|Issue:||Latin America 2004|
|Topic:||Facts and myths on the next-generation network|
|Organisation:||Tellabs do Brasil|
Álvaro Aquino is the head of Tellabs do Brasil. Before joining Tellabs as consultant, Mr Aquino worked for CPqD – O Centro de Pesquisa e Desenvolvimento – the research centre of the former Telebrás system, for Siemens, and for Mapra. Mr Aquino graduated from Inatel, the National Institute of Telecommunications as an electrical engineer. Mr Aquino also earned his masters degree in electronic engineering and telecommunications from Inatel.
Next Generation Networks (NGN) allows users inexpensively to access integrated communication services – voice, data, and images – through a single network. Nevertheless, in Brazil, no incumbent carrier really has a Next Generation Network. Most multi-service networks still use ATM technology, which is not optimised for IP. Nevertheless, the Internet Protocol (IP) is rapidly becoming the standard platform for NGNs. The challenge for the carriers, though, is to ensure that next generation networks are profitable, not whether or not they use IP.
The concept of the Next Generation Network (NGN) is very simple: at your home and office, the NGN allows you to access a range of integrated communication services – voice, data, and images – through a single network at a far lower price than you pay today, separately, for these services. This concept dates back to the early 1990s, when the technologies to build networks that could integrate all of these services began to appear. Since there is only one network to invest in, the price for integrated services is low. In fact, things did not really work out as originally expected. In the early 1990s, most believed that the platform to handle all these services would be the Asynchronous Transfer Mode (ATM) network. However, ATM networks never firmed up their position as the industry standard. Today, Internet Protocol (IP) is rapidly becoming the standard platform for NGN. However, in order to become the standard, some problems related to reliability, availability and security for commercial applications need to be resolved. For the major carriers, the challenge is still to ensure that next generation networks rendering ‘universal services’ are profitable, whether or not they use IP. Today, most existing multi-service networks still use ATM technology; although it is not optimised for IP, for the majority of the traffic. In order to deploy effectively next generation networks, there is more than technology to consider. The related economic and social factors are also crucial. In Brazil, there is no denying the importance of the new carriers established during the 1990s, when the state gave up its telecommunication services monopoly and privatised the sector. In Brazil, the 1998 privatisation model split the state communications monopoly into four major enterprises and at the same time, set up four new companies to ‘mirror’and compete with incumbent, ex-monopoly operators. Moreover, the government licensed ‘mini-mirror’ enterprises to compete in cities with up to 200,000 inhabitants. Today, a re-arrangement of the strategic scenario is occurring; the original post-privatisation operators are seeking company mergers or take-overs to hone their competitive edge. Building quickly a profitable data service, while planning a converged network infrastructure, is by far the most difficult task facing wireline service providers today. The mirror enterprises – although economic factors have hampered their full development – had no technological legacy to keep them from using new technology from the start. The incumbents, however, had a vast infrastructure based upon older technologies built up over the years. They were unable to scrap the enormous investment in equipment they had already made. Instead, they modernised critical items, and introduced media gateways and softswitches as they expanded. This let them interconnect new technology, and provide new services, using their Time Division Multiplex (TDM) digital networks. In Brazil, no incumbent carrier really has a Next Generation Network, but, by now investments in legacy networks are marginal. Nevertheless, some investment will still have to be channelled to the TDM networks – to ensure interoperability with the new networks – for quite some time. Providing the end-user new services together with lower costs is a challenging task. How can one reduce the price and, at the same time, ensure an adequate return on the carrier’s investment in a new network infrastructure? In addition to recovering these investments, the carrier must also compensate for the loss of voice revenues resulting from competitive price-cutting. To survive, the carrier must provide new services, but these often require new, expensive network infrastructure the cost of which might be hard to recover. IP networks offer the carriers a solution to this dilemma. In an IP network, voice, image or text – in fact everything – is transmitted and received, with relatively low cost as data. Accordingly, cost is no longer the problem it once was. Next Generation Networks use IP protocol and can take advantage not only of the Internet, but of Intranets and Extranets as well. Today, high speed, excellent quality voice and data – although not yet always on a large scale or seamlessly – is simple and low-cost to deliver. The market has, for instance, opted to use Asynchronous Digital Subscriber Line (ADSL) solutions. These help disseminate the NGN concept, but, still do not offer feasible solutions on a broader scale. The Internet Protocol (IP) is gradually becoming a de facto standard, as the problems with its use are gradually resolved: – Standard protocols – when IP networks first came into use, there were many priority facilities. Today, open protocols allow equipment made by a variety of manufacturers to work within the same network; – Reliability and performance – there are hardware and software tools already available that can handle quality management for private network access and transmission using the Internet Protocol / Multi-protocol Label Switching (IP/MPLS) standard; – Security – there is now an increasing number of network security resources; these range from risk protection detection and analysis, to access control and digital authentication. The adoption of new models and new methods of communication, always begins with the enterprise market; businesses have the most pressing needs for higher efficiency and better productivity. A residential user can use voice and data over IP without needing a set of comprehensive performance quality or security guarantees. For the residential user, few transmission problems have more than a minimal impact and in most instances the consequence is not that important. However, no matter how small, a company will not want to risk problems of any sort that might adversely affect its business. A carrier’s enterprise customers can benefit greatly from the new IP and Ethernet services, especially since these can interact with existing Frame Relay and ATM services. From the standpoint of the end-user, the issue is how to ensure high-quality services. This is especially true because the extremely high quality of today’s voice services boosts customer expectations for text and image transmission services to the same high levels. The carrier’s primary concern, accordingly, is to maintain the QoS (Quality of Service) of its access and transmission networks for all services that it renders, so that it can sign Service Level Agreements (SLAs) with its customers, confident that it will be able to meet its obligations. From the standpoint of the telecommunications carriers there are two essential issues. The first is how to ensure end-to-end services, despite network expansion, and simplify the expansion of new circuits and management activities. Second to reduce high operating costs and the downtime inherent in manual interventions, it is vital to provide for the automatic restoration of systems suspended due to faults. Closed voice over IP systems are already implemented at the corporate level and even for smaller enterprises. Larger carriers, though, cannot yet offer voice over IP services to the public, as we have seen, owing to the impact the pricing would have on their return on investment and their inability to guarantee quality of service. The ‘legacy’ TDM networks will not fade away immediately. The installed plant cannot be scrapped; the investment is too great to be thrown away in any country whatsoever, even the richest, far less in countries where investment funds are in short supply. Synchronous Digital Hierarchy (SDH), though, may well be the ideal transmission platform for a Next Generation Network. SDH networks can support traffic using the Ethernet protocol that is used by Internet Protocol networks. Many carriers will probably make Ethernet an integral part of their emerging multi-service platform. Since Ethernet is simple to manage, service providers will not need a highly skilled, expensive, technical support team to install, provision and trouble shoot their data services. Moreover, Ethernet equipment is less expensive than other platforms. The carriers’ goal is to reduce their operating expenses by optimizing their networks. Ideally, they want systems that function with fewer network elements, which can seamlessly maintain their existing customer services, and accelerate revenues, by rapidly provisioning new services. End-users are becoming more demanding in terms of NGN services and applications such as broadband, Internet and multimedia. The carriers, consequently, must take into account not only technological progress and what next generation equipment can provide, but, the market’s demand for new services, capital expense, operating expense, market pressure for lower prices and return on investment. The decisions will not be easy. There is no denying that the demand for new high-technology services will continue to rise, but today no one can see far enough ahead to guess the exact market size and timing. Carriers need to schedule their investments, but, they must also carefully consider the strategic advantages of gearing up their network in the medium term. For carriers, the most prudent business strategy might well be to ready their networks for the next generation before the market seeks these services. After all, being ready for the market, getting a head start, is certainly a great competitive advantage.