The value in softswitches

In these troubled times for carriers, the need to increase revenues through value-added services has become even greater. It's clear the goal is more likely to be reached through the adoption of softswitches than with conventional voice telephony platforms. The reasons are deeper than a simple "old tech" vs. "new tech" argument. Softswitches are the driver of a major restructuring in the industry.

At its most fundamental level, carrier profit results from the differential between infrastructure costs and service revenues. Carriers need infrastructure that attacks both sides of the argument and not just one.

Softswitches and application servers open up the switching interfaces and move circuit switched telephony onto IP. It will be possible, assuming that standards bodies assure openness of softswitch interfaces, for carriers to develop new services more quickly. With open application programming interfaces (APIs) to voice switching, third-party application developers will be enabled to build innovative applications that link voice and the Internet. Conferencing and instant messaging technologies now are the focus for developer attention.

Ultimate success requires a radical departure from current telco service launch processes that still resemble the five-year planning cycles of faded communist regimes. Successful carriers will take risks with new technology and open up their softswitch infrastructure to new vendors. Future value will come from radical service propositions and not lame enhancements to voice telephony.

Of course, carriers remain the arbiters of what is released in public services because their network integrity must be preserved. However, they should move away from engineering everything themselves and toward building services from third-party software components.

Really radical carriers will harness this development model and leverage it for their service development. With a larger, albeit ad hoc, development team, they will have access to a larger pool of talent and ideas. They will be more likely to find the next true breakthrough in value-added services.

Dr. Iain Stevenson (ias@ovum.com) is a principal analyst at Ovum in London, England. For more information about Ovum, visit www.ovum.com.