July/August 2001

BY ANDREW BURROUGHS

[ Go right to: Building Tomorrow With Today's Hardware ]

The latest revenue-generating idea comes in the form of "content billing." The Yankee Group has predicted that billing for content will become a significant revenue driver once high-speed services become more universally utilized. One step up from this are the benefits resulting from content usage-based billing. The content billing equation comprises a number of parts. Content providers create and prepare content for distribution on the Web, content portals point consumers in the right direction, and content hosts often host Web sites and provide the Web infrastructure. Content-delivery networks encourage speedy downloads while ISPs actually deliver content to the end users consuming it.

CONTENT IS KING
The recognition that content is the fundamental asset of the Internet has forced content providers to compensate creators of content and to charge consumers for their consumption of content. The industry has recognized that the majority of content has been kept off the Internet by those who created it because it has been impossible to receive compensation for putting it there, until now.

In recent months the industry has seen a major technological change in the integration that is occurring between billing and network suppliers to provide a content usage-based billing capability. In an age where every item in an organization has a value, from the building itself to the smallest paperclip, it's hard to believe that until now bandwidth has been charged at a fixed cost with IT departments unable to assign costs of bandwidth consumption to individual departments. The inability to explain exactly where money is going makes securing IT budgets very difficult.

Examples of the move toward billing for content usage are the large news and entertainment sites, which have recently adopted a subscription model to ensure users pay for the content they download. The providers can in turn monitor the content used and the type of content downloaded, and use this money to pay royalties to those creating the content.

Content-aware switches, such as those from Cisco and Nortel, recognize content by type for preferred delivery, making its use far more cost efficient. This is a great step forward, as traditional billing systems were unable to distinguish content by type and by usage, and this has led to the realization that organizations are missing out on major revenue opportunities.

ADVANTAGES FOR TELCOS AND ASPS
For telcos and ASPs, which own the networks, there is a vested interest in using content billing solutions. Bandwidth has traditionally been a good earner for them, but as competition increases and more people demand enhanced services such as streaming media, Voice over IP (VoIP), large e-mail attachments, etc., the margins generated from bandwidth have been eroded. Telcos and ASPs are looking for any service that adds value to their offering. They realize that content is the way to differentiate themselves and gain competitive advantage, but for that to happen they need to be able to bill for content used.

Companies have to demonstrate profitability immediately in order to survive. The creation of a revenue-generated billing service is the answer. Subscription models are currently popular, but do not solve the problem, as users are still able to access more content than they have paid for, or use high prices as a reason to disregard the service altogether. The only fully efficient method of using content to their advantage is for telcos and ASPs to charge per download.

Ultimately, organizations need a solution that allows them to assign a value to the content that is delivered, bill for it directly, and make sure that the appropriate parties receive their share of the revenue generated. However, content billing poses several technological challenges.

THE CHALLENGES
The first challenge is the need for a return on investment. Any company wants to see that the money it has invested is yielding it some benefit. Particularly in the current economic climate, companies need to prove that the money they have paid out is working to their advantage. A solution that offers low implementation costs, and avoids the expense of software upgrades as well as the expensive and lengthy integration and development efforts that inhibit the ability to respond to market opportunities in Internet time, is ideal.

Second, a company needs a scalable solution. This involves the need to collect, identify, rate, and bill possibly billions of content records daily. A content billing solution allows companies to rate and bill on virtually any type of content (hits, bytes, streaming video/audio, and so on) that a company's implementation can measure.

Third, network integration is an important factor. This is the requirement of companies to integrate directly into the fabric of the network in order to obtain content records in a timely manner. Integration is essential for companies to be as efficient as possible. Companies investing in a billing solution need to ensure that it interfaces with other third-party software packages, including financial interfaces, general ledger, and credit card payment interfaces so that everyone has instant access to the information they need.

The final factor is real-time service creation. Content has a time value and so there is a greater need to change business models faster than before. A practical solution supports product changes and new service creation in real time. It allows users to bring to market ISP products based on content and usage in days, instead of weeks.

Once the revenue-generating benefits of content billing are realized, it is likely that organizations around the world will integrate billing solutions with their networks. Users are familiar with itemized billing for all other utilities, so why not content? Many have downloaded copious amounts of content without thinking about where it has come from or who created it in the first place. After all, if you wrote a book and readers used your ideas as their own, you'd be rather annoyed that you weren't getting the credit for it.

Unless organizations start charging people for the content they use and paying the people who created it, we'll never know what the 90 percent of content that is currently being kept off the Internet actually is.

Andrew Burroughs is chief marketing officer for Apogee Networks. Apogee Networks develops and deploys advanced IP content rating/settlement and IP billing solutions for content distributors, ASPs, ISPs, carriers, wireless Internet providers, and enterprise customers.

[ Return To The July/August 2001 Table Of Contents ]

BY LIOR WEISS

In today's information-driven business world, we are constantly reminded of how quickly mobile communications devices matured from novel luxuries into modern-day personal and business necessities. Logically, today's groundbreaking innovations with IP telephony, voice recognition, and other converged services will also become backbone necessities of tomorrow's communications market.

Next-generation telephony convergence is opening incredible new markets with abundant opportunities for ASPs. As carriers find themselves in the flux of an increasingly competitive market, the clearest way to stay ahead of the pack is to shift the competition to new enhanced services. Telcos need cutting-edge enhanced services to stay competitive, but not many have the resources to develop or integrate them. The solution? Many are turning to the ASP model for next-generation enhanced services.

Part of what makes such advanced ASP services possible is the underlying technology provided by such industry giants as Cisco, Clarent, Lucent, and Sun. Recent innovations in chip processors have bridged the gap between switched telephone systems and new voice-over-packet (VoP) applications. Cutting-edge bridge technology can now seamlessly and transparently merge legacy PSTN traffic with next-gen VoIP streams. Essentially, these solutions split apart fully duplexed and multiplexed legacy audio and packetize it for IP in real time.

Also, advances in QoS metrics and real-time routing have made IP networks a feasible transport medium for mission-critical, time-sensitive data such as live voice conversations. Basically, this means the common IP infrastructure can now provide the quality and reliability users have come to expect from the traditional PSTN.

These developments enable telcos to make a phased migration, gradually shifting to next-generation transport architectures while continuing to leverage current system investments. This shift also creates an immediate need for IP-based equivalents to common legacy enhanced services.

DELIVERING THE SERVICES
This need for "IP equivalency" has not yet been fully satisfied. Even so, the new infrastructure presents a world of service possibilities, far surpassing the capabilities of the legacy network. Current IP enhanced service offerings include teleconferencing and multi-party collaboration, unified messaging, and "smart" personal assistant and directory services. But this is only the beginning. The voice-enhanced capabilities of tomorrow's telco offerings will include features that may not even seem technically plausible today.

What are some possibilities? Unified communications will likely proliferate, providing services such as fax, voice, and e-mail all through a single device or interface. Text-to-speech (TTS) and voice-recognition technologies will become more commonplace, along with interactive Web sites that allow us to speak directly with service representatives over our Internet connections. We can also expect to see the market for targeted and location-sensitive advertising expand significantly.

To deliver such next-gen enhanced services, an ASP is quickly becoming the vehicle of choice. Unfortunately, today's fragmented and largely immature market is laden with incompatibilities, making it difficult for new provider companies to break in. So if you are an ASP innovator with a new idea for an enhanced service application, what are you to do?

One approach is to target a specific platform and then let your application evolve. Let's say you've worked out a great new next-gen service -- for example, voice-to-fax dictated messaging. With your service, jet-set executives will be able to compose memos and reports by cell phone from the airport or the corner Starbucks between meetings. How can you get your application up and running with the least amount of set-up time?

BENEFITS OF A MODULAR ARCHITECTURE
The simplest method would be to purchase a plug-in solution, apply it to an integrated platform with a modular architecture, and brand and market it. This approach has been used by such notable technology leaders as Cisco, Lucent, and Clarent, all of which use an open, modular architecture with a standardized API that provides a consistent framework for building service applications. As a side benefit, customer-level service providers can plug in their own applications and accelerate their time to market.

A good modular architecture will provide data link, media gateway, media management, and media storage management, all integrated into a layered gateway architecture. Service modules in the middleware layer can be provided by outside or partner vendors, provided the developers have an open, portable interface for their applications. The concept is to give developers the ability to integrate and aggregate almost any media application on a single, scalable, and hardware-independent IP platform.

For ASPs building on this type of platform, the first step is to get the associated developer's kit, making sure it contains all the information needed to implement the new service, including the API and the hardware interface. Then install the hardware, in this case the media processing board, on your end.

A good platform provides core voice services such as line interfaces for IP and SS7 telephony, voice and fax message storage, and conference calls. Application partners provide integrated modules for automatic speech recognition (ASR) and TTS services, forming a more comprehensive platform. To add your own service, in this case speech-to-text-to-fax, you would build your application on top of these middleware and aggregation layers, plug it in, and take it to market.

Integrated platforms capable of providing that kind of flexibility will typically use a standardized interface to accept various service applications within a scalable, modular architecture. Platform providers should offer ASPs basic enabling technology to develop and integrate next-generation service applications without succumbing to compatibility issues. The result is simpler integration and much faster time-to-market, both advantageous when faced with the exploding complexity of voice-enabled features in today's environment of rapid-fire change. By employing a third-party application development platform, ASPs can quickly create and integrate new services, unique applications that will help them to stay ahead of the competition.

Next-generation enhanced services are exactly what CLECs, building LECs (BLECs), ISPs, and others are looking for. These "sticky" services provide fresh, compelling content and capabilities to grab subscribers and keep them. As communications ASPs proliferate, and they certainly will, the market leaders will be the ones who get in early with basic, compelling features. They are the ASPs building enhanced service applications right now, targeting an integrated platform in order to reach a wider customer base.

Of course, the market leaders of tomorrow will always be the ones with new, next-generation ideas. But those future giants will stand on the "shoulders" we are now creating, in order to see beyond the future we are building today. Communications are evolving faster than anything ever has before; technology that is elitist or bleeding-edge today will soon be commonplace, giving way to the next generation of ideas. Who will be the ones to prosper in the next wave? They will be idea people -- the service providers who built tomorrow with today's hardware.

Lior Weiss is product marketing manager for IPmedia at AudioCodes. AudioCodes' IPmedia platform allows OEMs to go beyond cheap minutes and provide sophisticated content and services that create revenue streams and customer loyalty.

[ Return To The July/August 2001 Table Of Contents ]