voice and data traffic by

superimposing an analog signal over a standard alternating electrical current of 50Hz or 60Hz.Traditionally, the promise of BPL appeared to reside in electrical engineering domains, in whichlooping the transformers was cost-effective (for example, in Europe and Asia/Pacific, where,because of higher secondary distribution service voltage, several hundred consumers are servedby one transformer, as opposed to North America, where only up to seven consumers are servedby one transformer). However, with the recent development of new technologies andtechnological improvements, embedded utility infrastructures can be used to deliver voice, videoand data services.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Utilities, searching for options to increase revenue,are revisiting BPL, and, at the same time, exploring its potential to improve utility functions.Business models that highlight utility-focused applications, such as advanced meteringinfrastructure (AMI), appear to be driving new implementations — particularly in Europe, wherethey still have a strong presence. However, other broadband technologies— particularly WiMAX

— are evolving faster and moving into position to take large portions of the addressable marketfor Internet access.

User Advice: BPL technology is maturing, but some technical issues still must be resolved (suchas tunneling/bypassing distribution transformers, signal attenuation and radio interference).Distribution feeders are dynamic in nature, resulting in changing network parameters as aconsequence of capacitor and line regulator switching for voltage control, as well assectionalizing and transfer switching. Utilities should understand that most BPL systems must beretuned for optimal performance every time a distribution component gets switched in or out of the network. Therefore, close collaboration should be established between BPL personnel andplanning engineers to consider BPL dynamics in circuit design and operations.

BPL continues to lag behind other mainstream broadband communication technologies, which

are attracting substantially more R&D investments. Although not yet fully mature, electric utilitiesand broadband service providers should follow BPL development and conduct technical feasibilityand economic viability studies. BPL appears to be more appropriate as a communication channelfor AMI and other utility control-monitoring functions (although some initial deployments haveraised performance concerns), but less appropriate for Internet access services. BPL must beevaluated as a vehicle that can increase system reliability, improve the use of the distributionasset, and enable sophisticated energy management and demand-response options, rather thana new revenue source by a company's entry into the broadband market. Users must ensure thatbusiness models, regulatory issues, and proper divisions between broadband service and utilityfunctions have been achieved before attempting rollouts. In addition, users need to consider that,due to lacking scale and investment level compared with other mainstream communicationtechnologies, BPL will become obsolete, which will impact product and supplier viability anddeployment, resulting in a "stranded asset."

Bus iness Impact: Affected areas include broadband communications and energy managementservices, including on-premises, "home-plug-type" provisioning for consumer energymanagement applications.







Maturi ty: Obsolete

Sample Vendors: Ambient; Amperion; BPL Global; MainNet

Recommended Reading: "Management Update: Top 10 Technology Trends Impacting theEnergy and Utility Industry in 2010"

802.11r-2008Analys is By: Timothy Zimmerman; Michael King

Definit ion: 802.11r-2008 has been ratified as a standard by the Institute of Electrical andElectronics Engineers' (IEEE's) subcommittee as part of an amendment regarding Basic ServiceSet (BSS). The amendment enables a secure, fast handoff experience for clients while they'reroaming among wireless LAN (WLAN) access points (APs). Fast roaming is achieved by quickreassociation and transfer of security credentials to a new AP, after the client moves out of coverage range of the AP where it was associated. The need for standardized, fast-roamingfunctionality is most noticeable when deploying loss-sensitive applications, such as voice over IP(VoIP). The intent of the amendment is to simplify the process that APs and clients must performto hand off clients from one AP to the next.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Most vendors have proprietary versions of fasthandoffs for their networks. As the adoption of voice over wireless LAN (VoWLAN) and the use of video over WLANs increases, there will be substandard handoff delays while roaming from AP to

AP, resulting in delays or calls being dropped. By standardizing and simplifying the handoffs,IEEE 802.11r provides a baseline of minimum functionality that all vendors must meet.

User Advice: Although ratifying 802.11r as a standard will improve the base level of roamingfunctionality for devices as they move through the infrastructure, there may be no perceptibledifference for most mobile users, because most use single-vendor implementations withproprietary methods for fast handoff. Enterprises need to ensure that vendors implement 802.11r as part of any WLAN evaluation to guarantee interoperability and establish a baseline of roamingfunctionality between access points across all vendors' products, and in controller andautonomous architectures. Vendors will continue using proprietary extensions beyond thestandard to differentiate functionality to improve quality of service for data, voice and video

applications.

Bus iness Impact: 802.11r will become the baseline metric for infrastructure roaming and fasthandoff, and will be another contributing component to the overall movement toward WLAN APinteroperability. The more metrics that are defined to solidify the wireless environment, the moreconfidence enterprises will have in using it as their primary access layer communication medium.The standardization of another basic wireless element will motivate vendors to find newcapabilities with which to differentiate themselves.

Benefi t Rating: Low



Sample Vendors: Aruba Networks; Cisco; HP; Meru Networks; Motorola

WiMAX 802.16e-2005

Analys is By: Phillip Redman; Joy Yang





Definit ion: WiMAX 802.16e-2005 is a mobile version of the Institute of Electrical and ElectronicsEngineers (IEEE) 802.16 standard. Its full flat Internet Protocol (IP) architecture supports timedivision duplex (TDD) frequencies in 2.3GHz to 2.5GHz and 3.3GHz to 3.5GHz. Korea Telecomin South Korea had built the first semimobile WiMAX-profiled Wireless Broadband (WiBro)network for USB dongles for broadband Internet applications. The WiMAX Forum launched theWave 1 certification process in 2008 for the Korean market specifically around WiBro. 802.16e-2005 is data-centric. Multimode handsets are just starting to come to market in the U.S., whichhas the largest mobile WiMAX network, that support voice over cellular and WiMAX for data. Ithas also seen some limited deployments in Russia and the Asia/Pacific region.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Gartner still sees possibilities in emergingcountries, as a "last mile" access technology to provide Internet services, especially where third-generation (3G) and next-generation communications or media services have yet to be launched.The first mobile WiMAX network was launched two years ago in Amsterdam; although there arealmost 600 WiMAX networks today in Amsterdam, only a small percentage support mobility. Mostmobile WiMAX networks are deployed for rural coverage, beginning in a defined area, such ascity networks, and will be used as a fill-in technology in markets for broadband access that arealready using 3G services. The focus on data versus combining voice and data will limit marketappeal for a full mobile solution, especially as rival wired and wireless broadband services arebeing launched close behind current plans. In the U.S., the largest mobile WiMAX network is

being planned, but has not seen the same widespread adoption in other developed economies.Many mobile WiMAX operators are already talking about a migration to LTE in the next few years.Many operators in emerging markets are still interested in deploying a semimobile version of 802.16e-2005, but that version requires scalability, large-scale shipments and vendor support thatare not often available. Notebook PC OEMS are staring to increase the use of WiMAX chipsets intheir products. Over 30 SKUs worldwide support WiMAX, with Dell having the largest number available.

User Advice: Mobile WiMAX network availability is limited internationally, and still does notsupport roaming. The U.S. availability is planned to reach 120 million points of population (POP),or about 38% of the population, by year-end 2010. Consider WiMAX as a broadband accessservice, especially if no alternative infrastructure is commercially available and national roamingisn't needed. WiMAX can also be considered an alternative for Wi-Fi on campuses for enterprisewireless data connections, if deployed in an unlicensed spectrum. However, enterprise customersshould leverage product portfolios or ecosystems in which as many products and solutions aspossible are certified to gain the cost economics and vendor support for technology road maps,especially for end-user devices and terminals.

Bus iness Impact: WiMAX 802.16e is a semimobile technology that will be used for definedareas, such as DSL fill-in in rural regions, rather than as a nationwide system for voice and data.It should also be assessed for private networks if frequency is available, because it is a lower-cost alternative to public broadband, and offers voice and data capability to replace older privatemobile radio systems. It will compete with high-speed 3G cellular services and WiBro when it islaunched.




Sample Vendors: Alvarion; Clearwire Communications; Motorola; Samsung

Recommended Reading: "First WiMAX World Congress Draws Global Support But ChallengesRemain"





IPTV

Analys is By: Ian Keene; Fernando Elizalde

Definit ion: Internet Protocol television (IPTV) refers to the network architecture, equipment andtechnologies, middleware and software platforms used to deliver standard or high -definitiontelevision (HDTV) signals, in real time, over managed communications service provider (CSP)

DSL and fiber-to-the-premises telecommunications networks. In the future, wireless-baseddistribution networks may be added to this list. IPTV delivery systems increasingly employadvanced video compression (AVC) technologies, such as MPEG-4 or VC-1, whereas earlyimplementations of IPTV used MPEG-2.

Posi t ion and A dopt ion Speed Jus t i f icat ion: IPTV constitutes the CSPs' response tocompetition from cable and satellite operators. It is a major area in the field of next-generationtelecom architecture and services; with the potential to be a transformational enabler for CSPsand for those end users who have not been able to receive interactive TV. However, factors thatblunt its quick, widespread deployment and adoption are numerous. These include mature pay-TV markets in some countries and regions (especially North America), and competitive bundledofferings from, for example, cable competitors. There are also technological issues, as therequired end-to-end solution is complex. IPTV means that CSPs need to manage complex server farms, home devices and networks. Set-top boxes to access the service are expensive and not allcopper loops can offer enough noise-free bandwidth for standard-definition video, let aloneHDTV. The inability of some CSPs to procure different and compelling content, or even contentsimilar to current content deals, and consumer inertia when it comes to changing serviceproviders are issues as well. Consumers are not universally convinced about the benefits of premium content and the market for over-the-top video on the Internet is growing fast. Globalsubscribers of IPTV services reached 19 million in 2008, and are forecast to grow to 36 million bythe end of 2010, but this is still a small number when you consider that household penetration isat less than 2% worldwide. In most areas, CSPs cannot engage in effective advertising andmarketing campaigns.

It is becoming clear that IPTV is not a quick, easy answer to new revenue generation. SomeCSPs have started to think about IPTV as a service delivery platform and are experimenting with,for example, digital advertising and marketing solutions; in addition to the "three-screen strategy"

of providing their customers with content and content-related services on TVs, PCs and mobilescreens.

User Advice: Keys to success will be:

To avoid "me too" offerings.

To gain access to compelling content.

To bundle IPTV with other services at favorable prices.

If CSPs are to drive customer uptake in mature markets, they need to come to market withservices that are either equal to those of their competitors' at a lower price, or superior to cable or satellite video services in terms of content, convenience and ease of use.

CSPs will need to evolve new applications, usage and user behaviors to differentiate themselvesfrom the established broadcast alternatives. In less-saturated markets, they will need to use thebest combination of price, technology and content (as well as bundling with non-entertainmentservices) to bring new customers into the pay-TV market. Expect market development to vary byregion and by country. The complexity of delivery means that integrated solutions will likely be the





fastest and most cost-efficient way of deploying the necessary architecture. Increased videocontent in networks will drive capacity upgrades.

The upside for service providers is still largely speculative and contingent on the ability todifferentiate services and price aggressively, especially in regions with significant satellite andcable deployment. The most positive immediate effects for CSPs are loss of churn and the abilityto sell more broadband to users. CSPs will need to embrace interactivity and user-generated

video in their IPTV platforms, focus more on the home and home networks, embrace targetedadvertising and promote further revenue expansion opportunities with broadband applicationdevelopment. HDTV, particularly HD video on demand, will be important.

Bus iness Impact: The effect of IPTV will be felt primarily in the residential market. IPTV serviceproviders promised to deliver a new viewing experience compared with cable or satellite TV.However, most cable and satellite offerings have upgraded to deliver what IPTV originallypromised to differentiate on. There is potential for virtually unlimited programming, thanks to the"switched" nature of the network architecture. In addition, more cross-platform integrationbetween entertainment, communications and information services is possible. This can also beachieved between PCs, TVs and mobile phones, even though the real value, and "killer application," from this kind of three-screen strategy is still unproven; as is user willingness to paya premium for this functionality. Other potential benefits include highly competitive pricing and

more integrated search and navigation among broadcast/linear programming, on-demand andpersonal content such as stored music, photos and videos. Gartner enterprise clients in industriessuch as hospitality (hotels), transportation (airports) and education are also becomingincreasingly interested in IPTV.




Sample Vendors: Alcatel-Lucent; Cisco; Ericsson; HP; IBM; Microsoft; Motorola; Nokia SiemensNetworks; Thomson

Recommended Reading: "Dataquest Insight: Worldwide IPTV Growth to Remain Steady, but

not Spectacular"

"Dataquest Methodology Guide: IPTV Service Forecast and Business Model Definitions,Worldwide"

"Market Share: Top 20 IPTV Carriers, Worldwide, 1H09"

"Forecast: IPTV Subscribers and Service Revenue, Western Europe, 2007-2013"

"Dataquest Insight: IPTV Ecosystems, 2009"

"Dataquest Insight: Forecast Assumptions for IPTV Subscribers and Revenues, Asia/Pacific,Japan and Western Europe, 2007-2013"

"Leading IPTV Carriers and Their Technology Vendors, Worldwide, 4Q09 Update"

802.11n

Analys is By: Timothy Zimmerman; Michael King

Definit ion: 802.11n is the next-generation wireless LAN (WLAN) standard developed by theInstitute of Electrical and Electronics Engineers. Improvements in the technology have expanded





the throughput and range that can be implemented in 2.4GHz or 5GHz. A single spatial streamoperating in a 20MHz channel width can achieve 75 Mbps in a single coverage area, comparedwith the 54 Mbps of a similar 802.11a or 802.11g solution. Theoretically, with 40MHz channelbonding, which is double the channel size of the previous standard, and with spatial streamsincreasing from only one to up to four, 802.11n is expected to deliver as much as 600 Mbps of networking performance using four spatial streams and expanded channels. However, actualperformance will depend on each vendor's implementation of functionality, such as frameaggregation, which is not covered by the standard. 802.11n uses multiple input/multiple outputantenna technology to create separate spatial streams that turn multipath conditions in theenvironment into an advantage, whereas previously they diminished 802.11a/b/g performance.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Ratification of the standard in late 2009 unleasheda rapid movement of 802.11n as the de facto WLAN implementation. Dual soft radio accesspoints, which are capable of providing 802.11n functionality as well as addressing 802.11a/b/gmigration issues either in a dedicated or backward compatibility mode, have become a mainstayof WLAN RFPs. In most decisions, 802.1n access points are delivered as the rule, and802.11a/b/g access points are implemented as an exception. The speed of adoption to a full four-stream 802.11n 600 Mbps will move ahead — but more slowly— as 300 Mbps dual radio two-stream products provide mobility and more flexibility than the 10/100 Mbps wired infrastructurethat they are replacing.

User Advice: Enterprises need to deploy 802.11n for their WLAN needs, but they mustremember that 802.11n is a framework, not just a physical standard, which means it represents awider set of implementation choices for manufacturers than previous 802.11 physical standardsamendments (that is, for 802.11a/b/g). This will create vendor differentiation and technicalcompetition that not only will improve wireless network performance in terms of capacity androbustness of communication, but also will create the need for use-case testing because vendor implementation choices will affect data, voice and video applications. Enterprises need toremember that the wireless communication from the client to the access point is only one part of a wireless solution. Network application services that work in conjunction with the physical radiosare needed to implement a complete WLAN solution and will provide a better area of vendor differentiation. Gartner recommends that enterprises deploy 802.11n 2.4GHz radios for legacyconnection as well as address migration issues and 802.11n at 5GHz solutions for clients thatneed higher throughput.

Bus iness Impact: 802.11n is the de facto standard for "greenfield" or expanded WLANconnectivity. It is becoming a requirement for conference rooms and reception areas for manyenterprises as it expands to more coverage to increase the mobility in the enterprise. We believethat 802.11n will enable sufficient bandwidth, functionality and network application services for enterprises to consider moving not only data, but also voice and video for many enterpriseapplications to the WLAN.




Sample Vendors: Aruba Networks; Cisco; HP; Motorola

Recommended Reading: "Magic Quadrant for Wireless LAN Infrastructure"

"Toolkit: Technology Section of a WLAN RFP"

"Toolkit: Checklist for Building a Solid WLAN Access Layer"





"Critical Components of Any WLAN Site Survey"

HSPA+


Definit ion: HSPA+ is also known as HSPA Evolution and Evolved HSPA, the abbreviation

"HSPA" standing for High-Speed Packet Access. The Third Generation Partnership Project's(3GPP's) Release 7 specification has HSPA+ theoretically achieving 28 Mbps on the downlinkand 11 Mbps on the uplink by using downlink 16 quadrature amplitude modulation (QAM), uplink16 QAM, and downlink 2x2 multiple input/multiple output (MIMO) technology. In Release 8, theHSPA+ downlink will rise to 42 Mbps by using 64 QAM with 2x2 MIMO.

HSPA+ works in the same spectrum as current Universal Mobile Telecommunications System(UMTS) networks. The 3GPP requires HSPA+ to be backward-compatible with Release 99 (R99)UMTS and with R5 and R6 HSPA networks and devices. This makes it possible for operators tomake use of their existing UMTS and HSPA investments.

This analysis focuses on the frequency division duplexing (FDD) type of HSPA+. There is also atime division duplexing (TDD) version, which is an upgrade to Time Division Synchronous CodeDivision Multiple Access (TD-SCDMA). TD-SCDMA is a 3GPP TDD-based third-generation

technology, which has been deployed on a large scale only by China Mobile.

Posi t ion and Ado pt ion Speed Just i f icat ion: In December 2008, Telstra launched the firstcommercial HSPA+ service and achieved 21 Mbps on the downlink. Ericsson supplied thenetwork solution, and Sierra Wireless provided the handset, which had a Qualcomm chipset. Thenetwork had been upgraded to 42 Mbps by the end of 2009.

By April 2010, 46 networks had launched 21-Mbps services and six had launched 28-Mbpsservices. According to the GSM Association, 103 networks have made commitments to HSPA+.

Also, 42 HSPA+ devices have been launched by 11 suppliers.

Although the performance of Long Term Evolution (LTE) is better overall, on 5MHz bands HSPA+is just as spectrally efficient. In May 2010 at the Shanghai Expo, Nokia Siemens Networks'demonstration of HSPA+ achieved a peak rate of 112 Mbps using 64 QAM, 2x2 MIMO and four

bundled wideband code division multiple access (WCDMA) channels (20MHz of spectrum).With the deployment of HSPA+, some bandwidth-hungry mobile applications are becomingpossible, such as mobile video.

User Advice: Together with deploying HSPA+, network operators should consider transformingtheir service and control layers to improve their ability to enable and manage new applications,including voice over Internet Protocol (VoIP) and multimedia applications.

Mobile device vendors should synchronize their HSPA+ handset road maps with operators' roadmaps for network rollout. They should also recognize that HSPA+ is good for the brand image of handset designs incorporating MIMO, which will be a key technology for LTE devices.

Bus iness Impact: HSPA+ will significantly improve the mobile broadband experience. It offersenhanced bandwidth and has the potential to increase voice capacity for VoIP services.

The recession has made operators conservative about investing in LTE. The backward-compatibility of HSPA+ enables them to provide high-performance mobile broadband services inphases, as demand arises, and to keep using their existing UMTS and HSPA networks for basicservices in areas without HSPA+ coverage. For existing HSPA operators, there is the possibilityof migrating to HSPA+ through a software upgrade, depending on their vendor. This would





protect operators' UMTS and HSPA investments. Some operators, such as Vodafone, havechosen HSPA+ as a more cost-efficient technology than LTE.



Maturi ty: Early mainstreamSample Vendors: Alcatel-Lucent; Ericsson; Huawei; Nokia Siemens Networks; Qualcomm;Sierra Wireless; ZTE

Recommended Reading: "The Impact of LTE on Corporate Wireless Strategy"

"Dataquest Insight: Mobile Operators Must Manage Costs While Nurturing LTE Revenue"

"Early Commercial LTE Networks To Reach Sweden, Norway"

"Vendor Rating: Ericsson"

"Market Share: Mobile Carrier Network Infrastructure, Worldwide, 2008"

"Forecast: Carrier Network Infrastructure, Worldwide by Country, 2003-2014, 1Q10 Update"

"Dataquest Insight: Femtocell Market is Unlikely to Take Off Before 2012"

"Emerging Technology Analysis: Long-Term Evolution (LTE), Hype Cycle for WirelessNetworking Infrastructure, 2008"

Mobile Application Stores

Analys is By: Monica Basso; Charlotte Patrick

Definit ion: Application stores offer downloadable applications to mobile users, mostlyconsumers, via a storefront that is either embedded in the mobile handset or found on the fixed or mobile Web. Application categories include games, travel, productivity, entertainment, books,utilities, education, travel and search. Applications are free or charged-for.

Posi t ion and A dopt ion Speed Ju st i f icat ion: Mobile application stores are targeted tosmartphone users, mostly consumer and prosumers, mainly for entertainment applications, suchas games and ring tones, or phone utilities, such as screen savers. One of the original applicationstores was offered by GetJar, and is still in the market today.

With Apple's App Store introduction in 2008, the market saw a revival in interest. The companyrecently announced that there are now over 225,000 apps, there have been over 5 billiondownloads, and it paid out over $1 billion in revenue sharing to developers (June 2010). Theapplication store generated excitement in the market with free (sometimes advertisement-based)or charged-for applications, and has been a differentiator for the iPhone.

Other handset and operating system (OS) manufacturers looking to create similar excitement withtheir phones and/or OSs have also introduced application stores, including Android Market(Google), Ovi Store (Nokia), BlackBerry App World (Research In Motion), Windows Marketplacefor Mobile (Microsoft) and Palm Software Store (Palm). Carriers are also offering upgrades totheir own application stores and offerings for their feature phones, with a view to exposingservices such as billing, location and messaging to developers— e.g., Orange App Shop andVodafone 360. A number of third parties, such as Handmark, GetJar and Qualcomm, offer white-label solutions to carriers.





One example of an enterprise-specific application store is Citrix Dazzle, which works across arange of client and mobile devices, and provides a mobile app store for internal deployment (i.e.,the enterprise runs the store).

Due to the expectation that the adoption of smartphones and high-end feature phones willincrease, along with the popularity of applications, we expect application stores to acceleraterapidly to the Plateau of Productivity in fewer than two years.

User Advice: Application stores are a "scale game," and those offering them need to createsome unique selling points that will bring developers to their stores, rather than those of their competitors. An "ecosystem" needs to be created in which developers have the tools to easilywrite and port applications; consumers can easily access, download and use applications; and allsides have visibility into the accounting of application sales and an efficient billing system thatallows everyone to get paid in a timely manner.

Enterprises are particularly interested in this type of smooth ecosystem, as it takes the guessworkout of the application business.

Device manufacturers and software manufacturers are able to insert icons into the mobile deviceuser interface so that users can easily access the application store. However, having anapplication store is not for every device manufacturer. Smartphone manufacturers that do not

offer their own applications will need to offer applications via third parties and operators in order to compete in the market. Other handset manufacturers that primarily offer high-end featurephones (with proprietary OSs) should look to their partners to offer applications, such asoperators or third-party application stores like Handmark or Handango. The choice of applications, how your customers obtain them, and their ease of use on the device are important,rather than owning your application store.

In essence, operators have been offering application stores for a long time. They need toincrease their selection of applications and fight for good discoverability on the device versusother competing stores. One option is to work with third parties to create virtual application storesthat can compete with some smartphone application stores or can work together in the Wholesale

Applications Community (WAC) initiative. Important components of these stores are ease of search, discovery and downloadability. Operators can also use their billing functionality tofacilitate payments, location information to enhance applications and customer demographics toimprove advertising inside the applications. Being on a carrier deck can be an advantage to athird-party application store, as this is still a strong channel. Carriers can also offer APIs to attractdevelopers.

Application providers and developers should look for application stores that are associated withpopular handsets and that can create a good user experience, and should weigh that against thedifficulty of developing and porting applications and the potential popularity of an application. It isalso important to choose application stores that have good distribution in terms of outlets andservice from the application development community. Other features of application stores thatwould benefit developers include advertisement support (like the Google model, to allow vendorsto be "top of deck"), user reviews, rankings and recommendations (as with Amazon), and goodbilling and reporting features.

Bus iness Impact: Mobile application stores are likely to have an impact on:

Smartphone manufacturers, allowing a different degree of differentiation, depending onthe user experience and the selection of applications offered by the store.

Wireless carriers, primarily because of their interest in data access.





Applications providers, giving them access to additional customers in a well-organizedecosystem.

Brands, which can advertise and segment customers based on applications.

The biggest issue for any party wishing to provide an application store is that it is unlikely to behighly profitable, given the current market price points and the necessary startup costs. Media

reports suggest that the Apple store does not make a profit, and that it is part of the company'sbroader "halo" strategy (encouraging third-party content and accessories that make the productmore attractive) for the iPhone and iPod touch family. Also, for operators, there are someopportunities to drive data usage.

For later entrants rolling out a "me-too" strategy, the issue will be how much money is worthinvesting and what, if anything, can be sold to developers, aside from the opportunity to reach acompany's customer base. A range of parties has announced stores, although, in someinitiatives, this might not have a high impact on their bottom lines. More joint initiatives like theWAC are likely to develop — especially with vendors of apps stores bringing smaller communications service providers (CSPs) in different geographies together — to get economiesof scale.




Sample Vendors: Apple; Google; Microsoft; Nokia; O2; Orange; Palm; Research In Motion;Vodafone

Recommended Reading: "Marketing Essentials: How to Decide Whether to Start a Mobile Application Store"

"Dataquest Insight: Application Stores; The Revenue Opportunity Beyond the Hype"

VDSL2

Analys is By: Ian Keene

Definit ion: Very-high-bit-rate DSL 2 (VDSL2) (G.993.2) is the latest DSL standard to be ratifiedby the International Telecommunication Union (ITU), in May 2005. Theoretically, it can deliver asymmetrical or symmetrical aggregate bandwidth of 200 Mbps on twisted pairs at shortdistances (up to 100 Mbps downstream and upstream). There are claims of achieving 500 Mbpsunder laboratory conditions and vendor enhancements continue to stretch the achievablebandwidth when installed in typical copper networks. However, practical deployments areexpected to deliver 20 Mbps to 70 Mbps services during the next two years. VDSL2 essentiallydoubles the downstream data rates delivered by VDSL and quadruples those delivered byasymmetric DSL 2+ (ADSL2+). Based on discrete multitone (DMT) line code, the VDSL2standard specifies eight bandplans or profiles, optimized for different deployment scenarios.VDSL2 allows for operation in spectrum ranging from a minimum of 8MHz up to 30MHz, allowingfor better performance under various loop length and noise/crosstalk scenarios. Its achievements

include longer reach than VDSL (up to approximately 2.4 kilometers from the DSL accessmultiplexer [DSLAM]), and speeds of up to 100 Mbps symmetric on short loops. A significantfeature is that VDSL2 uses Ethernet as a multiplexing technology, eliminating asynchronoustransfer mode (ATM).





Posi t ion and A dopt ion Speed Jus t i f icat ion: While most service providers are still upgradingtheir networks to ADSL2+, VDSL2+ is being positioned for extra-strength triple-play— thedelivery of high-speed data, voice and digital video with the capability of handling multiple high-definition television (HDTV) streams. Its deployment is being spurred selectively in markets thatare facing strong competitive threats from cable multiple system operators and broadband cellular services. For communications service providers (CSPs) that do not want to pull fiber all the wayto the home, VDSL2 is seen as a potentially economical in-between step. CSPs can still use their legacy copper infrastructure, while being able to provision advanced services, such as InternetProtocol television (IPTV), video on demand, interactive gaming and peer-to-peer applications, allof which require not only high bandwidth, but also better upstream capability than was possiblewith earlier DSL flavors.

The main deployments of VDSL2 will be where carriers are expanding their fiber networks out of the central office with a fiber-to-the-node (FTTN) architecture, and carrier delays in doing thishave caused the slow initial build out of VDSL2. This brings the DSLAMs closer to the end user inorder to benefit from the higher-bandwidth services that VDSL2 can provide over shorter copper loop lengths.

Several carriers have deployed some VDSL2 in selected areas. With further expansion of FTTN,more trials and deployments are expected, particularly where there is competition from Data-

Over-Cable Service Interface Specification (DOCSIS) 3.0 cable services. Where there is lesscompetition, deployments are not expected in the next two to three years and asymmetric DSL(ADSL) or ADSL2 will dominate.

User Advice: Carriers should consider VDSL2 where there is a high likelihood of intensecompetition from DOCSIS 3.0 cable services or High-Speed Packet Access (HSPA) cellular services. Factor in the expected arrival of Long Term Evolution (LTE) cellular services in someareas from 2010.

Be aware that performance degrades as loop length increases. The best deployment scenarioswill be FTTN, fiber to the building (FTTB) or fiber to the curb (FTTC), with VDSL2 serving the restof the copper-based access network outside and in-building. Building out the fiber infrastructurewill be a significant cost factor for carriers in provisioning for VDSL2 services.

To ensure extra bandwidth, carriers may want to consider VDSL2 equipment capable of channelbonding. Ensure that equipment is multimode and maintains a high standard of performance,while being backward-compatible with ADSL/ADSL2+.

Carriers that have weak competition should consider whether ADSL2+ is sufficient to deliver anyadditional broadband services that are planned, such as IPTV and triple-play services, especiallyif uptake of HDTV is still sparse. Keep in mind, though, that ADSL2+ offers only about 1Mb of upstream bandwidth without ADSL2+ channel bonding.

Bus iness Impact: It will primarily be the residential and small or midsize business markets thatwill experience significant bandwidth upgrades because of VDSL2. The standard may also havean impact in providing cellular network backhaul. VDSL2 will prove popular in countries whereregulators favor the unbundling of FTTH, making the business case for fiber direct to thepremises weak.




Sample Vendors: Alcatel-Lucent; Ericsson; Huawei; NEC; Nokia Siemens Networks; ZTE





Recommended Reading: "Forecast Analysis: Carrier Network Infrastructure, Worldwide, 2005-2014, 2Q10 Update"

"Forecast: Carrier Network Infrastructure, Worldwide by Region, 2006-2014, 2Q10 Update"


Climbing the SlopeDOCSIS 3.0 Cable

Analys is By: Ian Keene

Definit ion: A cable modem is a piece of customer premises equipment (CPE) that modulatesdata signals over cable operators' hybrid fiber-coaxial infrastructure to deliver broadband Internetaccess. Data-Over-Cable Service Interface Specification (DOCSIS) is an international standardspecified by CableLabs that defines a protocol for the bidirectional exchange of signal databetween a cable modem and a cable modem termination system (CMTS) at the headend.DOCSIS 3.0, the latest version, was completed in 2006 and supports up to four times as muchbandwidth as DOCSIS 2.0. It achieves this chiefly by:

Bonding four or more 6/8MHz channels for downstream transmission rates of 160 Mbpsor more and upstream rates of 120 Mbps or more.

Incorporating statistical multiplexing, to give more users a higher peak capacity.

Using version 6 of the Internet Protocol (IPv6) to expand IP address space.

It also employs the Advanced Encryption Standard (AES) for more secure connections. DOCSIS3.0 requires compatible modular CMTS equipment to enable channel-bonding in bothdownstream and upstream directions. A tiered qualification system allowed CMTSs to be partiallyfeature-compliant with DOCSIS 3.0 until March 2009, after which time they must now be fullycompliant with all portions of the specification.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Cable operators worldwide are demanding ultra-high-speed products, so that they can compete more effectively against advanced digitalsubscriber line (DSL) and fiber-to-the-home (FTTH) services. In addition, mobile operators areoffering attractive High-Speed Packet Access services. As a result, most high-profile cableoperators in North America, Europe, Asia/Pacific and Japan have upgraded a significant portionof their infrastructure to be DOCSIS 3.0-ready. Consumer services are steadily being rolled outthrough 2010.

In the U.S., Comcast continues to increase its "DOCSIS 3.0-ready" footprint. But other U.S.operators may reserve deployment of this higher-priced, more feature-laden equipment for markets where FTTH services, such as Verizon's FiOS offerings, put them at a disadvantage.Generally, services are limited to 50 Mbps. Providing higher speeds will require even further investment in their infrastructure. However, J:Com in Japan provides a 160-Mbps service andVirgin Media in the U.K. is testing a service of 200 Mbps.

In Europe, the Middle East and Africa, and in Asia/Pacific, adoption is expected to be swift in themost competitive markets. Some cable operators will use the technology to leapfrog ASDLbandwidth offerings, bundle services and help to reduce customer churn. Worldwide adoption of DOCSIS 3.0 equipment will grow rapidly from 2010 to 2014.

User Advice: Volume manufacturing of DOCSIS 3.0-based products has intensified. While theconsumer market is the main target of the operators, enterprise and small and midsize business





(SMB) customers might want to consider these solutions for their remote workers or for their offices. With the addition of DOCSIS 3.0 in their portfolios, cable operators wanting to attractSMBs will now have more solutions to offer targeted segments of the commercial sector, beyondusing out-of-band overlay technologies that provide Ethernet-type bandwidth or direct fiber connections.

Bus iness Impact: The initial impact of DOCSIS 3.0 equipment will be mainly on the residential

consumer market. Higher transmission rates of 100 Mbps and greater will give cable operatorsmore effective competitive firepower against very-high-bit-rate DSL 2 (VDSL2) and FTTx-basedcompetitors to meet the demands of early adopters of ultra-high-speed connections, keen gamersand high-end consumers, who will use the extra speed to download videos, play multiplayer interactive games and to access other media content from the Internet. Next-generation gatewaydevices with DOCSIS 3.0 channel-bonding technology will also set the stage for cable operatorsto combine their CPE solutions with "whole house" video solutions for multiroom video networkingand other services. The longer-term impact of ultra-high-speed broadband also has the potentialto change many aspects of pay-TV business models and the video content consumption habits of users, as more video content migrates to the Internet and availability of, and access to, thiscontent on an "on-demand" basis takes place over broadband connections using PC-baseddisplays, rather than via the TV using set-top boxes or the TV itself. Until Internet content is easilyavailable on TVs, broadband networks using ultra-high-speed connections and simple home

networking/whole house video technologies will predominate.




Sample Vendors: Arris; Cisco; Motorola; Netgear; Thomson

Recommended Reading: "Forecast Analysis: Carrier Network Infrastructure, Worldwide, 2005-2014, 2Q10 Update"

"Forecast: Carrier Network Infrastructure, Worldwide by Region, 2006-2014, 2Q10"


Network DVR

Analys is By: Fernando Elizalde

Definit ion: Network digital video recorders (DVRs), also known as network personal videorecorders (PVRs), are similar in consumer function to their stand-alone DVR/PVR counterparts;enabling consumers to record, store and play back content with DVD-like functions. The primarydifference is that a stand-alone DVR has storage on a hard drive within the set-top box, while anetwork DVR stores on to the service provider's network. For larger operators, the requirednetwork storage will grow to be in the thousands of terabytes.

Network DVRs have evolved into two primary versions: in one, consumers make pre-determineddecisions as to what they will record; in the other, the service provider records all video content,

or selects broadcast channels which are then available to the consumer for an establishednumber of days.

There are also hybrids; the consumer may have a combination of both versions, and there areimplementations of combined network DVR and set-top DVRs.





Posi t ion and Adopt ion Speed Ju st i f icat ion: Internet Protocol television (IPTV) and cableoperators are interested in the technology as a way to provide value-added services to their customer base. Despite its attractiveness as a customer retention mechanism and generator of incremental revenue, network DVR (in particular the version in which consumers make pre-determined decisions) presents network storage capacity and quality of service (QoS) issues thatneed to be addressed.

To date, most network DVRs deployed worldwide provide access to programs already broadcastfor an established number of days. The majority of the deployments have occurred outside theU.S.; IPTV operator FastWeb in Milan, Italy, was one of the first IPTV operators to offer a networkDVR product. British IPTV operator Talk Talk TV (previously, Tiscali TV) started offering selectedtime-shifted capabilities, start-over services and network DVR on selected shows in early 2007. Anumber of other European carriers have moved to the same type of network DVR solution,including: Orange, Free and SFR (formerly Neuf) in France; BT Vision in the U.K.; Imagenio inSpain; Teo LT in Lithuania for its Gala TV IPTV service and On Telecoms in Greece for its On TVservice. In China, several cable and IPTV operators offer most channels on demand after thereal-time broadcast. In the U.S., Time Warner Cable has been very successful with a reducedversion of a network DVR, called Start Over, where a viewer can watch a broadcast show alreadyin progress from the beginning. Verizon also introduced a network-based catch-up service(without the capability to fast-forward during commercials) for selected shows, which are available

for a few days after being broadcast. These types of services are welcomed by broadcastersbecause the system does not permit skipping over commercial breaks.

In the U.S., copyright issues dating back to 2006 (between cable operator Cablevision and agroup of media companies) held back full network DVR services. The American Court of Appealeffectively took a copyright perspective position that a network DVR is the same as a set-topDVR. The U.S. Supreme Court refused to hear a final appeal on the matter in August 2009,leaving the road clear for Cablevision (and others) to deploy network DVR services. However,Cablevision has not yet renewed network-based DVR capabilities. In other markets, the copyrightissues have been sorted out in a different manner. For example, in the U.K. and France thebroadcasters make a selection of their programming available to pay-TV service providers for distribution on their network DVR. In Greece, On TV asks its subscribers to sign an authorizationfor it to record shows on their behalf (for 72 hours) on to the operators' servers.

Network DVRs where consumers decide what to record on the operators' servers have seenlimited deployments worldwide. The complexity, size of storage capacity, and stress on thenetwork— together with copyright issues and cost of storage capacity— have pushed largeoperators away from network DVR platforms to successfully deploy premium set-top box DVRs.This type of consumer-driven network DVR platform is most often implemented in small IPTVdeployments; for example Teo's Gala TV in Lithuania, Invitel and Wist in Poland, Iskon in Croatia,

Amis in Slovenia and Minsk TV in Belarus.

User Advice: Regional implementations will vary because of copyright laws and their interpretation; carriers must be prepared to address these discrepancies with different strategiesand innovative ideas. No matter what the regional differences are, operators must have a workingrelationship with the studios and networks. A network DVR can offer significant benefits over aset-top box DVR. For example, network DVRs can handle how advertisements are treated — from not allowing advertisements to be skipped over, to enabling the advertiser to update andreplace old advertisements for more targeted advertising. However, for large operators, set-topbox DVRs are better positioned to address consumer recording decisions; this solution avoidsissues around service provider network capacity and copyright, and results in less capitalexpenditure.





Bus iness Impact: Network DVR will affect most, if not all, of the players in the consumer pay-TVvalue chain. For consumers, its positioning facilitates greater time-shifting and movement to an"on-demand" environment. Cable and telecommunications companies benefit from lower capitaland operating expenditures, but satellite operators will be the losers if they fail to emulate thenetwork DVR services (by providing hard drives in the set-top boxes) to compensate for a lack of a return path in their offering.




Sample Vendors: Alcatel-Lucent; C-Cor; Cisco/Scientific Atlanta; Ericsson/Tandberg Television;Espial; Microsoft

Recommended Reading: "Emerging Technology Analysis: Internet TV, Global Consumer Communications Services"

"Forecast: IPTV Subscribers and Service Revenue, Worldwide, 2007-2013"

"Dataquest Insight: Worldwide IPTV Growth to Remain Steady, but not Spectacular"

"Leading IPTV Carriers and Their Technology Vendors, Worldwide, 2Q09 Update"

Switched Digital Video


Definit ion: A switched digital video (SDV) system is part of a service provider's video networkinfrastructure. It enables transparent delivery of multicast and unicast video programs toconsumers from a network-based switch fabric. It works with the traditional video programmingdelivery system that sends linear broadcast video to all cable customers.

The term SDV describes a collection of network elements that groom, stage, encrypt and send abroadcast video channel through a hybrid fiber-coaxial (HFC) network at the end user's request.

An SDV system controls the delivery of broadcast video programs by managing the session andthe edge resources available on each service group's edge quadrature amplitude modulation(QAM) modulators. SDV client software for end-user set-top boxes is also part of the system.Using an SDV system, network operators can move blocks of linear video programming channelsto a multicast switched environment, thus freeing up large amounts of bandwidth on HFC-basednetworks to support the expansion of high-definition (HD), niche, on-demand and other programming content tiers. With each HD program using four times more MPEG-2 bandwidth inan HFC network than a standard-definition program, HD programming is particularly bandwidth-intensive, especially given many cable operators' slow implementation of more efficient AdvancedVideo Coding (AVC) schemes— such as MPEG-4 Part 10/H.264 — in headends and digital set-top boxes. In addition to improved bandwidth utilization, an SDV system enables greater resourceefficiencies, such as QAM sharing between video on demand (VOD) and SDV. It also paves theway for future revenue-generating opportunities, such as targeted advertising and next-generation personalized television applications.

Posi t ion and A dopt ion Speed Jus t i f icat ion: During 2009 the regulatory uncertainty that keptinvestment restrained in the U.S. subsided and investment in SDV by mayor players like Comcastand Time Warner accelerated. Canadian multiple service operators (MSOs) also accelerated thepace of deployments. European deployments have increased gradually in 2009 and 2010.





With competitive pressure mounting for MSOs to add more HD channels to compete with satelliteand fiber-to-the-home offers, MSOs are becoming more aggressive in deploying bandwidthenhancement solutions to solve this challenge, and this is driving SDV adoption.

Although SDV is only one way for MSOs to optimize and expand their available bandwidth, thetechnology has significant support from most leading vendors in the space. This supporttranslates into the use of significant R&D resources to solve some of the challenges of integrating

the technology into a very heterogeneous mix of set-top boxes. Some of these challenges, suchas interoperability with TiVo digital video recorders that use CableCARDs to access cablechannels, mean that some devices cannot tune to SDV channels without a special set-top box.However, the replacement cycle for some of these platforms continues to erode this limitation,and the cable industry is working with consumer electronics firms to develop customer premisesdevices known as tuning resolvers.

Another potential benefit of SDV adoption is the added flexibility that the technology provides interms of enabling more granular and targeted advertising, which could optimize advertisingrevenue.

SDV also has potential in markets outside North America as cable providers introduce HDprograms and as 860 (or lower) MHz-based networks experience capacity shortages. Europeanoperators introduced SDV technology to their networks in 2009.

User Advice: Operators must weigh the potential costs, benefits and operational complexities of SDV against those of a number of other bandwidth optimization and expansion technologies.

Business Impact : SDV technology is only one of a number of bandwidth optimization tools atcable service providers' disposal, but it has the potential, in the short term, to deliver bandwidthefficiencies as high as 50%. In addition, SDV will enable network service providers to reuse other common video network infrastructure elements for multiple purposes, thereby increasing theefficiency of their spending on VOD, digital program insertion, advertising insertion servers for dynamic advertisement placement in VOD streams, and more targeted "zone-based" advertising(tied to SDV service groups, for example).




Sample Vendors: Arris; BigBand Networks; Cisco/Scientific Atlanta; Ericsson/TandbergTelevision; Motorola

FTTH


Definit ion: Fiber-to-the-home (FTTH) is deployed as the most radical way (in terms of cost andperformance), to facilitate very-high-speed broadband access. This high performance can beachieved, due to the ultra-high bandwidth of single-mode optical fibers. The high cost associatedwith the technology is related to the civil works involved when installing the fibers.

There are two categories of FTTH technology: point-to-point (PTP) and point-to-multipointpassive optical networks (PONs). The former is standardized by the InternationalTelecommunication Union's (ITU) G.985 specification and the 802.3ah standard from the Instituteof Electrical and Electronics Engineers (IEEE). The latter comes in three types: Broadband PON





(BPON, ITU-T G.983), Gigabit PON (GPON, ITU-T G.984) and Ethernet PON (EPON, IEEE802.3ah).

Note that 10G PON and wavelength division multiplexing PON are not included in this FTTHprofile, as these two technologies are covered separately.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Communications service providers (CSPs) are

already deploying or planning to deploy significant amounts of FTTH-related fiber in severalcountries, including the U.S., Japan, South Korea, France, the Netherlands, Denmark, Norway,Sweden, Australia, Singapore, Greece and Portugal.

As the cost of FTTH equipment decreases and deployment techniques improve, FTTH hasproved to be the most future-proof, secure, reliable and bandwidth-agile technology for broadband access, and increasingly, for multimedia and video services delivery. As a result,FTTH has been gaining momentum in the market, although the high per-user capital expenditure(mainly related to the fibers and construction costs) remains as a barrier to even wider deployments— especially as end-users are reluctant to pay more simply for getting additionalbandwidth. Successful FTTH deployments will increasingly depend on CSPs also investing inappropriate content delivery networks (CDN) and in some cases CSPs will favor near-termoriented CDN investments over longer-term FTTH deployments.

The speed of adoption of FTTH is linked to CSPs in triple- or quad-play infrastructure andservices, but also depends significantly on the competitive and regulatory situation that anoperator faces. Service offerings and deployments do vary and will continue to vary significantlyby country and region. As such, the position of FTTH on the Hype Cycle should be understood asa "geographic mean" of deployments across different geographies. Additionally, note that FTTH ismoving more slowly toward the Plateau of Productivity than most other technologies, simplybecause of the huge investment and effort required to deploy it.

The impact of the financial crisis, by default, tends to be bad news for large, strategic and longer-term investments like FTTH— with some CSPs opting for shorter-term very-high-bit-rate DSL(VDSL2) investments instead. However, some of the government stimulus packages have offsetthis and added to the heterogeneous picture seen across different geographies for FTTH.

User Advice: Decide on the relative importance of short, medium and long-term successes

before comparing FTTH with other broadband access technologies. When making riskassessments, be sure to incorporate an analysis of the particular regulatory environmentconcerned and to take the impact of relevant government stimulus packages into account.

Be aware that while most FTTH business cases are justified— at least partially— byexpectations of new revenue streams associated with video services, it is typically a strategic,competitive challenge or opportunity that triggers FTTH deployments. An example is Verizon'sdeployment of FTTH as a response to rival, cable operators' move to DOCSIS 3.0 and AT&Tscomparable services for ultra-high-speed broadband.

Note that the popularity of the different types of FTTH varies in different regions. The mainexplanation for this is that the choice of technology is closely related to the type of CSP —mainlyincumbent operators vs. utility and local government deployments— and that regional variationsin the type of CSP that invests in FTTH, drive regional differences in the choice of technology.

With future revenue estimates being intrinsically uncertain, it is vital for CSPs to accuratelyestimate the reduced operational expenses that typically follow a FTTH rollout (due to fewer active nodes and the passive nature of the infrastructure).

Bus iness Impact: The primary business impact will be the availability of higher bandwidth in theresidential and small to midsize business markets. However, the long reach of FTTH systems





allows CSPs to operate with fewer active network nodes, which, along with the passive nature of the infrastructure, can have a significant impact on the operational expenses of CSPs deployingthis technology.




Sample Vendors: Alcatel-Lucent; Calix; Cisco; Ericsson; Huawei; Mitsubishi; Motorola; NEC;PacketFront; Tellabs; ZTE

Recommended Reading: "A Business Model for Next-Generation Broadband Access (February2006 Update)"

"Governments Can Bring Moore's Law to Broadband Access (February 2006 Update)"

"Why Governments Should Care About Fiber-to-the-Home"

"Australian Government Addresses Competition Problem with National Fiber-to-the-PremisesPlan"

"Tutorial: Green Perspectives of Fiber-to-the-Home; Ecology of Scale and Economy of Scale JoinForces"

MPEG-4 Advanced Video Coding


Definit ion: MPEG-4 Part 10, or MPEG-4 Advanced Video Coding (AVC), is the standard definedby the Moving Picture Experts Group (MPEG) for compressing audio and visual data for: Web(streaming media) and CD/DVD distribution; voice (telephone, videophone); and broadcast,cable, satellite and Internet Protocol television (IPTV) applications. It is part of the larger collection of MPEG specifications introduced in late 1998, which were designated as the standardISO/IEC 14496 for a group of audio and video coding formats and related technologies. MPEG-4

AVC is technically identical to the standard known as H.264 for video compression issued by theInternational Telecommunication Union's (ITU's) Telecommunication Standardization Sector (ITU-T), which coordinates standards for telecommunications on behalf of the ITU. The H.264 andMPEG-4 Part 10 standards are jointly maintained so that they have identical technical content.MPEG-4 AVC aims to provide good video quality at significantly lower bit rates (half or less of thebit rates of MPEG-2, H.263 or MPEG-4 Part 2), without an increase in the complexity of design,which would make it impracticable or too expensive to deploy. It also aims to be flexible enoughto enable the standard to be applied to a wide variety of applications on a wide variety of networks and systems. The key features of the technology, which is embedded in encoders,decoders, receivers, set-top boxes (STBs) and other devices, include: significantly improvedcoding efficiencies (which reduce the amount of bandwidth required for video transmissions); theability to encode mixed media data (video, audio, speech); error resilience for robusttransmissions; and the ability to interact with the audio-visual scene generated at the receiver.

Posi t ion and A dopt ion Speed Jus t i f icat ion: MPEG-4 AVC technology has been adopted inmany countries by digital terrestrial broadcasters (for Digital Video Broadcasting — Terrestrial[DVB-T]), a number of national and international programming suppliers, and selectcarrier/service provider networks for the transmission of high-definition television (HDTV) contentover satellite, cable and IPTV systems. It is also under consideration for mobile broadcasting.Next-generation optical video disc formats include the H.264/AVC High Profile element as a





mandatory player feature, and MPEG-4 is part of the Blu-ray Disc format of the Blu-ray Disc Association (BDA). The DVB standards body in Europe approved the use of H.264/AVC for broadcast television in Europe in late 2004. The Advanced Television Systems Committee(ATSC) standards body in the United States is considering the possibility of specifying one or twoadvanced video codecs for its optional Enhanced vestigial sideband (E-VSB) transmission modefor use in U.S. broadcast television. France has selected H.264/AVC as a requirement for receivers of HDTV and pay-TV channels for digital terrestrial broadcast television services, ashave numerous other countries in Europe, the Middle East and Africa.

In Asia, South Korea's Digital Multimedia Broadcasting service uses the standard; the FreeviewDVB-T service is used in New Zealand; and in Hong Kong, broadcaster TVB will also use H.264for its digital and HD transmissions. NHK and Fuji Television in Japan have adopted theadvanced compression technology.

In terms of mobile video broadcasting, the Third Generation Partnership Project (3GPP) hasapproved the inclusion of H.264/AVC as an optional feature in Release 6 of its mobile multimediatelephony service specifications. In Japan, mobile terrestrial broadcast services using IntegratedServices Digital Broadcasting — Terrestrial (ISDB-T) technology will use H.264/AVC codecs.

Programmers and service providers are adopting advanced compression technologies to savetransponder capacity on the satellites they use to transmit their programming to customers

nationally and globally. IPTV operators such as AT&T and others rely heavily on the bandwidthefficiencies of MPEG-4 AVC to enable IP video services to operate within the boundaries of strictly allocated broadband data rates per household.

Many cable operators still have a significant installed base of MPEG-2-based headend encodersand STBs. While they are moving more aggressively toward adopting MPEG-4, it is expensive tooverhaul their entire customer base with MPEG-4-compatible STBs. Dual MPEG-2/4 codec cableSTBs are continuing to enter the market, particularly as more customers take an HD service tier and get their STB upgraded in the process.

User Advice: Cable service providers need to align their business plans with their technologyevolution plans with regard to MPEG-4 AVC. The technology is a key enabler of HDTV, and theoverall strategy for promoting HDTV should dictate how aggressive cable operators need to be intransitioning STBs that are MPEG-4-enabled. Furthermore, integration of Web-based and cabledelivery in business models will drive the transition to more advanced codecs that will enable amultiscreen strategy. Cable service providers must weigh the costs and operational effects of implementing MPEG-4 AVC in terms of operational efficiency improvements and revenuegeneration. This includes calculations for STB swap-outs and whether this can be accomplishedwith self-install kits, which will be key to understanding the real cost of migration to MPEG-4.Programmers that have finite satellite transponder capacity will need to consider MPEG-4 AVC asthey move to HD programming formats, to stay within the bounds of their transponder "realestate," or else they may need to lease additional capacity.

Bus iness Impact: Implementation of advanced video encoding technologies will be crucial to thesuccess of network service providers' operational efficiency for video, and their attempts topursue additional revenue. This will enable cost savings due to lower bandwidth and capacityrequirements, as well as new revenue from HDTV content. Additionally, the technology will be

important for the contribution and distribution of content, especially in video-on-demanddistribution systems.








Sample Vendors: Cisco; Ericsson/Tandberg Television; Harmonic; Harris; Motorola; Technicolor

TD-SCDMA

Analys is By: Joy Yang; Sandy Shen

Definit ion: Time Division-Synchronous Code Division Multiple Access (TD-SCDMA) is China'shomegrown third-generation (3G) standard for cellular networks. It requires only a singlefrequency spectrum to provide the uplink and the downlink, unlike FDD which requires a pair of frequencies. This is a possible advantage as there is a lot of unused time division duplexing(TDD) spectrum globally.

Posi t ion and A dopt ion Speed Jus t i f icat ion: China Mobile received a TD-SCDMA license on 7January 2009, to become the only carrier running this technology. Given China Mobile's financialand managemental strength, TD-SCDMA may have a chance to keep its place in the market. Inaddition, trial networks have been set up in South Korea, and will also appear in Taiwan. Thesedevelopments are mostly driven by politics, and although they give momentum to TD-SCDMA inthe short term, we still believe this technology will become obsolete before reaching maturity, asLong Term Evolution (LTE) is expected to leapfrog TD-SCDMA before it reaches the Plateau of

Productivity.

So far, China Mobile's 3G network covers 238 cities. By the end of 2009, it had 3.41 million 3Gsubscribers. Currently, China Mobile is heavily prompting stakeholders in the mobile industry toripen TDD LTE. China Mobile has formed an ecosystem with integrated circuit, mobile device andmobile infrastructure vendors to develop TDD LTE solutions. TDD LTE was demonstrated byvendors including Motorola, Nokia Siemens Networks, Ericsson, Huawei and ZTE at the 2010Shanghai Expo, to test its performance.

TDD LTE is gaining momentum with the support of vendors in the ecosystem. Major TD-SCDMAequipment vendors have claimed that current TD-SCDMA Node Bs will be able to able to migrateto TDD LTE with software upgrades. Very likely, China Mobile, the only TD-SCDMAcommunications service provider, will adopt TDD LTE as soon as it is ready for commercial use.This leaves limited room for a TD-SCDMA market.

User Advice: Companies should resist signing up for TD-SCDMA data services untilperformance and indoor coverage improve. In the meantime, they should look at 3G options fromother carriers that operate mature technologies such as wideband code division multiple access(WCDMA) and cdma2000.

Bus iness Impact: TD-SCDMA could adversely affect China Mobile's performance if it fails to liveup to expectations. Vendors with multiple product lines are less exposed to the risks presented byTD-SCDMA.

Benefi t Rating: Low



Sample Vendors: Alcatel-Lucent; China Putian; Datang Telecom; Ericsson; Huawei; NokiaSiemens Networks; ZTE

Recommended Reading: "Dataquest Insight: Opportunities From China's Reorganization andShake Up of the Telecom Industry"





High-Speed Uplink Packet Access


Definit ion: High-Speed Uplink Packet Access (HSUPA) is also called Enhanced Uplink in ThirdGeneration Partnership Project release 6. It is a standard for fast data uploads over UniversalMobile Telecommunications System networks and is integral to the third-generation (3G) cellular

technology known as wideband code division multiple access. HSUPA complements High-SpeedDownlink Packet Access (HSDPA) by increasing upstream data bit rates on 3G networks. Atpresent, it is widely deployed at 2 Mbps, but the technology has been developed to support atheoretical maximum of 5.76 Mbps at cell level. HSUPA also improves latency, which will typicallyfall to 80 milliseconds (ms). In addition, the technology shortens round-trip times to approximately70 ms. The aim is for HSUPA and HSDPA to deliver symmetrical uplink and downlink data rates,so that 3G networks can support applications such as videoconferencing. The two technologiesshare many of the same techniques, such as adaptive modulation and hybrid automatic repeatrequest.

Posi t ion and A dopt ion Speed Jus t i f icat ion: By May 2010, 100 communications serviceproviders (CSPs) in 53 countries had launched HSUPA services, according to the GSA,compared with 77 in 2009. The uplink speed has been improved from 2 Mbps to 5.76 Mbps,which was deployed by 36 CSPs. Currently, 609 HSUPA devices are available, of which 281 cansupport, or are upgradable to, a peak of 5.76 Mbps or higher.

User Advice: The improved uplink data rates delivered by HSUPA benefit knowledge workersand make it easier to upload user-generated content from mobile devices, but nobody shouldexpect this technology to provide true "mobile broadband." Instead, it should be viewed as animprovement to 3G technology. However, in 2008, an uplink speed of 500 Kbps was typical,which has now been increased to 2 Mbps, and this helped to start a change in behavior, withmore content uploads (social networking, YouTube and more), and generally higher data usage.Factors such as flat-rate pricing, better device user interfaces (as on the iPhone) and subsidizedlaptops also contributed.

Corporate buyers should not make long-term commitments to any mobile data technology, butshould use the various competing technologies and operators as leverage when negotiating

contracts with carriers.Carriers must continue to manage the cost of backhaul carefully, because it will keep rising asdata rates increase, making flat-rate charging an unsustainable policy.

Bus iness Impact: The effect will be faster access to mobile data services.




Sample Vendors: Alcatel-Lucent; Ericsson; Huawei; Nokia Siemens Networks; ZTE

Recommended Reading: "Hidden Costs and Performance Issues in HSDPA May Surprise

Mobile Operators"

Mobile TV Broadcasting

Analys is By: Carolina Milanesi





Definit ion: The broadcasting of digital TV programs to cellular handsets using technologies suchas Digital Video Broadcasting— Handheld (DVB-H), Terrestrial Digital Multimedia Broadcasting(T-DMB) and MediaFLO.

Posi t ion and A dopt ion Speed Jus t i f icat ion: 2009 was not an exciting year for mobile TVbroadcasting. Most communications service providers (CSPs) offering this service were stilldelivering it for free and wondering how to make money from it. But there were some

developments.

Nokia, the biggest advocate of DVB-H, made a significant change of direction. From integratingDVB-H technology in mobile devices such as the N96, it shifted to providing an add-on solution.

Mobile CSPs in New Zealand and Indonesia started offering video broadcasting services, and atrial began in Saudi Arabia. However, CSPs in markets such as Italy struggled to increase their subscribers, and, for some, business was so bad that they shut services altogether.

The 2010 FIFA World Cup brought a major investment in Africa by broadcaster MultiChoice,which chose DVB-H as the technology to reach millions of football fans across the continent.Regional differences in the approach to mobile TV broadcasting were highlighted by, for example,ESPN's decision to take the application route to delivering tournament coverage to subscribers inthe U.S.

Despite a focus on digital broadcasting in the past few years, the numbers show that analog isthe winner when it comes to mobile TV. For example, semiconductor company TelegentSystems, which has been providing free-to-air analog and digital solutions since 2007, saw astrong increase in demand for analog products during the past year.

Connected devices other than mobile phones are also becoming interesting mediums throughwhich to deliver mobile TV services. For example, at the end of 2009, chip provider Sianoannounced that leading portable navigation device (PND) vendors such as Garmin wouldintegrate its mobile digital TV receiver chips into devices. As competition from smartphonesgrows, PND manufacturers are looking for ways to differentiate their offerings. Integrating TV andinformation delivery into in-car systems is one such way.

As we anticipated in previous research, free-to-air has proved to be the only type of mobile TV

service that attracts large numbers of subscribers. With more applications becoming availablethat offer time-shifting and Web-based video services, Gartner continues to believe that TV onmobile phones will remain limited. However, new device form factors, such as media tablets, mayopen up new opportunities for the integration of mobile TV receivers. If priced appropriately, thesedevices could be the first screen for many consumers in emerging markets.

User Advice:

CSPs looking to offer mobile TV broadcasting services in countries where an analogservice is still available should consider using analog technology in preference to digital,as this would limit any risks in relation to the availability of digital spectrum.

Mobile phone makers considering support for mobile TV broadcasting should look atoffering integrated solutions for analog TV and accessory options for digital TV, in order

to maximize buyers' options. Phone sleeves that function as chargers and receivers arean interesting option.

Content providers should evaluate the return on investment from creating ad hoc mobilecontent. Consumers might be happy to receive non-mobile-specific content, if theservice offered by the CSP is free.





PC producers and broadcasters should assess media tablets as devices through whichto deliver TV services to consumers in emerging markets.

Bus iness Impact: Mobile TV broadcasting will affect all areas of video production, rightsmanagement, syndication and advertising.




Sample Vendors: DiBcom; LG; Qualcomm; Samsung; Telegent Systems; Texas Instruments

Recommended Reading: "Dataquest Insight: Mobile TV Looking at Free-to-Air to Stimulate Adoption"

GMPLS/ASON


Definit ion: The Internet Engineering Task Force's Generalized Multiprotocol Label Switching

(GMPLS) standard and the International Telecommunication Union's Automatically SwitchedOptical Network (ASON) standard enable communications service providers (CSPs) to automatetheir transport networks by means of an intelligent control plane and associated signaling.GMPLS/ASON functionality can be applied to different types of fiber optical transport network,such as Synchronous Digital Hierarchy/Synchronous Optical Network (SDH/SONET), OpticalTransport Network (OTN — as per the G.709 standard from the International TelecommunicationUnion) and emerging packet-oriented transport solutions such as Multiprotocol Label SwitchingTransport Profile (MPLS-TP).

Posi t ion and A dopt ion Speed Jus t i f icat ion: Adoption of these standards started slowly, but willspeed up as CSPs upgrade and automate their transport networks to cost-effectively supportbandwidth-hungry video services. GMPLS/ASON technology is adopted primarily by carriers thatneed to automate their transport networks; although it started as a technology only for the largestcarriers, it is now starting to find its way to smaller networks as the wavelength count in these

networks is increasing beyond the "automatization threshold."

While CSPs need to rapidly add bandwidth to their infrastructure, it is rare that they need to takebandwidth away, so this relatively monotonous growth scenario does not utilize the full flexibilityoffered by GMPLS/ASON technology— which easily could cater for more dynamic provisioningscenarios. Examples of such dynamic requirements are starting to appear — one example being

AT&T's Optical Mesh Service, where the ability to reallocate bandwidth as needed, by increasingor decreasing capacity in near real-time, is central to this offer in the business segment.

User Advice: Investments in GMPLS/ASON must be justified by operational savings from theautomation of tasks that previously were manual or semi-manual. The larger the network, and thelarger the amount of traffic, the easier it is to justify this kind of investment. An additional prove-infactor is the ability to handle complex (and even malicious) failure scenarios by means of sophisticated protection schemes.

Over time, as the technology matures and the cost comes down, it is to be expected thatGMPLS/ASON will change character and will eventually be considered as merely "table stakes,"rather than as a key differentiator.





Bus iness Impact: GMPLS/ASON enable service providers to optimize network operations byreplacing centralized, network management-controlled manual procedures with decentralized,signaling-controlled automated ones.



Maturi ty: Mature mainstream

Sample Vendors: Alcatel-Lucent; Ciena; Ericsson; Fujitsu; Huawei; Nokia Siemens Networks;ZTE

Interactive TV

Analys is By: Andrew Frank; Michael McGuire

Definit ion: Interactive TV refers to any platform that enables two-way television services, such aselectronic program guides (EPGs); video on demand (VOD); interactive advertising; games; andinformation, transaction and communication services. Interactive TV can consist of local or network interactions, but must support some return path to a network-based station that cancollect data, process transactions and so on.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Interactive TV has taken nearly 20 years to makeits Hype Cycle journey, since it first emerged in trials in the early 1990s. During this long period,its architecture, design and business models have changed considerably, and they continue to doso.

First-generation interactive TV applications, in general, did not include a return path to providesuch services as EPGs, interactive games and information services. We are now entering an erawhere a return path is seen as essential for both commerce and measurement, and the model for providing it is a key point of competition.

Another key factor affecting the speed and nature of interactive TV adoption is the divisionbetween "bound" and "unbound" applications. Bound applications are tied to a specific channel'svideo programming context, and delivered within that channel's bandwidth, while unbound

applications are persistent and decoupled from a channel or program. Unbound applications canbe delivered through the bandwidth managed by a cable or Internet Protocol TV (IPTV) provider,or through an open Internet connection to a TV or set-top box (STB; referred to as "over-the-top"or OTT). Bound applications require less storage and, therefore, can run on more legacy STBs.Bound applications are now clearly within five years of widespread adoption, while the time framefor unbound applications is hazier, but probably also within a five-year horizon.

Bound applications tend to have limited return path capacity, and sometimes achieve this usingout-of-band channels such as wired or wireless telephony, or store-and-forward polling methods.These methods are satisfactory for simple network applications such as product ordering,requests for more information, or polling and voting applications. More-complex groupinteractions such as gaming and social networking generally require more bandwidth, althoughclever work-arounds are abundant and likely to proliferate in the next few years.

In the U.S., cable companies serve roughly 60% of the TV audience, and their approach tointeractive TV is invested in Canoe Ventures, a spin-off from the industry's R&D arm, CableLabs,which has been promoting the Enhanced TV Binary Interchange Format (EBIF) standard under the SelecTV brand announced in early 2010. Initial applications are centered on RFI responseoverlays for TV commercials. Early last year, the industry produced estimates that about 32million U.S. households would be live with EBIF by the end of 2009; the industry fell far short of





this goal and recent estimates (June 2010) suggested 30 million by the end of 2010. Another issue for EBIF is variation in implementations (known as user agents) that result in a relativelysmall range of universally interoperable application possibilities. Nonetheless, EBIF clearlyrepresents the first significant penetration of interactive TV capabilities in the world's leading TVmarket.

A longer-term standard from CableLabs that supports both bound and unbound applications is

tru2way (formerly OCAP), which has been licensed by STB and TV manufacturers, but is laggingbehind the industry's deployment timetable by a far greater margin than EBIF, despite havingpublicly committed in 2008 to having tru2way capable digital cable systems by 1 July 2009. U.S.satellite TV providers have also licensed tru2way, and have the capacity to serve boundapplications using EBIF or other technologies, such as the TiVo platform. IPTV providers, still asmall minority in the U.S., have already deployed proprietary unbound application platforms.

In Europe and South Korea, Digital Video Broadcasting Multimedia Home Platform (DVB-MHP) isavailable over the air on at least 20 million STBs, often with a telephone-service-based returnpath (wired or wireless).

In the U.K., MHEG-5 has been deployed by Freeview (a digital terrestrial TV service reaching70% of U.K. households) and Freesat (a joint satellite venture between the BBC and ITV), whileOpenTV has been deployed by Sky TV satellite service. These deployments offer interactivity, but

no return path. To address this, Project Canvas, another collaboration between BBC and ITV thatincludes BT, is developing a new interactive platform for free-to-air television that employsInternet connectivity to deliver two-way applications in a hybrid fashion.

All these developments add up to a picture of accelerated deployment for interactive TV over thenext five years, although questions persist about its ultimate business value, which is usuallyconceived to be based on enhanced advertising and television commerce (t-commerce)capabilities (including VOD movie rentals and games). While advertisers, merchants,manufacturers and content licensors generally acknowledge the promise of interactivity andaddressability, there is scant proof that the value that these applications deliver will be enough inthe near term to offset the cost and complexity of these platforms, especially given the legacy of engineering costs sunk into the pursuit of these visions over the years. Nevertheless, whilerevenue from interactive advertising and t-commerce may be unproved, the infrastructure for

interactive TV will also provide access on the TV set to popular Internet-based services, such asInternet TV and social networking. Interactive TV is far more likely to achieve mass adoption now,compared to the 1990s, because it can leverage Internet behavior, rather than having to inventnew behavior patterns.

User Advice:

Service providers need to align with their regional industry groups and negotiatecollectively for interoperable standards that allow their network platforms (cable,satellite, IPTV, broadcast and online video) to remain competitive and economical todevelop for. Service providers also need to focus on multiscreen strategies (TV, PC andmobile) for service bundling and integration.

Broadcasters and content providers should focus on how to incorporate standards-

based interactivity into programming in order to bring more value to both audiences andsponsors.

Manufacturers should resist the temptation to create differentiation on the level of standards implementations that would undermine interoperability, and seek advantageon the application level instead (such as better support for Internet TV and video devicecontrols).





Advertisers and ad agencies need to press for control over metrics and reportingstandards, and work to ensure full transparency in interactive TV advertising markets.

All commercial parties should focus in the near term on partnerships and alliances in thenewly forming "ecosystem" for interactive TV services, and hedge their bets on anysingle technology solution.

Regulators should focus on ensuring fair competition among service providers andstandards bodies, and be aware that technology is creating media environments inwhich legacy regulations are often inapplicable or irrelevant.

Bus iness Impact: Cable, satellite and IPTV operators have a substantial opportunity to increasetheir revenue share from advertisers and direct marketers by offering interactive features that cansupport transactions and consumer engagement. Consumer electronics, middleware and STBvendors face potentially decisive competition over where to strike the right balance betweenfeatures and cost. TV networks and advertisers, for which DVR-based ad skipping and Internetadvertising spending shifts are significant disruptive trends, rely on interactive features, along withmore-dynamic targeting, to shore up the value of the TV medium to advertisers.




Sample Vendors: BBC; Canoe Ventures; Ensequence; Ericsson Television; Intel; Invidi;MediaFriends; OpenTV; Rovi; Yahoo

Mobile TV Streaming

Analys is By: Carolina Milanesi

Definit ion: The streaming of live television from cellular networks to mobile handsets usingnarrowcasting or multicasting technology.

Posi t ion and A dopt ion Speed Jus t i f icat ion: As we anticipated in 2009, the popularity of

YouTube and services such as BBC's iPlayer continued to gain momentum because of theincreased browsing capabilities that many smartphones and feature phones now possess. Theseservices put more power in the hands of the consumer in terms of what content to watch and howto watch it. This, combined with the fact that users do not need to subscribe to a separate serviceor acquire a specific TV-enabled device, represents an attractive proposition. Peer-to-peer videoand sideloading remain the most popular forms of video consumption on mobile devices. Larger screens, higher resolution and touch functionality all help to deliver a much richer videoexperience.

Among more traditional providers of streaming TV services, MobiTV is the most successful. Itprovides streaming services to operators across the Americas, working with content partnerssuch as Disney, NBC, ESPN and Fox. Subscribers to the service have now passed the 7 millionmark. Sport remains the strongest driver for streaming, as well as live services, as shown by thespikes in viewership in the U.S. registered by MobiTV during the National Basketball AssociationPlayoffs on ESPN. MobiTV showed the 2010 FIFA World Cup live from South Africa on ESPNMobile TV.

One possible enabler of the uptake of mobile TV streaming is the rollout of Long Term Evolution(LTE) networks. Operators are looking to deploy LTE technology to increase network speeds andcapacity, but they might face the same issues they encountered with their wideband code division





multiple access rollouts in terms of finding a "must have" service. That said, the network speedand capacity that these networks will offer are ideal for video streaming. Video might, therefore,be the easiest "killer app" operators could use to market LTE. But we will have to wait to find out,as we do not expect LTE-enabled phones to be available across the world at mass-market pricesbefore 2014.

User Advice: Mobile operators offering TV- and video-streaming services need to look for

solutions that help to optimize their networks, so they can ensure that delivery of crucial servicessuch as e-mail are not adversely affected by TV streaming. LTE might be an opportunity toincrease the quality of the video streamed because of the higher bandwidth available.

Price remains key for consumers, so flexible pricing will encourage adoption.

Bus iness Impact: Mobile TV and video streaming have an impact on mobile data services, theproduction of content and content rights.


Market Penetrat ion: More than 50% of target audience


Sample Vendors: MobiTV; YouTube

Recommended Reading: "Dataquest Insight: Application Stores; The Revenue OpportunityBeyond the Hype"

Next-Generation Voice

Analys is By: Deborah Kish; Bettina Tratz-Ryan

Definit ion: Next-generation voice refers to the network architecture, equipment and protocolsneeded to replace the traditional time division multiplexing public switched telephone network(PSTN) with voice over Internet Protocol (VoIP), and to provide enhanced voice functions andapplications in both fixed and mobile networks. In mobile networks, the architectural design for next-generation voice includes a IP Multimedia Subsystem (IMS) core, as well as the Global

System for Mobile Communications Association's (GSMA's) voice over Long Term Evolution(LTE)— VoLTE — initiative. These approaches allow mobile communications service providers(CSPs) to deploy telephony in an efficient way while moving to upgrade their networks toaccommodate broadband-based multimedia services.

Posi t ion and Ado pt ion Speed Just i f ication: Approaches to next-generation voice are helpingCSPs to reduce the cost of delivering telephony services. Although voice services don't constituterevenue growth because of their low ROI, they do provide a steady income stream, so CSPshave to reduce the cost of delivering them while simultaneously innovating toward provisioningnew voice-enabled service bundles, particularly in fixed networks. In the case of mobile voice, thecost to provide it is relatively low, but the ROI is considerably higher. IMS in the core willcomplement LTE when mobile next-generation voice becomes available. CSPs are under pressure to maintain good quality voice services, so are working toward improving the quality tohigh-definition voice.

User Advice: Continue to investigate and take advantage of the benefits of open andstandardized technology architectures with interoperable interfaces, such as Session InitiationProtocol. Investigate the benefits of telephony emulation using VoIP rather than IMS architecturefor multiservice delivery. Users should evaluate advanced features accurately, ignoringtechnology hype while acknowledging true added value and understanding the key benefits.





Vendors and CSPs should participate in initiatives such as Rich Communication Suite (RCS) andwork with software and handset vendors to improve interoperability and speed up time to market.

Bus iness Impact: The impact of next-generation voice is widespread and will affect CSPs, their corporate customers and residential users, and vendors of next-generation voice technology.VoIP will increase competition between service providers, and should encourage the appearanceof a wide range of new Web application providers, such as Google and Skype, as well as cable

operators offering voice services. Lower price points due to increasing competition and lower production costs will encourage residential users and enterprises to adopt services at anincreased rate. Government initiatives will encourage service providers to increase their reachand upgrade their networks.




Sample Vendors: Alcatel-Lucent; BroadSoft; Cedar Point Communications; Cisco; Ericsson;Huawei; Italtel; Metaswitch Networks; Motorola; NEC; Nokia Siemens Networks; Veraz Networks;ZTE

Recommended Reading: "Magic Quadrant for Softswitch Architecture"

"Forecast: Voice Switching, Control and Applications, Worldwide, 2004-2013 (2Q09 Update)"

"Market Trends: Carrier Network Infrastructure, Worldwide, 2009"

"Magic Quadrant for LTE Network Infrastructure"

ROADMs


Definit ion: Reconfigurable optical add/drop multiplexers (ROADMs) are the wavelength divisionmultiplexing (WDM) equivalent of the add/drop multiplexing that has been used in theSynchronous Digital Hierarchy (SDH) and Synchronous Optical Network (SONET) markets for more than a decade. ROADMs enable communications service providers (CSPs) to automate theway individual wavelengths of WDM systems are routed through their networks, mainly in ringconfigurations, with protection switching and easy provisioning being the major benefits.ROADMs are a trade-off between capital expenditure (capex) and operating expenditure (opex);where a capex premium is paid (relative to less-dynamic WDM solutions) to save on subsequentopex.

In Gartner's market statistics for optical transport systems, ROADMs are included in the opticalexchange equipment (OXE) segment; which includes all types of node equipment that handletraffic in the optical domain without relying on client-layer functions (such as those provided bySDH/SONET). The OXE segment also includes optical switches and optical cross-connects.

Posi t ion and A dopt ion Speed Jus t i f icat ion: ROADM equipment is currently being deployed;

especially in large, bandwidth-hungry networks that are being enabled for video services. ManyCSPs are already investing, or planning to invest during the next year or two.

User Advice:





Be sure to weigh the opex advantage offered by ROADMs against their intrinsic capexpremium; ensuring that investment decisions are made from an appropriate total cost of ownership point of view.

Smaller CSPs are likely to find that they will not have the same economic incentives toinvest in ROADMs as larger CSPs, simply because of the lower wavelength count intheir networks.

Equipment vendors should focus their ROADM marketing efforts on midsize and largeCSPs, and on those that are early adopters of bandwidth drivers— such as fiber to thehome and Long Term Evolution.

Bus iness Impact: By automating wavelength handling, ROADMs enable CSPs to achieve "bit-wise economies of scale" as well as faster, and more flexible, provisioning in their WDMnetworks.




Sample Vendors: Adva Optical Networking; Alcatel-Lucent; Cisco; ECI Telecom; Fujitsu;Huawei; Nokia Siemens Networks

Entering the Plateau

Residential VoIP

Analys is By: Deborah Kish; Bettina Tratz-Ryan

Definit ion: Residential voice over Internet Protocol (VoIP) is a telephone service delivered viabroadband cable or DSL connections using specialized end-user customer premises equipment(CPE), primarily a telephone adapter that is integrated with, or attached to, a broadband modemand associated headend/central-office broadband access platforms. These platforms includeeither Internet Protocol DSL access multiplexers (DSLAMs) for telcos or cable modemtermination systems (CMTSs) for cable operators, along with softswitches and other associatedcall and customer management servers and software. Residential VoIP can be a managedservice that provides quality of service (QoS), or a best-effort service, such as Vonage andmagicJack, that plugs into an existing broadband connection or PC, but does not provide amanaged service with QoS. Service providers can provide these services themselves over their own networks or they can offer VoIP that is hosted and managed by a third party. We do notdefine PC-to-PC-based calling services, such as Skype, which are best-effort "over the Internet"services, as residential VoIP services.

Posi t ion and A dopt ion Speed Jus t i f icat ion: Residential VoIP has been growing at an averageof 26% and will continue that momentum through 2014. Government initiatives, such as those inthe U.S., Germany and Australia, have been under way over the last two years in order to bringbroadband to rural, unserved and underserved areas, which is expected to bring a spike in

growth of residential VoIP by an additional 5% between 2009 and 2012 globally, while CSPs inrural areas complete roll-outs. Growth in broadband varies region to region, for example inmature markets it is expected to be anywhere from 60% to 80% by 2014 (such as, Iliad inFrance), whereas in emerging markets penetration varies depending on the size of the accessnetwork, but on average by the end of 2014, broadband penetration will be 20%.





Fixed line replacement has been happening gradually over the last five years and globally,traditional wired line replacement is expected to drop by 4%.

In mature markets it is forecast that wired line will drop 9% by 2014, from 85% to 76%, whereasin emerging markets the penetration is much less to begin with but replacement rate is lower. Inemerging markets, wired connections will drop by 3%, from 37% penetration to 34%. Whilemobile broadband will be a major factor of fixed line replacement, this will be most evident in

emerging markets.

User Advice: Service providers need to look beyond voice services to find ways to differentiatethemselves from competing providers, including "over the top" competitors such as Google andSkype. They need to add value to the VoIP platform by offering cross-platform integration withdata and multimedia services, as well as integrating fixed and wireless platforms that can be usedwith any device. At a time when consumers are looking for ways to cut spending, serviceproviders need to find ways to encourage subscribers to add services and pay for them at lower additional costs. An example of this would be developing software pricing models in whichconsumers can download additional features if they pay for the license. Look for variations of CPE to include gateway devices that incorporate combinations of broadband modems, voice-signaling adaptors, multiport routers and Wi-Fi access points or femtocells.

Bus iness Impact: Residential VoIP is delivering on the promise of new service and revenue

opportunities. Its bundling with broadband is having a positive effect on the uptake of servicesand, in many cases, of digital video services as well. In an IP Multimedia Subsystem (IMS)environment, it also serves as an additional platform for integration with broadband data andvideo services, as integrated portals are emerging to manage all services from a single location.Caller ID on televisions, voice mail on PCs and televisions, voice-to-text or voice-to-e-mailservices, single voice mailboxes for mobile and fixed lines, and the ability to view call logs arebecoming common, offering greater simplicity and convenience to consumers, and increasingproductivity and the perceived value of the bundle. As technology platforms become moreconverged, the portability and mobility of applications will increase.

Residential VoIP can be used with traditional "black phones" or dedicated IP phones, however itis a matter of preference of the end user as to what kind of terminal is used. For residential users,we do not anticipate an uptake in IP phones, rather base station phones since the device needs

to be plugged directly into the modem or router limiting the location of a single terminal.Benefi t Rating: High



Sample Vendors: Arris; AT&T; BT; Cablecom; Cablemas; Cablevision; Cablevision Systems;Cedar Point Communications; Charter Communications; Cisco; Comcast; France Telecom;Jupiter Telecommunications; Megacable Comunicaciones; Motorola; Nokia Siemens Networks;Nortel; Rogers Communications; Shaw Communications; Telenet; Telenor; TeliaSonera; TimeWarner Cable; UPC; Verizon Communications; Videotron; Vonage

Recommended Reading: "Forecast: Consumer Fixed Voice, Internet and Broadband Services,

North America, 2007-2013"

"Forecast: Consumer Fixed Voice, Internet and Broadband Services, Europe, 2007-2013"

"U.S. Government Signs American Recovery and Reinvestment Act"

"U.S. Broadband Initiative: Advice for Applicants and Telecom Vendors"





"German Government to Enforce the Broadband Data 'Autobahn'"

"Dataquest Methodology Guide: Consumer Fixed Voice, Internet and Broadband Services,Worldwide"

"Key Issues for Consumer Services, 2009"





Appendixes

Figure 3. Hype Cycle for Communications Service Provider Infrastructure, 2009





Hype Cycle Phases, Benefit Ratings and Maturity Levels

Table 1. Hype Cycle Phases

Phase Definition

Technology Trigger A breakthrough, public demonstration, productlaunch or other event generates significant pressand industry interest.

Peak of Inflated Expectations During this phase of overenthusiasm and unrealisticprojections, a flurry of well-publicized activity bytechnology leaders results in some successes, butmore failures, as the technology is pushed to itslimits. The only enterprises making money areconference organizers and magazine publishers.

Trough of Disillusionment Because the technology does not live up to itsoverinflated expectations, it rapidly becomesunfashionable. Media interest wanes, except for afew cautionary tales.

Slope of Enlightenment Focused experimentation and solid hard work by an

increasingly diverse range of organizations lead to atrue understanding of the technology's applicability,risks and benefits. Commercial off-the-shelf methodologies and tools ease the developmentprocess.

Plateau of Productivity The real-world benefits of the technology aredemonstrated and accepted. Tools andmethodologies are increasingly stable as they enter their second and third generations. Growingnumbers of organizations feel comfortable with thereduced level of risk; the rapid growth phase of adoption begins. Approximately 20% of thetechnology's target audience has adopted or isadopting the technology as it enters this phase.

Years to Mainstream Adoption The time required for the technology to reach thePlateau of Productivity.


Table 2. Benefit Ratings

Benefit Rating Definition

Transformational Enables new ways of doing business acrossindustries that will result in major shifts in industrydynamics

High Enables new ways of performing horizontal or vertical processes that will result in significantlyincreased revenue or cost savings for an enterprise

Moderate Provides incremental improvements to establishedprocesses that will result in increased revenue or cost savings for an enterprise





Benefit Rating Definition

Low Slightly improves processes (for example, improveduser experience) that will be difficult to translate intoincreased revenue or cost savings


Table 3. Maturity Levels

Maturity Level Status Products/Vendors

Embryonic In labs None

Emerging Commercialization byvendorsPilots and deployments byindustry leaders

First generationHigh priceMuch customization

Adolescent Maturing technologycapabilities and processunderstandingUptake beyond early adopters

Second generationLess customization

Early mainstream Proven technologyVendors, technology and adoptionrapidly evolving

Third generationMore out of boxMethodologies

Mature mainstream Robust technologyNot much evolution in vendors or technology

Several dominant vendors

Legacy Not appropriate for newdevelopmentsCost of migration constrainsreplacement

Maintenance revenue focus

Obsolete Rarely used Used/resale market only


RECOMMENDED READING

"Understanding Gartner's Hype Cycles, 2010"

"Forecast: Carrier Network Infrastructure, Worldwide by Region, 2006-2014, 2Q10"


"Forecast Analysis: Carrier Network Infrastructure, Worldwide, 2005-2014, 2Q10 Update"

"Dataquest Methodology Guide: Carrier Network Infrastructure, Worldwide"

"Key Issues for Carrier Network Infrastructure, 2010"

This research is part of a set of related research pieces. See "Gartner's Hype Cycle Special

Report for 2010" for an overview.



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