 | Issue: | EMEA 2005 |
| Article no.: | 8 | |
| Topic: | Last chance for telco profitability: triple play networks | |
| Author: | Kevin DeNuccio | |
| Title: | President and CEO | |
| Organisation: | Redback | |
| PDF size: | 64KB |
About author
Kevin A. DeNuccio is the President and Chief Executive Officer of Redback. He served previously as the Senior Vice President of Worldwide Service Provider Operations at Cisco Systems, where he was responsible for all field activities in the service provider marketplace globally. During his tenure at Cisco, Mr DeNuccio also managed worldwide field operations, including all sales and engineering support organisations. Before joining Cisco Systems, he was the founder, President and Chief Executive Officer of Bell Atlantic Network Integration, a wholly owned subsidiary of Bell Atlantic, now Verizon Communications, responsible for corporate strategy and operations. Mr DeNuccio has also held senior management positions at both Unisys Corporation and Wang Laboratories as Vice President in their network integration and worldwide channel partner businesses. Kevin DeNuccio earned his degree in Finance, from Northeastern University, and graduated from the Executive MBA program me at Columbia University.
Article abstract
Traditional fixed voice telcos face serious threats from IP-based networks: growth and per minute revenues are declining, and mobile service competition has captured clients. Broadband IP-based networks let a carrier use single high quality triple play networks to carry all traditional voice and data services, provide VPNs, video, games and a host of other personalised services as well. Telcos need to consolidate their networks to offer users an array of cost-effective tailor-made services via a broadband IP infrastructure.
Full Article
Advances in IP (Internet Protocol) equipment, rapidly increasing broadband penetration and growing residential broadband capacity are revolutionising the delivery of services via broadband. Interactive television, voice and next generation online gaming services are rapidly becoming a reality, due to breakthrough architectures that deliver these services at dramatically lower cost. Historically, telecom operators have dedicated entire networks to single services. This means that telecom operators needed a network for voice, another for leased lines, one for VPNs (virtual private networks), one more for Internet access, and so on. With the growth of broadband and IP, a carrier can build a single network to carry all these services and more, especially since the quality of service end users demand is now available using IP networks. Dial tone broadband Similar to the always-available telephony dial tone, many carriers are preparing their networks to offer a ‘dial tone for broadband’ service that will bring broadband service, by default, to every household. This broadband connection will provide any new service a consumer requests. This gives residential and business users access to a wealth of services, ranging from VPNs to video, to games or voice. Eventually, when greater bandwidth is available, virtual reality based applications will be accessible over broadband connections. The telecom operator perspective The end user sees a virtually endless stream of IP-based capabilities. What, though, does the advent of broadband IP applications mean for the telecom operator? How can a telecom operator use these technologies to position itself for healthy growth? Voice, the core business of traditional wireline telcos, faces serious threats from IP-based networks. Voice service growth has been slow, per minute revenues are declining and competition from mobile services has drained fixed traffic. A few years ago, the volume of data traffic, mostly Internet access, surpassed that of voice on telco networks. Consequently, the Internet Protocol is now the dominant network protocol. Analysts predict that Video-over-Broadband traffic will eventually surpass voice and data. Today’s competitive world is a challenge for telcos. They face shrinking voice revenues and need to generate new revenue, but income from Internet access services has been low, and often barely profitable. Internet access prices are expected to drop, so what can the telcos do? The two obvious choices are either to sell low cost access and transport or to offer content and become a full service provider. The first option requires the telco to pursue the lowest possible costs for reliable service and become a cost leader. The second option calls for adding value to its access and transport services to increase its Average Revenue per User (ARPU). In truth, most telcos risk their survival if they do not do both. This means telcos must abandon today’s ‘dedicated-network-per-service’ model and consolidate their service-dedicated networks into a single network architecture. A single network for all services, using standardised network elements and procedures, significantly reduces capital and operating expenses. Single network architectures today, generally rely upon IP-based broadband networks. Telcos, to make use of their existing copper infrastructure, tend to choose ADSL for their broadband subscriber access. Current IP technology can provide time critical and delay sensitive services such as voice or video running alongside each other on a single network. Offering the basic suite of services over a single network, using a single protocol, lowers the operator’s costs and enhances the subscriber experience. The end user perspective Today, business and consumers want more than traditional services. They look for advanced services anywhere, any place, any time. Figure 1 shows the unification of residential and business user requirements and expectations. Traditionally, residential services were about scale and service variety, whereas for business users, reliability and performance came first. Broadband technologies have changed this. Today, reliability is as important for residential users playing an online game, watching IP Television or making a VoIP phone call as it is for a business. Think about how important broadband Internet connections are these days. If a fixed phone does not work, a user gets the exact same service from a mobile phone. Today, if the broadband Internet connection fails there is no alternative. Greater expectations The unification of business and residential requirements generates greater expectations. For example, Internet users expect their voice and video services to be available wherever the user is on whatever device is being used. Only the screen size – the difference between a 2″ cell phone screen and a 42″ LCD – not the connection, limits the viewer’s experience. Each user can receive individual, personalised television and video content. Video over IP, IPTV, will let one watch the 10 o’clock news at any time – can we still call it the 10 o’clock news? – and permit interaction between the network, other users and other applications. Today’s cable or satellite systems are unidirectional. Broadband IP makes two-way communication, including fully interactive television, possible. Interaction could vary from online voting regarding a show’s content, to directing and selecting different camera angles during World Cup football. New broadband IP applications, including interactivity, will drive revenue growth as full service telecom operators begin to offer ‘one-stop shops’. Enhancing the end user experience To execute a ‘high value added’ strategy, operators need to enhance the experience to persuade the user to spend more. IPTV’s most successful deployments to date have offered either exclusive content, such national sports events or interactive elements. Today, service providers in Belgium, Spain and The Netherlands have purchased exclusive rights to their national football leagues. They expect to offer a fully interactive viewer experience. For example, while a viewer watching a match he will be alerted if a goal is scored in another match. He can, if he chooses, see a replay of the goal and then switch back to the game he was originally watching. The next way to enhance the user experience is to make the broadband IP network ‘subscriber aware’. The system should recognize each user, and user session, to control the quality of the service and personalise the user experience. In many countries, people pay relatively little to see a great many channels. New broadband IPTV and Video on Demand services will have to be affordable and comparably priced. Given the price sensitivity, telcos must continue to deliver traditional services economically despite the addition of new services. This will only be possible using an integrated IP-based triple play, voice, data and video, network. With broadband IP technology moving ahead rapidly, telcos will be able to consolidate their networks and combine strategies to offer an advanced user experience through a subscriber aware network. By offering each user an array of tailor-made services via a cost effective, highly controllable and highly available broadband IP infrastructure everyone wins. With new individualized services soon to be a reality, and the strategies at hand for the operator, will the ‘big bad Telco’ and its customers end up as close friends? It could very well be the case, as there will be only winners.
