By Ian Cox, Industry Analyst, ABI Research

Vendors are reporting up to a 50% increase in enquiries for SDP in 2006. The market is being driven by the search for new ARPU in Europe, network growth in Asia, and IMS in North America.

Multimedia interactive services delivered over IMS networks bring a new order of complexity across multiple networks and access technologies. The objective of an SDP is to manage and create a single-user experience for each service, no matter how it is delivered.

SDP Capex Forecast

Standards
It is unlikely that there will be a single standard for SDP, which is why many vendors are developing an “environment” that can accommodate the several types of SDP that will evolve from today's situation of multiple networks and services. The standards position for SDP is currently lagging behind the market. Integrating custom APIs into a network is currently uneconomic for smaller networks; the support of a set of standards is needed to improve the situation. Some progress has been made by the OMA in setting standards for policy control, but that is behind the state of development of the market. For example, TISPAN and 3GPP are working on the architecture for IMS, but IPTV is evolving separately, and it is unclear if this will be included by TISPAN. Web portals are being worked on by W3C and IETF, but not as a formal set of standards. Service enablers for IMS may be extended to include Web services, but that work is still to be completed.

Ecosystems

Service providers will look for stronger partnerships with network equipment providers (NEP) as they move from deploying an intelligent network (IN) model to service creation over IP networks and Web services. They need help putting it all together. They could use middleware vendors — independent software vendors — but they have little experience of dealing with them, so they are using system integrators, companies such as Capgemini and Accenture, to prime a project when the focus of the systems integration is OSS/BSS. And they are using NEPs when the focus is network and service transformation.

Applications are initially being deployed over SS7 (Common Channeling Signaling System No 7) signaling and will be migrated to SIP-IMS in the future. This will include Centrex and hosted PBX applications and will involve replacing current IN applications. IN replacement will reduce operating expenses and capital expenditures and has the potential to be able to support many new applications. Three of the top five Tier One operators in Europe have begun to replace their IN services. Wi-Fi and WiMAX, using VoIP, will also have an impact as they bring many new tariff implications. Peer-to-peer traffic essentially avoids ITU rules on interconnect and international tariffs and will cause tariffs to fall. WiMAX's effect will begin in 2007.

Market Drivers
The main services driver for IMS on the fixed network is the migration to next generation networks (NGN). It will take fifteen to twenty years before this process is complete on all fixed networks, but some networks will be operational within five years. It makes the business case more difficult for fixed-line operators in the short to medium term as they are effectively running two networks in parallel.

Fixed-mobile convergence (FMC) and quadruple play are drivers for the SDP market and will help fixed-line operators retain customers as they bundle broadband, voice, mobility, and TV together into a single user device.

SDP is also being driven by the emergence of data services on mobile networks. SDP is seen as a strategic IT environment for service creation and billing. Data traffic translates into additional content on the network. This will be provided by third parties and needs a managed interface using open standards such as those defined in the OMA and Parlay initiatives.

Market Capex
Telenity believes that a fully functional SDP can cost between $3 million and $40 million, depending on its capacity, and in some cases could reach over $100 million. It believes that JAIN SLEE has not gathered much support in the industry, which has been dominated by servers running J2EE. Parlay/OSA is seen as the most effective way of providing access to IP telecom structures. It also sees the Eclipse development environment as the most important.

ABI Research's SDP capital expenditures (hardware and software) estimate is shown below. Capacity planning is not an exact science and the mix of services as well as calling rates have an impact on the number of servers required and the number of software instances that the network will need. Network reliability and geographical spread will also affect the final cost. That is the reason why we show a moderate and aggressive forecasts.