Enterprise services steal Supercomm spotlight

Business services lack the sex appeal of IP video and triple-play offerings, but as Supercomm 2005 activity reinforced, new data services will be the primary revenue generators for the carrier community in its drive to a converged IP-based network.

Carrier Ethernet services, in particular, stole the spotlight at Supercomm, beginning with the Metro Ethernet Forum's initial demonstration of carrier Ethernet, based on its developing standards and certification programs. Its SuperDemo featured 30 member companies running live applications such as IPTV, voice over IP (VoIP) and Gigabit Internet access over a live network that met the 11 specifications of the carrier Ethernet standard.

One MEF member, Riverstone Networks, showed not only its Ethernet technology but also a customer, Telefonica, that is well ahead of U.S. service providers in migrating its network. The Spanish operator decided two years ago to stop investing in an ATM/SDH network and instead transition to Ethernet.

Luis Fernandez Vega, Telefonica's manager of technology planning and transmission, was on hand at Supercomm to talk about his company's aggressive move to all Ethernet. Within the next six months, Telefonica will merge its two separate Ethernets, one for business and one for its residential triple-play customers, into a single infrastructure.

“Within the next six months, we will have national coverage for our bundled service,” he said. “We have been operating a network for residences and a network for business customers, but both have the same architecture, and we are trying to use the same technology solutions. By the end of the year, we will combine them, and we will be able to offer service to any customer from the one network.”

The result will be substantial cost savings for the Spanish telecom provider he said, based on much simpler network operation.

Telefonica currently has 40,000 IPTV customers and has started to market that service more aggressively, Vega said. Telefonica is offering its Imagenio video service, including 50 channels of broadcast and cable TV, plus video-on-demand, which includes exclusive landline rights to the soccer games that are a European favorite. The company has deployed more than 100,000 IPTV ports of Lucent Technologies' Stinger DSL broadband access concentrator.

Telefonica offers MetroLAN and MacroLAN virtual private network offerings to businesses, for in-city and nationwide coverage.

“We are offering flexible bandwidth, and we are offering VoIP,” Vega said. “Our business customers are able to get rid of many interfaces and boxes that they had to deploy to connect to us. For us, Ethernet is new, but for them, it's legacy.”

BT was also looking for operational savings when it took a major leap of faith and launched its 21st Century Network plan to move to all-IP, which BT Wholesale Chief Technology Officer Paul Reynolds explained in his Supercomm keynote address. The landmark effort will move BT to an all-IP network, beginning with about 300,000 customers next year.

“We realized that this isn't something you can do incrementally,” Reynolds said in a pre-speech interview. “The business case is based partly on adding new services and partly on reducing costs. As long as you are operating even part of the old network, you are not getting the cost savings, and the longer you do that, the worse the business case gets.”

BT, which pushed its request for proposal through in record time to name equipment vendors April 28, is now under pressure to deliver on the promised savings, Reynolds admitted, to overcome industry skeptics. The only other option, however, was to “bleed the business for cash” because competition will otherwise take over, he said.

“It was risky to think about investing more, but the risks for doing nothing were too awful to contemplate,” he said. “Our board took a strategic decision to drive for an all-IP network.”

Moving back to the U.S. side of the pond, Supercomm became the launch pad for a number of new service initiatives. AT&T, Broadwing and WilTel all announced major new business initiatives.

AT&T teamed with Microsoft as part of a five-year agreement to develop and deploy IP communications services globally, leveraging AT&T's worldwide IP backbone and Microsoft's Connected Services Framework (CSF) platform.

The deal is the first strategic alliance Microsoft has announced since launching its CSF in February as the enhanced Microsoft .Net platform for service providers to use in developing and integrating new services.

AT&T said it would make the Microsoft framework the centerpiece of its services-oriented architecture, creating a .Net-based platform with common Web interfaces, allowing virtually any application created by Microsoft's development community to integrate easily back into AT&T's back-office systems.

The alliance will allow AT&T to deliver integrated services, initially focused on enterprise customers, that leverage its IP/MPLS backbone and don't require customers to invest in new hardware or systems, said AT&T Vice President Eric Shepcaro.

“The services are built right into the [network] cloud,” he said, adding that chief information officers have asked for that level of service. They want IP-based applications that improve employee productivity, such as presence-based service and integrated messaging, but they don't want to have to invest in new equipment and integration of separate systems and software, Shepcaro said.

The new services will be easier to administrate, via point-and-click menus, and more flexible because open application programming interfaces will allow developers or even customers themselves to design new services.

“Administrators can provide a new employee with a thin client device and then go through a menu, on a per-user basis, and click the services they want that employee to have,” he said.

On the user interface side, the new VoIP and enhanced services will be integrated into familiar Microsoft desktop applications such as Outlook and Word, and easy for workers — and later consumers — to use, said Maria Martinez, corporate vice president of the communications sector of Microsoft.

Broadwing and OnFiber announced a virtual private LAN service (VPLS) that the two companies will jointly market. It ties OnFiber's metro Ethernet connections to Broadwing's nationwide Layer 2/3 Converged Services network.

“Some customers want a Layer 2 service, if they have a large IT staff and want to manage their own routing tables and not hand that over to a service provider,” said Jamey Heinze, director of product management for Broadwing. “We have that flexibility to offer either.”

The service features customizable bandwidth on a per-port basis rather than on a service profile.

“Customers can buy what they want and change it flexibly,” Heinze said.

Broadwing and OnFiber, both based in Texas, did extensive testing of the service, which will reach business customers in the 16 markets in which OnFiber operates metro optical networks. The carrier-to-carrier testing is necessary because there is no standard that today defines how service providers pass off VPLS offerings between their networks.

The MEF is currently working on an Ethernet network-to-network interface that would standardize that process, but until it is complete, individual carriers must negotiate the technical and business issues behind such interconnection.

WilTel's new service initiative targets enterprise customers with a storage WAN offering for business continuity and disaster recovery, exploiting virtual concatenation technology.

“The space is exploding — there are a lot of new applications,” said Tony Tomae, senior vice president of marketing for WilTel. “We are still strong on carrier services — we aren't veering from that — but in the enterprise, there are key applications that are recognized as wide area network services, like storage, Ethernet and IP-level services — that we are carving out.”

WilTel's offering includes a Sonet-based StorageXtend product that allows customers to get bandwidth in increments of 50 Mbs up to 2.5 Gbs. The service uses Nortel Network's Optical Metro 3500 at the customer premises to do service mapping through general frame protocol and virtual concatenation.

“We can throttle the service up and down on a monthly basis as needed,” said Paul Savill, director of data product management for WilTel. “We buy, deploy and manage the equipment for them.”

Against the backdrop of new technology being deployed and new services being delivered, there was also considerable discussion of an old problem: The need for regulatory reform.

Among the loudest of those calling for change were some of the regulators themselves. On a luncheon panel at the Telecommunications Industry Association's “Convergence: Roadmap to Growth” conference, FCC Jonathan Adelstein and Kathleen Abernathy joined California Public Utilities Commissioner Susan Kennedy in bemoaning the fact that the law significantly lags behind the technology.

Kennedy, a crusader against unnecessary regulations, said regulators are hamstrung in their efforts to more rationally address how regulators should look at new IP-based services by laws written before VoIP and other capabilities.

“State regulators are struggling to define their role,” Kennedy said. “The law tells us there is a distinction between telecom service and information service. The law is dangerously out of step with reality.”

The result, in California, has been a chilling effect on investment by two of its largest service providers, Verizon and SBC Communications, she said. Regulators stopped Verizon from upgrading switches in California last year, halting “tens of millions of dollars of investment in my state, based on an irrelevant regulation,” Kennedy said. SBC had to wait nine months for regulatory approval to offer reverse directory assistance, even though its competitors were already offering the service, she added.

“We are desperately trying to shed the exoskeleton” of outdated laws and regulations, Kennedy told a receptive audience. Twenty-five states are dealing with regulatory reform, she explained.

Distinctions between local and long-distance services and between voice and information services are vestiges of the legal framework created in the breakup of the Bell System, Abernathy said, but aren't relevant in a world in which all services are converging onto an IP network. Regulators want to encourage investment in new technology but can only work within the laws they are given to enforce, she said, calling for major reform.

FCC Chairman Kevin Martin agreed, in his keynote speech, that the FCC “needs to decide what rules apply to IP services and needs to decide pretty quickly.”

Such decisions still may not come quickly enough for those within the U.S. telecom sector who are concerned that the country is falling behind the world in broadband penetration and technology innovation.

“There are certainly things the [U.S.] government can do,” said William Owens, Nortel president and CEO. “There is no telecom vision in its policies.”

At the very least, he said, both the U.S. and Canadian governments should be willing to help the telecommunications industry fight against unfair competition, such as government subsidies of manufacturers in other countries. Owens would also like to see the U.S. and Canadian governments work harder at helping the telecommunications industry fight unfair competition in the global marketplace, such as government subsidies of manufacturers.

“We should be unafraid, that if there is unfair competition in the world, for that to be fodder for our governments with the [World Trade Organization], just as it has been for the steel, lumber or airplane industries,” Owens said.