Facing the future

Delivering the opening keynote address at last month’s NetWorld+Interop conference in Atlanta, Sprint President and COO Ronald LeMay deftly proclaimed, “Confusion, it seems, prevails everywhere today.”

LeMay’s remarks described the current tumultuous state of the telecommunications industry; he noted “that a lack of a clear vision and too many questions about who knew what and when has fueled pessimism, if not downright despair, in the telecom industry.”

He’s right. The telecom industry remains in a serious morass.

But carriers are showing signs of life, fueled by a number of technologies that are making it possible for them to offer new services in a cost-effective manner. As always, a string of acronyms — SIP (Session Initiation Protocol), Wi-Fi, and of course IP — are being bandied about as the keys that will help carriers generate new revenue while reducing operational expenses. Use of these technologies and others are inspiring options such as self-service provisioning portals, better wireless access and services for enterprises and consumers, and hosted IP Centrex, a set of hosted call control services.

Many users though are still a bit reticent to turn over internally run systems to the telecoms, content to hold a wait-and-see stance. “We’re fairly traditional with our telecom requirements,” says John Hayes, vice president of IT at E.piphany in San Mateo, Calif. “I’d like to see the carriers have the ability to get true quality of service before anything else.”

“Sure, managed services are profitable and the way to go, but it is difficult to do,” says Courtney Munroe, vice president of telecom and IP services at IDC in Framingham, Mass. “I believe that as companies get more complex, they will want to outsource more, but [telecoms] need to demonstrate ROI.”

According to Brian Boyland, lead architect at Paris-based Cap Gemini Ernst & Young Group’s telecom, media, and network practice, “Large enterprises don’t want to manage bandwidth. Companies also don’t want to manage stuff outside of their core competency.”

Instead, explains Boyland, enterprises want to outsource some of these services, and telecom carriers are hearing the same message. WorldCom and Sprint have been complementing voice services offered over their traditional TDM (Time Division Multiplexing)-based networks with new services that take advantage of their large datacentric IP infrastructures. For example, as part of its Connection service, a collection of converged voice and data services offered over its IP network, WorldCom has been offering a managed VOIP (voice over IP) service.

“[The service] lets customers focus on business, and they don’t need to be trained to manage equipment at their own premise,” says Jim DeMerlis, vice president of product management at WorldCom in Clinton, Miss.

SIP — a signaling protocol that initiates real-time communications on the Internet, including VOIP calling, instant messaging, video conferencing, multimedia conferencing, and chat sessions — is also being deployed as part of the Connection services.

DeMerlis explains that the SIP technology is being used with the Connection service in order to reduce costs: When a customer makes a call from a traditional phone, the call is translated from voice into data packets then rerouted to the portion of WorldCom’s network that terminates the PSTN (public switched telephone network). Then, with SIP, WorldCom is able to connect that call to its IP network.

From there, WorldCom can offer additional services such as call forwarding, call transfer, call routing, and four-digit dialing — services that are traditionally obtained from an on-site PBX. As carriers take over services such as these, enterprises gain the option to outsource a burden they previously had to manage themselves.

Telecom services smorgasbord

Carriers are also reducing costs and generating revenues via new back-end billing platforms and Web-based portals that allow customers to access, add, delete, or change the services to which they subscribe. The self-service solution offers telecom carriers a way to sidestep costly customer service solutions, and gives users more involvement in their own telecom strategies.

Chris Grejtak, senior vice president of marketing at Portal Software, explains that during the past decade, carriers built their own billing and accounts receivable applications, which have grown complex and inflexible. Cupertino, Calif.-based Portal Software is one of a handful of vendors that has developed a billing platform allowing carriers to change and create new pricing models and pricing plans over multiple networks.

“Carriers are in a tug-of-war. They are being pulled between generating revenue and reducing costs,” Grejtak explains. “We allow them to lower the total cost of ownership of billing.”

The company’s Infranet product is being used by 35 wireless carriers worldwide and was recently selected by Telstra, Australia’s largest telecommunications carrier, to launch new mobile data and broadband services, Grejtak adds.

Wireless is indeed garnering much attention from users and carriers alike. Jorge Blanco, a director of strategy at communications equipment provider Avaya in Basking Ridge, N.J., believes a number of carriers are looking at building out Wi-Fi hot-spots in order to expand wireless coverage.

Wi-Fi’s appeal lies in its speed: the IEEE 802.11x-reliant technology runs at speeds as fast as 11Mbps, faster than the 3G wireless networks that top out at 144Kbps. If the carriers can build out public hot-spots, they can offer customers ubiquitous access from wherever they may be as augmentation to a company’s existing means for accessing its broadband connections.

Analysts don’t think Wi-Fi will totally displace 3G, but rather complement it. “Carriers know there are new devices out there to access broadband,” Blanco says. “A new class of service providers is extending this model, but the carriers are watching.”

That new class of service provider is being led by companies such as Santa Monica, Calif.-based Boingo Wireless. Boingo offers Wi-Fi Internet access from airports, hotels, cafes, and other public places, leveraging existing hot spots that have been deployed by a number of startups.

The major carriers are also exploring Wi-Fi connectivity for their customers. WorldCom’s DeMerlis says the company is currently evaluating hot-spot roaming capabilities, viewing it “as an extension to our access service to reach more people.” The company would look into wiring corporation campuses in order to improve their broadband access, he adds.

On the other side of wireless is Sprint, which is making a lot of noise with the August rollout of its nationwide 3G wireless service. Dubbed PCS Vision, the CDMA (Code Division Multiple Access)-based network offers speeds as fast as 144Kbps, with average speeds between 50Kbps and 70Kbps.

Taking advantage of the network’s capacity, Westwood, Kan.-based Sprint also plans to offer additional services; one application designed specifically for businesses is Sprint’s wireless e-mail access service, positioned to compete with RIM’s BlackBerry service. According to Sprint’s LeMay, the service gives employers the ability to provide employees with access to their corporate e-mail, calendar, and contacts found in Microsoft Exchange, Lotus Notes, and Novell GroupWise applications.

Analysts note that the telecom industry is still in a sorry state, but believe that new wireless services, increased converged data and voice services, and increased managed services will help them emerge from the doldrums when enterprises start writing checks.

“Once spending picks up, enterprises will continue to outsource and focus on their core competencies,” says IDC’s Munroe. “Managed services will grow, but not as fast as we once thought.”

Return to the Special report: Future of telecom package.