Next-Generation Network Architecture: what and when?

“The rise of NGNs and NGAs, coupled with the vogue for separation of bottleneck physical assets, raises a fundamental long-term question for operators: “Where do operators want their principal assets to be?”” Rupert Wood, Principal Analyst

Given their stagnating revenue and the decline in their core service propositions, most incumbent operators are embarking on next-generation network (NGN) transformations. The principal reasons that operators give for this investment are the requirements to cut costs by rationalising core businesses and to re-engineer to better take advantage of the opportunities presented by pervasive IP networking. NGN roll-outs also represent a way for incumbents to reduce their burden of regulation and to transform their asset bases; both these outcomes could have broader implications for the industry.

This report examines the relative merits of the three main approaches to NGN investment: a move to a full NGN core (such as that being carried out by BT), investment in next-generation access (NGA) with a core overlay (like that by Deutsche Telekom), and a full-IP strategy of rolling out NGA and NGN at the same time (like that of KPN). Using a return on investment (ROI) model, the report identifies critical dependencies and assesses the ability of each strategy to attain the desired outcomes of cost saving and revenue enablement, given different market and regulatory environments.

• What are the key dependencies and critical success factors for the different NGN strategies?
• What are the potential benefits of these strategies, in terms of cost transformation, and how time-dependent are they?
• Is there sufficient demand for centralised services?
• What are the regulatory issues associated with NGNs?
• How much leverage can incumbents expect to exert on regulatory authorities?
• What are the long-term implications of NGNs for the market structure?

• Incumbent operators: identify critical dependencies in the formulation and implementation of NGN strategies.
• Alternative operators: understand the implications for the altnet sector of incumbents' strategies.
• Non-facilities-based service providers: in a changing landscape, identify market opportunities and formulate the best strategies to address them.
• Media, IT and consumer-electronics companies: develop a view of the way the telecoms landscape is changing and of how different strategies will influence the value chain.
• Policy makers and regulators: gain insight into how different NGN strategies can affect the competitive situation of the main groups of players.
• Investors and analysts: understand how different NGN strategies will affect the long-term prospects of the major players in the market.
• Mobile operators: understand probable developments in the fixed retail and wholesale markets and how they could affect the mobile business.