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Publisher's Outlook
August  2000

Rich Tehrani  

The ASP, I Hereby Bequeath My Phone Closet...


Go Right To:
The EXPO's The Thing

Quick Bits & Nuggets...

"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.

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 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 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.

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.

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).

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.

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 ]

The EXPO's The Thing

Ask anyone who's ever read Shakespeare in school to compare their reading experience with the experience of attending a professional performance of the same script and they'll tell you hands down, the play's the thing. Likewise in the rapidly evolving communications industry, reading leading trade publications only takes you so far. You need to get out there, onto the Exhibit Hall floor of a leading trade show for an educational experience that simply can't compare to flipping pages. To make informed product selections, you need to witness live demonstrations of the latest products. And the most productive way to do this is to go to an EXPO that allows you to compare products from hundreds of companies under one roof. Shakespeare, himself no stranger to live performances, would agree: "The EXPO's the thing!"

Communications Solutions EXPO will be making its dramatic return to Las Vegas for a limited run -- December 5-7, 2000, and this time, the stage is the Sands Convention Center, which is connected directly to the Venetian, our primary show hotel. I for one can't wait to go... This hotel is one of the newest and most elaborate hotels in Vegas where they boast that every room is a suite, and every suite offers high-speed Internet access.

Communications Solutions EXPO is known for continually leading the industry when it comes to education. Our desire to offer our attendees the latest, most dynamic live attractions on the most important communications technologies is unmatched. You could say I am obsessed with your education, because, frankly, I am. By putting your needs first, we can't help but end up with successful events. We love what we do and we work as hard as we can to attract only the most qualified attendees to our shows: Those people who are really interested in selecting the most appropriate products, furthering their careers, and staying way ahead of the curve.

Our never-ending drive to help you select products more intelligently has led us to develop attractions that are unlike anything seen at any show before. For the first time ever, you will be able to come to Communications Solutions EXPO and truly delve into our world, or rather, "Worlds." We are partnering with the industry's leading companies to build "Communications Worlds" on the Exhibit Hall floor, where you will be able to immerse yourself in the latest technologies and enjoy an in-depth learning experience while seeing the latest solutions in action. Live. I could tell you more but I won't. The only way to get the details is to attend Communications Solutions EXPO. Please don't e-mail me -- I won't budge. You've got to check it out for yourself.

Communications ASPs are one of the fastest-growing areas of communications. Everyone agrees that we will soon be outsourcing just about every facet of our communications. Regardless if you are going to become a Communications ASP or you are looking to potentially outsource your communications needs, you will benefit enormously from this attraction. There is simply no better place to come learn about the latest and greatest opportunities for your company to explore. Expect to see technology that helps you become an ASP and see successful ASP services on display for yourself.

Here is another area of communications that is advancing faster than anyone previously imagined. Wireless Internet, 3G, wireless local loop, in-building wireless, WAP (wireless application protocol)... It's all hot! And it's all right here in Wireless World. Whether you are looking to deploy the latest wireless services or you want to incorporate productivity boosting wireless apps into your enterprise, you'll be happy you attended this attraction.

Also taking center stage will be CRM World. CRM (customer relationship management) has become synonymous with the ability to provide leading-edge e-sales and e-service to your customers. A consistent customer experience regardless of the customer interaction type is crucial to the success of any e-commerce endeavor. This applies to the enterprise and service providers alike. There are no exceptions to providing good service. Today's customers won't stand for it. We have had a long history of successful trade show educational partnerships with CellIT (the people who have brought you the Live Multimedia Blended Call Center in shows past) and once again, we will be working with CellIT to build a unique attraction you're sure to benefit from!

TMC wants to be your partner in selecting the next generation of products and services you need. We count on you -- serious decision makers -- to make our shows successful, and you can depend on us to do our utmost to make sure all TMC events, including Communications Solutions EXPO, help you become more successful in your career. Register online at www.csexpo.com. Act now, and save up to $200 in the process. See you in Las Vegas!

[ return to the August 2000 table of contents ]

Quick Bits & Nuggets...
...Rich Tehrani's quick takes on some of the more exciting things he's recently seen on the trade show circuit...

Do you ever get tired walking at trade shows? I know I do. I keep buying more comfortable shoes but my feet don't seem to care, or even notice. And occasionally when I feel like taking a rest, I will be lured into an exhibitor's booth by some inane attraction such as a plate juggling, pie eating, card shuffling magician/entertainer who is simultaneously guessing 10 people's weights and liberally tossing t-shirts in every direction. Other times, it just takes a Bruce Willis flick or even The Matrix on a DVD screen to capture my attention. Sometimes, companies can even weave a movie into their product demo. Such was the case at Dynarc.

The demo I witnessed showed an extremely hi-res Keanu Reeves jumping out of a helicopter. As I watched, Dynarc's super-efficient PR team told me that behind the scenes it was Dynarc's IP routing equipment that allowed for channelized bandwidth. This technology allows channelized reserved services or the ability to reserve bandwidth based on packet type (using layers 24 to help classify traffic). As the demo progressed, network congestion was introduced to the system and an obvious degradation of picture occurred. Once the bandwidth reservation system was turned on, the picture cleared up immensely (of course, I missed my favorite part of the movie).

Guaranteed bandwidth optical networks open up new service provider opportunities for video conferencing, multicasting, telephony, and even high-paying, high-bandwidth VPN customers. The option to supply bandwidth dynamically allows service providers the ability to increase revenues, as customers require additional bandwidth. Dynarc's Dynamic synchronous Transfer Mode (DTM) transmissions can support OC-48 SONET and you can expect their solutions to start at $45,000...

For those of you who attended my keynote at last year's INTERNET TELEPHONY CONFERENCE & EXPO at the Hotel del Coronado in San Diego, you may recall that I demonstrated a wireless IP telephony call between a laptop and remote PC using NetMeeting. In fact, Nokia's wireless IP endeavors earned them the first-ever ConvergeNET interoperability achievement award.

Imagine my surprise when I found out that Nokia has extended this technology into our homes by integrating it into a service-based solution. The product I am highlighting is called a home gateway and it was just released to the U.S. and Canadian markets. By combining ADSL and multi-megabit wireless technology, DLECs and other service providers can give their customers (power users, SOHOs, etc...) high-speed access throughout the residence. Dubbed the MW1122, this solution certainly reduces churn by allowing high-speed wireless in-home access using the IEEE 802.11b standard...

IP isn't just for wired networks anymore. For those service providers that are having trouble getting to those hard to reach places, there is linkway.IP, a service provided by COMSAT Corporation. COMSAT's satellite network makes it possible to set up global intranets and extranets, regardless of customer location. The service is accessed through antennas that are between four to six feet in diameter, and service options can be as low as 300 Kbps and up to four Mbps. I am looking forward to the day when the antenna is small enough to fit into a PCMCIA slot but I'm not holding my breath.

...watch this space monthly for more quick bits & nuggets from Rich's ongoing trade show travels...[Ed.]

[ return to the August 2000 table of contents ]

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