 | Issue: | Latin America 2002 |
| Article no.: | 2 | |
| Topic: | Access Networks: Flexibility Makes Your CAPEX Budget Go Further | |
| Author: | Robert Kurz | |
| Title: | Managing Director | |
| Organisation: | Keymile Brazil Ltdby | |
| PDF size: | 24KB |
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Article abstract
Access networks are the key to profitability for operators since they focus upon maximizing returns from deployed infrastructure. Last mile customer access allows operators to effectively deploy, manage and competitively price both the legacy and emerging services. Today, operators seek low investment evolution, not revolution. The use of flexible, modular and evolving multi-service capable products offers solutions for operators without having to select one or another access technology or having to build multiple networks in order to provide different services.
Full Article
The last five years have seen unprecedented growth and acceptance of new technologies in the Brazilian telecommunications industry. Historically, we have seen that the technologies used in telecommunication networks have followed different waves or trends, either as a result of real needs to fill service gaps or, in some cases, because of industry and technology hype. Many of these trends end abruptly, but some remain for years, spread and evolve to become part of the standard, everyday, telecommunications environment. “Failure to understand the dynamics of the access segment and adopt a flexible access strategy can be fatal.” The recent turmoil in the telecommunication industry is forcing the industry back to fundamentals since little capital is available to upgrade or replace existing networks. This is also true for the access network where CAPEX (capital expenditure) limitations restrict an operator’s ability to deploy services to customers. Failure to understand the dynamics of the access segment and adopt a flexible access strategy can be fatal. In today’s restricted investment capital environment operators must maximize returns from any investment to remain competitive. Today, operators in Brazil have a broad choice of products, both imported and locally manufactured. Industry awarness of access network importance, and debate about economically building, managing and evolving them continue to focus significant interest upon the segment. Economics and resulting pressure on access product margins will determine which vendor companies continue in the market and what they must do to compete successfully. Access Networks The role of access networks is to connect the users of telecommunication services with the services themselves. The regulatory opening of access networks, through loop unbundling with co-location, was intended to play a major role in telecommunication deregulation. Clearly regulators in Brazil consider the access network and last mile a key to creating a competitive environment. Today operators are very focused on value for money. The access network, due to its size and complexity, is probably the most significant area of concern considering the inadequate funding available. Access network growth, driven and controlled by solid return- on- investment business cases, will help operators ride out the storm. Multi-service products allow operators to provide a range of services with minimal investment. The service requirements, however, are evolving from voice-only-service towards broadband multi-service provisioning. Several technologies, media and protocols will continue to coexist in the future, though with different positioning and growth. Therefore intelligent product selection today can diminish the risk of access network obsolescence in the future. A challenge operators face when determining the technology and topology of their access network is to match their specific requirements to the correct product. Multi-service products that can evolve and be enhanced reduce the risk of mismatch. Market Dynamics End-users determine the types of services needed and influence the types of networks to be built. End- users pay for the services, thereby funding the operator’s networks and, ultimately, the vendor’s products. These dynamics help define the behaviour and strategies of the participants in the telecommunications environment. The end-users of telecommunication services have complex needs for telecommunication services. Besides value for money, they also need different granularity of services, depending on their particular situation. SOHO (small office home office) and SME (small to medium enterprise) for example require bundled services that provide cost- effective voice and data service. Larger businesses and corporations also require voice and data, but more of it and with more stringent quality requirements. The diversity of the end- users targeted will, therefore, impact and determine the requirements of the access network. The network operators and service providers can use “service bundling and quality of service”, with adequate network management systems, as differentiators. The last mile or access segment of the telecommunications network has traditionally proven to be one of the most complex, challenging and capital- intensive segments for the network operators. This segment of the network has provided opportunities for companies to differentiate themselves from their competitors. Operators need a cost-effective evolutionary path towards broadband multiple services protecting the investments made in the network. The world-wide appearance of new operators to compete with the incumbent operators, as well as the emergence of loop unbundling and co-location of the new public networks, has forced competition in specific environments. This will continue, although consolidation in the industry may slow this trend. “Capital expenditure restrictions are pressuring product margins.” The vendors are reviewing in which product segments they should invest and from which they should divest. This will be driven by market economics and fundamental to their survival. Operators’ capital expenditure restrictions are pressuring product margins. In the access segment, specialized companies that have lower administrative overhead, short development cycles, low costs and provide good value for money would be well positioned to gain market share. As a result, specialized niche companies are beginning to play a more important role in the access market. This trend could lead to alliances between vendors to provide operators with turnkey- type service based on a different, more economical, business model. Trends Certain trends in the access network market can be expected to take hold during the coming years: o IP will continue to consolidate as the major convergence protocol. o Standardization – such as that now occuring with xDSL (digital subscriber line) and for interoperability between POPs (points of presence) and IADS (integrated access devices) – will stimulate competitive pricing of equipment and drive deployment of services over DSL. Symmetrical DSL through the G.SHDSL standard has the potential to become a global open standard and drive the deployment of business services over copper. o Voice services will remain a major revenue earner, but bandwidth needs and traffic growth will be data- driven. o Ethernet is becoming an ever- present network technology, not only in the LAN but also in the WAN environment. The widespread adoption and use of Ethernet as a WAN technology and recognition of resulting issues has made significant progress. The increased bandwidth used by transport backbones will force access networks to remove any bottlenecks between the service provider and service user. “Access products must also provide and support the higher bandwidth technologies, particularly those supported by open standards.” Removing these bottlenecks will necessitate using intelligent access products able to allocate bandwidth when and where needed. Access products must also provide and support the higher- bandwidth technologies, particularly those supported by open standards. Broadband multiple services will evolve from plain old telephony service, ISDN (Integrated Services Digital Network), Circuit Data, IP, and VoIP (voice over IP) towards a multimedia type of offering. The provisioning of multimedia services requires an evolutionary path protecting the investments made. Network management capability will increase in importance, as operators must quickly adapt their networks to respond to customer needs and deploy extra services. Sophisticated network management will be a differentiator for operators as they strive to fulfil customer service level agreements and enhance services to reduce customer churn. As a consequence, networks will need products that must provide for voice, support open standards, offer Ethernet interfaces, support scalable bandwidth and traffic throughput, and can be integrated within a network management system that allows them to managed in an evolving telecommunications network environment. Multi-Service Access Products Businesses have either a radical, revolutionary, or more conservative, evolutionary approach or point of view. This also applies to building telecommunications networks. Products that can be cost- effectively deployed in existing networks, but can also evolve in response to new trends as needs arise, are being successfully deployed in today’s networks. This conservative, evolutionary, approach is paying dividends for operators as they wait for new applications and services to gain mass acceptance. Driven by economic reality, network planning groups at many Brazilian network operators are now focused on evolving access networks rather than replacing them. As access networks generally consist of large quantities of many different types of equipment, the direct and indirect costs of the access network significantly impacts service pricing policies, which in turn can determine market penetration and company growth. The development and availability of multi-service access products evolving into next- generation access platforms provides operators with the ability to build complex and future- proof access networks cost- effectively. Previously the alternative was to build overlay networks or separate networks to provide the emerging services supported on these new platforms. Accordingly, equipment design should combine access and transport to provide a solution that does not require external transport nodes prior to connecting to the core transport network. This allows one design team to have control over a wider range of functionality with inherent product cost savings. This concept is mirrored in the operator organizations where rationalization has merged groups with previously segmented responsibilities into groups with a wider range of responsibilities. Those multi-service access products that have the capability to support legacy services and emerging services are playing, and will play, an increasingly important role in allowing an operator to cost- effectively evolve existing networks into future networks. These products will underpin today’s revenue drivers, e.g. native voice (POTS) and data leased lines, as well as offer migration and some protection to a future variant of the same service, e.g. derived voice (packetized) and virtual private networks (VPN). The development of DSLAMs (digital subscriber line access multiplexor) is an example of how new technology can open up opportunities for vendor and operator companies alike, but even then not quite match an operator’s vision for the access network. The first generation DSLAMs were very much focused on single service delivery (the emerging residential IP service) and were incapable of supporting other services that customers (or end- users) demanded. These services were legacy services, e.g. leased line, or emerging requirements like guaranteed SLAs (service- level agreement). “Today the industry struggles with technology hype, vested interests, standards evolution and new technologies that need to be evaluated and then integrated into the existing platforms being deployed today.” This problem was particularly evident in the access network where the POP was located in either a street cabinet, remote co-location environment, or basement of a building. Due to space and power requirements, and generally low density of service ports required for certain types of service, it was often uneconomical to deploy another type of equipment to support new service requirements. Access networks, in general, are geographically spread and usually the POPs are not in easily accessible or friendly environments. Upgrading POPs is difficult, expensive and time- consuming and can disrupt service. The ability of access equipment to handle evolving needs is paramount to ensure that emerging services can be provided using existing access nodes. This is much more difficult than it would appear and is a challenge for the access vendor companies. Today the industry struggles with technology hype, vested interests, standards evolution and new technologies that need to be evaluated and then integrated into the existing platforms being deployed today. This is most easily accomplished by building flexibility into the products by designing equipment with multiple bus structures, modular and distributed architectures, supported in a range of mechanical sizes, and controlled by management systems with remote software upgrade capability to ensure that evolution is actually possible. Conclusion Operator focus on maximizing returns from deployed infrastructure with minimal incremental investment will require cost- effective evolution of the access network in order to sustain short term revenues. The use of flexible, modular and evolving multi-service capable products offers solutions suitable to generate revenue today, but also offer migration to future technology when the time is right. The evolution from circuit- based to packet- based networks is now well underway in Brazil and will dictate the evolution of access products. Today most networks consist of both circuit- and packet- based equipment, but not always in the same access equipment. Those operators that select products capable of supporting various technologies will benefit from lower total ownership and maintenance costs of their access networks. Overall network costs associated with procurement, repair and service, spares, training, and commissioning are all minimized due to the need for fewer types and generations of products. “pay- as- you- go” basis will provide better returns on the initial investment.” Access network products selected for their ability to evolve and expand and generate costs on a “pay- as- you- go” basis will provide better returns on the initial investment than single- service, fixed- function, products with limited life cycles. Access products with platform architectures utilizing the latest available technologies, providing multiple access services, and that can support both legacy and emerging services are available today.
