Since the late 90s, when softswitches actually began taking shape, they have been touted as something that would dramatically impact the fundamentals of carrier operations. Not just by altering the network architecture but also by helping create new services almost at will. So, while the new softswitch-based networks would save on opex as they would be more efficient and could be better managed, the faster and simpler new service creation would help generate new revenue streams.

In December 2002, when VOICE&DATA carried stories on softswitches, commercial deployments were rare and trials very few. Not only did softswitches face issues of reliability and stability, lack of volumes and crashing circuit switch prices made them less attractive and look costly from a capex perspective. Then, there were issues related to interoperability with existing TDM networks.

Despite all that, the vendors were gung ho about how softswitches can help lower capex and opex, equip service providers with better and faster service creation capabilities, and improve network efficiency. Underplaying concerns related to maturity and reliability of the new technology and issues arising out of lack of uniform standards and interpretability, vendors argued that benefits offered by softswitches made them imperative for service providers. Just wait for the right time, they had said.

That right time now appears to be close. Not only are trials happening everywhere, market reports and vendor revenues suggest that the softswitch market is moving from trial mode to commercial deployments. A Dell'Oro Group report says that sales of next-generation VoIP equipment-including softswitches, media gateways, and hybrid-media gateway softswitches grew three percent worldwide in the second quarter of 2004. Purchases of softswitch trunk licenses, which are indicative of deployments in the service provider network core, grew four percent in Q2 2004 over Q1 2004, while subscriber licenses declined 12 percent during the second quarter. Year on year sales of softswitch trunk licenses grew almost 36 percent. "Although subscriber licenses declined this quarter, the migration of VoIP to the access edge is underway. Carriers are planning, piloting, and rolling out residential and business VoIP services including IP-centrex," says Steve Raab, director of IP telephony research at Dell'Oro Group. "We expect local exchange access services to be a key growth area for this market, beginning 2005," he adds.

Source: Infonetics Research

According to Infonetics Research's quarterly market share and forecast service, Next Gen Voice Products, the worldwide next-generation voice product revenue totaled $452 million in Q3 2004, up 13 percent from Q2 2004 and up 69 percent year on year. Annual revenue is projected to grow from $1.3 billion in 2003 to $4.8 billion in 2007, representing a strong CAGR of 39 percent. "Most equipment categories saw sequential growth this quarter," says Infonetics Research's Kevin Mitchell, directing analyst and author of the report. "Voice application servers, session border controllers, and softswitches, especially class 5 licenses and revenue, grew the most. This indicates that service providers are really beginning to change gears, from investing in infrastructure to investing in next-generation equipment that will allow them to offer new services," he adds.

Even though most deployments are currently focused on core networks (replacing class 4 legacy switches), the access networks (class 5 switches) too are seeing good amounts of action. Infonetics Research found a good growth in class 5 softswitch revenue that went up 34 percent quarter on quarter, to $76 million.

“Softswitches are rapidly becoming mainstream” Ruchir Godura, UTStarcom “We expect large scale deployment of soft-switches in 2005 in India” Sanjay Vidyarthi, Tekelec “Commercial deployments are a stamp of approval” Parmindra Kwatra, Motorola

There is good news for softswitch vendors from almost every major telecom markets. For example, in the US market, there has been major deployments of both class 4 and class 5 softswitches. While class 4 have been deployed by service providers like Sprint, Verizon, and Quest, class 5 switches are being used by Bridgecom, US Lec, and TDS Telecom among others. Nortel Networks has deployed an end-to-end next-generation network (NGN) solution for Shanghai Netcom that included, among other things, its Succession communication server (CS) 2000-Compact superclass softswitches. Similarly, Australian incumbent Telstra is all set to use Telica's softswitches (Telica has been bought over by Lucent) and media gateways in its VOIP-over-broadband trials. In South America, Brazilian operator VIVO's order for Motorola softswitches, announced in July 2004, has been the largest single order among Motorola's base of global customers and one of the largest in the industry.

The Indian Story So Far
The Indian story is no different, though things are moving a little slower then elsewhere. While vendors were always optimistic, it is only in the past one year that softswitches have gained any serious traction among Indian service providers with almost all of them doing trials with different vendors. As questions about stability and reliability of the softswitch technology still remain in some domain, trials are almost mandatory for service providers. While vendors are tightlipped about the names of service providers running trials, they claim that almost all of them are doing so. "People have been talking about softswitches for a long time but now things are happening as operators realise that softswitches would save them on opex," says UTStarcom's south Asia operations head Ruchir Godura. UTStarcom is doing a CDMA softswitch pilot with a private operator, so is Tekelec, which is trying out a combination of class 4 and class 5 MSC with some operators in India. Sanjay Vidyarthi, chief operating officer for Tekelec in India, too is optimistic that Indian market would soon see major action. In fact, Vidyarthi expects most of Tekelec's growth in India to come from softswitch sales.

"While 2004 was the year of evolution, we expect major deployments in 2005," says Vidyarthi, adding that 2006 would be year when heavy-duty softswitch deployment would happen.

Source: Infonetics Research

The incumbent BSNL too is now interested in the softswitch technology. One of its latest tenders is for procurement of softswitches (along with media gateways and other related elements) to be deployed at New Delhi and Chennai. What is interesting is that BSNL is keen to deploy softswitches that should have capability to support class 5 features as and when IP is introduced in the access network of BSNL.

Parmindra Kwatra, who heads Motorola's Global Telecom Solution Sector in India, points out the fact that commercial deployments happening are a stamp of approval. Kwatra, however, does not discount challenges and hiccups. "The challenge is to replace the old switches with the same amount of reliability and take care of future requirements and we must do that quickly and better. That is the major challenge for the softswitch industry," he observes. Tata Teleservices has deployed a Motorola SoftSwitch for CDMA (MSS-C) on its CDMA2000 1x network at Nagpur in Maharashtra.

For service providers, softswitches would become the key vehicle of expansion to new geographies including smaller locations and rural areas, vendors say. "With a softswitch, a service provider does not need fiber everywhere-remote locations can be connected to the central switch with satellites," Godura points out. Kwatra also believes that softswitches would be key to development of rural telephony and expansion of networks to locations with small subscriber base.

Ravi Shekhar Pandey