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Market Study
Published: February 2008
Pages: For full details, please email keithw@cmsinfo.com
Tables: For full details, please email keithw@cmsinfo.com
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Research from: Analysys Mason
Sector: Mobile Strategies

Much attention has been given to investment in next-generation networks and services but it could be a costly mistake to neglect legacy services.

This report examines where and why legacy services figure on the road map to a next-generation world, assessing the actions that network operators and service providers should take to ensure returns from legacy activity. The report looks at current practice and answers the following key questions:

- Should core legacy revenue be defended prior to migration or should its decline be managed?
- How long should legacy platforms - and therefore legacy services - remain in operation?
- What role will legacy services and legacy emulation services have in a carrier portfolio?
- How can the functionality of legacy connection-oriented services best be migrated onto next-generation platforms?
- How can operators best deal with the security concerns around NGNs?

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0 Summary
1 Managing legacy is half of the challenge of NGN migration
1.1 Operators need to manage the transformation of both legacy networks and legacy services
1.2 The importance of legacy services lies in more than just revenue generation
1.3 Operators can choose to maintain legacy services or to switch them over
1.4 Transformation offers an opportunity to switch off some services completely
2 Defensive strategies will not halt falling profitability of legacy services
2.1 By 2012, legacy services will represent less than 50% of a typical incumbent’s fixed revenue
2.2 Enduring value is found only in certain legacy areas
2.3 Incumbents may benefit in the short term from the phasing out of legacy services by altnets
2.4 Defending against fixed-mobile voice substitution is simply playing for time
2.5 NGNs can damage legacy service revenue as well as defend profitability
2.6 Legacy networks dilute performance
3 Business continuity must not be threatened and brand trust must be preserved
3.1 Consultation and communication have to be planned from the outset
3.2 The moment of switchover needs to be carefully planned
3.3 Achieving CPE compatibility and full service emulation remain the largest obstacles to successful transformation
3.4 Satisfying the requirements of enterprise customers is complex
3.5 Competition and social regulation will prolong the life of certain legacy wholesale services
4 It is difficult to guarantee the security of next-generation services
4.1 NGN transformation introduces IT-type risks into the operating environment
4.2 Technical security may be well designed but is still subject to implementation problems
4.3 NGN operators need to factor consumer protection and regulatory compliance into their budgets
5 Managed decline of legacy is a better choice than defence

Companies discussed in this report: BT, Deutsche Telekom, KPN, France Telecom, Telstra, Telecom Italia, T-Com Slovakia.


List of Figures and Tables
Figure 1.1: Legacy and new networks and services
Figure 1.2: Fixed-line telecoms service revenue, retail and wholesale, in Western Europe, 2005-2007
Figure 1.3: Overview of Deutsche Telekom overlay network
Figure 1.4: Overview of BT’s 21CN switching and transmission
Figure 2.1: Fixed-telecoms service revenue in Western Europe, 2005-2013
Figure 2.2: Legacy services as a proportion of non-mobile revenue for a typical Western European incumbent, 2008-2017
Figure 2.3: Retail PSTN/ISDN access revenue in Western Europe, 2004-2007
Figure 2.4: Retail PSTN/ISDN geographic voice calls revenue in Western Europe, 2004-2007
Figure 2.5: Retail PSTN/ISDN non-geographic calls revenue in Western Europe, 2004-2007
Figure 2.6: Selected Western European incumbents’ market share of retail PSTN/ISDN revenue (access and calls), 2004-200714
Figure 2.7: Incumbents’ shares of Western European legacy geographic voice calls markets, 2006 and 2007
Figure 2.8: Operating margins of retail fixed wireline divisions of major Western European incumbent operators, 2005 and 2006
Figure 2.9: Return on selected BT legacy regulated services, FY 2005 and 2006
Figure 2.10: Key financial outcomes of a typical incumbent operator adopting a do-nothing approach
Figure 3.1: Stakeholders in an NGN transformation
Figure 4.1: An NGN security model

For full details, please email keithw@cmsinfo.com

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