Download IP Services in Western Europe

IDATE Conference
IP Services and Voice over IP
•
IP Services in Western Europe: The Case for a new IP Realism
•
Pros and Cons of IP Technology
•
Voice over IP
•
Conclusions and What’s Next
Contact Details: Tolga Uzuner, Director, Technology Investments
–
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[email protected]
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Our study framework to discuss the outlook for IP Services over
the next 24 months
IP Market Dynamics—Project Focus Areas
Demand Side
Supply Side
Corporate
Customer
Needs
Corporate
Applications/
Services
IP Services
Consolidation
Consumer
Needs
Consumer
Content/
Services
IP Migration
Business Case
Emergence of
New Players
Critical study areas
Technology
Developments
Availability of
Finance
Secondary factors
External Factors
Other factors
.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
The IP services market is still in its infancy but is increasingly
recognised as a legitimate hope for the industry growth
• IP services are unlikely to provide a growth catalyst of the magnitude required to
bring telecoms out of the current crisis
• The “converged network of the future” will be a hybrid network where IP and legacy
services complement each other
• Shifts in the value chain and changing the dynamics of competition may cause
vendors, service providers and systems integrators to focus on the same end-user
attention
• With some exceptions (e.g. IP Storage), the technologies underpinning IP are
relatively mature, and the industry is in a later stage of its life cycle:
–
Expect to see vendor consolidation and a shift to process innovation
–
As in all other industries preceding it, the number of vendor/operators is likely to decrease over time, market leaders will
consolidate their positions, and the nature of innovation will move from product to process innovation, the realm of the
established vendor/operator.
• IP-based technologies have failed to live up to their promise due to the
uncalculated/hidden costs associated with complexity (e.g device proliferation,
unpredictable nature of traffic):
–
Hence, tech vendors offering products that solve complexity management issues are sure-fire winners.
–
One of the few areas where we expect significant product innovation to occur and where we believe start-ups still have
a reasonable chance of winning.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Looking at the traditional definition of communications did not
allow for a clear segmentation of IP Services
Traditional Services Definitional Framework
Basic Services
•
•
•
Local, national, long distance calls
Freephone, local anywhere
Directory assistance, contact centres
•
PBX and centrex services, voice mail, call
forwarding, call waiting, call return, caller ID,
conference calling, find me services
Voice
Value Added
Services
Basic
Connectivity
Broadcast/
Media
Broadcasting
Services
• How to deal with voice
services carried over
data infrastructure?
• How to deal with with
unifying sevices that
combine voice and data
services?
•
•
•
Leased Lines
Connectivity
Access
•
Network management, element ownership,
security, hosting, storage provision,
application provision, video conferencing
•
Videoconferencing
Data
Value Added
Services
Unanswered Questions
• How to deal with new
services that result from
convergence?
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Our own definition reflects three dimensions: type of service,
infrastructure and delivery approach
IP Service Definition
Outsourced
Managed
Customer Managed (DIY)
IP Connectivity
Services
IP Voice Services
• Internet access
• IP-VPN
- Site to site
- Extranets / branch
offices
- Remote Access
• VoIP in corporate networks:
- Basic voice services
• Value added voice services:
- Voice mail
- Call forwarding
- “Follow me” services
- Call Centre Automation
Unified Services
IP Media Services
•
•
•
Video conferencing
Web-casting
Streaming
•
Unified messaging
QoS /CoS/Security/OSS/BSS features (not typically sold outright)
Hosting
IP Storage
Physical/Digital
Storage/Disaster recovery
IP Advisory Services
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
These strong benefits gave rise to a set of IP-based
communications offerings referred to as “IP Services”
IP Services are services that are sold by a service
provider to customers and rely on and leverage IP
networking technologies for the exchange of
information (packetised data, voice and other
media).
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Overall uptake of IP services will likely be only moderate over the
next 24 months
IP Services Growth/Margin Matrix
Explaining the Results
• The IP services market is expected to
50%
Converged
Services
$0.30bn
40%
CAGR (2002-04)
grow from its current size of $14.5
billion to $17.5 billion in 2004/5, with a
CAGR of 10%
VPN features:
Security/QoS
30%
• IP VPN is the foundation layer on which
$0.86bn
$1.36bn
Advisory
• VoIP will grow slowly, as it is not the
Managed + Hosting/
Storage Services
20%
Access & connectivity
(incl. basic VPN)
value-added services will be built
$4.08bn
optimal technology for scaling a voice
business
10%
• Video over IP and unified
$7.94bn
0%
0%
10%
20%
30%
40%
50%
60%
-10%
communications will experience high
take up after 24 months
• Penetration of the IP storage market is
Margin
NB: All managed and outsourced elements of IP services have been included with hosting and storage revenues to
reflect similarity in delivery capabilities.
low with huge growth potential
Players recognising IP-VPN (connectivity) as the foundation for upselling
other services will likely be most successful.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Although incumbent’s traditional franchises may look strong,
new business models pose a serious competitive threat
Incumbent Traditional Franchises
Local Loop
Access
Impact on
IIncumbent
Competitive
Advantages
Access Network
Specialists
•
•
•
•
•
International
Wholesale Voice over
Public Internet
Low infrastructure
deployment costs
Parent financial
support (utility cos.)
New, urban areas
targeted
•
Hits at local loop
data
Pricing pressure
•
Examples
• 51 Degrees
• Urband
Data
Transport
Voice
Transport
•
•
•
Regional Alternative
Network Providers
Proprietary network
management
software
Infrastructure light
Carrier noncompetitive
•
Hits at int’l voice
transport
Pricing pressure
• Alt nets with network
rings and local tails
threaten leased line
business
Examples
• iBasis
• ITXC
•
•
Advanced networks
built from ground up
to support IP
services
Deep network
penetration
Liberated from debt
worries by Ch. 11
Example
• Interoute
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Value-Added
Services
Advisory
International/Metro
Wholesale Data
Virtual Service
Providers
• Network designed
from ground up to
handle IP/MPLS
• Low cost
• High-end service
capability
• Some carrier
neutrality
•
•
•
•
• Hits at int’l & metro
data
• Carriers outsource IP
services transport—
lessen infrastructure
burden
• Price pressure
•
Example
• Level3
•
•
•
Infrastructure light
Neutrality
Service expertise
International
flexibility
Contract renewal on
<1 year cycles
Hits at high-end
services
Undermines
relationship with
end customer
Price pressure
Examples
• ET&T
• Vanco
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
For service providers, the key to growth lies in offering the right
bundled propositions from an IP-VPN platform
Drivers/Inhibitors
Integration of instant messaging
agents to the desktop
2002
2005
Unified communications
Instant messaging
(including location-based
services)
Converged
High cost and low quality of ISDN
service
Emergence of better compression
standards
IP videoconferencing to the
desktop
Softwsitch architecture enables
services today
Hybrid voice data architectures
Collaboration on voice & data
improves productivity
Media
Customer self-service for conferencing
services
Distance collaboration using data (e.g. slides)
Legacy voice equipment is cheap
and very efficient
VoIP
IP-Enabled
Voice
Voice
QoS issues unresolved
Critical business need for secure
Intranet connectivity
IP-VPN
the foundation layer
Typically greenfield deployments before
brownfield
Connectivity
Financial pressure to reduce
bandwidth bill
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
IP buyer priorities currently do not reflect end-user needs for
simplicity in the workplace
Comparison of IT Buyer and End-User Needs
High
Cost
Reliability
Quality
Migration
Current
Service
Provider
Focus
Manageability
IT Buyer
Priority
Needs
Mobility
Ease of Use
“Pull”
Opportunity
for Service
Providers
Multi-accessa
Speed
Low
Low
End-User
Priority Needs
High
a. Ability to access over multiple devices.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
The benefits of IP technology have emerged from both its
network layer capabilities and higher layer protocols
Benefits Associated with IP
TCP/IP
Protoc
ol Suite
OSI Reference Model
Employs Open
Standards
Led to accelerated development of new applications
Layer
APPS
7
Application
6
Presentation
5
Session
TCP
4
Transport
IP
3
Network
2
1
Accessible
Connected all networks, regardless of operating
system (also known as interoperability)
Ease of Use
Point-and-click and click-through (hypertext mark-up
language) for applications; browsers (Graphical User
Interfaces or GUI) for surfing
Universal
Uses comprehensive addressing system (Domain
Naming System - DNS)
Intuitive
Use of Uniform Resource Locator (URL) or
www.xxx.com allows access without number
Efficient
Connectionless: disperses and reassembles packets
using only resources required
Data Link
Physical
Stateless: network remains dumb, unaware of rest of
network; applications/devices are intelligent
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
IP dominates the ‘store/forward’ data world
The question remains: when it will conquer the ‘real time’ world of voice and video
Mantra vs. Current Position
Mantra
•
IP dominates the LAN
•
IP is the ultimate mediation layer between
application and infrastructure
•
IP internetworking is the most cost
effective and universal way to scale a
multi-service network
 Therefore IP is the fundamental
connectivity protocol of the future
“Traditional”
?
Voice
?
Video
Net access
E-mail
Transactional &
Messaging
Apps
IP
Migration
& QoS
Issuesa



Is IP really going to live up to its billing as the “unstoppable internetworking
protocol”?
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
However, IP’s promise of better, cheaper and simpler services
has not been fulfilled
Not Better
• Of 50 companies
interviewed, 30 cited quality
and reliability as reasons
for not using VoIP:a
– The benefits of VoIP are hard to justify
while Quality of Service issues are not
yet resolved
• 93% of IT Managers state
security as a key barrier to
deploying IP-VPNSb
Not Cheaper
Not Simpler
• Equipment costs still high,
• Can be more complex: 60%
payback uncertain:
– IP phones too expensive
– No cost savings until $100 each
– Traditional PBX cost is also
lower when counting
implementation costs for a new
IP PBX
– IP PBX estimated 5-year
payback may be too long
• Falling PSTN prices, have
eroded VoIP’s price
advantage
of IT managers said ease of
use/management issues
were barrier to IP-VPN
deploymentc
• Migration to new IP services
has often resulted in
requirement to operate
simultaneous systems.
• Issues of inter-operability,
billing and customer
service have also emerged
for service providers
– Sometimes referred to as Toll-bypass
a. See IDC, “Attitudes towards IP Telephony in European Corporations”, October 2001. b. Internet Week Research, VPN usage survey based in US users (multiple responses accepted). c.
Forrester, “Surviving A Metro Bandwidth Crunch”, December 2001.
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Circuit switching dominates at the core, with packet-based IP
networks becoming prevalent at the edge . . .
Transport Architecture
• Dynamic Circuit Switching:
Technical Implications
• QoS is free!
• Vendors with dynamic
circuit switching
offerings:
• IP playing a secondary,
Core
supporting role, for Internet
access
• Mix of packet and circuit-
Edge
switched, using multi-service
edge equipment:
– Driven by customer demand
– Packet interface to access and
circuit interface to core
• Packet-switched networks
Access
will dominate intranets over
the medium term:
– IP, over time, will dominate
corporate LANs and WANs
Winning Vendors
– Next-gen Sonet, not Mesh
– Reconfigurable networks
• QoS statically managed:
– CoS on packet interface to
access
– Topologically optimised for
Internet access
– Ditto on circuit interface to
core
• QoS actively managed:
– Real-time monitoring,
measuring and reconfiguring
– Without breaking the basic
stateless/connection-less
paradigms of IP
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• Strong multi-service edge
offerings based on packetswitching architectures:
– Key features are switched
routing, and edge optical
nodes
• Corporate IP vendors, and
access/LAN IP QoS
management vendors:
– Dynamic, policy-based QoS
based on business objectives
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Recent Academic Research is coming to the same conclusions
•
•
From a paper presented at Hotnes, Princeton, October 2002: “Is IP going to take over the world (of
communications)?”
– Pablo MolineroFernandez, Nick McKeown, Stanford University; Hui Zhang, Turin Networks and Carnegie
Mellon University
"It remains ill suited as a means to provide many other types of service; and is too crude to form the transport
infrastructure in its own right."
•
"The growth and success of IP has given rise to some widely held assumptions amongst researchers, the
networking industry and the public at large. One common assumption is that it is only a matter of time before IP
becomes the sole global communication infrastructure, dwarfing and eventu ally displacing existing communication
infrastructures such as telephone, cable and TV networks."
•
"But for all its strengths, we (the authors) do not believe that IP will displace existing networks; in fact, we believe
that many of the assumptions discussed above are not supported by reality, and do not stand up to close scrutiny."
•
"It is the goal of this paper to question the assumption that IP will be the network of the future. We will conclude that
if we started over - with a clean slate - it is not clear that we would argue for a universal, packet-switched IP
network."
•
"We take the position that while IP will be the network layer of choice for best-effort, non-mission critical and nonreal time data communications (such as information exchange and retrieval), it will live alongside other networks,
such as circuit-switched networks, that are optimized for high revenue time-sensitive applications that demand
timely delivery of data and guaranteed availability of service."
•
"At the core of the network, we expect the circuit switched transport network to remain as a means to interconnect
the packet switched routers, and as a means to provide high reliability, and performance guarantees. Over time,
more and more optical technology will be introduced into the transport network, leading to capacities that electronic
routers cannot achieve."
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
. . . But IP will dominate the market for smaller enterprise
networks
• Small IP networks (such as Corporate LANs and WANs) are cheaper and simpler to
operate than small circuit-switched networks:
–
Enterprise packet-switching is considerably simpler and cheaper to manage.
–
The number of components in an all IP corporate LAN can be significantly smaller than a circuit- switched infrastructure
with N^2 characteristics, especially in highly interactive corporates like banks, the pharmaceutical sectors, large
engineering firms, and the military.
–
The power/density/operational complexity characteristics of IP infrastructures in a core network. [NOT CLEAR]
• QoS solutions for corporate LANs and WANs are becoming more manageable with the
advent of policy-based management technologies:
–
Both from a hardware/software and operational perspective.
• Service providers will also need to maintain packet-switched architectures to enable
Internet access and other services:
–
E.g. managed services, such as storage and hosting, where most corporate interfaces will be IP.
–
E.g. multi-party services, such as audio, video, and web-enabled conferencing, due to the N-squared complexities
associated with trying to provide these services efficiently off a circuit-switched infrastructure.
From our conversations with buyers, systems integrators, and service providers,
we are convinced the future of enterprise LANs and WANs will be all IP.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Review of Key IP Services Technologies
and Identification of Potential Winners
IP VPN
• What are the drivers and inhibitors of VoIP uptake
?
Voice over IP
• What other value-added services might VoIP
enable service providers to offer?
Video over IP
Unified Communications
Quality of Service
• What does the voice migration architecture look
like ?
• Who are the potential winners in the Voice over IP
arena?
IP Storage
• What is the outlook for VoIP in the short term?
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
VoIP currently has some inherent challenges, particularly in the
areas of QoS and cost
Inhibitors to VoIP
• Low cost and efficiency of legacy PSTN equipment weakens the business
case for migration to VoIP
• Tolerance for medium quality video is high but tolerance for even mildly
reduced voice quality is very low
• Replacing a TDM switching fabric with routers is not likely to deliver
enhanced performance
• PBX depreciation cycles are quite long and delay VoIP adoption
• MGCP (in cable) vs SIP XML (Telcos and mobile operators) debate is making
interoperability more difficult for all vendors
Source: CGEY and DrKW Analysis
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
Why QoS matters
The example of Voice, a delay sensitive application where users tolerate minimal drop in quality
Anatomy of a Simple Voice Call
Coder
Delay
Site A
Phone
First
Mile
Queuing
Delay
Buffer 1
Delay
Buffer 2
Delay
Network
Queuing
Delay
Last
Mile
Dejitter
Buffer
Site B
Phone
Delay
Coder Delay G.729 (5msec look ahead)
5 msec
Coder delay G.729 (10msec per frame)
20 msec
Voice can tolerate
only 100 msec;
margin for error
is small
??
Queuing delay and Network Buffer delay
Propagation Delay (private lines)
0 msec ?
Dejitter Buffer
50 msec
Total
75 msec + ??
* Courtesy of Fred Destin
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
However, there are significant advantages for service providers
from hybrid trunk side architectures
Advantages for Service Providers
Internet offload
Intercept dial-up calls handled by the IP infrastructure avoid clogging up
Class-5 and Class-4 switches
Improve mesh
performance
Adding switching capacity has decreasing advantages as more ports get
allocated to interconnect with other elements of the mesh rather than to handle
new calls
Operational savings
By using, for example, an ATM cloud for the interconnect service providers can
greatly reduce the number of trunks they need to manage
Deliver new hybrid
applications
Many of the applications that mix voice and data, which generally involve SIP
manipulations, require IP anyway to interact with intelligent clients
Source: CGEY and DrKW Analysis
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
The necessity to deliver new advanced voice services is driving
developments in network architecture
New Architecture
Customer Demand
•
Economic advantages of packet voice are
driving access voice networks from circuit
to packet switching
•
Corporate demand for:
•
•
•
–
Unassisted,on-demand, reservation-less conferencing
services
–
Unified messaging
–
Call centres
•
Interoperable technology is finally becoming
available to enable VoIP over LANs and
increasingly WANs
–
•
In next-generation carrier networks:
–
•
Obligation to deliver local number
portability, emergency and directory
services
Web-based invitation, notification,
scheduling and device control
Unified network to allow unified and
simplified management
PBX interoperability is improving in brownfields
Voice traffic between traditional voice networks and new packetbased networks will be directed by media gateways and media
gateway controllers, which will be handled by soft-switches
There are two key concepts behind these new
networks:
–
Media gateways, signalling gateways, media gateway controllers
and application servers will be divided into separate logical network
components
–
These components will communicate with one another through the
use of intra-switch protocols such as Media Gateway Control
(MEGACO), Media Gateway Control Protocol (MGCP),
SCTP/M3UA and Session Initiation Protocol (SIP)
VoIP today is more a question of delivering a suite of hybrid voice/data services
than replacing TDM networks.
Source: CGEY and DrKW Analysis
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
VoIP is not interesting in itself, but explosive growth in IP
Services will come from services it enables
Conferencing
A market experiencing
explosive growth at
present and that tops the
agenda of vendors and
users alike
Call centers
Unified Messaging
Huge addressable market
further enabled by speech
technologies for total
customer contact and
reduced operational costs.
A medium term winner
delivering clear user
experience and
connectivity improvements
VoIP ToolBox
| 22 |
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
IP Centrex
•
Centrex (central office exchange service) is a service from local telephone companies in which up-to-date
telephone facilities at the service provider’s central office are offered to business users who do not wish to
purchase their own facilities.
•
The Centrex service consists of allocating centralized capabilities among different business customers.
The customer is spared the expense of having to keep up with fast-moving technology changes (for
example, having to continually update their private branchexchange infrastructure) and the phone
company has a new set of services to bill for.
•
According to statistics compiled by RHK, the Centrex service is most popular with small to mid-sized
companies with up to 400 lines. However, customers with over 1,000 lines represent over 20% of the
existing Centrex base.
•
These larger customers have been increasingly investing in their own infrastructure, as suggested by the
following data showing erosion of 8% per year from 1996 to 2001. The rate of decline is expected to
increase to 12% per year from 2001 to 2005.
•
Meanwhile, smaller customers are expected to show only modest growth in the adoption of Centrex.
Another source of risk with Centrex customers is that as they switch from outsourcing to owning their own
facilities, service providers risk losing other precious sources of revenue such as Web hosting, VPN
offerings and Unified Communications. According to Lucent, such losses could add up to $750,000 per
customer per week, or approximately $39 m per year.
Source: Ariane Mahler, CGEY and DrKW Analysis
| 23 |
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
We have identified the potential winners in the VoIP space...
Issue
Solution
Winners
Complexity Management
Elegantly bridging voice and
packet networks
Integrated bearing/
signalling/control box
Telica
Device Proliferation
Deliver QoS sensitive services with
limited knowledge of endpoint
Converged SIP based application
delivery platform
Dynamicsoft
Interoperability, multi-vendor
solutions
No appetite for forklift upgrades
Gradual migration in softwsitch
architecture in multiprotocol world
Veraz networks
Integrating voice with other realtime apps
Multi-channel interface for
application delivery
Iperia, Voyant, Aspect
Scale packet based voice services
Separate voice processing from
application logic
IP Unity (media server) Sylantro,
Pactolus (apps server)
End-to-end solutions absent
Control the value chain from the
user interface up
Avaya
Product Innovation
Process Innovation
Source: CGE&Y and DrKW Analysis.
| 24 |
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
… and created a market map of the next generation VoIP
players
IP Devices
Cisco
Avaya
Ascom
Mitel
Polycom
Congruency
e-Tel
Ericsson
Telstrat
Tundo
Nortel
Toshiba
Alcatel
Samsung
Gateways
Softswitches
Sonus
Syndeo
Commworks
Taqua
ipVerse
Convergent
Networks
Cisco (IP Cell)
Mockingbird
Tekelec
Nuera
Unisphere
Gallery IPT
Sonus
Syndeo
Commworks
Taqua
ipVerse
Convergent
Networks
Cisco (IP Cell)
Mockingbird
Tekelec
Nuera
Unisphere
Gallery IPT
Alcatel
Nortel
Lucent
Telcordia
Alcatel
Nortel
Lucent
Telcordia
Application Servers
Dynamicsoft
Telephony@Work
Sylantro
Pactolus
Media Servers
IP Unity
Convedia
Source: CGEY and DrKW Analysis
| 25 |
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
100% VoIP for core voice transport is many years into the future
Conclusions on VoIP
• IP is not the optimal technology for scaling a voice business:
–
QoS slippage is not an option
–
Legacy infrastructure is cheap and very efficient
• The transition to VoIP will be slow as each new service introduced must be value
accretive and protect the value of legacy networks
• Work on VoIP has led to developments in technology that enable delivery of real time
services e.g. call centre automation and conferencing
• The market take-up of these services depends on the design, pricing and bundling of
attractive end-user applications:
–
It is up to the carriers to design and deliver IP-enabled differentiated services that leverage existing TDM networks …
without falling back into a minutes / bits price war
The near-term significance of VoIP is in the real-time IP Services that it enables.
Source: CGEY and DrKW Analysis
| 26 |
© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
While IP technology promises a lot, success depends on
improved QoS and IP-VPN users reaching critical mass
What It Means
Key Findings—Technology
• Most IP services have crossed the
“Operational Chasm”—they work!
• Proliferating technologies,
standards, and devices have not yet
given way to more integrated
solutions
• IP-VPN and voice/video over IP may
enhance the next wave of services
• QoS-driven IP services can evolve only where QoS issues
resolved; not everywhere at once!
• IP services with QoS work best in autonomous networks e.g.
in the LAN or the service provider’s own core IP network
• Corporate IP-VPN (not the internet) becomes the foundation
and enabler for all other IP services
• Massive technology disruptions are unlikely
• QoS to deliver real-time IP is
emerging, but selectively and slowly
• “IP everywhere” is neither always
required nor always desirable
• Costs of managing IP complexity
may exceed many IP benefits:
– Too many ROI case studies fail to consider
“hidden costs" of complexities
Key Technology Challenges
• Extend QoS across the WAN to include all brownfield and
greenfield sites; becomes the basis for other services
• Enhance legacy voice services with IP interactivity:
– For customer-activated conferencing, internal line provisioning, integrated
communications interface, and other additional functionalities
– Additional software/hardware/”wetware”
(blood, sweat and tears) needed as device
numbers increase.
• Make corporate applications fully available to remote users
– Tasks such as “coupling" and "amplification"
are proving difficult in large-scale networks.
• Delivering IPv6 and end-to-end QoS across the internet
and key external parties
cloud look to be many years away
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
The future of real-time IP Services depends on successfully
developing and deploying emerging QoS tools
QoS Solution/Method
Description
• Common over-provisioning is for typical
Over-provisioning
Guaranteed bandwidth
allocations or resource
reservation
Traffic management
bandwidth utilisation
• QoS over-provisioning is for peak
utilisation
• May raise questions of affordability
• Make sure preferred “bursty” bandwidth
is available to QoS-sensitive
applications
• Determine preferred paths in network
• Admission control
• Data management: packet prioritisation,
policing and shaping
• Compression
• Prioritise by application, not packet
Application-driven QoS
type or port
• Measure and police network traffic in
real time
• Content management & caching
Tools
• Increased edge/access infrastructure
(servers, switches, routers and gateways)
• Implement circuit-switching with ATM
• Implement connection-oriented IP with
MPLS
• Signalled resource reservation with RSVP
• Provision-class packet marking with
DiffServ
• Standardised shaping/queue
reordering/etc.
• IPv6
• Implement centrally controlled trafficmanagement tools and drive policies down
to network elements in the LAN
• Multicast & content-aware networking
Delivering quality is an inter-domain traffic engineering problem encountered at
both the interface of the WAN and LAN and between service provider networks.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved
The IP services market is in its infancy, but it is increasingly
recognised as the industry’s best hope for growth
• No winners in next 24 months, only survivors.
• IP services will grow steadily over the next two years (possibly 10%).
• QoS has yet to be fully resolved: Be suspicious of any hype.
• TDM voice networks will not disappear into some converged Nirvana; they
work!
• “Converged networks” more likely means hybrid networks with IP
enhancements, not fully converged IP networks.
• Service providers and vendors are still not speaking end-user benefits.
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© 2002 Dresdner Kleinwort Wassertstein and Cap Gemini Ernst & Young - All rights reserved