 | Issue: | Global-ICT 2003 |
| Article no.: | 15 | |
| Topic: | Leading Edge Solutions for Existing Network Infrastructure | |
| Author: | David Poticny | |
| Title: | President Europe | |
| Organisation: | Lucent Technologies, Europe | |
| PDF size: | 108KB |
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Article abstract
A lot has changed over the last few years in the telecommunications industry. Between 1996 and 2001, total capital spending by communications service providers jumped from $161 billion to $310 billion – a compound annual growth rate of about 24 percent – and on a huge base. But as we now know, the spending growth and the bubble fuelled by it was not sustainable. What happened is what some have called “The Perfect Storm” in telecommunications. Worldwide total capital spending by service providers, which peaked at $310 billion in 2000, dropped to about $205 billion in 2002. Between 2001 and 2002 alone, service providers reduced their capital spending by nearly 27 percent. The excess capacity that was built in the late 1990s during the telecom boom resulted in these dramatic cuts in capital spending from 2000 until now. And regulatory uncertainty contributed to delays in service provider spending as well.That excess capacity is working its way out, and with primary demand on networks continuing to grow, the market for telecommunications equipment will ultimately recover.
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Given this climate, service providers and operators want to cut their overall costs, they want to leverage the value they have invested in existing networks, and they want to find profitable new services to offer their customers, particularly business customers. They need to identify affordable solutions that are compatible with their existing infrastructure and can introduce new revenue generating services while reducing costs. As a result, service providers are looking at a range of available solutions outlined here. Introducing profitable new services One alternative would be Fast Ethernet services. With this option, service providers can directly connect LANs at various locations to their optical backbone network and obtain scalable transmission rates of up to 100 megabits per second. Such services as these can remove costly, high-maintenance, wide area network routers and open up a whole new dimension in direct data connection. End customers can receive full coverage – fast Ethernet services, with back-up functionality, combined with flexible bandwidth. This sort of network configuration supplies exactly what enterprise networks need: security, reliability, ease of use and fast, flexible bandwidth. The arguments for combining Ethernet and SDH are compelling. SDH provides the predominant transport underpinning of the global telecommunication network. Its growth continues to outpace other transport technologies and is sure to be around for a long time. The key to SDH is its network resiliency; it can restore network connections less than 50 milliseconds after a failure. Ethernet over SDH (EoS) allows enterprises to combine the proven reliability and ubiquitous reach of today’s SDH networks with the affordability and simplicity of Ethernet. EoS is an incremental and evolutionary step for carriers who want to offer new services but continue to value the strengths of SDH networking. Standards-based EoS solutions eliminate the need to rebuild or overbuild existing networks to offer scalable Ethernet services. Convergence, reducing operational expense More than half of the service providers operate three or more independently built networks and this network independence results in the distribution of their spending among internal service provider IT groups, equipment vendors, systems integrators and ISVs. Operators are realising, more and more, that the consolidation of disparate OSS and systems will enable the reduction of operational expenditure and capital expenditure. Implementing next generation software systems and network management tools, that facilitate integrated operation and management, can allow service providers to offer enterprise clients new services and dramatically reduce their own operating expenses. Convergence, getting the independent networks to operate together, enables the operator to manage its network resources more easily, quickly and centrally – this reduces the complexity for its IT managers, reducing time spent in identifying potential network problems and resulting in a more effective service. On top of this, it facilitates the migration from the sale of bandwidth services to the sale of value added services by giving the operator or service provider customer and service centric service quality management. Convergence ensures that the service provider is able to leverage the network intelligence from all of its resources to provide more effective and innovative operations. Developing Mobile Capabilities – identifying new markets Within the mobile space, the industry is moving towards spread-spectrum as its presence continues to grow worldwide. Mobile communications are moving from time division to spread-spectrum. –There are compelling service provider financial models for migrating 2G voice to 3G spread spectrum technologies including reduced cost, improved margin and greater network capacity. Mobile operators are currently facing growing competitive pressures exacerbated by a drop in consumer spending, substantial debt in some regions due to high 3G license costs and a trend toward service provider consolidation. Operators are looking to retain their existing customers, and expand their subscriber base, with an emphasis on increasing the number of highly profitable customers. They need to expand their revenue base by creating, and introducing new value-added services. A series of in-depth studies conducted by a third-party research firm, have found substantial demand from businesses in North America, Europe and Asia for high-speed mobile data access. The studies were based on detailed interviews with thousands of telecommunications / information technology (IT) managers. These indicated that 3G mobile operators are in the best position to provide secure mobile high-speed data services to enterprise customers, a market segment characterised by high subscriber loyalty and a high willingness to pay for premium services. They also indicated that there is a significant pent-up demand among enterprise users for 3G high-speed mobile data services to handle critical business processes and increase their productivity and customer satisfaction. Operators need to work directly with enterprises in each market segments to better define their needs for high-speed mobile data services. This will ensure early identification of revenue generating opportunities and enable mobile operators to use their high-speed data experience in the consumer market for 3G mobile data as it emerges. Early research and business model development for 3G will enable better services for business and consumer end user. Optimising performance, reducing costs Finding effective ways to improve a network’s efficiency, reliability and security, adding new revenue-generating services while reducing operating costs are the toughest challenges you face today. There is a real opportunity in the services space for service providers, as industry players have developed their experience and knowledge of the multi-vendor environment. Service providers need to reduce capital expenditures and get the most from current investments. By identifying where improvements can be made in existing network infrastructure, service providers can save substantial amounts in lost revenues while improving their network capacity. Complex networks, multiple technologies and multi-vendor environments are difficult and costly to operate. Service providers are starting to see the benefits of outsourcing more of their network infrastructure. This would enable them to focus more effectively on their business, reduce expenses, and pursue new markets and revenue generating opportunities. Currently, service providers spend more than $3 billion every week on network services, including for work they traditionally did themselves. Service providers, today, have a tough agenda. They must deliver the services needed by businesses and consumers, and at the same time, keep capital and operating costs under control. They need to provision new services quickly and flawlessly. Furthermore, they must do all this with limited resources while under pressure to maximise their return on investment. Ironically, investments in networks have slowed while demand for telecom services has continued to rise and the need for increased productivity has never been greater. Enterprises and consumers around the world continue to use networks at record rates. The number of wireless subscribers is growing rapidly, and so too is mobile phone usage. What’s driving this demand is the ever-increasing number of applications that communications services are enabling. In the business world demand for communications services is being driven by what customers buy, how they buy it and what type of service they expect, by what competitors are doing and by the need to cut costs and make their operations more efficient. Their workforce has become increasingly mobile. So businesses are looking for ways to link their people in the field to critical company data so they can respond more quickly to their customers, suppliers and partners. These businesses need networks with the highest levels of reliability and performance to maintain constant contact with their operations in the field. The costs associated with even small outages can be enormous. Service providers need leading edge solutions, but solutions that are readily compatible with their existing network infrastructure and which will help them to improve and expand their existing facilities. They require flexible, secure solutions which ensure that they can meet and exceed customer requirements but which are realistically priced and do not require costly network overhauls. This way, service providers will be able to meet the demands of the market and provide what clients expect of them.
