Although massive commodity bandwidth is a key requirement, profitability comes from services available to customers over the metropolitan area network.
STEPHEN M. GARRISON, Riverstone Networks Inc.
The flood of data traffic generated by the new Web-based economy is overwhelming the existing voice-optimized infrastructure within the metropolitan area, creating two separate bottlenecks. The first bottleneck is in the "local loop" and well known. The second is in the carriers' backbone, where SONET rings optimized for voice traffic are struggling to keep up with the demands of a data-centric Internet economy.
Technical advances in infrastructure equipment are breaking the bandwidth bottleneck. In the local loop, broadband access, including Ethernet, WDM, cable, DSL and wireless, is bringing high-speed connectivity to small and medium-sized businesses. In the carrier backbone and an ever-increasing part of the metropolitan core, optical DWDM switches are replacing traditional SONET switches, providing a huge increase in commoditized optical bandwidth and drastically reducing the time it takes to provision a circuit.
Now that optical core and broadband access technologies are addressing these bottlenecks, the metropolitan area network (MAN) is undergoing a radical transformation. Service providers are realizing that while massive commodity optical bandwidth availability is a key requirement for the new Internet business economy, it is not the source of profitability-actually, services available over the MAN are that source.
While solutions for the local loop have given small and medium-sized enterprises access to far greater bandwidth than ever before, a new breed of application service providers (ASPs) is encouraging management-information-system and information-technology departments to redirect their spending to managed or outsourced services available over the metropolitan network. These services are changing the face of the MAN, which will carry the heaviest amount of business traffic in the future.E-commerce is perhaps the best known of these metro-based applications. With diminishing security concerns, e-commerce is gaining wider acceptance and being adopted by enterprise customers, both large and small. Traditional brick-and-mortar businesses and Internet pioneers alike recognize that e-commerce is not only viable, but also crucial to their future growth and profitability.
To succeed in the new economy, most businesses will set up shop in new Internet data centers springing up alongside the new metro network highway. Just as out-of-town retail shopping malls attracted businesses and customers with their easy highway access and parking, these new "Internet malls" will attract businesses with the promise of fast and reliable access to their customers located within the new metropolitan networks. These new Internet data centers, where content is stored and applications are run, require massive, tightly controlled bandwidth and high-availability services to ensure that content and applications are always accessible.
In this model, most traffic remains entirely within a given MAN. Traffic destined for out-of-town or across the world hops onto the Internet through one of the backbone Internet connections feeding the metro data center. Essentially, the long-haul Internet becomes just the interstate freeway connecting these local metropolitan networks, with the majority of business traffic and content remaining in the metro area where it is close to the business sites and their customers.
The combination of these Internet data centers and the MAN is leading to a new type of entity: the "new business Internet" (see Figure 1).
In the new business Internet, competitive providers can offer a wide range of local, affordable, high-bandwidth business applications and services. However, they will need more than larger pipes and near-infinite optical bandwidth to make the transformation. With the bandwidth bottlenecks easing, service providers will have to look beyond selling commodity optical bandwidth and providing "plain vanilla access" to grow revenue and profits. Successful providers will increasingly grow their profits by selling differentiated, value-added business services.
New and existing carriers agree that this transformation is well underway. Raw bandwidth is no longer their major challenge, nor is providing access. The new mantra is services. Just as telecommunications carriers realized profits were not in providing dial tone but in enhanced call services such as call waiting, voice mail, and the like, today's service providers are also looking to a service-creation model where higher-value services are needed to increase profitability and reduce customer churn.
This realization has spawned whole new classes of service providers. In-building providers, or building local-exchange carriers provide a rich array of data services inside multitenant buildings. Content and application service providers are offering outsourced applications and business processes. Metropolitan service providers (MSPs) and fixed wireless providers are lighting up entire cities with their high-bandwidth, business-oriented services. And regional Internet Protocol (IP) carriers are bringing whole areas of the country online with next-generation services (see Figure 2).
The transition from selling commodity optical bandwidth to selling services will require carriers and service providers to build an infrastructure that allows them to handle-and profit from-business traffic. Profitable metropolitan service delivery requires higher-level functionality and intelligence. MSPs must be able to slice bandwidth into customer-selected increments, then dynamically allocate that bandwidth on customer request.
The MSPs must be able to monitor bandwidth usage to ensure that customers are getting what they have paid for, then be able to reliably account and bill for these allocations in real time. Service providers also need the intelligence to identify customers who consistently bump up against their maximum allocations, because therein lies an opportunity to sell larger allocations. In short, bandwidth control and accounting-not bandwidth availability-lie at the heart of the new business Internet. Without these, metropolitan service delivery is impossible.
In addition, metro service providers must offer advanced capabilities to support the services delivered over the metropolitan network. Content and application hosting requires intelligent caching, load distribution, and secure partitioning, without loss of performance. At the same time, access providers require dynamic self-provisioning to reduce operating costs and maintain customer satisfaction. The infrastructure must allow partitioning for security to protect customer data, reliability to route around failures, and scalability to maintain return on investment throughout hectic subscriber acquisition and growth cycles.
From an infrastructure perspective, the message is clear. Network equipment vendors must provide solutions that deliver a service-creation platform and a technology that can both handle the optical bandwidth and provide rich service enablers. It is the combination of these that enables differentiated services and gives the service provider a competitive advantage. The rising importance of differentiated services has segmented the market and created a whole new class of equipment vendors whose products allow service providers to convert raw bandwidth into profitable services.
Bandwidth control and provisioning are among the important functions that network equipment must now perform, providing carriers and service providers with one of many opportunities for charging service-level tariffs. Today's most advanced switch routers, for example, can dial up optical bandwidth in bit-level increments. This intelligent bandwidth provisioning and advanced traffic engineering are the launch point for differentiated services for customers. It also allows service providers to scale and auto-provision their optical bandwidth according to business metrics, thus creating profits by capturing revenue that would otherwise be lost.
Switches with sophisticated traffic shaping and quality-of-service features allow service providers to dynamically classify and prioritize customer traffic. Providers can define different service classes based on the identity of the customer and the type of application to offer different service levels or ensure service quality for time-critical traffic such as voice or video.
Through the use of Multiprotocol Label Switching, virtual private networks, and differentiated services, the latest generation of switch routers can set priorities and offer advanced traffic engineering and hardware-based rate limiting throughout the network. Carriers and service providers also need to make sure their switch routers can deliver 7-by-24 content and application uptime, which is critical for the nascent ASP and commerce service-provider markets to take hold (see Figure 3).
A still more sophisticated service enabler, making its appearance during the past year, is hardware-based accounting. This capability allows service providers to characterize each customer's traffic pattern and, by creating a detailed "map" of customer usage, enables service providers to offer customized services to individual customers. Just as long-distance voice carriers offer different service plans for customers with different calling patterns, this type of traffic mapping makes it possible for service providers to deliver this same level of customization to their customers.
Equipment that provides an open application programming interface can integrate with solutions from leading providers of business infrastructure and operational support systems for applications such as itemized billing, customer retention, fraud management, and other enhanced services.
As they transition services to the fiber-optic-based business Internet, service providers must deal with a mixture of existing and next-generation media, including legacy copper and fiber, that today leads to customer premises. Fiber-to-the-curb architectures are growing dramatically but account for less than 10% of all building access. That means more than 90% of curb access around the country is through copper with T1 (1.554-Mbit/sec), T3 (44.736-Mbit/sec) and DS-3 (44.736-Mbit/sec) circuits running frame relay, point-to-point protocol, or ATM. It is extremely important, therefore, for carriers and service providers to choose equipment that can deliver services in all environments by supporting all media types. This media versatility fuels the rapid deployment of services across any infrastructure.
Equipment that allows service providers to use whichever transport is available-optical, copper, or wireless-from the local carrier, rather than waiting for costly and time-consuming fiber pulls, delivers time-to-market advantages by enabling providers to bring their customers online more quickly. Service providers can win the customer's business today, then migrate the customer to high-speed fiber services when they become available. This migration can be done seamlessly, without costly truck-rolls and without changing the provider's operational support system, provisioning, and billing models.
The past has taught us that there is always a new, faster technology on the horizon-and today is no exception. Network speeds of 10-Gigabit Ethernet and beyond are just around the corner. While big new pipes with commodity optical bandwidth are exciting, it is the ability to deliver new services that will change the way business is conducted.
In the new business Internet, infrastructure equipment enables services, and services enable service providers to differentiate themselves. This differentiation creates sustainable, defensible market positions and leads to success and profits.
Stephen Garrison is director of corporate marketing at Riverstone Networks Inc. (Santa Clara, CA). He can be reached at Riverstone Networks at [email protected].