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Integrated Edge services gives 22 percent advantage for operators’ total cost of ownership

A new study, conducted by an independent technology research and consulting firm,  cites the advantages of integrated edge routing solutions such as Ericsson’s SmartEdge multi-service edge router

August 21, 2009

The new report*, titled “Integrated Edge Services – The TCO Advantage,” reports a total cost of ownership (TCO) of 22 percent, with CAPEX and OPEX savings of 21 percent and 53 percent (respectively) of integrated solutions over multi-element solutions. The research also uncovers five key business drivers for service providers that are adding urgency to their decision to go beyond the mere convergence of functions onto a common edge platform, to the benefits inherent in converging the fixed and mobile networks themselves.
  

“Service providers are rationalizing their organizations to present a more nimble and lean competitive profile. At the same time user demand for voice, video and data services and the ability to modify services on demand is growing,” said Jennifer Pigg, vice president at Yankee Group, the firm that conducted the research.  “Our TCO analysis demonstrates that solutions such as the Ericsson SmartEdge, which provides capabilities on a single platform for converging legacy broadband and IP networks, offers service providers an operational and competitive advantage.”
 

Based on extensive primary research and proprietary TCO modeling techniques, the report compares this year’s findings with those of the initial study in 2006, identifying five critical areas where service provider networks have changed including: more traffic, a greater mix of traffic, less revenue per bit of traffic, constraints on headcount, and frozen or lowered capital budgets. As a result of these changes, Yankee Group’s research points to the growing benefit to be derived from solutions with multi-function capabilities, a converged network model, modest capital cost, and a low power profile and green footprint.

Single Converged Platform, Flexible Subscriber Management and Scalability Top List

Given current estimates that global IP traffic is growing at over 45% per year through 2012, (doubling every two years), the study points to the benefit derived from multi-core routing processors that can scale and balance network tasks to handle all inbound and outbound traffic while applying rules to the traffic without imposing delay.  In addition to volume, the mix of traffic has increased, placing greater importance on subscriber and traffic management. In response, service providers are looking for scalable solutions that can handle large volumes of diverse traffic, and help define, track and report a wide range of service level agreements (SLAs), as well as identify and apply the appropriate Quality of Service (QoS) for each type of traffic.
 
Despite the unprecedented growth in traffic and rise in average bit rate of broadband connection, Yankee Group reports that average revenue per user (ARPU) is stagnating. To offset lower ARPU, cost per bit of traffic must decline (CAPEX and OPEX). Service providers must begin evaluating costs more granularly and flexibly.  Multi-service solutions lower CAPEX costs by reducing hardware acquisition costs, and help lower OPEX by simplifying management of the system itself – from configuring and updating protocols to software upgrades and deep packet inspection filtering.
  

The last area of change reported in the study signals the collapse of separate service provider networks and the need to simplify networks as a result of reduced headcount and lower budgets. Service providers know that to compete in a triple- or quadruple-play arena they must look to unify their data and mobile organizations. This will require consolidation and convergence of both the number of platforms and management systems within their network.  The edge of the network is where service providers are looking to focus resources.
  

Ericsson has both a strong multi-service edge routing heritage and world-class mobility solutions that are proving to be a powerful and unique combination. In previous years, carriers placed an emphasis on functional consolidation to deliver wireline services, which was answered with the innovative SmartEdge. In today’s era of convergence, their requirements are rapidly evolving to embrace a common platform for fixed and mobile service delivery. Ericsson remains committed to helping service providers sharpen their edge by providing the best TCO and flexibility for converging their networks onto a single, all-IP platform.
 
*The report was a commissioned work conducted by Yankee Group Research, Inc. on behalf of Ericsson as of April, 2009.

ABOUT ERICSSON

Ericsson is the world’s leading provider of technology and services to telecom operators. Ericsson is the leader in 2G, 3G and 4G mobile technologies, and provides support for networks with over 1 billion subscribers and has a leading position in managed services. The company’s portfolio comprises of mobile and fixed network infrastructure, telecom services, software, broadband and multimedia solutions for operators, enterprises and the media industry. The Sony Ericsson and ST-Ericsson joint ventures provide consumers with feature-rich personal mobile devices. 
 
Ericsson is advancing its vision of “to be the prime driver in an all-communicating world” through innovation, technology, and sustainable business solutions. Working in 175 countries, more than 75,000 employees generated revenue of SEK 209 billion (USD 32.2 billion) in 2008. Founded in 1876 with the headquarters in Stockholm, Sweden, Ericsson is listed on OMX NASDAQ, Stockholm and NASDAQ New York.
 
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ABOUT ERICSSON PACKET NETWORKS

Ericsson Packet Networks are the industry’s most advanced and proven portfolio for fixed and mobile infrastructures. Our market leading Packet Core, Multi-Service Edge and Metro solutions are trusted by the world’s largest network operators to power network convergence and enable the Full Service Broadband experience. The award-winning Ericsson SmartEdge and Converged Packet Gateway platforms are foundational to next generation networks-- lowering capital and operating expenses while increasing revenue per subscriber, network traffic monetization, and the fast delivery of new services. For more information, visit www.ericsson.com/IPnetworking.

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