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Publisher's Outlook
June 2001

Rich Tehrani


Telecom Frustration


Go Right To:
The Important Role Of Communications ASPs
>>Join The Leaders

According to Webster.com, the noun frustration dates back to 1555 A.D. The definition reads "a deep chronic sense or state of insecurity and dissatisfaction arising from unresolved problems or unfulfilled needs." More on-topic for Internet telephony, let's explore "Telecom frustration," which I define as living in a heavily populated area near where your colleagues all have high-speed Internet access and you have no chance of getting broadband access any time soon. All the while you see ads on TV, in the newspaper, and radio for speedy Web surfing that is simply not available where you live.

This is the case with many of my coworkers that live in various parts of New York, New Jersey, and Pennsylvania. These people browse at full speed in the office and are forced to deal with sluggish dial-up access at home, keeping them from downloading any video or audio files of length, as well as large graphics necessary in their jobs.

I wonder whatever happened to supply and demand? Weren't we all educated about this in high school economics? Who will supply broadband connections to the people that so desperately need them?

So many CLECs and other providers jumped into the pool trying to quickly splash up the market share in the broadband area, and suddenly the capital markets eroded beneath their feet leaving many companies and consumers without any broadband options. Unfortunately for many new service providers, they are now being faced with the prospect of sinking. Their business plans called for them to receive investments for a number of years while gaining market share and that funding is just not materializing.

So what do today's service providers have to do to make money?

For those of you that have been reading Internet Telephony Magazine for a while, you know that we have been excitedly heralding the onslaught of new, exciting, better, and more profitable services for a few years now. I've spoken about new services at trade shows. I've written about them. I am sorry to say that they have just been too darn slow to take off.

Part of the reason for the slow pick-in service implementation in my opinion is the large opportunity in the arbitrage market -- there is a race on to supply international users with IP telephony service while the rates are still high enough that they can be easily undercut. This market is quite large; and as deregulation is a recent phenomenon in most countries, it will get bigger. I mentioned this a bit last month. We can expect the arbitrage opportunity to be huge for two to four years (in my estimation) and then the market will slow a bit.

Certainly arbitrage is almost dead in the domestic U.S. market. Really, how much money can you really save when the major providers charge around five cents a minute? This brings us back to how the new breed of integrated communications providers are going to make money. This of course in a single word is services.

But what kind of services you ask? I've asked the same question of many industry insiders on my recent whirlwind tour through Canada and the greater Boston area. One company that caught my eye in the course of my many meetings was Ubiquity, whose motto is "service providers need to provide value added services." What a great place to start, I surmised.

We've all heard of unified messaging-style services, but I wanted to look for more compelling services. I decided to ask the company for a service I had never heard being offered: Fedex or other carriers could sell a "Share the moment" service and you could check the box corresponding to this service on an envelope when you send it out. Since Fedex agents are already able to connect wirelessly to the home office and transmit the status of packages that are sent, the addition of this service is quite rudimentary. A Fedex agent in the home office needs to just call the sender and the recipient of the package and conference them together. Ubiquity responded with a SIP-based intelligent connection service that rings when a package is delivered.

This service would be a great e-commerce booster. I recently sent some books to my cousin on his birthday and would definitely have checked this option if I had it. I have been thinking about how other delivery companies, such as flower shops, could take advantage of this service. It occurred to me that the delivery person could use a WAP phone as a method of delivery confirmation. Drivers can have a Web page with their personal delivery schedule saved in their favorites menu and check off each delivery as they are made. An ASP could once again conference the two parties together at the appropriate time.

Another potential service the company discussed with me is of the follow-me variety, but it would additionally offer the ability to interface with your scheduling program to determine your location including any conference rooms you may be in.

I wondered how these types of services could be marketed, as I know that many technology companies typically make lousy marketers to begin with. One great response was that you could give away a basic service that easily leads the user to try a paid service. (Dialpad has done this phenomenally well. First they allowed domestic long-distance calls to be made for free and then started charging low prices for calls outside the country.)

I was intrigued by what Ubiquity's ideas and philosophies were. I wanted to delve deeper by asking some important questions about reducing consumer call-cost in order to help today's service providers (both old and new) learn more about generating new revenue streams -- a necessity in today's profit driven capital markets.

I'd like to thank Ubiquity's Martin Sendyk for taking the time to answer these questions.

Q: How should the telecommunications industry view the recent shake out in the carrier space?
A: It's sad, but it's as natural as the laws of competition. It's difficult to be a successful service provider because competition is cut-throat. The value of current services is decreasing, and arbitrage-based opportunities are drying up. Amongst this growing need for differentiation, customers are demanding more. Carriers have spent a lot of money deploying IP-based networks. The current situation leaves service providers looking at the entire IP-based infrastructure and asking themselves "Where is the money?"

Q: What is it going to take to breathe life back into this carrier crunch?
The solution begins with the right attitude. An attitude of value-added as opposed to cost reduction, an attitude of providing something to the end user that is better and more useful as opposed to simply cheaper -- these attitudes are key. Service providers need to stop telling their customers "Come with me and I'll save you a dollar." Instead they should be saying, "Pay me a dollar more," to the subscriber, "because I have a very special service for you." The bottom line is that the solution lies in new business models and new technology, specifically in new value-added converged services based on Session Initiation Protocol (SIP).

Q: So what's it going to take to get us to this "Promised Land of SIP?"
Well, we're basically there. Softswitches and the application services platforms that sit architecturally above them, need to be flexible and robust enough to enable service providers to develop revenue streams by creating and deploying next-generation converged services both quickly and cost effectively. Since salvation for the carrier community comes with differentiation, service providers need to have the flexibility to build specific custom services for niche target markets. This is really the only way for them to inject the dollars back into the dial tone and feed their networks with traffic generated by new applications.

Q: Does this mean architectural changes in the network?
It sure does. On the architectural side it means doing away with the monolithic structure of the traditional Class5 CO switch. Enter the softswitch. The most important concept associated with a softswitch is that it allows for a "Service Layer" to rest (architecturally) on top of it. Remember -- a softswitch is really only as exciting as the services that it can support! Softswitches must be flexible enough to allow an application services platform to rest comfortably above it in the Service Layer.

Q: Wait a minute, what is this independent Service Layer anyway?
The Service Layer is an architectural construct, a concept if you will. It is this Service Layer that is the bridge between service delivery vehicles that touch the end user (phone, PC, mobile phone, PDA, etc.) and what I will call the "underlying infrastructure." This independent layer of mediation and the application services platform that lives in this layer latches to the softswitch and the core of the network via SIP.

This Service Layer must be an independent layer. This means that most services should not be built right into a softswitch because it only leads to re-creating the same monolithic architecture that we had before. We don't want to go back to a world where service providers are single sourced, and held captive by large network equipment vendors. An independent Service Layer means that service providers can build multi-vendor networks. It's going to be a "network of networks" in the end, and subscribers will expect to get their service of choice ubiquitously and seamlessly.

Q: Is this all really coming down to "a war of architecture?"
It sure is. And what I've described is the only architecture, which allows a truly open environment where a third-party community of developers can for the first time in history create converged telecom services. These services can be created rapidly and cost effectively. Gone are the eight to 24-month wait cycles for service deployment. CLECs (those that remain!) and other customer carriers can differentiate their service offerings and move their business models to the next level long before they build out their own networks. It's all about getting the architecture right, and it's all about SIP.

Q: Why does SIP keep coming up in our discussions about what carriers need to do next?
SIP (i.e., IETF RFC2543) is the right vehicle for this because of its low complexity, easily extensible, horizontal architecture. Most importantly however, SIP "thinks like the Internet." It borrows on many existing Internet protocols and become the ideal vehicle for the converged services that represent the value added we talked about in the beginning. SIP is also in a good position to dominate over potentially competitive protocols such as H.323 because next-generation call control companies, service creation environment companies, and, most importantly, the service provider community, are embracing it.

The future of communications is without a doubt going to be full of service providers hosting a variety of services. The reasoning behind this trend is obvious -- the time has come for all service providers to start thinking about the future and start providing these services to customers. This is the best way, at least in my estimation, for these companies to start swimming in the turbulent economic environment facing them today.

[ Return To The June 2001 Table Of Contents ]

The Important Role Of Communications ASPs

If there is one certainty in life it is that companies that have reduced capital expenditure budgets need to find alternative ways of getting the job done. This is exactly the reason that the communications ASP market has so much potential in the slowest of economic times.

Of course the current capital markets are challenging but I am convinced that there is a tremendous opportunity for communications ASPs to help corporations outsource their communications and thus save money.

It is for this reason that we are very excited to announce our first Communications ASP Conference & Expo, which will be held at the Fairmont Hotel in the Nob Hill area of San Francisco August 8-10. You won't find an ASP show with a clearer focus or more valuable attendees than this conference, and our editorial staff has put together a unique set of conference tracks to educate our attendees on the technology, business partnerships, and unique applications and services driving the hosted communications marketplace.

The conference will features tracks devoted to the following topics: Corporate/Enterprise, Contact Center, CASP/Service Provider, Reseller, Developer, Research & Analysis, Launching a Voice Portal Operation, Financing Opportunities, and Partnering. Each track will include sessions focusing on applications, enabling technologies, systems, infrastructure, voice and data networking strategies, management solutions, and case studies.

Valuable Conference Tracks
Our topics will cover everything from how to negotiate service level agreements (SLAs) with your service providers to the value and implementation of voice portals for your business. Security at the customer premises, the possibilities for using hosted services for telecommuter employees, and adding voice to your Web presence are other Enterprise/Corporate topics. Contact Center topics will include using unified communications in the contact center, how to determine how much technology and functionality you should outsource, and using location-based services to target your customers.

Are you interested in implementing a voice portal for your enterprise business, or maybe just learning about voice portals and how they can benefit you? Are you looking for hard facts and figures on the hosted communications market and specific segments of it like speech recognition? Or maybe you'd like to explore financing options for getting your hosted services off the ground, or meet other companies in your space to discuss potential partnerships. Then our conferences are where you should be this August 8-10!

In addition to our educational conferences, Communications ASP Conference & Expo will feature many other valuable opportunities for learning about hosted communications and meeting important players in this space. Our Exhibit Hall floor is the perfect place to mingle with companies offering the most innovative products and services in the market, and to see live demonstrations of the technology. Or perhaps you're more comfortable sitting back with some wine and cheese. In that case, the relaxed atmosphere of our Networking Receptions will be perfect for you, and the receptions are free to all attendees.

Don't miss out on an amazing opportunity! To learn more about Communications ASP Conference & Expo or to register to attend, visit our Web site or call 800-243-6002. See you in the city by the bay!

[ Return To The June 2001 Table Of Contents ]

Join The Leaders
Industry-leading vendors already signed up to exhibit at this event include:

Abiliti Solutions This hosted billing ASP offers the BillingCentral outsourced solution, with support for local and long-distance service, calling card services, and voice services over frame relay, ATM, ISDN, xDSL, and VoIP.

Aravox Technologies, Inc. Once known as a VoIP firewall, Aravox has expanded its VoiceShield product into a network services platform, with capabilities for controlled access, usage, IP addresses, and paths based on specific application needs.

Centrinity Centrinity offers a hosted unified communications platform that has already been deployed by service providers on a carrier-class scale, supporting hundreds of thousands of users. The FirstClass solution offers end users a unified mailbox for voice, fax, and e-mail receipt and delivery, accessible from any type of device.

ComoreTel This unique company is a venture between the sovereign nation of Comoros and an international investment group, providing opportunities for delivering toll-free long-distance services through one number, which may be used worldwide. The company's Global269 service will enable registration and activation of 269-800 numbers via the Web.

Crystal Group Crystal offers server-based communications platforms with fully integrated packaged applications, designed for mission-critical communication service installations. Products focus on space savings, open architecture, carrier-class performance, and easy serviceability.

ICS Advent ICS Advent designs, manufactures, and integrates high-availability rackmount and single board computers using customer-defined software and I/O resource boards. The company offers complete bundled solutions for voice processing, IP telephony, telecommunications, and broadcast applications.

NetCentrex Offering next-generation voice networking products for VoIP and PSTN networks, NetCentrex also provides network-based applications for the e-commerce, consumer, and enterprise markets. The company's offerings include an IVR platform, an application development and execution platform, and a multi-protocol softswitch.

Quicknet Technologies Quicknet offers low-density Internet telephony hardware, software, and services. The MicroTelco service offers a central location for choosing an Internet telephony service provider (ITSP) based on voice quality and cost, for making voice calls from a PC to a standard phone.

The amazing solutions available in our exhibit hall are just part of the reason you should attend this important industry event. We will also be featuring keynote speakers and free networking receptions on the evenings of August 8 and 9. Don't miss out on this unique opportunity! For more information on Communications ASP Conference & Expo, visit our Web site or call 800-243-6002.

[ Return To The June 2001 Table Of Contents ]

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