CARRIER EQUIPMENT:  Is the Softswitch Finally Firming Up?

Since the late 90s, when softswitches actually began taking shape, they have

been touted as something that would dramatically impact the fundamentals of

carrier operations. Not just by altering the network architecture but also by

helping create new services almost at will. So, while the new softswitch-based

networks would save on opex as they would be more efficient and could be better

managed, the faster and simpler new service creation would help generate new

revenue streams.

In December 2002, when VOICE&DATA carried stories on softswitches,

commercial deployments were rare and trials very few. Not only did softswitches

face issues of reliability and stability, lack of volumes and crashing circuit

switch prices made them less attractive and look costly from a capex

perspective. Then, there were issues related to interoperability with existing

TDM networks.

Despite all that, the vendors were gung ho about how softswitches can help

lower capex and opex, equip service providers with better and faster service

creation capabilities, and improve network efficiency. Underplaying concerns

related to maturity and reliability of the new technology and issues arising out

of lack of uniform standards and interpretability, vendors argued that benefits

offered by softswitches made them imperative for service providers. Just wait

for the right time, they had said.

That right time now appears to be close. Not only are trials happening

everywhere, market reports and vendor revenues suggest that the softswitch

market is moving from trial mode to commercial deployments. A Dell'Oro Group

report says that sales of next-generation VoIP equipment-including

softswitches, media gateways, and hybrid-media gateway softswitches grew three

percent worldwide in the second quarter of 2004. Purchases of softswitch trunk

licenses, which are indicative of deployments in the service provider network

core, grew four percent in Q2 2004 over Q1 2004, while subscriber licenses

declined 12 percent during the second quarter. Year on year sales of softswitch

trunk licenses grew almost 36 percent. "Although subscriber licenses

declined this quarter, the migration of VoIP to the access edge is underway.

Carriers are planning, piloting, and rolling out residential and business VoIP

services including IP-centrex," says Steve Raab, director of IP telephony

research at Dell'Oro Group. "We expect local exchange access services to

be a key growth area for this market, beginning 2005," he adds.

Source: Infonetics Research

According to Infonetics Research's quarterly market share and forecast

service, Next Gen Voice Products, the worldwide next-generation voice product

revenue totaled $452 million in Q3 2004, up 13 percent from Q2 2004 and up 69

percent year on year. Annual revenue is projected to grow from $1.3 billion in

2003 to $4.8 billion in 2007, representing a strong CAGR of 39 percent.

"Most equipment categories saw sequential growth this quarter," says

Infonetics Research's Kevin Mitchell, directing analyst and author of the

report. "Voice application servers, session border controllers, and

softswitches, especially class 5 licenses and revenue, grew the most. This

indicates that service providers are really beginning to change gears, from

investing in infrastructure to investing in next-generation equipment that will

allow them to offer new services," he adds.

Even though most deployments are currently focused on core networks

(replacing class 4 legacy switches), the access networks (class 5 switches) too

are seeing good amounts of action. Infonetics Research found a good growth in

class 5 softswitch revenue that went up 34 percent quarter on quarter, to $76

million.

“Softswitches are rapidly becoming mainstream” Ruchir Godura, UTStarcom “We expect large scale deployment of soft-switches in 2005 in India” Sanjay Vidyarthi, Tekelec “Commercial deployments are a stamp of approval” Parmindra Kwatra, Motorola

There is good news for softswitch vendors from almost every major telecom

markets. For example, in the US market, there has been major deployments of both

class 4 and class 5 softswitches. While class 4 have been deployed by service

providers like Sprint, Verizon, and Quest, class 5 switches are being used by

Bridgecom, US Lec, and TDS Telecom among others. Nortel Networks has deployed an

end-to-end next-generation network (NGN) solution for Shanghai Netcom that

included, among other things, its Succession communication server (CS)

2000-Compact superclass softswitches. Similarly, Australian incumbent Telstra is

all set to use Telica's softswitches (Telica has been bought over by Lucent)

and media gateways in its VOIP-over-broadband trials. In South America,

Brazilian operator VIVO's order for Motorola softswitches, announced in July

2004, has been the largest single order among Motorola's base of global

customers and one of the largest in the industry.

The Indian Story So Far



The Indian story is no different, though things are moving a little slower

then elsewhere. While vendors were always optimistic, it is only in the past one

year that softswitches have gained any serious traction among Indian service

providers with almost all of them doing trials with different vendors. As

questions about stability and reliability of the softswitch technology still

remain in some domain, trials are almost mandatory for service providers. While

vendors are tightlipped about the names of service providers running trials,

they claim that almost all of them are doing so. "People have been talking

about softswitches for a long time but now things are happening as operators

realise that softswitches would save them on opex," says UTStarcom's

south Asia operations head Ruchir Godura. UTStarcom is doing a CDMA softswitch

pilot with a private operator, so is Tekelec, which is trying out a combination

of class 4 and class 5 MSC with some operators in India. Sanjay Vidyarthi, chief

operating officer for Tekelec in India, too is optimistic that Indian market

would soon see major action. In fact, Vidyarthi expects most of Tekelec's

growth in India to come from softswitch sales.

"While 2004 was the year of evolution, we expect major deployments in

2005," says Vidyarthi, adding that 2006 would be year when heavy-duty

softswitch deployment would happen.

Source: Infonetics Research

The incumbent BSNL too is now interested in the softswitch technology. One of

its latest tenders is for procurement of softswitches (along with media gateways

and other related elements) to be deployed at New Delhi and Chennai. What is

interesting is that BSNL is keen to deploy softswitches that should have

capability to support class 5 features as and when IP is introduced in the

access network of BSNL.

Parmindra Kwatra, who heads Motorola's Global Telecom Solution Sector in

India, points out the fact that commercial deployments happening are a stamp of

approval. Kwatra, however, does not discount challenges and hiccups. "The

challenge is to replace the old switches with the same amount of reliability and

take care of future requirements and we must do that quickly and better. That is

the major challenge for the softswitch industry," he observes. Tata

Teleservices has deployed a Motorola SoftSwitch for CDMA (MSS-C) on its CDMA2000

1x network at Nagpur in Maharashtra.

For service providers, softswitches would become the key vehicle of expansion

to new geographies including smaller locations and rural areas, vendors say.

"With a softswitch, a service provider does not need fiber everywhere-remote

locations can be connected to the central switch with satellites," Godura

points out. Kwatra also believes that softswitches would be key to development

of rural telephony and expansion of networks to locations with small subscriber

base.

Ravi Shekhar Pandey