EDITORIAL: Supercomm 2004- The Good News, No News and Bad News for the OSS/BSS Community

Supercomm was the place to be for network and service provider engineers. In fact, with 625 vendors demonstrating equipment advances, and hundreds of technical sessions on everything from test equipment to video servers, it was technology paradise.

But what do these advances in network technology mean for the OSS/BSS industry? From my perspective, I saw some good news, no news and some bad news.

The Good News

IP networking is marching forward. At this point, it is only a matter of time before IP displaces the TDM network. The reason IP network upgrades are so critical is that obviously, before operators can deliver many of the exciting services hyped in the industry, an "all IP" network must be in place.

This is not to say that IP networking is perfect-as originally designed, it isn't. But today just about every transport technology (DSL, cable, wireless, satellite) is optimized for IP. Likewise, the IP protocols have been tweaked to improve quality to support voice, video, real-time messaging, and so on, thereby addressing many of the weaknesses of the original IP protocol (IPv4).

Advances in IP networking have led to a number of success stories in terms of new services. Of these, VoIP is arguably the most significant. Today, many operators have replaced a good portion of core circuit network with IP-based voice trunks. That's a good thing, because it saves money. On the access front, carriers have made solid progress addressing the challenges such as quality of service (QoS)-enabled DSLAMs, signaling standards and native VoIP peering. That's a good thing, too, because it will enable a range of VoIP wholesalers and residential options, and provide native VoIP peering in the near future. As a result, operators can offer a range of very powerful voice services to every market segment (more on this in the "no news" section).

Multi-protocol label switching (MPLS) is probably the second greatest advancement in terms of service-enablement. MPLS is a technology that allows IP-based network operators to better manage bandwidth and improve QoS. It works by adding header information to an IP packet that is used by network routers to create fixed paths (virtual circuits) through the network. The key technical benefit of MPLS is that it allows multiple types of network traffic to be isolated while traversing the network, as well as providing limited QoS guarantees for each.

The good news is that just about every backbone network operator has now deployed MPLS technology. The key business benefit is that operators can now offer a range of VPN services (so-called IP-VPN services). This capability allows operators to offer performance-based data networking services more flexibly and cost-effectively than ATM and Frame Relay service.

The final "next-gen" success story is Metro Ethernet, a service that provides Ethernet LAN connectivity (layer 2 connectivity) across long distances (such as a metropolis, or beyond). This is accomplished by using a fiber or SONET transmission core and high-performance Ethernet switches. Although this is not technically an IP-based service, Ethernet and IP go hand in hand, perfectly complementing each other. (Note: both were standardized around the same time in the early 1980s.) Therefore, Metro Ethernet is significant, because it can lower the cost and improve performance/connectivity for IP-based applications.

For the OSS/BSS community, new services are fantastic. First, for the network management and device-oriented OSS vendors, any carrier spending on infrastructure is great news. This is because operators who are upgrading their network must also invest in fault, performance, element management and other "low-level" systems in order to effectively integrate new devices into their network operations systems and processes.

New services are also good for the "business-oriented" support systems such as billing, care and service management. Here the new technology is not the driver, because these systems are abstracted from the network infrastructure. Instead, the value proposition for BSS vendors is that in order for operators to succeed, they will need to invest in systems that deliver, manage and bill for those services correctly-and do it right in terms of instant provision/zero-touch, self-service, easy install/self-testing, ease of support, single sign-in, and other features.

The "No News"

With an all-IP network, ILECs, IXCs, CLECs and cable operators should be able to offer an unprecedented range of services. Voice should have infinite feature-set possibilities; fiber builds should enable on-demand video in high-definition format; interactivity should enable a range of content offerings that can be targeted to individual homes; QoS-based access should support any home-office or business application; integrated network service should enable rich multiparty gaming; conferencing applications should integrate video and other media for powerful collaboration services; and much more. Right?

The truth (or reality) is that there is no news to report-not much is happening regarding new services. Instead, much of the discussion is the same hype that we have been hearing since the dot-com days. Specifically:

Messaging-everyone recognizes that messaging (instant messaging, email) has not generated any additional revenue for carriers thus far. Instead, it is just another freebie. However, many believe that in light of its pervasiveness and heavy use among teens, this area will soon spawn a set of big revenue-generating services. Broadly speaking, the feeling is that messaging will be part of the larger "instant communications" paradigm in which presence and multimedia will be integral with the service. For example, one study showed that 40 percent of instant messages were "are you there?"-type queries. Beyond basic "signaling," there is also significant talk around integrated messaging-being able read your email from any device, hearing voice translation of email/messages, receiving messages that include pictures of the senders, and so on.

Presence Management-Presence management remains, as it has been for a while, viewed as the next killer app. Specifically, the interest is in applications that understand such elements as where you are, what you are doing, when you are available, to whom you are available, and via what channels (email, telephone, wireless, laptop), and provide a means to communicate to you given the available options (talk now, traveling, working off-site, or others). A good example is setting up a conference call among a group of peers. The idea is that you would click on whom you want to meet with, and then the system automatically sets up the call when all parties are available-and does so by their available communications means. Also, the system could be set up to route/hand-off voice and other communication between home, work, wireless, or other destinations, based on user profiles.

Gaming-Online games remain a huge interest area. The notion is that the next set-top box you buy might be integrated with a purpose-built gaming device (such as Xbox). If the system is linked into a gaming infrastructure, users could theoretically download and run any game desired-"on demand." Further, cable and DSL operators could offer and support a variety of different charging and payment models (pay as you go, subscription, usage-levels, loser pays, and so on). And finally, the broadband network easily enables multiparty, networked games-an untapped revenue area.

Collaboration and multi-media conferencing-WebEx and the other conferencing systems on the market have proven to be very powerful tools for online collaboration, and a very successful service-albeit not for the carriers, since they don't generate any incremental revenue. The feeling among many folks in the industry is that media-rich conferencing has growth potential for operators-especially as the technology and network transport improve, and as the expense and trauma of traveling continue to grate on business travelers.

Consumer broadband services-Interest in consumer broadband continues to flourish, as access speeds are expected to increase and operators plan to offer more specialized, performance-oriented access plans. However, a range of value-added services have garnered attention as well. One example is storage on demand, where users could have terabytes of storage available to them on a usage basis. Other examples include firewall/security packages, software license management, virtual private LAN service, smart-home technology, advanced surveillance, security monitoring and premium remote access.

Entertainment-We've been hearing about video on demand, HDTV, pay-per-view and interactive video forever (remember Bell Atlantic's $100 million Stargazer investment?). With advances in broadband access, some believe that this is the year for video. Why now? Broadcasters, studios, labels and unmentionables are all looking for alternate distribution channels. Further, ILECs and CLECs need to compete with cable. Nobody can argue with the market studies that show everyone from grandkids to grandparents wants flexible video programming, on-demand. It will be interesting to see what happens with Microsoft's IPTV and the other initiatives to bring switched programming over DSL.

Niche voice solutions-Some believe the killer app of the next-generation IP network is niche voice solutions. These are voice networks that are simply more powerful and flexible than today's TDM services in terms of call routing, IVR, video, hunt groups, conferencing and advanced terminal integration. For example, consider a call center providing complex customer support that may require several technicians, integrated system analysis and testing, and online collaboration tools to resolve a given issue. Such an environment requires a number of telecom technologies to be blended together-none of which can be easily accomplished with the voice network today, but which are readily accomplished with IP.

IP Centrex-Many operators believe a hosted local service solution is a very compelling market offering for small business or a highly distributed workforce. With a performance-based IP network environment, IP Centrex makes a lot of sense. It is easy to support, customers can self-provision/manage their devices, powerful feature sets are available, and the cost of ownership is low.

The Bad News

No news is bad news-The bottom line for OSS/BSS vendors is that no news regarding the above services is bad news. This is because without the new services, operators don't need to invest in OSS/BSS systems to support them. Granted, many OSS/BSS projects today are funded based on efficiency improvements and operational cost savings for the operators (such as revenue assurance, flow-through and inventory). However, no matter how hard the CFO tries, operators can't save their way to success. These new services need to become a reality.

New services aren't generating new revenue-The single worst piece of news is that IP technology thus far has actually decreased revenue for many services, not increased it. Consider VoIP. IP has lowered the barrier for entry to the market. As a result, VoIP today is just cheap voice with the quality level "just above tolerable." This is a bad situation, because now an increasing number of voice players are in the market competing on price, not innovative services. So instead of generating new revenue from new services, actually less money is entering into the industry. And the operators are left hanging on to what remains of their voice margins via the cost savings on infrastructure.

The same can be said with MPLS. Where is the vision of "IP bandwidth on demand" for enterprise networks, wholesalers or bandwidth-hungry applications? It hasn't happened. Instead, companies are migrating VPN traffic from ATM and Frame networks to lower-cost MPLS networks. I'm not defending the often outrageously high prices of past data networking services. But, like VoIP, MPLS networks are more or less "stealing old money." My opinion is that cannibalizing ATM and Frame revenues (a cash cow of the industry) via MPLS without replacing that revenue with new ARPU is not good.

Finally, what's possibly worse than the eroding voice and data revenues? Many of the new operators are planning to offer some of the new services discussed above as freebies in order to hold their $19.99/month flat rate or differentiate their offerings. Again, that is not good news.

Session Initiation Protocol (SIP) is bad news-

To understand this point, first ask yourself: Why aren't those "new" value-added services hitting the market? What's the holdup? The problem is that many of these services integrate network and application components. For example, the messaging services require servers to store, process and manage messages; presence management requires servers to track your presence; gaming requires peer-to-peer and client-server interaction.

In the past, integration occurred at the network layer; in addition to signaling, this is what the Intelligent Network was all about. Here, various feature sets (such as class services) and value-added services were managed on switches and SS7 SCPs. This was, and still is, a closed environment in which it is very expensive and time consuming to roll out new services. This is because before the services can be offered, the features and interfaces must be developed, agreed upon, tested and certified.

This approach cannot (and should not) be used in the IP network. Instead, what is needed is an "IP-centric" approach to integrating transport and application services that aligns more to the VoIP approach and overall IP architecture.

Enter SIP, a very simple, yet flexible protocol for call setup. It is most commonly used by end-systems (CPE) to set up VoIP calls (or voice sessions) between two peers over an IP network. It is also used to set up video/multimedia sessions that have voice, video and other media components.

However, the real power of SIP is that it can be used to set up "sessions" for any type of rich media data. In this context, SIP is used between CPE and media servers to deliver ring tones, messages, IVR, DTMF generation, text to speech, and more. This is a fundamental building block that in turn empowers developers to create the innovative services and applications mentioned in the "no news" section above.

SIP, therefore, should be a good thing, because it is a key to bringing many of the value-added services to market cost-effectively, right? Yes and no. Yes, it provides the right technology. But "no" in that SIP may devastate the industry, because it enables peer-to-peer control of service delivery. This is in contrast to the Intelligent Network approach, in which services were controlled by the network. Under SIP, they are controlled by the application/CPE. This allows services to be developed outside the operator's control in such a way that the network operator is only providing the transport.

While SIP may be a superior architecture (and I think it is), it clearly is designed to take the "intelligence" out of the network, and turn operators into pipe providers-the kiss of death. On the other hand, if the operator can't control the service, and therefore the revenue, then there is no incentive for them to deploy a smarter network (a QoS-enabled network). Therefore, the industry is essentially stalled, because without QoS the applications won't perform correctly. But without the applications, there are no innovative services.

The regulatory mess is bad news-As discussed, beyond transport (VoIP, IP-VPN and Metro Ethernet) and access, the state of IP services is somewhat of a mess. To make matters worse, the regulatory framework is as much-if not more-of a mess. The rules are set up assuming a monopolistic delivery of wireline telephony service. These assumptions, and the policies built on them, are wrong given today's environment. Instead, the new services contemplated today would seamlessly blend data transport and application components. Likewise, the TDM network as a service platform is being phased out. My fear is that it will take a long time for the various regulatory bodies to sort through matters, thereby further delaying innovation and new services.

Conclusion

Advances in IP networking have allowed the telecom network to make tremendous leaps forward in providing true service innovation. This is exactly what the industry needs: Services that bring new money into the operators, as opposed to redistribution of old money, and services that deliver real value to customers and generally bring true innovation that requires OSS/BSS upgrades. I think that is the only way we'll see long-term growth for the OSS/BSS vendors, and the telecom industry in general.

What has yet to be done, and needs to be done, is for operators to figure out how to bring these services to the market, and to do so profitably. (Let's hope next year is better.)

To learn more about the tough carrier-grade VoIP issues and challenges, upgrading carrier BSS/OSS, taxatio