What does it take to be an ASP?
It doesn't take a marketing expert to realize that business and residential communications are undergoing rapid and radical changes. Most consumers are familiar with cellular phones and the Internet, and videoconferencing and video distance learning are no longer considered science fiction. The ever-changing nature of the market presents major opportunities for alternative service providers (ASPs), with one major caveat--ASP revenues directly correlate to how well the provider succeeds in a highly competitive market. It is essential that ASPs select a vendor whose products clearly answer the requirements and multiservice provisioning needs of the current telecommunications world.
Characteristics unique to the market include:
* A highly competitive arena. ASPs are entering a market which already includes many well-established participants, such as the regional telephone companies in the United States, with a large existing customer base. Such a market requires a highly flexible approach that can respond quickly to customer needs. To prosper in this environment, ASPs must start by offering reduced service costs to the customer. This requires keeping a tight lid on provisioning costs at every step of service deployment.
* Customer loyalty. Another key to success in this market is fostering customer loyalty. Customers are no longer reluctant to switch service providers. Once they do, it can be costly to reclaim them. Acquiring and maintaining a loyal customer base is essential.
* Value-added services. Since the market contains so many players, differentiation from competition ranks high on the list of importance. Providers offering value-added products that can be tailored to precise customer requirements will have the edge over competition.
* High performance and reliability. The market is known for its exacting quality standards and high network reliability. This means ASPs must choose equipment vendors that are familiar with and adhere to telecom requirements. For this reason, service assurance and network management continue to be essential elements in any service offering.
* Multiservice multimedia provisioning. The current trend is for providers to provision more than one type of service. Customers are looking for new multimedia services that include not only voice but also high-speed access for data applications and higher-quality video. With current trends of corporate cost constraint measures leading people to work at home, as well as establish small home offices or businesses, there is a demand for higher speeds and more bandwidth.
Service provisioning has been available since the inception of telecommunications. The public switched telephone network (PSTN) has long been a service delivered for both business and residential customers. Leased lines were introduced as a service to meet the demand of voice and data. New services, such as advanced frame relay, transparent LANE services, IP, and ATM, provide new revenue-generating sources for efficient use of bandwidth and quality of service (QoS).
To remain competitive, alternative provider businesses depend on efficient communications. But they also must deal with the challenge of improving efficiency while reducing ever-escalating costs. Meantime, as networks grow more complex, the pool of expertise in the market to manage them is shrinking. DataQuest Research shows that the "management" aspects of a private network comprise the greatest cost burden when compared to equipment and facilities.
As businesses constantly look for ways to reduce operating costs and focus on their core business activity, the service provider must also find ways to reduce the burden of cost to the user while still meeting customer demands. These requirements are key in deploying the managed services that form the foundation of today's multiservice provisioning strategy.
Managed services provide a number of significant benefits to the business customer. not the least of which is the reduction of costs. When the service provider supplies, supports. and manages the communications network. businesses receive a number of direct cost benefits, perhaps the most important of which is end-to-end network management. Another relevant CLEC saving is based on the ability to ensure that ILEC-leased lines live up to promised criteria.
The need for cost reduction and improved service must be addressed with network management planning. Considerations must include a standards-based platform, end-to-end management, and quality-of-service measurements.
MULTISERVICE PROVISIONING FACTORS
Scalability is critical in multiservice provisioning. A multiservice platform must be able to handle the various stages of growth. There must be a small form factor for initial cost of deployment. Initial installments of equipment must be able to interoperate with equipment additions to the network that accommodate growth and new technology-based needs. The system architecture must be scalable and modular in design. There must be a road map for future development.
Meantime, value-added services give ASPs the opportunity to grow and retain a customer base. For service providers, replacing existing copper with fiber is not affordable--or even logical--given their investment in physical infrastructure. Businesses continue to make ever-increasing demands for bandwidth. Although there will remain a substantial need for lower speeds for access to a public switched network, the pressure already exists for cost-effective higher-speed access.
Fortunately, technologies have been introduced--and more are emerging--that better optimize existing copper. Called xDSL (digital subscriber line), this group of technologies encompasses a range of speeds suited to the application, cost, and distance of the existing majority of copper loop plant.
Telecom equipment vendors tend to approach the ASP market with a suite of products that provide specific technologies to answer requirements in this unique arena. When selecting a vendor, it is important to avoid those with a "one size fits all" mentality. In addition, a vendor should be able to address many needs and provide more than just a xDSL solution.
Multiservice provisioning system architecture must include access and switching products. Efficiency demands dictate that there is complete end-to-end service provisioning from the copper loop to the backbone. The architecture must have end-to-end management and be able to carry voice, video, and data services. Finally, public and private networks must be interconnected.
MULTIPLEXING VOICE AND DATA
Alternative service providers who deliver both voice and data to a customer's premise must choose devices that can maximize transmission economies. In an MDU (multidwelling unit) scenario, equipment that integrates voice and data access can be placed on the customer premise. By using this type of system, substantial savings can be realized on ILEC charges for individual trunk lines.
Many CLECs rent space from RBOCs to gain entry to unbundled copper pairs in order to provide local services. Co-location is often the most cost-effective way to enter the local service market. But incumbents often will not allow all types of equipment into their facilities. ILECs, for example, typically require adherence to NEB (Bellcore network equipment building) standards.
A selection of the best choice of a co-located access system means that leased copper can be used at higher speeds provisioning xDSL services. The many different flavors of xDSL, such as HDSL, SHDSL, and IDSL, can be marketed as value-added services. A universal access device should also be selected that can provide major cost reductions in access, grooming, and transmission charges from an ILEC. Cost-effective provisioning with copper loop management is key.
SWITCHING AND CONCENTRATION
Switching and concentration requirements to realize transmission efficiencies from the ILEC central office are achieved with ATM technology. All requirements are met with two principal technologies and associated product families: ATM and advanced network access. Concentration of traffic can occur through access devices, as previously described, at a customer's premise, at a central office, or at various network locations with ATM switches.
ATM has been the principal enabling technology for managed services. Before ATM, a number of technologies existed, such as TDM, packet switching, and circuit switching. Each was applied differently for data, voice, and video, and had its own specific design criteria based on distance, speed, protocols, and proprietary management. ATM encompasses all these criteria and provides higher connection speeds than previously available.
Through the continued efforts of the ATM Forum, ATM incorporates interfaces for each of the separate technologies based on a single platform and under one management philosophy. A key advantage to ATM is that it was designed from the outset to accommodate voice and video, as well as data applications.
A single ATM switch should include the following interfaces:
* Frame relay
* Frame transport (for X.25 and HDLC/ SLDC)
* Circuit emulation (provides an emulate leased-line circuit over ATM)
* Direct connect for digital PBXs
* Direct connect for video (integral video codecs)
* Direct connect for LAN (Ethernet, etc.)
* High-speed digital connect (ATM user-to-network Interface)
ATM is flexible in that it adapts most legacy technologies to ATM and complements most technologies deployed today for migration to new scalable networks with guaranteed higher levels of QoS.
ASPs who "long haul" voice need to maintain cost efficiencies in transport. ATM switches with strong voice compression capabilities allow for savings with ratios of 4:1 up to 8:1. Dramatic cost savings can be achieved in total voice network costs. Through the use of a standards-based VBR (variable bit rate) and CBR (constant bit rate), voice-solution providers can utilize an existing ATM backbone to add voice traffic essentially for free.
The domestic ASP market has unique telecommunication requirements. A carefully selected multiservice platform allows the provisioner to have competitive advantages over incumbent ILECs, as well as peer competitors. The ASP can offer attractive value-added services at better-than-competitive prices with complete management and control.
Growing in number and scope
Alternative service providers (ASPs) are now joining the ranks of incumbent LECs (ILECs) and IECs to sell local service to customers, primarily businesses. These service providers entered the competitive arena opened by the Telecommunications Act of 1996. Since then, their number has been expanding exponentially and now covers a broad industry spectrum that includes:
* Competitive local exchange carriers (CLECs)
* Cable TV companies
* Internet service providers (ISPs)
* Competitive access providers (CAPs)
* Exempt telecommunications carriers (ETCs)
* Internet access providers (IAPs)
Circle 257 for more information from General DataComm
Palmer is marketing manager for alternative service providers at General DataComm, Middlebury, Conn.
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|Title Annotation:||Industry Trend or Event; Alternative service providers|
|Date:||Feb 1, 1999|
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