|Issue:||Latin America I 2003|
|Topic:||Turning Access Into Business|
|Author:||Robert Kurz and Sameer Sant|
|Title:||Managing Director and Head of Corporate Strategy|
|Organisation:||Keymile Brasil Ltda|
Robert Kurz is Managing Director of Keymile Brasil Ltda. based at Keymile’s South American Regional Headquarters in Rio de Janeiro. The Keymile Group, a recent merger of Ascom Transmission Ltd. and Datentechnik AG is a leading supplier of multi-service access systems enabling network convergence for subscriber services. Previously, Robert Kurz was VP Business Development North America and Global Key Account Manager for Ascom Transmission Ltd. He has held various engineering, sales and managerial roles in Australia, Switzerland, and the USA. Robert Kurz holds an Electronic Engineering degree from Curtain University, Western Australia. Sameer Sant is Head of Corporate Strategy of the Keymile group. He began his career as a software developer and led many projects in inter-working between data networks, telephony and Telex networks in the Ascom group. He served as a Product Manager for access products, in product management and business development for Ascom Transmission Ltd now part of the Keymile group. Sameer Sant holds a BSC in Electrical & Electronic Engineering, a MSc. Degree in Digital Communications Systems and an MBA.
Many SMEs do not have full time, in-house, IT support. They depend upon suppliers such as their telecommunications service providers to determine their needs and provide solutions. By delivering additional services and content to small business service providers can open a new market. Operators are superbly placed to build this market. They control the access both to consumers and businesses and can offer both advice and an array of intelligent bundled services over and above those directly attributable to telecommunications networks.
The sheer size of the market in the small and medium enterprise sector (SME) deserves the attention of industry. Operators are uniquely placed to offer an array of emerging and intelligent services to business through their control of the wire-line and wireless access to business users. What are some of the challenges and opportunities facing operators today? What are the services that can now be supported, the ways to reduce costs, and migration strategies? Real Benefits to Operators and Businesses A more intelligent “network edge” offers opportunities for operators to add value to the services they can offer a business. Today, we already have customer premise equipment (CPE) products that combine functions that have traditionally been split between an operator and a business’ IT department. Many small and medium enteprises do not have the in-house skills or ability to employ full time IT staff. Yet today, as technology marches on, clearly the level of business reliance on IT, the shifting demarcation between IT and access infrastructure and the myriad of potential new applications that require both enhanced telecommunications and business electronics all demand a greater level of competence from the end-user. This then, offers the telecommunications service provider an opportunity to deliver additional services and meet these business’ needs.The challenge for operators is to build up the necessary competence and business models to offer additional services to small business and move up the value chain. If operators are able to competitively “build, maintain, and operate” services, they can benefit from repeatable revenues. Clearly, if the operator gets this right, he will benefit from reduced “churn”, as the SME becomes more reliant on the operator. A similar theme concerns delivery of content; to date content delivery has primarily focussed on consumers rather than businesses. There has been much speculation in the media recently that major operators in the USA and Australia would merge or acquiring companies in order to offer content to consumers. Content delivery to small business would not be entertainment linked, but applications linked. Today, many software companies complain that piracy is robbing them of legitimate revenues. Some have priced the applications software above what businesses are willing to pay and consequently businesses make do with what they have, or continue with their existing low-tech methods. Making applications available on a rental, pay as you go or pay per use basis could open a large a market. Supporting this with IVR (Interactive Voice Response), on-line help or call centre capability can add further value. Operators are superbly placed to build this market. They control the access both to consumers and businesses and can offer an array of intelligent bundled services over and above those directly attributable to telecommunications networks. By creating alliances with content providers, offering data storage and management, managing security and account control, establishing in-house or out-sourced applications support skills, and by evolving the access network to enable delivery and control of these new services, operators have the potential to capture a greater share of a business’ CAPEX (Capital Expense) and OPEX (Operational Expense) budgets. “ …the introduction of SDSL broadband is set to help operators increase their penetration into the hard-to-reach and largely untapped SME and SOHO sectors,” For businesses, costs may not necessarily be reduced, but investment would be divided into smaller parcels, making expansion less risky and easier to justify. Perhaps together they can restart the merry-go round. Lets Move on After an often turbulent beginning, the South American broadband market is now more established, and has earned greater interest from consumers. Although the main focus has been on updating the core network into a multi-service high-speed environment, there are signs that operators are placing access network investments higher on their priority lists. However, operators still have a difficult balancing act to manage. They have to justify rollout of broadband access in an uncertain and highly competitive market, taking into account the needs of existing narrowband and POTS (Plain Old Telephony) customers, while also bearing in mind their responsibility to shareholders. Therefore, operators need to find ways in which to create a business case for connecting and meeting the individual needs of each customer. At the same time, these operators are also seeking ways to reduce CAPEX and OPEX, while supporting customers on legacy networks, without compromising their future migration strategies. Although the challenges these operators face are still considerable, they do have an increasing range of opportunities and choices. Among the key enablers are the multi-service access solutions offered by a variety of vendors. These solutions are helping a growing number of operators to target the business market more cost-effectively, to significantly reduce operating overhead and simultaneously provide more flexibility for the future. Tapping into the business market When looking for sources of new revenue, the business market has long been a focus for network operators, and the introduction of SDSL broadband is set to help operators increase their penetration into the hard-to-reach and largely untapped SME and SOHO sectors. While the market focus has mainly been on ADSL, it does not really meet the requirements of the business market. For example, with its limited upstream bandwidth, ADSL is fine for downloading, but not uploading large amounts of bursty data. While SDSL may be slightly more expensive to implement than ADSL, the business case is strong, with appealing advantages for a customer sector that is generally willing to pay more than the residential market. With SDSL, business customers can upload massive amounts of data, paving the way for swapping large files, holding video-conferences, delivering higher speed services from web sites, low-cost VPNs and so on. In this way, network operators can address not just the SME and SOHO market, but full-time or occasional home-workers, such as senior company executives and sales staff. Operators can also use SDSL to support corporate customers with ROBO (Remote Office Branch Office) requirements. The second half of 2002 saw a number of network operators across Europe launching SDSL services and trials and there is certainly room for many more to follow suit world-wide. Bundled services By using multi-service/multi-technology access multiplexers to support SDSL, operators can also start to exploit another area of potential revenue growth: bundled service delivery. The latest generation of multi-service access multiplexers can support multiple technologies, enabling operators to support a mix of services – such as SDSL, POTS, even STM-1 – within a single unit. Not only does this approach help operators to attract new customers, but also increase revenue from existing users, with both legacy and new services. By delivering basic telephony, DSL and even optical connections from a single multi-service access platform, operators can offer bundles of both narrowband and broadband services at lower capital and operational costs. For example, operators can offer a mix of basic telephony and data services ranging from 64Kbps and 512Kbps to 2Mpbs and beyond. “Operators are continually looking for ways in which to reduce operating costs” Reduced operating costs Operators are continually looking for ways in which to reduce operating costs, and again multi-service access solutions have a contribution to make. This is because these access units provide different services and technologies within a single shelf, making an immediate saving on the cost of space. Installation, training, maintenance and running costs are also reduced. In Keymile’s experience, a multi-service and multi-technology approach to access deployment – in addition to being up to 20% cheaper than traditional points of presence (POPs) – can host a number of single service solutions. With their ability to support different technologies and services, multi-service access solutions also help operators to develop a more viable business case for rolling out services in regions, such as rural areas, where density of a particular category of customer – such as broadband users – may be low. According to a recently published a report by Ovum, a leading industry analyst, entitled ‘Broadband Technologies and Rural Areas’, multi-service multiplexers are ideal for operators moving into green-field areas where a variety of customers and services need to be supported. For example, in many out-of-town or village areas, there may be a cluster of business units located near domestic housing, and so the ability to support all these customers from a single access node is an attractive proposition. New building developments, particularly retail parks or business campuses, represent a similar opportunity. The multi-service strategy also extends to CPE (Customer Premises Equipment.) Conventionally, operators have installed equipment for customers that are focused on voice or data. The evolution of multi-service CPE means that operators can deploy units that say, support voice and data and the option to add further data services in the future. By reducing the amount of on-site equipment needed, this approach has attractive cost benefits for the customer, as well as helping operators to increase revenue. Migration strategy While operators’ attention is naturally focused on the needs of today’s market, any investments they make in access technologies now have an inevitable impact on the future. How do they ensure that their choices today do not block their options in the future? Do they continue to use and invest in their existing TDM-based, circuit-switched investments, which meet existing business requirements but are increasingly expensive to maintain? Or do they make the move to ‘all IP’ now and accept a lower grade QoS (Quality of Service)? “How do they ensure that their choices today do not block their options in the future?” Or do they take the evolutionary route of ATM switches, which enables them to introduce packet-based transport and the ability to carry IP traffic? The migration decision has a direct impact on the access portion of the network: do operators invest in solutions that are based on existing circuit-switched technology, ATM or IP? The technology-agnostic approach of the latest multi-service access multiplexers solves this dilemma. With their ability to support existing circuit-switched/TDM, as well as ATM and IP, over both copper and fibre, these units enable operators to, in effect, ‘buy now, decide later’ in terms of their migration strategies. Operators can even continue to provide access services on the same platform but on separate core networks, allowing them to delay the final decision on their core multi-service network technology and, depending on the access solution chosen, upgrades could be as simple as inserting additional cards in the access multiplexer. While choosing access strategies is still a major challenge for operators, today they have more options than ever before, particularly with an increasing range of multi-service network solutions on the market. Multi-service network solutions, coupled with innovative supply and control of applications and content to businesses, can turn “access” into “business”.