In Part 1 of this blog, we talked about VoWiFi adoption and the five common themes we are seeing across all service providers. In Part 2, we will address the various ways in which SPs are responding these themes.

The Service Provider Response

Service providers (SPs) are responding to these themes in various ways. We notice that SPs that are challenging larger competitors in their regions are more likely to adopt VoWiFi. The US market is an example. T-Mobile and Sprint, the two smaller ‘major’ service providers have made VoWiFi available, while Verizon and AT&T have not. AT&T, however, has said that it plans to roll out VoWiFi sometime in 2015. In addition, much-smaller-in-size MVNOs such as Republic Wireless, Freedompop and Scratch Wireless are using a ‘WiFi-First’ strategy, as well.

We see evidence in other regions outside the US where challengers are using VoWiFi as a means of gaining advantage over incumbents. These varying VoWiFi adoption strategies give rise to three distinct types of service provider plans for VoWiFi:

  • First, there are service providers leading with VoLTE service infrastructures, then simultaneously using this IP Multimedia Subsystem (IMS) based infrastructure to deliver VoWiFi capabilities to customers.
  • Second, some service providers are adopting VoWiFi first, with plans to deliver VoLTE later.
  • Third, some operators are varying vendors to maintain arms-length relationships for pricing leverage. Service provider procurement strategies typically involve buying technology from multiple vendors.

Large, established vendors such as Alcatel-Lucent, Ericsson, Huawei and Nokia appear to be lining up with the larger SPs and advocating VoLTE first, VoWiFi next as a strategy. We see little evidence that these vendors are working with operators who plan a VoWiFi first strategy. In contrast, Mavenir Systems worked with T-Mobile early-on to enable T-Mobile USA’s VoWiFi capabilities before its VoLTE service was provided to customers. Sprint, too, announced it plans to work with a smaller start-up, Taqua. As a side-note, Taqua acquired a company called Kineto, which has a client software capability that enables Android smartphones to make VoWiFi calls similar to those of the newer iPhones.

To summarize, in our service provider and vendor interviews over the past few months, we have learned of three VoWiFi rollout plans:

  • VoLTE First. Many cases where the same underlying infrastructure that previously delivered VoLTE service (including IMS Core, Voice Application Servers and Session Border Controllers) is now also used to deliver VoWiFi service. In most of these cases, VoLTE services get rolled out first, and then VoWiFi is either offered as a service simultaneously or after some delay. Very commonly, the same vendors are used for both services – at least on the initial rollout. We believe this is likely to be the most common path chosen by service providers.
  • VoWiFi First. Some cases where the VoWiFi infrastructure is built well ahead of the ‘full blown’ IMS-based VoLTE infrastructure at a reduced cost and is viewed by the service provider as a way to improve coverage without having to make as large an investment as would have been needed if it had built an IMS-based VoLTE capability. These systems would later be upgradable to VoLTE with significant re-use of the initial application server systems that are at the core of the VoWiFi service delivery system. We expect that service providers that have exceptional 2G/3G coverage, inadequate LTE coverage, or that are primarily wireline operators such as MSOs, may chose this path as a means of differentiating service offerings from competitors in their market. Mavenir has benefitted from early sales of its telephony application server to T-Mobile USA as the SP offered VoWiFi to its customers before its VoLTE service was offered to customers. So, too, has Taqua benefitted as Sprint chose its telephony application server about a year ago. It appears T-Mobile has outpaced Sprint significantly in customer adoption of VoWiFi, however.
  • VoLTE and VoWiFi from Different Vendors. Some cases where the VoLTE infrastructure is purchased from one vendor and the VoWiFi infrastructure is purchased from another vendor. Presumably, there might be some shared functions such as the IMS Core, but we expect that the application servers are from different vendors. We see that service providers like Verizon have purchased IMS systems from vendors like Nokia and Telephony Application Servers from vendors like Ericsson to build out VoLTE service, and likewise, we believe that the same type of multi-vendor selections are happening for VoWiFi vendor selections.

Maintaining the Connection

In the course of our research on VoWiFi, we’ve encountered two technical matters that are interesting to note. A network-level device called the ePDG enables a smartphone to maintain its call connection when the user moves from WiFi to LTE radio coverage. Mavenir introduced this technology in June 2014 . Ericsson also offers an ePDG. This device is associated with wireless packet core infrastructure typically, which historically has been related to cellular traffic, but now that WiFi traffic is involved, an additional network element is necessary to maintain a constant phone call connection.

Also, one more note we’d like to leave on that relates to WiFi infrastructure itself. Since we also forecast the purchasing trends of service provider capital spending on WiFi gear, we thought we would mention that most, if not all, WiFi coverage that enables VoWiFi is based on WiFi gear that is already in place at homes and businesses. And, if we consider purchasing of SOHO-class gear by a SP that is delivered to a consumer’s home, this is relatively inexpensive gear that is not included in our classification as “SP WiFi” gear that is more typical of gear sold by SP WiFi gear leaders such as Cisco Systems and Ruckus Wireless.

 


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Chris DePuy

Posted by Chris DePuy on February 26, 2015

About Chris

Chris DePuy is responsible for Dell’Oro Group’s Carrier IP Telephony, Wireless LAN, Wireless Packet Core And Storage Systems market research programs. He has more than 20 years of financial and business analysis, and engineering experience.