Microsoft, Juniper and Sonus Network Direct and Indirect Collaboration redefining UCC – Unified Communications and Collaboration paradigm

By the end of June, Microsoft (MSFT) is expected to launch updated version of Lync with inbuilt Skype. Microsoft Lync is unified communications platform targeting enterprises customer base. The Skype integration will help Microsoft to convert Lync in a consolidated IP communication system that would offer PBX replacement.

Microsoft Lync platform without voice received good response and adoption from Enterprises. The upcoming version with Lync integration is going to make major difference. Many Enterprises are looking for consolidated Unified communication and Collaboration platform and Microsoft is hoping to increase Lync existing and new Enterprise customer base.

In a managed service environment, Microsoft collaborated with number of partners to fulfil enterprise customer hardware and software requirement through single window to enable Enterprise with complete and unified communications management system. The partner product line include Session border controllers(SBC), Media Gateways, Networking Gear and IP phones to offer management platform for CAC, Voice QoS, End-to-End Call setup and retention.

The one of the major beneficiary would be Sonus network. The pure Service Provider networking gear OEM entered into Enterprise segment through acquisition of Network Equipment Technologies (NET). Sonus innovative Session Border Controller designed for Service Provider and Enterprise through Smart policy and call management system attracted many enterprises looking for voice add-ons and differentiated media. Sonus recent collaboration with Juniper in the field of Software Defined Network may enable Sonus Lync Business Unit to serve Microsoft Lync Platform adopter with Skype add-ons.

Post Acme Packet acquisition by Oracle, the Session border controller segment is changing fast and Sonus acquisition of NET attracted many platform players in consolidated voice, data and media offering to forge collaboration with Sonus to tap increasing growing Unified Communications and Collaboration segment. Juniper partnership with Sonus and Sonus partnership with Microsoft inturn created end to end solution provider for Enterprise and can seamlessly refine, redefine existing or new service provider network. Its win wins collaboration for all entity and offer great opportunity to increase revenue share in a very competitive segment of UCC.

Sonus and Juniper Collaboration on Software Defined Network – New Opportunity for Customers

Few months back Oracle acquisition of Acme Packet surprised everyone. The acquisition explained the unexplained changing industry dynamic and forced ecosystem player to realign their business strategy to maintain or increase their presence through innovative managed services portfolio. The focus shifted from network management to smart service delivery.

In Feb 2013, Sonus Network collaborated with Broadsoft to target Unified communication, SIP trunking and inter-working. Sonus already leader of Session Border controller ( SBC’s) through their innovation integrated feature on PCRF, PCRE, Security, CAC and many other captured many contract from competitors in the Service provider and Enterprise segment. Their entry into UC segment through an acquisition enabled customers to get consolidated solution for triple play.

Now, Juniper and Sonus collaborated to enhance services or product delivery using Software defined Network Principle. The smart aggregation and segregation of SBC, Routers and Policy Engine Pool would be used to develop self-healing intelligent traffic provisioning management. It would also help customers to upgrade or downgrade traffic delivery to deal with real and non-real time traffic without network over provisioning of network. The capabilities would enable service providers of create dynamic priority based hierarchical service management to fulfill real time traffic SLA commitment. The combination of above features with Juniper JunosV App Engine would offer service provider on the go availability, reachability, scalability, adoptability, security, QoS to deliver triple play services or product or Apps lines. The customer would be able to achieve their requirements on consolidated mirrored service delivery, network optimization, higher capacity utilization, QoS, SLA, Regulatory compliance.

With the growing adoption of UC, Rich Communication, M2M,IoT; the proposed collaboration is going to bring an opportunity tap the untapped revenue opportunities.

Is Indian PSU’s are helping in maintaining India Telecom Story

Indian Telecom sector started witnessing turbulent time post 2G scam. The entry of additional service provider added fuel in fire by escalating tariff war. It resulted in deep recession in Telecom sector. The incumbent private service provider lost major ground to regional and challengers in all circles. It prompted Incumbent to introspect their service offering and area of concern which resulted in fall of revenue attributed by multiple factor. The MNP regulation was used by low earning subscribers as a tool to get the freebies from competitors and get the communication service literally free of cost. The tariff war and easy way to get the connection offered subscribers a way to acquire multiple connections to avail lower tariff from multiple service providers. It also helped them to bypass roaming charges while being on other service geographies of service provider. The revenue sucking environment prevailed for more than year till 2G scam surfaced. The speedy trial and greater scrutiny of subscriber address forced many subscribers to stop using multiple connections. The sudden changes in regulatory environment dramatically increased non active subscriber base. In FY11-12, the VLR active subscriber base stood at 30-32% of total subscriber base. Post license cancellation by Supreme Court, the incumbent got an opportunity to realign their strategies to get back their lost subscriber base through multiple point of action. The decision initiated major write off of non VLR active subscriber and subsequently total subscriber base started going down steeply in first half and early second half of FY12-13. Bharti Airtel, Reliance communication, Vodafone, Tata and Idea shed out around 50 Million non-active subscriber base whereas Aircel, Uninor, Videocon and other lost millions of subscriber due to the license cancellation. The unexpected move by Incumbents took everyone by surprise and all analysts scrambled to re-access the growth potentials in Indian Telecom sector. The government also struggled to project their India Telecom growth story afloat. During all these period, I failed to see any write down by government PSU telecom players. The TRAI Feb 2013 subscriber data clearly indicates the same. In Feb 2013, Indian wireless sector again started showing net positive subscriber addition which also includes positive net addition by major PSU Telecom Company. On detailed analysis of VLR active subscriber base, it is evident that PSU company VLR active subscriber % is only 54.17 of their 100.6 Mn subscriber. The incumbents VLR active % are running at higher than 93 % and current VLR active subscriber base is 712 million out of total subscriber base of 862 million. It translates to a conclusion that PSU contribution in non-active subscriber base is currently running at 30.5%. Based on the TRAI directives and release of number, incumbent were directed to indicate non VLR subscriber data as well as to initiate the clean-up process. The non-initiation of process by PSU might be a reason to keep the Indian wireless sector growth story intact. I believe that proactive approach by PSU to clean up the non-active subscriber base would bring down Indian wireless sector subscriber base by another 7-8% to 820 – 840 Mn range by the end of FY13-14

MNP in India is facilitating Incumbent to recapture their lost ground

The intention of regulators is to offer level playing field in telecom segment and also to enhance the service offering QoS indirectly. At the onset of MNP launch, the challenger and regional player clutched the opportunity to grab new subscribers by offering lucrative voice and text plan. It also triggered tariff war escalation which impacted industry dearly. The addition of new subscriber also encouraged challenger and regional player to go in big way in introducing new but not successful product with lower price points. By early 2012, it was the talk of street that incumbent players are going to suffer more subscriber loss due to aggressive price point coupled with free minutes by the competitors. The revenue growth of the regional and challengers started falling at higher speed than incumbent which led to subscriber dissatisfaction. For the last few months the average per month request crossed 2.5Mn. On detailed analysis, it is quite clear that once the dominant subscriber acquisition strategy of challengers and regional players did not work and they lost revenue generating subscribers to incumbents. At the same time, the Supreme Court ruling on challengers and regional player service continuation in cancelled service area led subscriber in no man’s land. The subscribers used MNP as a tool to keep their communication system running and not losing the contact with their dear ones. The regulatory directive which was once used by the regional and challengers the most to hurt Incumbent in turned impacted them the most. It is believed that the regional and challengers brand image got the major beating and it would take additional advertisement in dollars and years to recover the same level of trust from subscriber end. Idea Cellular result validated the same.

One Nation –One License -Free Roaming Policy offer India Full MNP vision achievement

In approved NTP 12 document, the Indian government clearly stated long term vision for telecom sector - to exploit the already built foundation to create unprecedented communication reach across Indian geographies. It also set very aggressive targets on teledensity, potential network deployments to serve and offer Indian people very cost effective communications services.

I have already highlighted in my earlier blog posts, MNPRegulation – Regulator’s Vision Verses Reality and UnrealisticNational Telecom Policy vision to achieve 70% Teledensity by 2017 & 100% by2020, the current pattern of broadband and logical challenges in achieving the set goal by the government. But the most interesting vision is to

1. Strive to create One Nation - One License across services and service areas.
2. Achieve One Nation - Full Mobile Number Portability and work towards One Nation -Free Roaming.

The above mentioned clause took telecommunication service providers by surprise and it is even more surprising when there was lack of visibility on the licensing issues.

Currently, Two MNPO’s are managing dipping database and service providers in the respective zones and are integrating their networks through centralized database development to get the real time update.

In a current scenario, the mobile user can only make donor to receipt mobile operator switch within their current service geography or circle.

Is there a need of “Full MNP” when one license across services and service area is going to be implemented?

In a scenario of national roaming abolishment; Intra circle roaming would be abolished and all operator level switch would not be limited to specific circle level. Once intra circle level roaming under one license regime comes into force, it would automatically enable ported out user free movement and flexibility of keeping same MSISDN across service geography. It would automatically offer full MNP across recipient’s mobile operators’ service geographies.

The mobile operators would be forced to pay carriage fee in order to correctly connect and deliver voice call and SMS respectively. On the capex and opex front, the Mobile Operator’s, International Long Distance Operator’s would be forced to remodel centralized ported user database, SMS aggregation platform as well as realign their service logic and business logic in order to correctly redirect voice and SMS traffic. I have not seen any updated regulatory document about the changes required to be done on the dipping database update side.

Even more surprising that regulator are in consultation with stakeholders, post deciding on the policy without zeroing in on the licensing, potential solutioning impact on the user and network performance and cost attached with it.

In my point of view, free roaming would remove the need of Full MNP. The existing mechanism of limited MNP would automatically be extended to Full MNP. The regulators may opt for the clear specifications defining all the raised concerned points by the stakeholders to reduce the revenue loss fear and associated cost. The consultation regarding the licenses and associated cost, post policy approval is bit surprising. I must stress that there are multiple hidden business opportunities for ecosystem stakeholders out of the unwarranted challenges around Full MNP and free roaming.

Growth Opportunities in Indian Mobile Operator Segment

The MVAS, UCC, User verification norms based regulation is hurting VAS revenue for the last six to eight quarters. The regulations clearly impacted SMS and IVR based VAS services and products. The mobility messaging and other VAS revenue share came down from 10-11 % (Q4, FY12) to around 8% (Q3,FY13, consolidated one) whereas data revenue reached to 6-7% (Q3, FY13) from 3% (Q4, FY12). Moving forward, Mobility industry would experience further negative growth in high single digit QoQ for next few quarters reflecting the regulation clause of getting the authorization from user before activating MVAS services. Any authorization process based on IVR, SMS or email may experience low adoption by the consumer due to multiple surrounded reasons. It would clearly impact on Messaging, IVR, Music, RBT, ODV and SMS based delivered, activated Applications. The expected market size of total and non-voice mobility market size may touch $ 32 Bn & $ 5.7Bn (including data and other services). On-going revenue trend suggest that Mobile operators may be able to generate close to $ 2.3Bn from data services neutralizing the loss of MVAS revenue share. According to TRAI performance indicator report, 49% of the total mobile user devices are data capable and that translate it to 440Mn pulse potential total addressable market. With the current paid data user base of around 140 Mn generating slightly lower $1 ARPU present great opportunity to convert lost revenue opportunity into new revenues. Based on the numbers and trend, Mobile operators are losing more revenue than generating. With the population base of 65% as youth, opportunities are offered for mobile operators for smooth transition from SMS, IVR & Voice based and dominated MVAS to data centric MVAS services. The MNO’s are actively refining and defining their evolving delivery mechanism to make it interoperable, portable, and secured through cloud centric and OffNet/OnNet supported environment to capture the un-captured.

The super hyped 3G & BWA - $13 Bn in license auction and another $ 10 Bn in network upgrade investment stretched service providers balance sheet to the limit and their 30% EBITA is used to service debt burden. The slow 3G service user acquisition which stands at around 30 Mn worsened the situation. In the BWA segment only few operators are able to launch their services. Most of the observer started writing down India 3G story as none of the mobile operator covers all circles and regulatory/legal dispute on 3G roaming. It might have dented user confidence to opt for the service. In India, only 8-9% of the total mobile users are frequent travellers and would require seamless roaming. I believe strongly that slow adoption will gather pace with the higher adoption of enabled handset, lower cost through cutting edge delivery platform. The dedicated and priority based QoS, security, data protection, online storage space and dynamic charging model would attract more and more user base. The recent data revenue and user growth is going to act as catalyst for ecosystem players to focus on data centric services, product or application development instead of focussing on auto cycled legacy MVAS product line. The paid applications download is going to experience high double digit growth QoQ for next few years from current run rate of 7-8 million download per month. In my opinion, the incumbent mobile operators must create and invest heavily on new product development research and development to keep on fulfilling user adoption and usage trend pattern quickly instead of relying on MVAS players’ product lines. The mobile operators can easily invest by reducing advertisement cost by 2% as mobile operators at an average invest 10% of their revenue on advertisement. The continuous investment on brand building by most of the mobile operators for the last 10 years created an environment where these brands are household name and thus now they can afford to reconsider their strategy on advertisement investment cut

The innovative services offering product lines to manage Consumer and Prosumer VAS across connected device environment would kick-start VAS revenue growth. The realignment of consolidated SDP into multiple virtual service delivery platforms is needed in order to cater voice, data and video centric VAS portfolio. It would enhance the QoS w.r.t service creation, execution, activation and provisioning. It would also offer granularity in B2B and B2C usage mirroring, higher renewals and increase user adoption.