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"Who knows? In five to ten years, owning a PBX may be analogous to
owning a power plant today. We can expect in time to be renting or leasing
just about every telecommunication function that we have to buy today."
This concept has been making the rounds and was brought to my attention by
Kevin Mayer, the Consulting Editor to this publication in a recent meeting.
The analogy Kevin shared with me made such sense that I in turn felt I had
to share it with you.
According to just about every source you can quote and every hardware
vendor in the communications market, we can soon expect service providers to
indeed inherit the phone closet. This concept is certainly not strange to
readers of this publication and it is certainly not a surprise to the
exhibitors at the last few trade shows I have attended.
If you are already a service provider, or are considering becoming one,
or if you want to resell another company's services, there are vast
opportunities before you. Unfortunately, where there is opportunity, there
is also competition, and in order to succeed in a competitive market, you
must make many decisions about many things. As a service provider, you must
make intelligent choices about the type of service you want to provide as
well as the underlying technology you need to bet on.
I feel your pain. I have spent hours interviewing companies that are
striving to be the equipment providers of choice to service providers. I
have met with vendors in just about every subset of the communications space
and in the following pages, I hope to give you a good feel for service
provider opportunities and equipment choices.
SOFTSWITCH
First, a bit about some equipment choices. These days if you are trying to
sell any type of IP telephony product into the service provider market and
you don't either work with a softswitch or have your own, you are in deep
trouble. Softswitches are all the rage and it looks like this latest
buzzword has caught on in full force. Simply stated, a softswitch allows the
separation of call control intelligence from media transmission.
Softswitches typically embrace open APIs and allow service providers the
flexibility to mix and match different signaling systems such as MGCP,
H.323, SS7, IPDC, SIP, and others. Softswitches are a significant
advancement in the IP telephony service provider market, offering more
flexibility to service providers. And in a market so rife with acquisitions
and takeovers, the ability to work with anyone's standards-based gateways is
a huge plus.
ipVerse
ipVerse was one of the more interesting
companies that I visited. Comprised of 110 people that are passionate about
their softswitch and Internet offload vision, ipVerse excited me with ideas
of interoperability and enhanced services. The vision at this company is
that carriers will need to be able to offer a blend of service based on
converged and legacy networks. To that end, their softswitch (ControlSwitch)
is able to deploy services on networks both old and new. Furthermore,
ControlSwitch works with open protocol media gateways such as the Tellabs/Salix
ETX5000, Cisco's MGX8260 or AS5300/AS5800, and the Lucent MAX TNT/APX8000.
New services are developed for ControlSwitch with Web-based tools and XML
(eXtensible Markup Language). [For more information on XML, check out the
sidebar to last month's Wireless
IP Appliance roundup (July
INTERNET TELEPHONY, entitled 13
Steps To Wireless Communications Knowledge.] One great service that
ipVerse demonstrated allows users to handle real-time call control through a
Web-enabled PDA. The ability to handle calls on-the-fly could be a godsend
for power telephone users. This type of technology is exactly what we would
need to evaluate the significance of incoming calls and deal with them as we
see fit at that time. Finally, the call control associated with desktop CTI
systems is available to users not tethered to their desks.
Tekelec
Tekelec produces a softswitch called
VoX that they sell as a Class 4 switch replacement. In addition, this switch
interoperates with media gateways from Tellabs, Lucent, and Newbridge, among
others, allowing voice to travel over IP or ATM. Tekelec's strength in
intelligent network (IN) solutions allows them to reliably interconnect
their softswitch to the SS7 network through their IP7 secure gateway. By
implementing standards-based or proprietary SS7 signaling over IP networks,
Tekelec is able to increase efficiency, reduce cost, and increase
manageability.
Service Delivery
Now, softswitch technology is just a tool, a stepping stone if you will,
to the service provider's real goal: Service delivery with an eye toward
customer retention.
Broadsoft tells me that the SME
market is underserved and if service providers could just give these growing
companies access to easy-to-use productivity enhancing features, these
emerging enterprises would sign up, no questions asked. (Perhaps I've
embellished a bit, but you get the point.)
In fact, Broadsoft goes one step further by attacking the marketing of
the ILECs, reproducing an ad campaign from one of these providers showcasing
a series of cartoon figures representing various * codes such as *72, *99
and others. They even went one step further and quizzed me on my knowledge
of the star codes. I failed... Miserably. Besides *69 and *72, I guess I'm
star-code illiterate.
So Broadsoft's solution to this problem rests with a service delivery and
creation system designed to let Integrated Communications Providers (ICPs)
such as CLECs, cable operators, and others deliver user-friendly enhanced
services. You can expect the usual basic services such as call waiting,
voice mail, and follow-me -- you know, all those services that are available
now but we don't know how to access (?!). These features are now Web-based,
meaning they are extremely "tweakable." So, let's say you want to
forward your office calls to your home or cell phone but on weekends, you
like to sleep undisturbed until noon. No problem, this flexibility is
available using Broadsoft's solution. And as for service providers, you can
feel good about locking your customers in as they will stay loyal to you as
long as you give them control of their communications and make them more
productive.
The Web is fast-becoming the call control mechanism of choice and using a
browser-based interface, customers are increasingly able to manage their own
services. Vertical markets are the target market du jour for competitive
carriers, and the general feeling is that there are opportunities galore if
you know how to capture them. To that end, Broadsoft gets the service
provider started with some services we may be familiar with in the CPE world
such as personal/group directories, messaging, conferencing, accounting, and
auto-attendant services. From there, you are free to add other services that
can be constructed with Java-based tools.
IP-Enabled MLS
A great example of vertical services is one dedicated to real estate
with the ability to integrate with the Multiple Listing Service (MLS)
database and initiate a call when a targeted house profile is listed.
Realtors can optionally set up "hot client" lists that always have
their calls answered by a live person regardless of time of day. Oh, and in
case you were wondering about the bottom line, the base system costs
$300,000 and the system can scale to 75,000 users. Time to open the piggy
bank.
So there you have some equipment choices as well as an example of the
importance of service creation and delivery. It seems a perfect launch
scenario for service providers interested in getting into the ASP line of
work, no? Install the proper equipment in your network, generate a bunch of
creative, unique services, take on the responsibility of delivering those
services, and the customers will beat a path to your door, and, if all goes
according to plan, stay there for the long term.
A CAF-SP?
Have you ever wondered what the communications market has in common with
coffee other than the fact that you need to drink copious amounts of it to
reach a caffeine buzz capable of sustaining you to keep up with this
ever-changing market? If you have, you'll have your answer in Sylantro, a
company that wants to do for dial tone what Starbucks did for coffee. Sylantro
sees the world of telephony as one that will be enhanced with value-added
applications that people will gladly pay for as a service if they can have
their communications personalized for them. This is analogous to paying one
dollar for steamed milk, fifty cents for a shot of syrup, etc.
Sylantro supplies an application switch, in essence, bundling softswitch
functionality with revenue ready apps and the ability to develop further
apps through Java beans and XML interfaces. They are looking to convert
CLECs into communications ASPs. One major differentiator here is that the
company has struck a deal with Toshiba that gives Sylantro's customers
access to Toshiba's 500 offices as well as access to the Toshiba sales force
which numbers in the thousands. This brick and mortar infrastructure may
turn out to be the crucial link in allowing communications CLECs to easily
enter a market without having to train hundreds or thousands of local sales
and technical personnel from scratch. There is a great deal of synergy here
that is amplified by the fact that Sylantro's services work with both analog
as well as Toshiba digital telephones.
ASPs supply customers with a customized portal that meets the needs of
their customers. Some of the functions I witnessed at Sylantro's booth were
click-to-dial as well as the ability to set up a favorite caller folder, all
with Outlook integration. Most of the basic business phone features you'd
expect are available with this solution: Features like call waiting, hold,
hunt groups, conferencing, and more. Interestingly, Sylantro tells me that
they are able to display a list of incoming and outgoing calls, just like
your cell phone. This is a great feature and one I wish I had in my office.
Doesn't it seem ironic that we need ASPs to allow office phone users who
spend hundreds of thousands of dollars on CPE equipment to finally harness
features found in $50 cell phones?
The bottom line here is that service providers need to lock in customers
and the best way to do that is by customizing solutions that their customers
need and will gladly pay for.
ASP AS ART FORM?
Where Sylantro focuses on software-based, churn-reducing solutions, Congruency
has differentiated themselves by focusing on the end-user device as well as
a transaction-based e-commerce model. The heart of Congruency's offering is
an IP phone -- the i.Picasso -- which features 24 MB of RAM as well as a
backlit 320x240 VGA screen that can render HTML pages.
Congruency is not a softswitch provider but they allow CLECs to put
together solutions that are similar to those provided by softswitches. They
consider themselves communications ASPs and have developed an IP telephony
network that allows them to work with CLECs in supplying them with unique
solutions. The phones allow easy HTML customization for vertical markets
such as hospitality, limousine services, and more. A great application in
the hospitality market is the ability to allow hotel guests to order room
service as well as other services through their telephone without placing a
call. This type of service will be greatly appreciated by those of us who
are very specific about our dietary needs and are used to having our orders
butchered by room service operators who seem to have other things on their
minds besides the actual order being placed.
Congruency works with CLECs to service end users through a variety of
broadband solutions. In addition to IP Centrex and voice mail, CLECs can
offer their customers e-commerce apps such as the ability to order from
partners such as office supply companies, fast food chains, and a variety of
others. What is at work here and in the above example of the portal supplied
by Sylantro is an application of Tehrani's Law, which I introduced last
month: "He who owns the user interface owns the market." Although
I applied this law to operating systems, there is no reason why this can't
be applied to telephony portals, be they embedded in the phone or displayed
on a browser. A communications portal is a great place to sell ads and even
more services as they are rolled out. You'll have an easy way to sell more
enhanced services and your customers will be able to order new services with
a click of a button (give or take a few credit card numbers).
EXTENDING THE ASP
One of the most obvious signs that the telecom industry is shifting
towards the ASP model is the strategic shift in direction from CPE to the
ASP model. We have already seen telephony move from circuit-switched to
packet-switched networks, and now it is common for every communications
hardware provider to have a voice-over-IP strategy. We are beginning to see
this in the ASP market as well.
The fact that MCK Communications, a
company typically associated with remote workers and corporate telecommuting
even has an ASP/service provider strategy is amazing. And amaze me they did
as they told me that the future of PBXs would be network-based PBX services.
They went on to explain that we will be purchasing services from the cloud
and not hardware. Perhaps I shouldn't have acted surprised but I still was.
Not because I don't agree but because in my head, MCK was always "that
telecommuting company." I am really happy to see traditional CPE
companies wake up. Sooner or later, all CPE companies will do the same or
perish.
MCK is working with partners such as Telocity
and ipVerse to provide services using MGCP and there are plans to embrace
SIP as well. One application that they envision is the seamless recording of
customer conversations at the click of a button over IP, allowing for
verification of products and services purchased. This feature would be
extremely useful to companies that need to comply with government
regulations as more and more sales are made by phone.
MCK already has a great deal of depth in their PBX extender line of
products and are now able to leverage this technology (and existing
extenders) to allow analog phones into the realm of IP. They are even
working on a cell phone extender that allows users to dial into the PBX and
act as a remote station, with full PBX functionality. MCK sees itself as the
bridge between the world of analog sets and IP-based ASP services.
CONCLUSION
After speaking with so many companies and seeing room for growth in so many
sectors of the communications market, I realize that I really have picked a
great career path. There was a time when I felt that the PC market was
leading edge and telecom was boring. Few would argue with me on this point.
Nowadays, exactly the reverse is true. The communications market is
absolutely rife with new technology and the convergence of voice and data
enabled by IP telephony and other associated technologies has made voice and
video the hot spaces and the PC market has turned suddenly into a bargain
basement commodity business with little differentiation between competing
products.
The way I see it, as broadband solutions continue to proliferate and the
world realizes the benefits of purchasing services instead of products, we
can expect continuous and rapid advancements in technology. Once we see
communications move to a Web-based application model, we'll be able to take
advantage of new and rapidly adopted services and new models. I predict that
in just under a year, we'll see a great deal of developments in the
communications ASP market. These changes will come just in time for spring
and as you start to see them coming, you'll probably want to focus your
spring cleaning on the phone closet.
Rich Tehrani is President, Group Publisher, and Group Editor-in-Chief
for TMC publications. He welcomes your comments at rtehrani@tmcnet.com.
[ return
to the August 2000 table of contents ]
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