Global IP Exchange: Current Status and Future Prospects for IPX
Total Page:16
File Type:pdf, Size:1020Kb
Global IP Exchange: Current Status and Future Prospects for IPX Research Extract for Report Participants Simon Sherrington and Terence Prospero Edited by Danny Dicks Innovation Observatory Ltd December 2012 David Martin and Simon Sherrington Innovation Observatory Ltd May 2009 Global IP Exchange: Current Status and Future Prospects for IPX – Research Extract Copyright and terms of use This report is published by Innovation Observatory Ltd, Silvaco Technology Centre, Compass Point Business Park, St Ives, Cambs., PE27 5JL, UK. Tel: +44 1480 309341 Email: [email protected] Web: www.innovationobservatory.com. Registered in England and Wales at Charter House, 3rd Floor, 62-64 Hills Road, Cambridge, CB2 1LA. Company registration number 5598542 © Innovation Observatory Ltd 2012 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means (electronic, mechanical, photocopying, recording or otherwise) without the prior written consent of the publisher. Innovation Observatory grants customers a personal, non-exclusive, non-transferable right to use the report within their organisation only, including within closed computer systems, for internal use. The report shall not be distributed in any form to people outside a customer’s organisation. Disclaimer This document, including any figures and tables, has been prepared by Innovation Observatory using all reasonable care and skill, and independently of any client-specific work. Opinions expressed are those of the report authors only. Innovation Observatory shall not be liable for loss or damage (including consequential loss) whatsoever or howsoever arising from the use of this publication by the customer or any third party. Terms appearing in this report may be proprietary and these are acknowledged through the normal UK publishing practice of capitalisation. The presence of a term in whatever form does not affect its legal status as a trademark. All reasonable attempts have been made to seek permission from authors and publishers to reproduce extracts from academic work cited in this report. © Innovation Observatory Ltd 2012 Page 2 Global IP Exchange: Current Status and Future Prospects for IPX – Research Extract Table of contents 0 Executive summary ................................................................................................................... 4 1 Definitions ................................................................................................................................ 5 2 Awareness and benefits of IPX ................................................................................................... 6 3 Barriers and drivers of IPX ......................................................................................................... 7 4 Who’s who in IPX ...................................................................................................................... 8 5 IPX equipment markets ........................................................................................................... 10 5.1 Technologies underpinning IPX networks ........................................................................... 10 5.2 Leading providers of IPX enabling technologies .................................................................. 11 6 Market forecasts ..................................................................................................................... 12 7 Contents list for full report ....................................................................................................... 16 © Innovation Observatory Ltd 2012 Page 3 Global IP Exchange: Current Status and Future Prospects for IPX – Research Extract 0 Executive summary The international IPX market is now emerging – after years of discussion. Many of the world’s largest carriers and several major wholesale roaming service providers have now launched IPX propositions. Customers are starting to sign up for IPX services. Innovation Observatory estimates that by the end of 2012 the leading IPX providers had around 1200 customer accounts for their services. Most customers were still only buying one or two IPX services (rather than the wide range of services many IPX providers can now offer) and often only for limited traffic volumes or select routes. However, the number of buyers of bundles is growing, and a few buyers have decided to use IPX for all their international connectivity. Revenues from IPX remain very small in comparison with the global market for wholesale international and roaming voice, data, messaging and multimedia services. And while many wholesale buyers do indicate their likelihood to begin buying IPX services over the next three to five years, IPX providers cannot expect them to shift all their spending during that time frame. They will still want and need to manage many legacy connections. The transition to IPX will be incremental – an evolutionary rather than revolutionary process. Over the next five years Innovation Observatory forecasts that the wholesale value of services traversing IPX networks will grow from around USD706 million in 2012 to USD5 billion in 2017. Overall, excluding value- added services, the IPX market is forecast to represent around 6.4% of the international wholesale market for voice and data services by 2017, up from around 1.4% in 2012. While these numbers look very large the retained (net) value for IPX providers is expected to be much smaller (USD108 million in 2012 and USD1.0 billion in 2017). This is because, for instance, termination fees for voice simply flow through the books, and the transit value of GRX is based on traffic volume, not the high wholesale price of mobile roaming data – the money for which might not even be booked as revenue by the IPX. The net value proportion of the total grows over the forecasts period as IPX providers develop more value-added services. Much of the 2012 market value is associated with legacy services such as GRX which have been migrated on to IPX networks – sometimes without customers even knowing. This is not new revenue but simply a migration of existing spend. Future growth will be delivered by LTE roaming and interoperability services, voice services (including VoLTE), high-quality international data services, rich media and advanced telephony services, and value-added services designed to make service provision more efficient and which help operators identify potential customers. Further into the future IPX providers have a real opportunity to drive growth by helping ‘over-the-top’ (OTT) providers to access fixed and mobile operator networks in a way which generates revenues for the OTT providers, the IPX provider and the fixed and mobile operators. Opening up APIs will be critical for this, and IPX providers are in a great position to aggregate APIs to enable global access. Innovation Observatory’s report Global IP Exchange: Current Status and Future Prospects for IPX (of which this is a summary extract) focuses on the opportunity to provide international IPX services (including direct international services and roaming services). It does not address the opportunity to provide in-country national IPX services – an associated and potentially significant market. It is based on in-depth interviews with 44 wholesale service buyers, IPX providers and technology vendors; as well as extensive desk research and market modelling. It provides definitions for the market, looks at the complex mix of market barriers and drivers, reviews market trends and customer requirements, and analyses leading IPX providers and leading providers of IPX infrastructure (specifically signalling and IPX proxy solutions). It also provides forecasts for the value of services flowing over IPX networks. © Innovation Observatory Ltd 2012 Page 4 Global IP Exchange: Current Status and Future Prospects for IPX – Research Extract 1 Definitions IPX networks are interconnected, private (i.e., off the public Internet), secure, managed IP networks capable of providing guaranteed quality of service within and across interconnected networks by class of service or application. IPX networks are additionally intended to be able to deliver services end-to-end with a limited number of network hops to assure quality of service. (Services must travel through a maximum of two IPX providers.) Services are typically supported by SLAs. IPX user communities are intended to be able to adopt a range of wholesale business models and payments models that can support fair payment throughout the value chain, with everything from free and paid peering to end-to-end cascading payments between suppliers with transparent pricing. IPX networks are intended to enable the delivery of voice, data or other content between networks, with interoperability between different implementations and standards. IPX networks are also intended to be able to deliver many services across a single connection. They are intended ultimately to be truly multiservice-capable. Indeed, IPX networks may already carry a variety of services. These include services that have previously travelled over alternative infrastructures such as Roaming 2G and 3G mobile data traffic, 2G and 3G voice and data roaming signalling data and National or international voice transit. They are also expected to carry new service types that cannot be technically or cost-effectively delivered over traditional TDM wholesale networks, or be properly delivered over IP networks without end-to-end