PracticeConsultingTelecoms and bandwidth – Call together

Telecoms and bandwidth - Call together

One big clue that the telco game is starting to bubble and boil is the way venture capitalists are leaping out of dotcom ventures and into new age optical switching operations. After years of fantasy hype, the optical Internet is starting to get some traction and when this wagon really starts to roll, nothing will ever be the same again.

For medium to large corporations, what this means today is the dawning of a new era of flexible contracts with wide area network (WAN) bandwidth providers. For small to medium sized enterprises, it will soon mean access to services that only the Goliaths of their industry sector could have afforded in the past.

One way in to the technology jigsaw is to look at the game plan of New Age telcos, and at their offerings. Unencumbered by huge investments in legacy kit, these newbies are fleet footed and are building networks using the latest game-changing technology. Take the UK based Interdigital Networks, for example. CEO John Wheeler says the company deliberately bases its game on the concept of “smart build”. This means leasing dark fibre from others, rather than digging trenches all over the country to lay its own, and then “lighting” that fibre using bleeding edge technology.

In IDN’s case, this means using Nortel Networks Optera Dense Wave Division Multiplexing kit. The basic concept of DWDM is to divide the light beam passing down a single fibre into a number of constituent wavelengths. Each wavelength acts as a separate “virtual” fibre (or pipe). The latest technology can split a single fibre into 160 separate wavelengths and we are not yet at the physical limits of this process.

The second element of the DWDM party concerns the “payload”, or traffic volume you can shove down each of these virtual pipes. Earlier this year, the maximum capacity was 2 gigabits per second (Gbps). The equipment IDN has bought can now push 10 Gbps down each wavelength. What Wheeler is looking forward to, with scarcely concealed impatience, is Nortel’s next advance, which is not far off, which will expand each wavelength’s carrying capacity to 40Gb. Buried in the laboratories of the likes of Nortel and Lucent Technologies is technology aiming at 80 Gbps throughput and higher.

If we compare this to the current state of play for most corporates, where companies are still contracting for one and two megabit (one thousandth of a gigabit) leased lines, the step change the industry is about to go through becomes obvious. Bigger players can start making a case for buying whole wavelengths (called Lambda services). Smaller players can start thinking in terms of gigabit lines instead of megabit lines, an increase of three orders of magnitude.

At present there is much talk of the “last mile” or “local loop” bottleneck, since most small to medium sized businesses, and just about all private residences have ISDN or plain old telephone lines going in to their premises.

However, as as Nortel marketing solutions manager Ronen Shpirer points out, many carriers are already laying fibre direct to corporate premises, and a growing percentage of residential customers should follow in the coming years.

But the changes going on in the industry are also very much about new technologies that enable the supplier to manage that bandwidth very much faster and more flexibly than has hitherto been possible. Sandy McPherson, a director at Storm Telecommunications, a pan-European new age telco, points out that Storm can now offer its customers a “point and click” approach to establishing new point to point connections, and to changing bandwidth requirements between two or more points on Storm’s network.

Old style telcos would take three months or more to physically set up a new connection, so by putting intelligence into the switches, switch vendors like Sycamore (which provides Storm’s kit), have given their telco customers a huge competitive advantage over legacy players. Says McPherson: “You can’t have dynamic provisioning without dynamic client contracts.

These contracts give tremendous flexibility to the client, which service providers and corporates value highly.”

The nature of the billing processes for corporate customers changes as well. Storm’s billing system is a component based system which captures and bills for “events”. An event can be a customer initiated change in bandwidth demand, be it up or down, or a new point to point connection. An additional dimension lies in the realm of services. Selling raw bandwidth is likely to be a tricky game for all but the biggest wholesale providers. For most service companies, the future lies not just in providing bandwidth, but in providing customers with new, high value services.

There are two really fashionable services at the moment for corporate customers – apart from high speed Internet connectivity. The first concerns converged voice and data networks, using technology called Voice over IP (VoIP). The second involves Virtual Private Networks (VPNs). The main attraction of VoIP for corporates until recently was the cost savings that could be had by “piggy backing” voice traffic onto the corporate’s WAN data links. Today VoIP can enable applications such as “call me” buttons on the corporate website. With applications having access to voice communications websites can be “blended” with and supported by call centre based services.

VPNs are interesting to corporates because they offer a viable alternative to expensive leased line private networks. A VPN sets up an encrypted secure link over the highly unsecure, public highway provided by the Internet.

However, as Nortel’s Shpirer notes, telcos and service providers are very keen to make “personalised” dynamic services available.

This may sound a little opaque, but the basic idea is dead simple. While we still live in a world of bandwidth scarcity, it would obviously help matters enormously if companies and individuals could be given the precise bandwidth connection to the Internet (or to other offices) that they require on a moment by moment basis. The thought here is that not every action over the Internet requires the same bandwidth. E-mail is relatively light, requiring only a few kilobits per second connectivity, while watching a high quality web cast of Madonna or another star of your choice in concert, is vastly more demanding. If the switches in the network were smart enough the network itself could automatically allocate sufficient bandwidth to each task, by juggling tasks against the total available bandwidth in the network. When demand exceeded capacity, those users who were on premium guaranteed services would get preference, the rest would find their connections dying – an incentive for them to pay up for premium services.

Not surprisingly, service providers are very keen on this concept since it provides clear added value opportunities. There are also consultancy opportunities (in analysing client requirements on the corporate side).

It obviously paves the way for premium pricing for highly specific guaranteed performance, and it enables the service provider to keep clients on-side and more or less happy in a world of constrained bandwidth and expanding demand. The key to all this, Shpirer points out, is once again, intelligent switching and billing systems. “You can’t overestimate the importance of billing in all this. You have to have systems that can react precisely to client requirements, according to pre-defined service level agreements, and that can bill fairly for usage on a dynamic basis.”

Some of these elements are available today if you talk to the right providers. Competition will force the pace and carriers will have to respond to competitors’ moves. Most industry watchers think the entire voice/data network space will change totally within the next 18 months to two years. Alistair Broom, enterprise marketing manager at Siemens Network Systems, says corporates will be able to achieve very significant benefits over the next few years by focusing on aligning business strategy and investment in their communications infrastructure. For the consultancy community, helping corporates to achieve this will be a very significant value added opportunity.

Anthony Harrington is a freelance journalist

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