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The Future of IPX in Bahrain and the GCC Region 2 IPX THE FUTURE OF What customers think and want May 2013 IPX IN BAHRAIN AND THE GCC The future of IPX in Bahrain and the GCC region 2 DISCLAIMER This Report has been produced by Hot Telecom for the Telecommunications Regulatory Authority of Bahrain (TRA). The report is provided for the purposes of assisting the TRA and other stakeholders to understand issues related to IPX. This document contains information and statistics that have been obtained from sources believed to be reliable in regard to the subject matter covered. No guarantee or warranty is given for the accuracy and completeness of either the information in this report or of related oral information that may be supplied. This document does not however constitute commercial, legal or other advice however so described. The TRA and HOT TELECOM excludes any warranty and, or liability, expressed or implied, as to the quality, completeness, adequacy and accuracy of the information, statements and statistics contained within this document. This document is a study and it is a non-binding document. It has no legal effect. This document does not represent an official position of the TRA, but is intended to stimulate debate on the part of stakeholders and public. It does not prejudice the form or content of any future proposal by the TRA or HOT TELECOM. The TRA and HOT TELECOM reserves the right to change and update the information, statements and statistics provided in this document at its discretion and without prior notification and assumes no obligation to update the document on the basis of suggestions, comments and/or queries made by third parties. The TRA and HOT TELECOM assumes no responsibility for any consequences that may arise in the absence of such changes and/or updates. To the fullest extent permitted by law, neither the TRA or any of its officers or HOT TELECOM however so described or agents will assume responsibility and/or liability for any loss or damage, including losses or damages such as loss of goodwill, income, profit or opportunity, or any other claim of third parties, arising from or related to the use of the content of this document. The copyright for the Report and all rights of use are the property of the TRA or as defined in the contract between Hot Telecom and the TRA. www.hottelecom.com The future of IPX in Bahrain and the GCC region 3 About the authors Contacts Isabelle Paradis Canada President Isabelle Paradis Isabelle has worked for 20 years in the telecoms President industry. Her personal experience ranges from +1 514 655 3236 International Wholesale through to Business Strategy, [email protected] Marketing and Product Management along with www.hottelecom.com extensive research and consulting experience. She has worked across all continents and has lived in North America, Europe and Asia. USA Steve Heap CTO Steve Heap +1 703 485 5789 CTO [email protected] www.hottelecom.com Steve is a senior telecom executive with 30+ years experience leading companies from small technology start-ups to global service providers. He is a recognized UK expert in voice services and VoIP, Internet backbones and IP services, optical and submarine networks with Colin Brooks significant additional experience in operations. Executive Director +44 7802902432 [email protected] www.hottelecom.com www.hottelecom.com The future of IPX in Bahrain and the GCC region 4 Table of Content List of Tables ABOUT THE AUTHORS 3 TABLE 1: SUMMARY OF THE TELECOM INDUSTRY EVOLUTIONARY CHANGES 6 EXECUTIVE SUMMARY 5 TABLE 2: LIST OF IPX SERVICES, CAPABILITIES AND FEATURES 44 TABLE 3: LIST OF CURRENT IPX PROVIDERS 45 INTRODUCTION 14 TABLE 4: IPX WHOLESALE AND RETAIL SUPPORTED SERVICES 48 1.1 WHAT IS IPX 15 TABLE 5: EVALUATION OF POTENTIAL SOLUTIONS TO MEET BAHRAIN’S OPERATORS’ REQUIREMENTS 67 TABLE 6: POTENTIAL INTERNATIONAL INTERCONNECTION SOLUTIONS PROS AND CONS 68 TELECOM INDUSTRY TRENDS 16 TABLE 7: REQUIREMENTS NECESSARY TO MAKE A GOOD IPX HUB LOCATION 73 2.1 KEY TRENDS 17 TABLE 8: SUMMARY OF POSSIBLE IPX OPTIONS FOR NATIONAL AND INT’L OPERATORS 79 2.2 INDUSTRY EVOLUTION 19 2.3 TRENDS SPECIFIC TO BAHRAIN AND THE GCC 30 2.4 MAIN INDUSTRY CHALLENGES AND ROLE OF IPX 33 List of Figures IPX NOW AND IN THE FUTURE 34 3.1 IPX – THE BASICS 35 FIGURE 1: WORLD FIXED VS MOBILE SUBSCRIBERS (MILLION SUBSCRIBERS) 24 3.2 IPX SERVICES CAPABILITIES AND FEATURES 40 FIGURE 2: INTERNATIONAL VOICE TRAFFIC BY ORIGINATING REGION (BILLION MINUTES) 25 3.3 IPX PROVIDERS 45 FIGURE 3: DATA ROAMING TRAFFIC BY MOBILE TECHNOLOGY (PB/YEAR) 26 3.4 IPX CUSTOMERS 48 FIGURE 4: GCC FIXED VS MOBILE TELECOM SUBSCRIBERS (`000) 30 3.5 REGULATION 50 FIGURE 5: GCC MOBILE SUBSCRIBERS BY COUNTRY (‘000) 30 3.6 THE IMPACT OF IPX 51 FIGURE 6: GCC INTERNATIONAL OUTGOING AND INCOMING TRAFFIC (MILLION MINUTES) 31 3.7 EXAMPLE OF IPX STRATEGIES 54 FIGURE 7: CURRENT COMPLEX INT’L VOICE AND DATA SERVICES INTERCONNECT AND NETWORK 3.8 IPX AS AN ENABLER OF THE IP REVOLUTION 56 ENVIRONMENT 38 FIGURE 8: IPX – SIMPLIFIED MULTIPLE SERVICES AND PROVIDERS OVER A SINGLE PLATFORM 39 POSSIBLE USE OF IPX IN BAHRAIN AND THE GCC 58 FIGURE 9: ULTIMATE IPX VISION 57 4.1 BAHRAIN’S NATIONAL OPERATORS AND IPX 59 FIGURE 10: DIRECT INTERCONNECT SCENARIO 61 4.2 BAHRAIN’S INTERNATIONAL OPERATORS’ AND IPX 69 FIGURE 11: WHOLESALE INTERCONNECTION SCENARIO 61 4.3 THE TRA/BAHRAIN GOVERNMENT AND IPX 74 FIGURE 12: MOBILE GROUPS’ SCENARIO 63 4.4 THE GCC REGION AND IPX 74 FIGURE 13: ETISALAT’S IPX SMARTHUB SCENARIO 66 POSSIBLE OPTIONS FOR BAHRAIN’S OPERATORS 75 ANNEX 80 ACRONYMS 81 www.hottelecom.com EXECUTIVE SUMMARY The future of IPX in Bahrain and the GCC region 6 Objectives Table 1: Summary of the telecom industry evolutionary changes This report and the analysis underpinning it provides a clear understanding of IPX, how it is evolving and what role it will play in the continuing IP services evolution, not only globally Evolutionary Changes but also in Bahrain and the GCC region. This will help the TRA to define its strategy towards IPX to ensure Bahrain plays a leading role in the new IP world. The target . Fixed to mobile substitution accelerating audience for this document includes the Bahrain Telecom Regulatory Authority (TRA), . TDM to IP migration underway operators and stakeholders in the Bahrain telecom industry, GCC regulators and regional . 2G, 3G to 4G migration starting carriers and finally any investors or International carriers wanting to better understand the . VoLTE and VoWiFi in early deployment stages role that IPX can play in the GCC region. Retail service evolution . Video and Content supported over mobile . RCS and IMS used to compete with OTTs . Key telecom trends and drivers M2M roaming will be required The telecom industry has always been at the forefront of innovation, but more recently a . Voice termination moving to IP number of radical trends are forcing it to evolve at warp speed and similarly forcing many . LTE Roaming requirements are growing of the key telecom operators and carriers to re-invent themselves into something more . Value added services are added to the mix nimble, innovative and customer orientated. The four key trends currently shaping our Wholesale service evolution . Return of quality as a differentiator industry are: . Explosion of data roaming traffic expected 1. Local is becoming global . Growing role of the mobile corporate groups 2. Everything, everywhere, at anytime . Convergence of the roaming providers 3. Customer empowerment Business model evolution . Consolidation of the wholesale market 4. Everything IP, everything wireless and everything for free . New pricing models . High quality communications In addition, our industry is undergoing a number of significant changes, in terms of . Support of high speed applications technology, service offering, customer requirements and business models, which impacts . Seamless experience at home, on the road or how service providers’ conduct their business, the services they offer and the business abroad model they use. A summary of these evolutionary changes is outlined in Table 1 on this Customer need evolution . Seamless experience between devices page. As a result, service providers are facing a growing number of challenges and the . Need for a secure communication experience ones that are of interest to us in this study have been identified as the: Upcoming data tsunami . Debate over Net neutrality Support of a seamless LTE roaming experience . Continue decline of mobile termination rates Need for global network reach and scalability Regulatory evolution . Increased regional regulation of roaming rates Decreasing ARPU and increasing CAPEX . What about OTTs Monetization of data Increasing pace of innovation to compete with OTTs and new entrants www.hottelecom.com The future of IPX in Bahrain and the GCC region 7 IPX now and in the Future As such, there is a common set of services that were pre-defined by the GSMA as being IPX or IP eXchange is a telecom interconnection model for the exchange of IP-based required to support the evolving nature of mobile networks, in particular the need to traffic with service level agreements which guarantee end-to-end Quality of Service, support LTE roaming. From there, individual IPX providers are seeing the opportunity security through a dedicated IP network, service interoperability and a commercial model enabled by a large number of mobile operators being connected to a private IP network based on cascading payments. The IPX platform supports multiple services through a with large capacity private connections and are creating services over and above the initial single interconnection. definition. Over time, some levelling of service offerings will occur between IPX providers, but there will continue to be an opportunity to launch something new and compelling that IPX is not intended to replace the Internet as a global connectivity platform, but it offers was never envisaged in the original GSMA design.
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