Transcript TeliaSonera Power Point Guidelines

Bringing knowledge,
quality and stability to the
communications industry
TeliaSonera International Carrier
Daniel Sjoberg, Reykjavik, August 25th
Public
“Outlining requirements for new network
services and examining how the optical core
can be cost effectively upgraded to support
them"
Daniel Sjoberg
Head of Technology
TeliaSonera International Carrier
Public
?
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Requirements
More Capacity & Cheaper
How the optical core can be cost effectively upgraded?
Lower Price from Vendors
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Outline
• Current drivers for international Capacity
• Future Requirements
• Cost Drivers For International Carriers
– Comparison between IP and DWDM
• Conclusions
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TeliaSonera International Carrier
Target
To be one of the top three profitable carriers in the wholesale
segment in Europe.
Business scope
Focus on offering wholesale capacity and IP services to network and
service providers over the wholly-owned European and the trans-Atlantic
networks. TeliaSonera IC will also run its own IP network and maintain
and operate its peering points and relationships in Europe and in the US.
The international voice business will at the same time be focused to
international interconnect agreements and bilateral routes.
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Current drivers for international Capacity
Public
TSIC Infrastructure
• X ducts
VOICE
• 96 Fiber pares
• One fiber pare lit and used for
– DWDM
IP
SDH
– IP
– SDH
DWDM
– Voice
• IP & Voice is “buying” wavelengths at Market price
• Voice is buying IP and SDH at Market price
• This enable us to create Business Case for all
PoP’s and services
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TSIC Business Logic
Consumers
Corporate
Service Providers
TSIC
For TSIC to understand future service requirements, we need to understand
end customer markets.
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General Business Comments
• IP has higher Margin per MBPS then SDH & DWDM
• SDH & DWDM gets Profitable with Volume alone
• IP price should be “lower” per MBPS then long haul SDH
& DWDM price
• IP gets Profitable with Volume and tight Cost control
DWDM
IP
6%
5%
35%
43%
Fixed Cost
Fixed Cost
Variable Cost
Variable Cost
Depriciation
22%
Depriciation
89%
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Drivers For International Capacity
• IP
– Main driver for International Capacity either through IP Transit or
building own Backbones for IP
• Fixed Voice
– Most Voice Network already in place. Might be incentive to replace
bilateral with cheaper leased lines
• Private Line & VPN
– Legacy VPN network might upgrade but highest growth will be in IP
VPN.
– In Markets with cheap capacity SDH will still be alternative to VPN’S
• Mobile
– Little demand today for International Capacity, will change with
increasing data usage
– Consolidation and price pressure might drive need
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Drivers for International Capacity
Capacity
Best Effort IP
Private Line & VPN
IP VPN
Mobile
Fixed Voice
Time
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Wholesale Buying behavior
• IP
– Still same old IP Transit
– Bundle solutions with MPLS
• SDH
– In Western Europe mainly smaller ISP
– Still growing in Eastern Europe
– Price and Growth decrease due to Ethernet
• DWDM
– Buying Circuits not Networks
– Still volume growth but also price erosion
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New Requirements & Future Network Services
Public
“People tend to overestimate what
can be done in one year
and underestimate what can be
done in five or ten years.”
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What will drive new requirements?
• Broadband
– Peer to Peer dominating
– Today not quality minded
• Media
– Using legacy systems
– Will migrate but are very quality minded
• VPN
– Traffic growing due to change is behavior that might be enable
through cheap capacity
• Mobile
– Still for closed Networks
– Internet vs Mobile Networks, the next big battle
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Capacity pricing
• Cost Broadband Service
• 70 % of the cost are
fixed including last mile
& Equipment
Margin
30 %
IP Traffic
70 %
Fixed Cost
(Last Mile
&
Dslam)
• 30% is traffic related
• This will drive pricing down
for International Capacity
• Gives opportunity for new
International services
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SERVICE
PROVIDERS
CARRIERS
Capacity Alternatives
SDH/SONET
By far the dominating solution
DWDM/WDM
Few large customer, mainly carriers
Ethernet
Flexible Solution for Corporate customers,
Service Providers and………. Carriers
Ethernet
Flexible Solution for Corporate customers
ATM
Might over time be replaced by new technology
IP
Service platform for the future
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Ethernet – One Solution?
Customer
Ethernet
Last Mile
ATM, F/R, IP,
SDH, Ethernet
Metro
ATM, F/R, IP,
MPLS, SDH,
Ethernet, DWDM
Long Haul
ATM, F/R, IP,
MPLS, SDH,
Ethernet, DWDM
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When Technology shift?
Road to IP VPN
Public
Networks
PSTN
ISDN
Public Internet
X.25
Private
Networks
Private
Lines
IP VPN
F/R and
ATM
Ovum 2001
Lessons on Migration
New service have only triggered large scale migration when two conditions are met
 New service must offer substantial cost savings for existing applications
 Match or exceed the quality and reliability
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Traffic Mix TeliaNet 1997 - 2002
100%
90%
80%
70%
60%
Europe
50%
US
40%
Sweden
30%
20%
10%
0%
1997
1998
1999
2000
2001
2002
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Transatlantic Traffic Pattern
OLD
NEW
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Investing at the right time
• 60 – 80 % of Cost for IP is OPEX
• Of those more then 50% fixed
• 20 – 40 % % is depreciation
• Depreciation cost goes up
– with 20 % if customer is delayed with 6 month
– with 50 % if the delay is 12 month
• For IP investment timing is everything to maintain Product profitability
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Future IP Concept – IP like Voice?
IP Transit
IP Connect
European
Routes
Broadband
Routes
Customer
Routes
US Peers
Routes
Global Routes
Global Routes
Global Routes
Global Routes
Server Colocation
Back Up Connect
How will this impact the optical Network planning?
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Future IP Concept
Service Creation (Routing announcement)
Service Modules
Logical Connection (BGP)
IP Transit/ IP Connect
Physical Connection (Local Loops)
Metro Network
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Next coming Years
• SDH Customer will migrate towards
DWDM and Ethernet bringing
requirements from current SDH service
• 40 G will make sense on certain
stretches for IP Backbones
• 10 G Ethernet will be used as Backbone
links
• Not likely that routers will use GMPLS to
provision capacity
• GMPLS will be use to improve OPEX
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Current Network & Service Platforms
Products
Current Platforms
Voice
Server Colo
Voice
IP Transit
IP
Ethernet
ATM/F/R
SDH
SDH
DWDM
DWDM
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Capacity Grooming?
10 G
2.5 G
622 Mbps
155 mbps
DWDM
UNITE
UNITE
DXC 4/4
Xtreme
Use DXC 4/4
- muxing,
- grooming,
- protection / restoration
- and fast provisioning
Connecting 10 G directly to DWDM equipment because of no grooming
possibilities
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Current Network & Service Platforms
New Platforms
Products
Voice
Server Colo
Voice
IP Transit
IP
Ethernet
ATM/F/R
10 G Ethernet?
GMPLS ?
SDH
DWDM
SDH/DWDM
Will this save money for Carriers?
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Network Cost
Public
TS IC Cost Allocation Project
• TSIC initiated Cost allocation
project late 2002
• Purpose was to allocated all
company cost onto Product
Platform
• Based on allocation create Long
Term P&L based on growth
Scenarios
• Used it as base for Network &
Product Strategy
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Cost for upgrading
Cost
?
Time
• Current operation, investing based on customer, will short term be
effective on Corporate Cash Flow
• Change in technology might long term give lower production cost
• Very difficult to say what to recommend
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DWDM Cost
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Conclusions
• New Requirements on Optical Wholesale will be driven from
Corporate Customers
• Ethernet will initially take growth from SDH then from DWDM
• Most optical network are in the beginning of depreciation that will
delay upgrades
• Capex is not the only key cost component for profitable optical
service
“People tend to overestimate what can be done in one year
and underestimate what can be done in five or ten years.”
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Thank you for your attention!
[email protected]
www.teliasonera.com/carrier
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The Nordic and Baltic
telecommunications leader
Public