Handset is missing link in IMS

SINGAPORE--The lack of handsets that support IMS (IP multimedia subsystem) services is just one of several challenges hindering wider adoption of the communications platform.

Speaking at the IMS Asia conference today, Amrish Kacker, principle consultant head for wireless and multimedia at Analysys Consulting, said the delivery of IMS benefits to operators and consumers have been hampered by several challenges, including the lack of standards-based handsets, threat to an operator's existing revenues and uncertainty over how services should be priced.

"There is currently no standards-compliant IMS product available in the marketplace," Kacker said, adding that existing IMS services are largely based on proprietary standards.

IMS technology is touted to allow operators to focus on offering applications, rather than access technologies, and deliver fixed-mobile converged services. Kacker said it can also speed up application deployment, while helping operators lower their operational costs through easier network management.

"Typically, most cost savings would come from the backhaul and core networks, and you're potentially looking at 1 to 2 percent EBITA (earnings before interest, tax and amortization) margin improvement, which is significant considering that there's downward pressure on your margin," he explained.

According to Dean Bubley, an analyst at U.K.-based technology consultancy Disruptive Analysis, the noise level around IMS is huge but to date, almost all attention has been focused on IMS network deployments.

Bubley said the phone itself has almost been completely ignored. "Once again, the telecom industry seems to have underestimated the complexity of getting the phones [out in the market] right before investing billions on new infrastructure," he said.

This view was echoed by Wooyong Choi, senior manager of South Korean operator SK Telecom's core network development team, who was also a speaker at the conference.

Choi said: "The lack of IMS clients is the most important issue. The success of IMS services, especially complicated ones, depends on our subscribers' handsets.

"The real IMS client is not here yet," he said.

SK Telecom was one of the first telecoms operators in the world to deploy an IMS infrastructure, offering IMS-based services such as instant messaging and video telephony across its fixed-line and mobile networks, since 2004. IMS will also form the backbone of SK Telecom's next-generation converged network, which will be fully completed by 2010.

To combat the lack of IMS-based devices, Choi said, SK Telecom uses IMS middleware software to "communicate with the mobile OS (operating system), device drivers and applications".

"Otherwise, we cannot integrate and combine different applications and services," he said. While IMS can provide "blended service delivery" with synergies in entertainment and broadcasting using IP, Choi noted that the lack of compliant handsets is a key inhibitor to the technology's adoption.

According to Analysys' Kacker, IMS services could also threaten existing revenues from SMS (short messaging service), which could contribute between 6 and 15 percent of an operator's revenues.

"The amount of revenue you earn per SMS is fairly high but if you're going to deliver instant messaging, you'll start to move from a SMS carrier to a data-based carrier, of which the revenue is significantly less," he explained.

"If you were to do a like-for-like replacement, there would be revenue and profit impact on your network," he added.

There is also uncertainty over how operators should charge subscribers in an all-IP network, Kacker said. "In several countries across the world including Singapore, Hong Kong and the United States, end-users are not charged for [incoming] calls," he said.

"If you move to a data-based application, where you try to connect between a fixed and mobile network, a charging mechanism you might consider is that the person receiving a call is consuming data, and therefore he should be charged [for that service]," Kacker explained.

In most markets, that pricing model is very different what users expect for voice services, he added.

Another conference speaker, Fuad Fachroeddin, group head of wireless access products at Indonesian telco PT Indosat, noted that more than 95 percent of its Indonesian mobile customers are prepaid users. "They are cost-conscious and it would take time for IMS-based services to be introduced to the mass market," he said.