Telecom Act unleashes broadband services market dynamics
PHILIP YIM
Three forces are driving the explosive growth of the telecommunications marketplace: end-users` ever-increasing demands for reliable, high-speed networking tools; rapid evolution of fiber-optic and optoelectronic transport and switching technologies; and federal regulatory restructuring by the Telecommunications Act of 1996. This dynamic environment is pressuring network and service providers and suppliers to provide flexible, competitively priced broadband networks and services tailored to customer requirements.
To deliver future broadband multimedia services and consolidate them with existing offerings, network service providers and suppliers are turning to twin technologies: fiber-optic Synchronous Optical Network (Sonet) transmission systems for high-speed transport and Asynchronous Transfer Mode (ATM) technology for a universal switching platform. With virtually unlimited capacity and flexibility to handle diverse traffic formats, this technology combination holds the promise of delivering interactive voice, video and data communications cost-effectively.
End-users are insisting on more network capacity at both the access and core network levels so they can integrate voice, data and video traffic to run wide area network (WAN) multimedia applications such as videoconferencing and collaborative computing. On the local level, they want local area network (LAN) interconnection capabilities, on-demand bandwidth sufficient to bring up new applications quickly but still able to support legacy applications, and no signal format or time constraints.
Service providers as well as corporate management information systems departments running private networks want broadband solutions that feature relatively low start-up costs. In addition, they want uniform management systems that facilitate the monitoring and maintenance of the myriad network elements and applications involved in a specific deployment. Finally, they want scalable products and services that expand quickly to accommodate growth while protecting their embedded investments.
Market-driven forces
Large-volume user organizations are beginning to recognize the potential benefits of the communications-based "virtual corporation." They understand that real-time, high-speed, interactive communications can boost overall productivity, reduce cycle times, trim job times and expenses, improve customer satisfaction, and strengthen competitive abilities.
Not surprisingly, these organizations are developing a host of communications applications. For example, concurrent multimedia sessions among distant offices allow manufacturers and suppliers to design and refine products quickly, easily and inexpensively; medical specialists located hundreds or thousands of miles from patients are able to diagnose illnesses and prescribe treatments; employees working at home help to reduce auto emissions and traffic congestion; and trainees learn new skills quickly via videoconferencing at low cost.
Accelerating end-user demands for network services and technologies is evident in the explosive global growth of the Internet and the World Wide Web, the rising demand for Integrated Services Digital Network (ISDN) offerings and the emergence of high-speed cable modems that can deliver bandwidth-intensive information to homes and businesses. Other emerging broadband applications expected soon include faster LAN internetworking, video e-mail, electronic data interchange for paperless business transactions, and residential video-on-demand.
Rising market stakes
On the network side, service providers are feeling increasing pressure from end-users and competitors as global demands reshape the communications marketplace. Obviously, service providers that succeed in the evolving broadband services and networks arena will be best-positioned to satisfy end-user demands.
In the United States, adoption of the Telecommunications Act of 1996 is expected to expedite development of a broadband network infrastructure. Cable-TV companies are planning to add telephony and broadband data applications to their networks, telephone companies are racing to add network support for interactive broadband services and video programming, Internet service providers will likely expand their offerings to include telephony and broadband services, and emerging carriers are building both specialized and multiservice networks for voice and data.
To gain a competitive edge in the broadband arena, service providers are seeking low start-up costs, uniform network management systems and scalable processing power. The Yankee Group, Boston, MA, recently surveyed regional Bell operating companies, major interexchange carriers and competitive access providers. According to the survey, three characteristics are expected to distinguish the winning service providers from the losers in providing access to network services:
Time to market--the fast introduction of new services
Service flexibility--the offering of new or enhanced multiple services
Cost-effective service provisioning.
The speed bump
Until recently, service providers have been limited in their ability to deliver the services necessary to support the growing demand and variety of user applications because traditional narrowband networking technologies do not address the speeds required. To offer high-speed data-networking services for such demands as LAN connections and Internet access while continuing to provide standard telephone service, carriers have implemented numerous overlay networks, including switched multimegabit data service, frame relay, X.25, leased lines, ISDN trunk lines; and private branch exchange backbones for voice transport.
The inevitable results have been high costs, complex and often inefficient networks, a tangle of incompatible network management systems, and lengthy service-provisioning intervals--all of which add up to increased frustration and costs for end-users.
To exploit the bandwidth and economic advantages provided by fiber-optic technology and products, carriers are looking to consolidate their WAN services and, eventually, their LAN-based services. That is where the flexibility of an ATM-based switching platform enhances communications. By enabling service providers to switch--quickly and seamlessly--the growing volume of voice, data and video traffic speeding through fiber backbone and access networks, ATM can cost-effectively deliver more services. By combining fiber-based transport and ATM-based switching, carriers are expected to:
Create and provision new services quickly
Integrate voice, data and video services and reduce the operating costs incurred by mismatched overlay networks
Simplify the current tangle of network management systems and boost service quality and reliability
Develop a smooth migration strategy and path to all broadband services and networks.
Technology alliances
The changing telecommunications market landscape, with its complex mix of end-user demands, fierce competition, cost constraints and advancing technologies, demands new organizational structures, not only on the part of customers but also within the carrier and supplier ranks. In a dynamic and volatile marketplace, no single service provider can possibly satisfy all the demands of varied business and residential customers.
Service providers throughout the marketplace are merging or entering into alliances, each of which is designed to accommodate the demands of a changing market. On the international front, British Telecom and MCI have formed an alliance and, more recently, Sprint, France Telecom and Deutsche Telekom have entered into a partnership. On the national scene, shortly after the Telecommunications Act was signed, SBC Communications and Pacific Telesis merged, as did Bell Atlantic and Nynex, reducing the number of regional Bells to five (see Lightwave, June 1996, page 1).
However, an alliance between service providers is only part of the strategy necessary to succeed in the emerging broadband market. Melding the technological strengths of various suppliers is also necessary if carriers are to deliver what customers want.
Until recently, none of the large, traditional suppliers of carrier core networks had devised a network architecture that permits carriers to create new, broadband services to generate revenues and reduce operating costs. Similarly, traditional suppliers had not developed readily scalable solutions that would enable the carriers to build out from existing network environments--from the core through the user device--on a pay-as-you-go basis.
On the corporate internetworking side, suppliers had not provided solutions that scaled well in carrier core networks. Nor do individual suppliers have the complete operational support expertise required for such networks.
Typifying a vendor alliance designed to address supply-side gaps, Siemens and Newbridge Networks are integrating resources to speed the development and deployment of end-to-end carrier solutions based on fiber-optic Sonet transport and ATM switching technologies.
Vendor alliances reflect the changing worldwide telecommunications landscape. The benefits for global network operators, established local and regional carriers, and emerging service providers are:
A business partner that understands a carrier`s diverse, discrete markets and has the cultural and technical expertise to assist in the rapid deployment of revenue-generating services
A simplified deployment decision, especially for emerging carriers, that lowers investment requirements while offering ready access to technical expertise
A partnership for existing carriers that fills in the resource gaps created by downsizing
A business partner that can leverage its combined narrowband/broadband core and special-service network experience into a broadband network architecture that protects a carrier`s current investment in technology, processes and resources while migrating to the next-generation broadband network infrastructure
Consolidated management systems for end-to-end service provisioning and global reach, expediting time-to-market while trimming operational costs and providing strategic differentiation in a competitive marketplace. q