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 Channel Futures

Telephony/UC/Collaboration


IAD: Convergence Key for Small Businesses

  • Written by Channel
  • October 31, 1999

Posted: 11/1999

Networks

IAD: Convergence Key for Small Businesses
By James R. Dukart

Competitive carriers are using IADs to provision new
and attractively priced service bundles to data-hungry small- business customers.

The architects and designers at Weideman Architects may not have thought of it as such,
but they had a serious data problem. In the course of designing and building houses,
office buildings and industrial structures, the Kansas City, Mo.-based architectural firm
found it was increasingly using e-mail to send large AutoCAD drawings between offices and
to its design and building partners. The problem was that the large file attachments
included in incoming and outgoing e-mails was clogging the firm’s single Internet access
line, not to mention draining employees of productivity as they waited for seemingly
interminable downloads.

Weideman, a firm with fewer than 100 employees, needed something that would let it
easily and seamlessly grant Internet access to multiple users, but didn’t feel it could
afford or make full use of a full T1 line. In addition to granting Internet and e-mail
access, the service also would have to provide fast downloads so that graphics-intensive
drawings and plans could be quickly viewed and printed. The company found its answer in an
integrated access solution proffered by Birch Telecom, a competitive access provider based
in Weideman’s hometown of Kansas City.

Birch’s solution is based on an integrated access device (IAD), a device roughly the
size and shape of a pizza box that sits in the telephone closet of Weideman’s downtown
office building and lets Birch deliver a mix of voice and data services. On the customer
side, an IAD can deliver voice, integrated services digital network (ISDN), frame relay,
dedicated and switched high-speed data, Internet protocol (IP) or asynchronous transfer
mode (ATM) services. On the network side, an IAD consolidates all this traffic onto a
single T1 or E1 line–or even in some cases a high bit-rate digital subscriber line
(HDSL)–and passes it back to the service provider. The result is that business customers
that previously could not afford or would not spring for a full T1 line can get a wide
range of voice and data services at more digestible prices. Competitive carriers, in turn,
use IADs to provision new and attractively priced service bundles to data-hungry
small-business customers.


Graph: IAD Market Forecast

"A lot of the T1s that are being delivered to businesses today are being
underutilized," says Sab Gosal, senior product manager for VINA Technologies, a
Fremont, Calif.-based producer of the T1 Integrator IAD that Birch placed at Weideman.
"Businesses end up paying for bandwidth that is never used, and CLECs (competitive
local exchange carriers) are unable to maximize the use of the trunks to the network. With
IADs, carriers can deliver voice and data services in a cost-effective way."

From Many to One, and One to Many

The actual definition of IADs remains a bit murky, since the technology is still
somewhat new and evolving. Christin Flynn, an analyst in the data communications group of
Boston-based consultancy The Yankee Group, says simply, "We believe that they [IADs]
have to have a variety of user services and deliver to a variety of carrier services. They
may have a router inside, have CSU/DSU (channel service unit/digital service unit) or DLC
(digital loop carrier) capabilities or frame relay access device capabilities," Flynn
says. "On the WAN (wide area network) or trunk side, they also have to be able to
deliver into a variety of services that go back to the network."

Tim Smith, principal analyst in wide area networking for consultancy Dataquest, a
division of GartnerGroup, Stamford, Conn., is only slightly more precise. "We define
IADs as a device that combines various forms of voice and data traffic using TDM
(time-division multiplexing) to combine over a T1 or E1 into a carrier office," Smith
says. "The market for these devices has been a very interesting and buoyant one over
the past few years."

Expect future buoyancy, Smith says, to come from two sources. One will be the emergence
of IADs that aggregate and deliver traffic using packet-based technologies, notably ATM,
rather than TDM. Another will be the increasing use of IADs to deliver mixed voice and
data services to the growing small- and medium-sized business market. Flynn concurs that
the coming sweet spot for IADs will be services to small-to-medium-sized businesses. The
market for IADs in the multi-T1 or high-end form, she says, is "stalled" at its
current size of $486 million and will grow at a compound annual growth rate of about 11
percent to about $725 million by 2002. On the lower-end IAD market, though–devices that
aggregate traffic onto one or two T1 lines–Flynn predicts a market of roughly $42 million
in 1998 will grow at a 46 percent compound annual growth rate, more than quadrupling over
the next four years to $171 million by 2002.

Among the products currently making a splash in the smaller-end IAD market are VINA’s
T1 Integrator; Fremont, Calif.-based Premisys Communications Inc.’s Slimline and
Streamline products; the EdgeLink-300 and Access 45 from Norwood, Mass.-based Telco
Systems Inc.; the Access Bank II from Boulder, Colo.-based Carrier Access Corp.; and the
TSU600 from Huntsville, Ala.-based Adtran Inc. Most, if not all, of these products offer
voice-only versions, dual T1 support and international versions to support E1 lines. Smith
says the price range for a single IAD is $5,000 to $30,000, depending on the configuration
and services provided. He also says the devices are "pretty evenly split" in
ownership, roughly half being owned by enterprise users and the other half owned by
carriers that either lease the IAD to a customer or build the price into voice or data
access charges.

Down-Market Flexibility

Charlie Vasey, director of Internet technology and director of product management for
integrated services at Birch Telecom, says the key advantage for CLECs is that IADs
"enable us to take a flexible package down-market." Buying a T1 for Internet or
voice access, he says, has been price-prohibitive for many of the carrier’s smaller
business customers. Though he won’t specify current integrated access pricing, Vasey says
these same customers are eager listeners when they find they can get T1-equivalent
services for "about what it would cost to buy eight lines independently and add ISDN
for access."

Another advantage, Vasey says, is that IADs let both carriers and business customers
adjust networks according to changing demands. A company, he says, may start out with the
need for four local phone lines and 256 kilobits per second (kbps) data, but as it grows
may require more voice lines and 512kbps data. The flexible configuration of a typical
IAD, he says, allows that type of expansion to happen through software upgrades, and does
not require a switch-out of old equipment and replacement with new wires, switches, jacks
and cables. "We buy the routers and channel banks and such and take the investment
decision out of the equation for businesses," Vasey says. "They can make a
decision to go with data and not have to worry about their networks or equipment being
obsolete in a short period of time."

Jim Diestel, general manager for market planning at Premisys, says IADs also offer
carriers a cheaper technology introduction, adding to expanded carrier services in an
existing network as well as the opportunity to approach new markets outside the carrier’s
current territory. IADs, he says, will let carriers sell bundled services anywhere they
can buy the wholesale bandwidth they need on the network side, without heavy investment in
fiber or switches. "This will dramatically reduce the physical cost of the
network," Diestel says, adding that he expects to see a "dramatic
increase," in services such as DSL from CLECs that invest in and install IADs and
other such solutions.

VINA’s Gosal says IADs also offer carriers the ability to include value-added services
on top of integrated voice and data lines. VINA’s T1 Integrator, for instance, comes with
the software-downloadable Business OfficeXchange (BOX) option to support a full suite of
industry-standard voice-switching features, ranging from simple ring functions to
sophisticated call management. This functionality, Gosal adds, not only gives a carrier a
wider range of services to offer clients, but also it can be programmed to the carrier’s
advantage. He says, for instance, that carriers can program local call routing on the IAD
to route all profitable calls over the carrier’s T1 line while moving toll-free and
low-tariff calls (e.g. 800, 911 and 411 calls) over analog lines to the incumbent LEC
(ILEC) or local toll provider. Customers, he says, are none the wiser as to what is
happening with their calls, and the process lets a CLEC tap into profitable traffic
without needing to set up and manage a local voice switch.

Perhaps an even greater return to CLECs, though, comes in the customer satisfaction and
increased business that goes with providing always-on, high-speed Internet access at a
price attractive to smaller businesses. Smith says CLECs can use IADs to
"technologically differentiate themselves from the standard carriers" and gain
new customers, particularly those that are technologically savvy. Vasey says IADs and
integrated access provisioning gives Birch a higher level of visibility among its
customers, and adds that clients who start with relatively low Internet access needs are
usually eager to bump up once they start using the service. "We don’t end up getting
a higher price per line or more per 64k[bps], but we do get more lines and more
64k[bps]," he says. "I think businesses generally find that it really boosts
their productivity."

Weideman Architects would likely agree. Jeff Fisher, office manager at Weideman, says
the firm currently has about 15 users accessing the Internet through its IAD, and is
looking forward to adding many more. From the start, he says, the service has been a big
hit throughout the office. His boss, Weideman Executive Vice President Jay Tomlinson,
concurs. "The difference it has made has been pretty spectacular in my mind,"
Tomlinson says. "We exchange large amounts of information with consultants and
clients and it comes in instantaneously. We send and receive just amazingly quickly. It
has really been a revelation to us."

James R. Dukart is a freelance writer based in Minneapolis. He can be reached at [email protected]

Tags: Agents Telephony/UC/Collaboration

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