Analysis of Telecom Development Trend in Service-Driven Mode

In recent years, along with the advance of the times, the telecom industry goes to a crossroad. On one hand, the telecom service market is well established, and traditional telecom services, especially voice services, become saturated. On the other hand, as telecom network technology grows rapidly, network access and transmission bandwidth are no longer the bottleneck for service development in the short run. Moreover, during the telecom bubble a few years ago, large investments were made in network infrastructure construction. That was leading to low utilization of the telecom resources worldwide and slowed down the overall network construction speed due to large amounts of idle lines and bandwidth unoccupied.

    Under this background, the technology-driven mode in the long-term evolution of telecom is gradually shifted to the service-driven mode. The construction for a new and large-scaled network depends on service applications, as reflected in the 3G-network construction. Future network development depends on service applications, as seen in the NGN definition clearly stated by ITU-T and its discussion on service requirements in B3G (Beyond 3G) planning. Old telecom networks with large idle resources need to improve network efficiency and introduce new service applications as well. The convergence of service application layers gears up the convergence of mobile and fixed networks. Therefore, the study on future telecom services is a major driving force for the growth of telecom network construction.

    It has become clear that telecom growth is driven by services since 2002. The service-driven mode is playing an increasingly important role in telecom development worldwide. This article gives a preliminary analysis and discussion on it.

1 Important Features of Service-Driven Mode
    (1) Service convergence gears up network convergence
In the evolution of telecom services, there is an obvious tendency to converge fixed and mobile network services that gears up the Fixed-Mobile Convergence (FMC). The core concept of FMC is to form a unified domain for a variety of wireless networks, wireline networks, public networks and enterprise private networks. At the mean time, service applications are delivered to the users via these various access modes and offered with a unified user experience. The service convergence drives network convergence in the following two aspects. Firstly, it needs inter-network service convergence. Different telecom networks offer merely different access modes, but the IP-based core network provides a basis for the convergence. Secondly, it requires unified service access and management to bring unified user experience for different access modes, as shown in Figure 1.

    (2) The telecom and Internet industries are converging but competing

    In today´s global telecom market, traditional voice services have been saturated while emerging services haven´t been on a large enough scale to generate substantial profits. As there is a tendency to converge the traditional telecom industry and the IT network business developed through the Internet, traditional telecom operation is facing a great change. On one hand, telecom operators need to introduce new services to exploit new market opportunities and be dominant on the market through control over the service value chain. On the other hand, the new-generation network service providers are evolving through the Internet and seeing enormous potential for development. They hope to take advantage of the separation of the services and the bearer network in the telecom evolution to separate the network operator from the Service Provider (SP). In addition, they hope to be ultimately dominant on the service environment through control over content provision. The control over new services development is becoming a focus of the competition for future growth in telecom.

    The great success of Japan DoCoMo I-mode services and national/international Short Message Service (SMS) in recent years leads to new upsurge for investments in mobile value-added services worldwide. Therefore, it becomes a major concern for operators to build their service platforms. With the construction of 3G networks, number of telecom operators and consultative companies predict that mobile value-added data services will bring about a continuous and rapid growth in the telecom industry to stop the decline in ARPU. Furthermore, they emerge as future "Killer Services" to help operators walk out of the downturn of telecom development. Operators in China are taking an active part in exploiting new operation modes for mobile data services, for instance, Monternet (Mobile + Internet) and Uninet (Unicom+Internet) have achieved preliminary success. They have also established good cooperation with SPs and equipment manufacturers. In the field of mobile value-added services, telecom operators have successfully dominated the market and unveiled their ample development potentials.

    In the field of the fixed Internet, service providers such as MSN have made great progress and Peer-to-Peer service becomes a mainstream development mode. As fixed operators have keen competition with other broadband access operators, they can only charge the access fees by monthly flat rate or flow rate according to the data at the bottom layer. Therefore, they lost the control over Internet services at the upper layer. China Telecom rolled out "ChinaVnet" and China Netcom launched "China Online", via which they hope to imitate the development modes of mobile value-added services to control the value chain and compete with ISP/ICP. However, these yield little reward yet and result a little increase in revenue against obvious increase in service subscription. The explosive growth of broadband users and IP network data flows has not yet generated expected profits for the operators.

    As mobile value-added services dominated by operators and Internet services dominated by SPs and CPs complement and influence each other, the variation in their competitive strength will determine the development trend for future telecom services.

    (3) Telecom service is going from the basic communication services to the entertainment economy

    Another distinct feature of telecom services is the transfer to entertainment economy from communication service. This transfer occurs as a result of the following facts: traditional telecom services are saturated; people have achieved the goal of "Communication Unlimited". Even the people in Europe ironically describe the overrun handsets as trackers worn round the neck by dogs. In this case, consumers begin to feel compressed personal space, violation of their right to privacy and continuous work pressure due to the communication anywhere and anytime. Therefore, recent years have been the reflection on it and boycott campaigns against this kind of consumption pattern. For instance, handsets are prohibited in theaters and other public places, and office workers power off their handsets after work. The 2004 New Year´s Film"Handset" found great appeal with audiences, and aroused further thinking on the influence of handsets on the individual privacy.

    Under this background, the entertainment economy offers a more promising prospect for future growth of telecom services. With the improvements in the quality of people´s lives in modern society, people are in constant pursuit of all kinds of recreations and entertainment. The intention of providing telecom users with easier and richer entertainment can drive the future growth in telecom. The fact that telecom entertainment economy in Japan and Korea is developing vigorously is a strong evidence for this development trend. After digestion and absorption for the last two years, the concept of telecom entertainment economy has been widely accepted by operators, handset vendors and experts concerned in China. The rollout of "M-ZONE" with feature-rich entertainment proves that operators in China are actively involved in the research on entertainment economy.

    (4) Terminals plays an increasingly important role in service development

    The launch of new services relies increasingly on the support of terminals that is a prerequisite for the new services to win more market share. The rapid growth of mobile terminals lays a solid foundation for the booming mobile value-added services. In contrast, other wireline terminals except computers fail to catch up with the development pace, because most of wireline subscribers still prefer voice phone service. That makes it difficult to roll out new services over wireline networks and leads to the dominant position of current Internet services.

    Those services that are simple and widely supported by terminals are popular with people such as handset SMS and Coloring Ring Back Tone (CRBT). On the contrary, the development of those services with great expectations such as Multimedia Mail Service (MMS) and Location Based Service (LBS) are hindered due to the terminal restriction. Meanwhile, the bottom indices of low-end handsets begin to take effect, i.e., certain multimedia capability gradually becomes standard configuration for low-end handsets, or gradually goes to the bottom. It indicates that the service has obtained wide support of terminals and provides the prerequisite for large-scale applications in the market. Moreover, this bottom gradually goes up with the improvement in software/hardware performance of the handsets and the decrease in cost. For example, the rapid popularity of color-display handsets since 2003 paves the way for widespread applications of MMS.

    The terminal´s multimedia capability has a direct influence on diversified service provisioning, quality of user experience and service deployment. Moreover, some inherent restrictions of the terminal, especially the handset, begin to affect the service. For example, too short standby time of the 3G handset become obviously a weak point for 3G services rolled out in the overseas market by Hongkong International Terminals Limited (HIT). In addition, the screen size and the keyboard of the handset affect respectively the deployment of video services and game services. All this shows the terminal will play increasingly important role in the future development of telecom.

2 Telecom Development Trends in Service-Driven Mode
The most important features of the service-driven mode aforesaid have great influence on telecom development, as described in the following five aspects.

    (1) Service Access and Control Management
    As mentioned above, under the background of the convergence and competition between the telecom industry and the Internet business, the control over new services development is becoming a focus of the competition for future telecom growth. Accordingly, the access of services and control management is of most importance.

    IP Multimedia System (IMS) is a mainstream solution for service access and control management in the future for all-IP network environment of the telecom industry. Its core idea is to add an access and management platform controlled by the operator in a transparent all-IP network environment, thus ensuring the operator´s leading position in the development of future telecom services. IMS has been gradually perfected and widely supported by standardization organizations such as 3GPP2 and ITU-T, as well as telecom operators and equipment manufacturers worldwide, since it was put forward in 3GPP R5. Its development is of great importance in determining the development trend for access to and control management of future services. Figure 2 shows the position of IMS in service access.

    It should be noted that currently IMS hasn´t built up a solid position, and is facing a fierce competition from Internet technologies, such as Peer-to-Peer technical solutions launched by IT vendors. In addition, XMPP is rolled out by IETF to compete with SIMPLE protocol. The XMPP supported by Jabber.org is a threat to the bottom layer of IMS. The weakest point of the IMS itself is that it has few attractive services yet and the existing service engine lacks a market driving force for IMS transfer, therefore, there are uncertainties as to where IMS is heading. The future growth of IMS represents the strength variation in competition between the all-IP based telecom industry and the Internet business.

    (2) Feature-rich Services and Enhanced Experience
    In order to deliver diversified services, it is an inevitable trend to develop multimedia services. Location, ID authentication and presence can be other features of the service abundance. A number of factors should be considered in running multimedia and other featured services over the network, as described below.

• Support of the Bearer Network
  It includes performance indices such as bandwidth and time delay (fixed network, mobile network), as well as service features such as mobile location accuracy and speed.
• Presence of Multimedia and Other Service Features by Terminal
  Multimedia service features include video, audio, 2D/3D effect, and more. Furthermore, other features include Digital Rights Management (DRM), ID authentication, as well as update of handset service functions such as wireless download, Device Management (DM) and Data Synchronization (DS).
• Cost Decrease of Service Bearer
  By reducing the cost of optical bearer and improving spectrum efficiency at the air interface, operators or SPs can deliver services at a more competitive price.
  

    Therefore both the support of the bearer network for multimedia services and the development of multimedia and intelligent terminals are important trends for the growth of telecom technologies. In view of a different air interface used in a mobile network, the research can be divided into two fields: mobile network field and fixed network field. Moreover, terminals can be further divided into wireline terminals and wireless terminals.

    In the development of services like mobile TV, the reduction of the bearer cost shall be considered at first. Other possible substitution technology or disruptive technology shall be also taken into account, for example, network
telephone can disrupt conventional voice telephone service, and mobile TV terrestrial broadcast can take place of streaming media technology.

    (3) End-to-end Service Quality and Security Guarantee
    In service quality guarantee, the service-driven mode shall be based on the notion of "Customer First", and the
customer-oriented Operation and Maintenance (O&M) mechanism shall be established. Specifically, the conventional O&M mode in the past decades, where network-oriented O&M is adopted and the management contents focus on fault recovery and repair by means of NMS, shall be replaced by a new O&M mode. In this mode the customer-oriented management is adopted and the management contents focus on customer service guarantee and Experience of Service (EoS) quality by means of security guarantee. Particularly in a mobile network, QoS concept of the network itself has no practical meaning to mobile services due to the uncertainty of user access points. Therefore, adopted in mobile services are substitutable concepts such as customer-oriented EoS, Service Level Agreement (SLA) and Service Guarantee.

    From network security to end-to-end service security, much attention shall be paid because of the following reasons. First, the IP technology is gradually applied in telecom networks and becomes the basic bearer network technology for telecom networks. Second, the IP network gradually evolves from closed private network to public network, therefore, it faces the same security threat as the Internet does. Third, with increasingly rich telecom services, there exists more and more information asset value in the telecom network transmission, which means, the great economic profits will drive the hacker to attack telecom networks. Fourth, there are number of new services rolled out that pose strict requirements on information security, such as mobile stock, mobile banking and mobile payment. Furthermore, the emergency of 3G networks is more demanding on security to meet the trend toward more feature-rich service offerings. These new services press for the security guarantee shifted from network-oriented to service-oriented and based on the analysis of end-to-end service process.

    (4) Inter-network Seamless Service Access
    Seamless service access among different networks is an important development trend toward providing unified service experience. It is intended to meet the requirement for unified and convenient user experience, and to deliver services in all kinds of application environments. In the development of B3G, it has become a specific service requirement that seamless service access and roaming shall be achieved in various access modes such as GSM, GPRS, UMTS, WLAN, BlueTooth, DVB-T, satellite, etc. This is in compliance with B3G concept defined in ITU-R, and also represents the biggest difference that can be found at present between B3G services and 3G services, which will boost the development and maturity of B3G concept.

    Meanwhile, circuit-domain services and packet-domain services will still coexist for quite a long period. To realize access and transition of the two kinds of services, this problem shall also be considered in seamless service access.

    (5) Service Operation and Telecom Operation
    Service operation is closely related with telecom operation, which greatly affects the rollout and widespread application of telecom services, as well as cost-recovery and revenue generation of operators.

    The study on telecom operation in the service-driven mode is important for the development of telecom technologies. Currently the hot problems concerned include the following:

• Service tariff policy and profit model, and billing and accounting for different services
• Marketing and channel management that involves providing different telecom products and product packages, different sales promotion strategies and preference policies, and different service channels for different customers
• Virtual telecom operation, where the separation of service and bearer in all-IP environment provides the technical basis and the feature-rich services provide market opportunities for virtual operators
• Contracted IT engineering that helps operators improve operation efficiency and reduce IT system construction cost, and any alteration in the state´s telecom service policies. These are including whether to open the tariff for value-added services, whether to open the Number Portable (NP) virtual operation, whether to make it legal to operate IP phone, etc.
  

    All these will have great influence on telecom operation.

3 Conclusions
From the point of view of today´s service-driven telecom industry, this article analyzes the most important features of the service-driven mode. These features include service convergence driving network convergence, convergence and competition between the telecom industry and the Internet business, transfer to entertainment economy from basic service offerings. Besides, the increasingly important position of terminals in service development; and then in terms of service access and control management, feature-rich services and enhanced experience. Moreover, the
end-to-end service quality and security guarantee, inter-network seamless service access, as well as service operation and telecom operation, the article discusses telecom development trends.

    It is clear that the service-driven mode will play an increasingly important role in telecom development, and the study on future telecom services is driving the growth of telecom network construction and operation.

References
[1] Ye Yun. Opportunities and Challenges for 3G Value-added Data Services. Telecommunication Technology and Standard, 2003, 1(12)
[2] Ye Yun, Wang Qing. Position and Development Trend of Handsets in Mobile Service Application. Telecommunication Science, 2004, 19(10)