Softswitch Market Trends (Archived Report)


Softswitch Market Trends (Archived Report)









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Archived Report:
Softswitch Market Trends

by James G. Barr

Copyright 2015, Faulkner Information Services. All Rights
Reserved.

Docid: 00017770

Publication Date: 1502

Report Type: MARKET

Preview

The softswitch market continues to maintain rigorous competition among service providers and
technology developers despite tough economic conditions. Nevertheless, some
experts believe the market has reached maturity, although providers continue
to improve the networks and increase value-added business. The key factor in
the success of softswitch technology, as well as a
determinant in its future sustainability, is the continued cost reduction and
improvement in services it offers.

Report Contents:

Executive Summary

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A softswitch (which is derived from “software switch”) uses
software running on high-availability computer platforms to switch traffic
between the Internet protocol (IP) and the public switched telephone network
(PSTN), controlling the flow of voice and data and enabling the delivery of
converged business communications services. For network operators, they are a
cost-effective alternative to legacy switching technologies and can support a
migration from circuit-based networks to next-generation, packet-based
infrastructures. For businesses, softswitching technologies present an
exciting opportunity to customize the way enterprises communicate with their
employees, partners, and customers while substantially driving down overall
operating costs.

The global softswitch market is projected to expand at a compound
annual growth rate (CAGR) of four percent over the period from 2011 to
2015. One of the major factors affecting growth is the escalating
demand for mobile softswitches, although the high cost of Voice over IP
(VoIP) phones could present an anti-growth influence.1

The key vendors dominating the global softswitch market include:

  • Alcatel-Lucent
  • Ericsson Inc.
  • Genband Inc.
  • Huawei Technologies Co. Ltd.
  • Sonus Neworks Inc.2

Market Dynamics

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The
exact definition of a softswitch is volatile, but it is generally accepted
that a softswitch, in its simplest form, uses computers and software to
manage packet-based telecommunications services rather than a traditional
hardware-based approach that requires very expensive legacy-switching
equipment. It separates the various functions of a circuit-based switch,
which means that call transport, call control, and communications services
are all managed independently. The following image shows a simplified version
of the difference between a softswitch and a legacy switching architecture.

Figure 1. Legacy Switch
vs. Softswitch Architecture

Figure 1. Legacy Switch vs. Softswitch Architecture

Softswitches
are next-generation, packet-based switching equipment used by network
operators to offer voice and data services over a single network by
controlling connectivity between advanced IP networks and the legacy PSTN.
They perform switching and call control functions for multimedia traffic,
including video and voice.

The
downturn in the telecommunications market in the late 1990s and early 2000s
prevented any widespread deployment of softswitch technologies in carrier
networks. Newer telecommunications carriers were more prone to using
cutting-edge equipment in their networks, but these are the same companies
that fell victim to the poor market conditions and lack of investment
capital. However, the incumbent telecom carriers generally operated very
large, dated networks and had a significant amount of money invested in
legacy technologies. These companies collectively put the clamps on spending
and quelled any plans for major technology upgrades. 

Ironically,
companies in all industries began implementing cost-cutting initiatives and
began looking for ways to slash telecommunications expenditures and squeeze
more value out of their existing service. Enterprises from all vertical
markets were under increasing pressure from executives, directors, and
investors to cut costs. These organizations wanted more control over their
telecommunications services; they required it to be scalable enough to meet
their emerging needs, and they demanded it be inexpensive to fit their
budgets. As a result, IP-based voice service began taking off despite some
early clamoring over the quality of the calls. Companies were willing to deal
with some decrease in call quality if it meant a huge increase in
savings. 

Services

Softswitches
are critical parts of next-generation IP networks, and they enable telecommunications
carriers to offer a host of scalable and flexible services for business
customers. Essentially, all IP-based voice services are driven by
softswitches because they require some sort of switching, either solely along
the IP network or between an IP network and the PSTN. Softswitches offer a
powerful range of capabilities encompassing typical business telephony
functions such as Class 5 switch features, call forward, call conference,
call hold, and call transfer. Other versions offer additional functionality
with new services such as unified messaging, or features commonly found on
wireless phones, like push-to-talk, are now available on business wireline
phones and take advantage of a business phone’s LCD display to walk users
through previously challenging procedures like call transfers or conference
calls. Some go even further, offering all of the aforementioned items with a
suite of directory-enabled applications that even support some
non-telephony-related functions, such as sending an e-mail response to a
missed telephone call, supporting presence-based applications, and providing
multimedia services. 

Benefits

Softswitching
and next-generation technologies in general can provide businesses with
several key benefits, including flexible service creation, cost, scalability,
maximized efficiency of existing infrastructure, and increased control over
the company’s telecommunications services. 

Flexible
Service Creation. Softswitches are built on open standards, so
enterprise customers can act as third-party developers and create new
telecommunications services through the use of APIs. Because the softswitch
separates the call control functions from the actual telecom infrastructure,
these new services can be deployed into the network quickly and much more
easily than networks running legacy switching technologies. 

Cost. Next-generation technologies
offer substantial cost savings to businesses interested in IP-based services
for their communications needs. Softswitches are much less expensive than circuit-switched Class 5 switches, and although
less expensive carrier-grade networking gear might not mean much to an
enterprise customer, it enables carriers to offer less expensive
telecommunications services.

Scalability
and Increased Control. Softswitch technologies allow carriers and
business customers alike to control the services offered over the network.
Enterprise customers can leverage this function to customize their IP phones,
order new services, or activate value-added features like call forwarding
easily. Similarly, businesses with their own softswitches can manage
their organization’s telecommunications services easier than with a legacy
switch or PBX.

Company
Loyalty. The customized telecommunications solutions available through
softswitches and other next-generation equipment can help service providers
foster brand loyalty with their customers. The price for IP-based voice
services will reach a point where the difference between carriers will be
fractions of a cent, so the true differentiator will come down to services.
Softswitches allow businesses to customize their communications services and
create new services to meet their exact needs. 

Easier
Migration to IP. Softswitches are interoperable with packet-based
networks as well as the PSTN, so they enable carriers to develop a migration
path to next-generation networks. Businesses also can reap the benefits
from IP networks while maintaining ties to reliable legacy infrastructure.

Transitional Inertia

The
greatest obstacle to growth in the softswitch market remains the desire
for organizations to stretch the use of their legacy circuit-based switches
to reduce costs. However, carriers will eventually have to update
their equipment. 

Market Leaders

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The key vendors dominating the global softswitch market include:

  • Alcatel-Lucent
  • Ericsson Inc.
  • Genband Inc.
  • Huawei Technologies Co. Ltd.
  • Sonus Neworks Inc.3

Representative softswitch product
offerings include the Alcatel-Lucent 5060 Media Gateway Controller – 10,
and the Ericsson Telephony Softswitch.

Alcatel-Lucent 5060 Media Gateway Controller – 10

Built on the future-safe, open Advanced Telecommunications Computing
Architecture (ATCA) platform, the Alcatel-Lucent 5060
Media Gateway Controller – 10 (5060 MGC-10) supports multiple
applications on a single platform. The 5060 MGC-10 reduces network
complexity, operating expenditure (OPEX), and capital expenditure (CAPEX)
by enabling deployment of a Next-Generation Network (NGN) today, then
migrating to IP Multimedia Subsystem (IMS) at the client’s own pace.

Ericsson Telephony Softswitch

The Ericsson Telephony Softswitch solution provides full
PSTN compatibility with 99.999 percent availability – over
IP infrastructure.  The solution features:

  • The cost-efficient modernization of national and
    international transit (Class 3 & 4) as well as local
    (Class 5) telephony networks.
  • Interconnect between voice-over-IP networks
    (both SIP and H.323) and H.248-based TISPAN access
    gateway control.
  • A safe evolution path from TDM to all-IP.
  • Significant OPEX savings.

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Market Growth

The global softswitch market is projected to expand at a compound
annual growth rate (CAGR) of four percent over the period from 2011 to
2015.  One of the major factors affecting growth is the escalating
demand for mobile softswitches, although the high cost of Voice over IP
(VoIP) phones presents an anti-growth influence.4

Mature Market

The softswitch architecture market is considered “mature”.  As a
consequence, softswitch vendors have only limited opportunities to
differentiate their products.

  • From a client perspective, this means
    less real choice when selecting a softswitch product.  On the
    plus side, however, clients can be less concerned about the prospect
    of switching vendors.
  • From a vendor viewpoint, providers that focus on mobile operators and their needs for service differentiation and network optimization
    will be well-placed to help communications service providers (CSPs) in their transition to LTE.5

Media Gateways Vs. Session Border Controllers

A media gateway (or media gateway controller) is a “device that
converts data from the format required for one type of network to the
format required for another.”6  A session border
controller (SBC) is a “device or software

application that governs
the manner in which phone calls are initiated, conducted, and terminated
on a Voice over Internet Protocol (VoIP)
network. Phone calls are referred to as sessions.”7 

Frost & Sullivan’s
“Global Enterprise Media Gateway and Session Border Controller Market”
analysis reveals that media gateways and session border controllers are on the
opposite ends of the softswitch market cycle.  “While media
gateways are mature products and increasingly losing relevance in unified
communications (UC) infrastructure, enterprise session border controllers are
emerging from a nascent stage with a widening presence in businesses.  However,
the ongoing transition to voice over Internet protocol (VoIP) access and session
initiation (SIP) trunking is driving growth in both segments – media gateways in
legacy communication platforms, and [SBCs] in modern all-IP based UC platforms.

“Enterprise media gateways will continue to exist as an essential component of
enterprise unified communications and collaboration (UC&C) deployments for the
foreseeable future.  Gateways help to bridge disparate platforms and interfaces
in order to overcome some of the interoperability challenges in multi-vendor and
multi-protocol UC&C environments.

“The enterprise session border controller segment continues to make
great strides, yet rapid growth is stymied by a lack of mindshare among small
and mid-sized customers.”8

Incremental Migration

Analyst Susan J. Campbell suggests that new
capabilities like REDCOM-enabled incremental migration may speed the
adoption of softswitch systems.  According to Ms. Campbell, “It
can be nothing short of a challenge to migrate legacy infrastructures to
an environment that can deliver NGN services effectively and
efficiently, especially when multiple technologies are in place. 
The service provider must be able to [navigate] the transition …
without impacting the end user.  This often demands a migration
path that allows for full integration between VoIP and TDM to create the
unified architecture necessary to support all communications.

“REDCOM, [a developer and manufacturer of digital and IP-enabled
telecommunications systems], delivers a next-generation carrier-class
4/5 softswitch that preserves the functionality and the investment a
carrier has in its legacy assets, while also enabling safe pass through
to VoIP technology.  This scalable, interoperable and reliable
approach ensures the needs of the carrier business are met, while
maintaining a quality of experience for the customer base.”9

Cloud-Based Softswitches

REVE
Systems provides its softswitch, iTel Switch Plus, on a hosted
basis with a monthly payment option.  Hosted offerings are ideal
for small-to-medium-sized IP telephony platform (voice over IP)
providers, and are equally beneficial for carrier grade VoIP
service providers that elect to outsource softswitch
maintenance and monitoring.

Strategic Planning
Implications

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Very
large enterprise customers that operate their own telecommunications networks
could consider implementing softswitch-based technologies to provide very
cheap or even free service internally. Companies either building out networks
or looking to replace existing Class 4 or Class 5 switches for long-distance
and local exchange services, respectively, can achieve substantial cost
savings compared with legacy, circuit-based switching technologies. In
addition, large corporations can implement softswitch technologies to help
unify all communications, including wired and wireless, instant messaging,
e-mail, IPTV, and other services as fixed-mobile convergence becomes a
reality. The rest of the business world, however, can look to
telecommunications carriers to implement softswitches across their own
networks.

As the
softswitching market continues to adapt, businesses will be presented with
new levels of scalability, flexibility, and customization in the way they communicate.
Softswitches separate the call control and transport functions of traditional
switches, so business customers will be able to rely on telecommunications
carriers for transport while keeping the call control function in house.
Softswitching also allows businesses to manage their communications services
easily. IT or telecom managers can use a simple Web-based interface to
migrate PBX extensions around the office if employees move, add, or drop
services, or dynamically scale services to meet demand. Companies with unique
telecommunications requirements can leverage the full open-source
capabilities of softswitch technologies to create their own customized
services.

Business
customers can still look to this advanced technology to provide them with cost
savings and increased efficiency. Additionally, businesses who embrace
services made possible through softswitching technologies will be better
positioned to take advantage of IP-based services as the overall
communications industry continues its shift toward next-generation
technologies.

References

1 “Global Softswitch Market
2011-2015.” Infiniti Research Ltd. October 19, 2012.

2 Ibid.

3 Ibid.

4 Ibid.

5 Deborah Kish, Akshay K. Sharma, Joy Yang, Tina Tian, Bettina Tratz-Ryan,
and Sylvain Fabre. “Magic Quadrant for Softswitch Architecture.”
Gartner. May 31, 2011.

6 SearchUnifiedCommunications.com.

7 SearchTelecom.com.

8 Frost & Sullivan.

9 Susan J. Campbell. “Softswitch Decline
May Take a Positive Turn with REDCOM.” Technology Marketing Corp.
February 21, 2013.

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About the Author

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James G. Barr is a leading business continuity analyst and

business writer with more than 30 years’ IT experience.  A member of

“Who’s Who in Finance and Industry,” Mr. Barr has designed,

developed, and deployed business continuity plans for a number of Fortune

500 firms.  He is the author of several books, including How to

Succeed in Business BY Really Trying, a member of Faulkner’s Advisory

Panel, and a senior editor for Faulkner’s Security Management

Practices.  Mr. Barr can be reached via e-mail at jgbarr@faulkner.com.

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