First, what is a managed IP network? Basically it’s an IP network that has built-in quality of service (QoS) performance metrics so that a carrier can offer its customers service level agreements (SLAs). This Publisher’s Letter looks at the top 10 opportunities in this hot space—and the corresponding billing and OSS challenges.
1. Virtual Private Networks (VPNs)
An IP VPN provides sufficient QoS to replace private T-1 and T-3 circuit service, frame relay or ATM network services and private switched voice VPN services currently based on circuit-switched technology. The value proposition for large corporations is that an IP VPN will save money and offer more service flexibility: It can support the IP intercompany or extranet connectivity required for B2B e-commerce, it will provide connectionless connectivity like today’s public Internet and more.
However, a carrier must create a viable IP VPN infrastructure before all else. It’s the next crucial step that in reality hasn’t been achieved by any carrier to date. Other than secure, remote-access dial-up into a corporate network, virtually zero revenue is collected by IP-based carriers for IP VPNs. Bottom line: None of the remaining nine managed IP opportunities will reach their multibillion opportunities if you don’t have a successful IP VPN infrastructure.
The No. 1 problem is IP traffic management under control of real-time bandwidth inventory OSS. The reason private-line frame relay, ATM and circuit switched voice VPNs work with QoS is that bandwidth is essentially reserved between end points on a network—you set up a connection and allocate bandwidth before you send information. With IP VPNs, any two points on a network can be connected on demand (for example, connectionless), as on today’s public Internet. Without a real-time bandwidth inventory system, the IP VPN carrier won’t know whether the session will be QoS-enabled or not, or whether this new session will disrupt other sessions in process.
Today’s IP network designers, however, claim the QoS problem has been solved with a new-generation router, based on a technique called multi-protocol label switching (MPLS). There are a lot of design options here, but in reality an MPLS router can act like an ATM switch if notified. A message tag is attached to an incoming IP packet that says this packet, and many more packets to follow to support this session or applications, are to be sent over the same physical path. In essence there would be no difference between how these packets would be treated versus how private-line, frame relay or ATM service handles IP packets. The MPLS promise is QoS will be high with little packet loss, variable delivery delay, and so on.
MPLS routers allow carriers to have it both ways. Some IP packets can be processed under a public Internet QoS (a best-effort service level), and the others under IP VPN or managed IP QoS. Note: Managed IP service would come with a busy signal or service denial option. Yes, you, Mr. Customer, are requesting this IP multicast session, but we the carrier are rejecting your request (hence the busy signal), because of a lack of available bandwidth in our network at this particular time. But come back later (here’s when we will have the bandwidth).
Some carriers claim they have quality-managed IP or VPN service today with MPLS. They are cheating or kidding themselves. What they do to overcome the lack of a real-time bandwidth inventory OSS is just to greatly over-provision the bandwidth (the capacity of circuits) between individual MPLS routers. This is called throwing bandwidth at the problem. This works today because IP VPN services are not used extensively—over provisioned bandwidth is OK, if the bandwidth requirement is small. But it’s economically unrealistic if you have to pay for bandwidth, which is the case today.
OK, if you solve the problem of IP VPN, for example bandwidth inventory OSS, then you are ready to address the remaining nine managed IP opportunities.
2. IP Multicast
An IP multicast network provides point-to-multipoint distribution of live audio and video for distance learning, corporate-sponsored on-line seminars, and so on. The advantage of IP multicast over IP broadcast is that it uses less bandwidth than traditional broadcasting, and that it is real-time versus the alternative of downloading video files via FTP.
There are two major challenges. First, again, is OSS inventory. How can you provision a user’s request if you don’t know the access speed at the user’s site, what PC software is installed, or what IP network bandwidth is available at that time? Second is billing. How can you bill for the session if you have no idea whether the user received satisfactory QoS? How do you provide intercarrier settlements if the end user is on an ISP network with which you don’t have a business relationship and more?
3. Third-Party PKI Gateways
Public key infrastructure (PKI) is the catchall for all the network and business elements required to ensure security (data encryption of messages, digital signatures for non-repudiation of purchases, digital certificates for authorization, and more) in a managed IP network.
Managing PKI for an intercompany IP network or intranet is doable as long as all the firewalls, certificate authorities (CAs) and certificate formats are the same. The difficulty is mind-boggling, though, if you have to manage PKIs with different firewalls (Check Point, Cisco, etc.), different CAs (Entrust, VeriSign, etc.) and different corporate usage policies. This would be the case for a secure extranet between trading partners for e-commerce.
The holy grail for OSS multicarrier interconnection is, of course, gateways. There is a golden opportunity for a wholesale carrier or third party to provide PKI gateway service here. Just as you have a clearinghouse for wireless voice roaming, you could have and would need a third-party gateway for intercarrier PKI.
4. Application Hosting
Every managed IP carrier is busy creating data centers to host customer databases, files, Web sites, e-commerce applications, etc. The challenge for these ASP-type activities is billing. Today almost everything in the ASP space is priced flat rate. But this flat rate pricing model won’t work in the long run because almost all ASP resources are usage sensitive. The challenge thus is usage-based billing.
5. Content Management
Content hosting falls under application hosting. But content management is different. It calls for the indexing of customer information, verification of Web site links, reformatting of content to match access techniques such as for wireless access devices, and more. The near-term challenge is: How does a carrier bill this ultra IT labor-intensive activity? The long-term challenge is: How do you automate content management, or how do you set up service provisioning for it as a cookie cutter operation?
6. Directory-Enabled Networking
The visual concept is as clear as the long sought-after unified theory of physics, one law or equation that predicts all. Perhaps not as elusive is the directory-enabled network (DEN)—a single managed IP network database that authenticates, authorizes and accounts for billable user activity. Such a system would be highly desirable for IP service provisioning in an intranet (“This is the corporate usage policy, and this corporate user can get such and such IP network resources”). The OSS or service provisioning challenge here is scalability. Yes, if you have a few employees, site, routers, multicast centers, etc., you can create a DEN by yourself. But if you are a multinational company it would be beyond your realm. You would need your managed IP carrier or a third-party IP player to do it.
7. Directory Services
Directory services are characterized as a database service that’s extensively accessed but infrequently updated. The problem, again, begs a gateway solution. Corporations have lots of proprietary databases, and there are numerous standards (X.500, LDAP and hundreds of vendor pseudo-standards). The protocol interoperability problem is reminiscent of e-mail in the 1970s and 1980s before the Internet. An opportunity exists for a third-party or vendor product directory services gateway for managed IP networks.
8. Corporate Employee Portals
An IP portal is a gateway for information. Today corporate portals give you access to what a company offers. In the future, portals will give access to what every individual corporate employee has to offer to a customer, other employees or employees of trading partners. Like content management, it’s an IT labor-intensive activity with near-term, usage-based billing problems and long-term challenges for automating service provisioning.
9. Content Delivery Networks
First came broadcast TV, then cable TV, and then direct broadcast satellite for video content delivery. The next frontier is IP content delivery networks (CDNs)—video on demand to the PC, TV or PDA via a managed IP network. The technology to digitally store every movie ever made is here. Video streaming technologies can deliver a movie in real time with the same user experience or feel of a VCR experience. The problems are, on whose bill do you present the charges, how do you distribute the revenue, and how do you perform revenue assurance for CDNs via a managed IP network?
10. Advertising
Last and certainly not least is advertising. It happens billions of time today on Web sites: carrying someone else’s message as a banner, button link or site sponsorship deal. Managed IP networks will provide QoS-enabled voice over IP—maybe not as good as circuit-switched voice, but good enough to give away for free in return for hearing or seeing a sponsored ad. The managed IP opportunities here are equivalent to creating a TV Nielsen rating system for carrier IP services. In order to price advertisements correctly, you would need devices to monitor IP links, and rating engine capabilities associated with IP billing systems.
These are my top 10 managed IP opportunities. If you need to be more comfortable with managed IP technologies, plan to attend a TeleStrategies seminar (see www.telestrategies.com). In the meantime we will continue to keep you updated monthly on IP billing and OSS developments in Billing World.
