‘ T hought Leader s i n Quadr upl e Pl ay and Emer gi n g Wi r el ess T echnol ogi e s ’

WiFi Calling and the ePDG:

The continuing importance of voice in the carrier model

A Thought Leadership paper

By Rethink Technology Research

Lead author: In association with Oracle Communications

Caroline Gabriel, Research Director
January 2016
 White paper: WiFi Calling

Executive Summary

Amid all the discussion of ever-faster data and richer content, it is easy to assume that voice
no longer plays an important role in the business model of a communication services
provider.

This is far from the truth. Voice still contributes almost half of mobile operators’ revenues
worldwide, and is an important element in customer satisfaction, especially among business
users moving to mobile-first working.

With LTE, there is the additional challenge of moving from circuit-switched voice to Voice
over LTE (VoLTE), To deliver a strong voice experience, 4G, coverage needs to be almost
ubiquitous - not in near-term reach for a large number of MNOs.

WiFi Calling has emerged as a way to extend coverage and improve capacity, especially
indoors, by moving traffic intelligently between LTE and high quality WiFi connections. This
can transform the 4G voice business case and, since WiFi Calling is IMS-based too, it can offer
the same range of capabilities as VoLTE.

Fixed-line operators, particularly cable MSOs, MVNOs and large Internet service providers,
may opt for WiFi-First options in order to minimize their reliance on an MVNO deal (though
they still need access to an evolved packet core). At the other extreme, some MNOs may use
WiFi Calling only to fill gaps opportunistically, and especially to address the challenge of
good in-building penetration.

In a survey of mobile and fixed-line operators conducted in summer 2015, Rethink

Technology Research found that almost 90% of MNOs, and over 70% of MSOs, planned to
deploy WiFi Calling between 2015 and 2020. However, they had several critical success
factors which needed to be met to justify that decision. These included strong security,
customer satisfaction resulting in lower churn (to other networks or to OTT services), high
levels of service flexibility and scalability.

To meet all these requirements optimally, the critical investment is in the evolved packet
data gateway (ePDG) which controls the border between the mobile core and the public
internet. There are many choices and approaches when selecting the ePDG, but despite the
apparent efficiencies of integrating it into the packet gateway (PGW), this can prove to be a
false economy. A dedicated ePDG with a full set of optimized capabilities for WiFi Calling will
significantly affect the return on investment in this technology, and help to ensure that voice
remains an important part of the carrier business model for years to come.

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Introduction: The continuing importance of voice in the operator model

The evolution of mobile networks from 3G to 4G to emerging 5G has been heavily focused on
data, but voice remains a core element of the mobile network operator’s (MNO’s) business
model.

This is despite the fact that mobile voice is becoming commoditized by the competition from
internet services like Skype, and is offered on an unlimited, or even free, basis by many
providers.

Although mobile data revenues overtook those from mobile voice for the first time in 2015,
according to Ovum1, most MNOs are still looking to enhance their voice offerings as they
extend their 4G services.

Meanwhile, other wireless service providers also recognize that voice needs to be part of
their offerings. Fixed-line telcos and MSOs, and ISPs, have the opportunity to use WiFi-based
technologies to retain voice options within their emerging multiplay service bundles.

The reasons why wireless or fixed/mobile service providers remain interested in voice, even
in the era of Skype, include:

 Voice is still the largest percentage of revenues for many MNOs, particularly in
emerging markets (it continued to grow in Africa in 2015, the first year when it
slipped below 50% of mobile revenues globally).

 Even if voice itself is cheap or free, every time a user makes voice call with non-telco
mobile apps for example, they are lost to the network operator. Therefore it is
important to keep users on the network in all areas of their usage.

 Voice remains an important element of the service bundle. Data-only offerings have
achieved very low market penetration as primary contracts, and in mature markets,
fixed and mobile operators increasingly see growth coming from quad play bundles,
including voice alongside video and data, across fixed and wireless lines (mobile or
WiFi).

 Fixed-line substitution within enterprises and homes is on the rise, and this is driving
increased use of mobile voice. It also makes it important that mobile voice can fulfil
the same functions as the old landline service. This may open up the opportunity for
added value communications services, for enterprise users, in future.

1
Ovum, ‘Telecoms Media and Entertainment Outlook 2015’,
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40
35
30
% of respondents

25
20
15
10
5
0
Bundles are more Keep customers Replace fixed-line Attract enterprise Offer premium Don't intend to
sticky on network voice users add-ons support wireless
voice

MNO MSO WiFi

Figure 1. Primary reason to support wireless voice services, among different operator
categories.

Figure 1 indicates why voice remains an important service for wireless and converged
operators to provide, and – with WiFi Calling – can even be an element of a WiFi-only
proposition. Only 2% of MNOs and 15% of fixed-line players do not intend to offer any voice
services under their own brand in 2015-2018.

1. Challenges in deploying 4G voice

Any service provider wanting to offer voice services is facing a change in architecture. Fixed-
line operators increasingly need to support voice over wireless networks as their landlines
fall into disuse for this purpose. This involves an investment in WiFi and/or an MVNO deal
with a cellular provider (or even the acquisition of a mobile network).

The added challenge for MNOs in the voice market has come with the transition to LTE. As
an IP-based platform, LTE does not support traditional circuit-switched voice networks. That
has left MNOs with various options to migrate their 2G/3G base to 4G (see Appendix 2 for
details).

Whatever the choice of technology, the critical success factor for voice is universal coverage,
so that users do not experience dropped calls, black spots, or awkward hand-offs across
networks. Coverage is particularly important, and difficult, within buildings, where fixed-line
substitution is driving usage and quality expectations upwards.

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Yet most carriers will not achieve full LTE coverage for some years to come. Developed
economies are not expected to reach 95% population coverage, on average, until 2020, and
emerging economies until 2029, according to the GSMA.2 There are several reasons for this.
For example, coverage in rural areas may not be economically viable. Whereas in denser
urban areas ‘clutter’, such as buildings and infrastructure works, and interference can create
localized coverage gaps.

In addition, in-building coverage is poor on many networks even where the MNO has rolled
out significant LTE capacity, so real world coverage – as measured by user experience – is
far lower than the top line figures suggest. An Alcatel-Lucent study3 found that 87% of
companies would switch carriers if they were promised better coverage, primarily for voice
quality reasons.

Another challenge to the VoLTE business case is that WiFi usage is outstripping cellular
usage for various reasons, including cost, device support and data rates. The base of active
users and devices addressable with LTE is far lower than with WiFi, especially when
customers are indoors (for instance, many users default to WiFi, and 42% of tablets are WiFi-
only). Almost three-quarters of wireless data traffic is delivered over WiFi and as voice
becomes just another data service, users will expect the same experience on any connection.

2. The emergence of WiFi Calling

An emerging solution is WiFi Calling (also known as Voice over WiFi). Like VoLTE, this is
compliant with 3GPP standards and enabled by an IMS. Mobile operators can use this to ‘fill
the gaps’ in VoLTE, while for non-cellular providers, it provides a way to offer wireless voice
services without the need for an MVNO agreement.

WiFi Calling is an extension of the 3GPP’s evolved packet core (EPC) architecture which
allows any WiFi network to access the EPC via a gateway at the border between the public
internet and the operator domain.

The gateway is the evolved packet data gateway (ePDG) which is part of the 3GPP I-WLAN
platform. The ePDG creates a secure IPsec tunnel from the EPC all the way to the device and
anchors traffic in the packet gateway (PGW), which means WiFi can be treated in the same
way as a cellular RAN by the mobile core.

2
GSMA, ‘Mobile Economy Report 2015’
3
http://www.tmcnet.com/tmc/whitepapers/documents/whitepapers/2013/6708-small-cells-create-new-opportunities-
the-enterprise-key.pdf
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Figure 2. The WiFi Calling architecture. Source: Oracle.

The underlying architecture was defined back in 2005, and refined from 2008 to fully
support ‘untrusted’ connections in unlicensed spectrum, such as WiFi, but it was hampered
until 2015 by lack of device support (and lack of urgent demand, while 2G/3G and fixed lines
were still in heavy use).

The turning point for WiFi Calling came with the launch of Apple’s iOS 8 operating system,
which supports WiFi Calling and supports seamless access to IMS communications services
over LTE or WiFi.

Although the close relationship to the mobile architecture means it is primarily a technology
for MNOs, other carriers are also deploying it, particularly cable MSOs and some large ISPs,
provided they have an IMS.

3. Operator advantages of WiFi Calling

WiFi Calling can be an effective answer to many of the voice challenges outlined above,
because:

 Mobile operators can harness WiFi Calling supplementing their own coverage and
capacity with a lower cost complementary network. This enables them to build out
LTE at the pace to fit the primary data-driven business model, rather than be forced
to achieve universal coverage in order to support voice, which is often a loss leader.

 Non-cellular operators can greatly reduce – or even eliminate – the fees they pay to
MNOs for access to mobile networks, and add their own wireless voice services to
their multiplay bundles. WiFi-first and WiFi-only services are being launched by

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many MSOs round the world, especially in the US (Cablevision offers WiFi-only,
including voice, for instance).

 WiFi, often at very high quality, is far more heavily installed inside buildings than
cellular small cells, and provides a readymade source of voice coverage.

Seamless
Homes with Small office Operator
handover Outside
limited with limited services
between home
cellular cellular when
LTE and network
coverage coverage roaming
WiFi

WiFi Access Point

Figure 3. The various applications of WiFi Calling.

WiFi Calling has other advantages over alternatives including:

 Simple user experience, as it uses a native dialler not an app, and users can keep their
mobile number.

 Roaming and hand-off. An important element in customer satisfaction (and therefore

churn reduction) is the ability to make unbroken calls anywhere, which is enabled by
hand-off between different WiFi hotspots, and between WiFi and LTE, as well as IP-
based roaming.

 IMS-enabled value-adds. With IMS-based technologies like Rich Communications

Services (RCS), operators have the potential to differentiate their voice and
messaging services with options such as unified mailboxes, video calling or
conferencing.
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Figure 4 indicates the advantages which MNOs see in WiFi Calling – in a survey of 62 MNOs,
planning to deploy the technology, churn reduction was perceived to be the most important
business benefit.

5 WiFi-first
10
Figure 4. Among MNOs
9 20
Reduce churn planning to deploy WiFi
Calling, the primary
Reduce TCO business driver to do so.
11 Source: Rethink Technology
Fill VoLTE gaps Research survey of 62 MNOs
August 2015.
15 Improved indoor
14 coverage
Attract enterprise users
16

For all these reasons, there is a high level of interest in deploying WiFi Calling among mobile
operators, and among MSOs with access to an EPC via an MVNO deal, acquisition or sister
company (which will be almost 90% of them by 2020, as it becomes almost imperative for
MSOs to offer multiplay services).

100
90
80 Figure 5. Percentage of
70 MNOs and MSOs with plans
to deploy WiFi Calling
% of operators

60
50
services. Source: Rethink
Technology Research survey
40
of 62 MNOs and 41 MSOs
30
August 2015.
20
10
0
2015 2016 2017 2018 2019 2020

MNO MSO

By 2020, despite near-ubiquitous LTE and VoLTE population coverage in some developed
markets, almost 90% of mobile operators will nevertheless be offering WiFi Calling too.

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4. Deployment options for WiFi Calling

Despite the potential benefits, implementing WiFi Calling is a significant undertaking which
carries cost and risk.

It can only be enabled if the user device, the access and packet core networks, and the service
core (IMS) support it. Although any WiFi network can be used, the high quality experience
which many operators regard as crucial will be best assured by using access points and
devices with support for carrier-grade capabilities There are different ways to deploy and
support WiFi Calling, which will influence the effectiveness of the roll-out and how well it supports
the operator’s business case. The Rethink operator survey (see Figure 6) found that the most
important aspects of the deployment, in terms of reducing business risk, were:

 Security and privacy

 Ability to differentiate services
 Flexibility to support new services
 Coverage and QoS (dropped call rate, signal quality)
 Scalability

11
23
Security and privacy
13
Failure to differentiate from OTT
Flexibility
Coverage and QoS
Scalability
17 19
Other

17

Figure 6. Most important WiFi Calling requirement to mitigate business risk. Source: Rethink
Technology Research operator survey August 2015.

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5. The impact of the architectural choice

The deployment approach can decide the level to which the criteria outlined above are met,
and therefore the level of risk/reward on its WiFi Calling roll-out.

The critical element of the WiFi Calling architecture is the ePDG because it is the gateway
between the internet and the untrusted network, and the mobile core. It controls key
functions such as security and authentication, acting as the secure termination node for IPsec
tunnels established at the UE. It also supports roaming, hand-off, QoS enforcement and local
mobility. Depending on the choice of platform, it can add significant functionality on top of
that supported by standards.

Perhaps the most important choice when deploying an ePDG is whether to select one that is
implemented in a standalone gateway at the border of the network, or integrated into the
PGW and mobile core.

There are some obvious attractions to integrating as many functions as possible tightly
within the packet core, particularly in terms of cost. However, a September 2015 survey of
almost 30 mobile operators – all evaluating their WiFi Calling and wider IP strategies for
2016-2018 - indicated that there are concerns about this approach, and important reasons
to trust a dedicated gateway solution (see Figure 7). Almost half intend to implement a
standalone solution for IP border services including WiFi Calling, while 28% prefer an
integrated approach and 24% are undecided as yet.

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Dedicated
48
Integrated with PGW
Undecided

28

Figure 7. MNO intentions to deploy dedicated or integrated ePDG for WiFi Calling and IP
services. Source: Rethink survey of MNOs evaluating IP plans for 2016-2018, September 2015.
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 White paper: WiFi Calling

The main reasons to opt for a standalone gateway, according to the survey, relate closely to
the critical success factors already identified for WiFi Calling:

a) Security and privacy

The ePDG is frequently provided by a company with expertise in this area.

Security is the most prominent concern among operators adopting IP-based LTE in general
and WiFi Calling in particular (see Figure 6). An ePDG which is dedicated to securing the
border can significantly improve the operator’s defences against the rising tide of malware
and hacking of IP systems and therefore mitigate the key risk to the business case.

An ePDG protects users’ communications while optimizing the ability of the mobile core to
resist overloads and attacks. When securing the border between wireless access and packet
data networks, many carriers believe hacks and overloads are best addressed before they
get anywhere near the PGW itself, and by a purpose-built that has been designed specifically
to perform encryption at ultra-fast speeds and to offer deep layers of protection.

b) Differentiation of services

WiFi Calling, to fulfil its business purpose, needs to be clearly superior to the over-the-top
experience in terms of consistent experience with the mobile network, dropped call rates,
and so on. Some of this differentiation is achieved through IMS value-adds, but others rely
on the network itself – particularly, high levels of coverage, same native dialer, same mobile
identity, instant sign-in and authentication, and QoS levels related to policy.

The ePDG is optimized to enable many of these differentiators and can be linked to a policy
server to add intelligence when allocating connections. In addition, a dedicated system can
offer higher levels of functionality and performance when managing authentication,
connection choice or handover.

c) Scalability

Many operators are handling millions of subscribers, making billions of calls a month, and so
their gateway and core platforms need to be able to scale up to huge levels of usage.
Dedicated ePDGs are designed specifically to handle and secure subscribers at the border
and so they have optimized performance levels and ability to scale.

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IPsec is highly process-intensive and so can have an impact on the user experience and the
core performance if carried out by a general purpose platform. Any ePDG must combine
support for high density service interfaces with low power consumption. In addition,
encryption and decryption should have minimal impact on latency.

d) Flexibility

Mobile IP services are in their infancy and the needs of the operator and the subscriber are
changing quickly. Part of an operator’s competitive edge comes from its ability to respond to
changes rapidly and cost-effectively, in order to keep its user experience strong and updated,
without having to make a major network change each time. A purpose-built gateway often
has better ability to address emerging new requirements flexibly because it can perform
changes at the edge, without having to impact on the entire packet gateway on each occasion.

The dedicated ePDG has the horsepower to deliver a range of added value functions such as
secure video delivery and calls and to support a wide, and growing, set of services in an agile
manner. It can leverage embedded service and application intelligence to allow the operator
to deploy new services quickly and flexibly.

e) Best of breed

Many mobile operators are increasingly concerned about vendor lock-in, and procuring all
their RAN and core systems from just one or two suppliers. Adopting a best-of-breed
approach, with integration assured by standards and interfaces, can increase competition in
an MNO’s ecosystem and improve their ability to demand the best performance and pricing.

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Conclusion:

To summarize, the choice of platform to support WiFi Calling has a significant effect on how
far the system delivers the operator’s targeted business benefits. A dedicated and optimized
ePDG plays an important role in ensuring that those benefits are maximized, well beyond
what would be delivered by the basic standards alone, implemented in the PGW of the mobile
core (see Table 1).

Key operator requirement WiFi Calling ability to deliver Dedicated ePDG

Security and privacy,
especially when using
unlicensed spectrum.
Ability to differentiate from
OTT solutions by going
beyond just voice and
innovating with new
services.
IPsec tunneling between WiFi
and ePDG
SIM based authentication
Access to IMS-based IP
services and capabilities
World class firewalls,
specialized security gateway
expertise, high IPsec
performance
Instant authentication,
intelligent connection
management, trusted security
– all optimized by a dedicated
ePDG to enhance experience

Flexibility to support IMS support, ability to add Capacity to support many

emerging business cases and
services.
Quality of experience
enabled by strong coverage
Ability to scale up while
aligning the cost of
deployment to economic
benefits of voice (direct or
indirect).
capacity and coverage at low emerging services, agile
cost deployment without going to
PGW
Ability to harness licensed and LTE/WiFi handover
unlicensed spectrum as maximizes availability,
appropriate. Operator can dedicated processing of QoS,
confine WiFi Calling service to security and handover tasks
certain classes of connection
eg carrier-owned, in-country
to ensure the user is not
exposed to poor quality
connections. This is a rising
tactic among some providers.
Support for latency-sensitive
and packet-loss sensitive
services at high scale.
Relatively low cost of WiFi Ability to handle huge
expansion, rising device numbers of sessions and IPsec
support tunnels
Ability to support high
number of IPSec tunnels and
high set-up rate

Table 1. How a dedicated ePDG enhances the way that WiFi Calling can address operators’ critical
success factors.

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Appendix 1: Oracle and the Wi-Fi Calling solution

Oracle Communications offers a dedicated and highly optimized ePDG solution, the Mobile
Security Gateway (MSG), which is designed to maximize the business returns that operators
can obtain from their investments in heterogeneous networking. Its use cases include Wi-Fi
offload and onload, and secure small cell management, and Wi-Fi Calling is one of its key
functions.

By separating the Wi-Fi Calling ePDG from the PGW, the MSG provides scalability and
flexibility to address the large number of IPsec tunnels that will be required to support Wi-
Fi Calling at scale.

It is delivered as an appliance on the Acme Packet 4600, 6100 and 6300 platforms and can
work alongside other Oracle mobile core solutions such as CSCF to VoLTE application
servers.

Key operator requirement Oracle MSG

Security and privacy, especially when
using unlicensed spectrum.
Ability to differentiate from OTT
solutions by going beyond just voice
and innovating with new services.
Flexibility to support emerging
business cases and services.
Quality of experience enabled by
strong coverage.
Multiple authentication and
authorization techniques for SIM and
non-SIM; advanced firewall; high IPsec
performance
Instant authentication, intelligent
connection management including
offload to trusted and untrusted
networks
Capacity to support many emerging
services, agile deployment without
going to PGW
The MSG provides seamless mobility
between Wi-Fi and 3G/LTE

Ability to scale up while aligning the Ability to handle huge numbers of

cost of deployment to economic sessions and IPsec tunnels
benefits of voice (direct or indirect).

Table 2. How Oracle’s MSG addresses the operators’ critical success factors for Wi-Fi Calling

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Appendix 2: Voice options for the MNO

Mobile network operators have unique challenges in delivering voice services because of
their migration to IP-based LTE, which does not support circuit-switched technologies. This
gives them four main choices to underpin their voice and messaging strategies once they
move to LTE:

 Drop voice services and become a data-only provider

 Rely on a partnership with a voice application provider such as Skype
 Support circuit switched fallback or other mechanisms to move customers onto
legacy networks when making calls
 Implement Voice over LTE (VoLTE) and/or WiFi Calling, which requires an IMS (IP
Multimedia Subsystem)

The pros and cons of these approaches are summarized here:

Voice option Pros and cons

Drop voice services and become data- Increased risk of churn, mobile data-only
only services have little history of success

Rely on partnership with a voice Low cost, but no ability to monetize

application provider customer, weakens brand relationship

Support circuit-switched fallback (CSFB) No support for value added capabilities

or other mechanisms to move customers
onto legacy networks when making voice
or SMS calls
Implement VoLTE (Voice over LTE), an
IP-based solution which requires an IMS
(IP Multimedia Subsystem)
during calls, enabled by IP; relies on
maintaining legacy networks with full
coverage, which also limits the ability to
refarm that spectrum for 4G
High quality and often comes with
support for value added capabilities via
HD Voice and RCS; native dialer unlike
OTT; but IMS is a major investment; and
good voice services require ubiquitous
LTE coverage

Table 3. The MNOs’ main options for providing voice in the 4G era.

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About Rethink Technology Research

Rethink Technology Research is a specialized research and consulting firm with 12 years’
experience in surveying wireless, broadband, over-the-top and quad play operators. This has
resulted in a broad research base of over 140 service providers (MNOs, telcos, cable and
satellite operators, over-the-top providers) worldwide. These organizations are surveyed on
a regular basis about their network infrastructure and business plans, and have a
relationship of trust with Rethink.

Rethink also has deep relationships with the telecoms ecosystem (tier one device OEMs,
vendors, technology developers, integrators, regulators etc. Key areas of expertise and
research experience include HetNet migration, small cells and carrier WiFi; transformation
strategies for the RAN and the BSS/OSS; convergence of IT and network skills and platforms;
device and chipset roadmaps; spectrum strategy.
www.rethinkresearch.biz

About Oracle

Oracle offers a comprehensive and fully integrated stack of cloud applications and platform
services. For more information about Oracle (NYSE:ORCL), visit oracle.com.

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