Unifying Services, Disintegrating Supply

Posted: 07/2000

Unifying Services, Disintegrating Supply
By Mona Johnson

he convergence of mobile, IP and IN technologies is enabling sophisticated unified communications services to be developed and brought to market under the emerging service delivery chain, wherein network operators and applications providers may not be the same company.

The decoupling of the service provider and the network operator roles, along with the advent of less expensive
standards-based IP technology, encourages the development and provisioning of small niche or vertical telecom applications. However, the major horizontal applications likely will be the largest revenue-earning services
(see figure 1), according to the recently published study, “Opportunities for Unified Telecom Services.” The study, jointly published by Schema
(www.schema.co.uk) and Technical Marketing Inc.
(www.tech-marketing.com), identifies the horizontal services as IP telephony,
VPNs, conferencing, unified messaging, call centers and unified mobile services
(see figure 2).

Graphs: Unified Telecom Services Revenue, 2005

The study’s findings are based on a survey of more than 700 business end users in North America and Europe, and defines a unified telecom service as one that combines two or more of the following technologies–circuit-switched (and the associated IN), packet-switched (IP) and
mobile to present the user or subscriber with a single service offer.

IP Telephony. According to the Schema-TMI study, IP telephony accounts for 32 percent of the North American unified telecom services revenue forecasted for 2005, and 25 percent of the European revenue. IP telephony either can be declared and advertised as IP telephony, or undeclared and the user doesn’t know whether the call is routed over circuit-switched or packet-switched networks.

In the context of unified telecom services, IP telephony’s importance lies in its role as a strategic enabler of other services. The migration of voice traffic to IP networks allows for voice and data integration on one multiservice network, making possible potentially higher margin services, such as messaging and data and voice conferencing.

Wholesaler iBasis Inc.
(www.ibasis.net), for example, plans to take advantage of IP telephony’s role as an enabling technology to launch OneCore Unified Communications services, a suite of hosted services including unified messaging, follow-me and web-based subscriber management of services. These services should be attractive to telephony service providers who want to add high value services to their own service offerings quickly.

Fixed VPNs. By 2005, VPNs are expected to generate 25 percent of the unified telecom services revenue in North America and a full 33 percent of European revenue. The study defines a VPN as a public network service (originally PSTN and now IP-based) designed to connect CPE so the customer has a high level of functionality–comparable to that obtainable with private networks (e.g., when the equipment is connected with leased lines).

Chart: Unified Telecom Services

Multiservice VPNs–IP-based VPNs combining voice and data on a single public network infrastructure–provide the service provider an opportunity to offer other unified services, such as conferencing, instant messaging and unified messaging to end users. An example of this is the suite of services offered by I-Link Inc.
(www.i-link.net), which include IP telephony, one-number service with “call whisper” call screening,
unified messaging, conferencing and a web-based interface.

Mobile VPNs. Mobile VPNs account for 14 percent of the estimated unified telecom services revenue for 2005 in North America, and 28 percent of European revenue. Mobile VPN service is well established in Europe. Primary end user benefits include cost
savings on calls to and from corporate locations. VPN service is a strategic offering for mobile operators who benefit from increased voice and data traffic and reduced churn from the perception of the difficulty of changing out VPN dialing plans and features.

Network-Based Call Center. Network-based call centers aree forecasted to make up 10 percent of the unified telecom services revenue in North America by 2005, and 4 percent of the revenue in Europe. The
network-based call center is where the intelligence to queue and route calls is integrated into the public network.

Call centers are being integrated with websites to form transaction centers. This adds web-based self-service and IP-based voice and e-mail customer service to the
traditional call center capabilities.

Conferencing. Conferencing, while contributing only 12 percent of North American and 4 percent of European unified telecom services revenues in 2005, will be an important part of a service provider’s portfolio of services. For example, portals may find video conferencing crucial to providing attractive content.

Circuit-switched audio conferencing services are offered by specialized companies in France, North America and the United Kingdom. However, acceptance of audio conferencing is confined to certain market segments, and the use of video and data conferencing remains low.

Newer IP-based conferencing solutions offer advantages such as web-based control of attendees and calls, as well as the ability to combine voice, video and data conferencing via less expensive IP networks.

An example of IP-based conferencing advantages is the service offered by TelePost Inc.
(www.telepost.com), which allows an end user to set up a conference call almost instantly via a web interface. An added benefit is that it allows participants using web browsers to view a Microsoft PowerPoint presentation during the call.

Unified Messaging. Unified messaging–a service that provides the user with a single interface from various types of messaging–is projected to generate 7 percent of the total unified telecom services 2005 revenue in North America and 6 percent in Europe.

The service allows the user to access messages from access devices such as a fixed phone, mobile phone or a PC. The
service may be required to collect messages from many different systems–fixed voicemail, mobile voicemail, home e-mail accounts, office e-mail accounts–in order to present all messages as though they were available from a single platform.

While the service is popular among
service providers, the business model is uncertain. Many unified messaging services are offered at no charge with revenue derived from other sources, such as sponsorship, sale of subscriber databases, increased traffic and usage charges and reduced churn.

The New Value Chain

These services, which are projected to generate more than $50 billion in Europe and North America by the year 2005, will be delivered through a new industry “value chain,” wherein service providers and network operators are not necessarily the same company.

The model is taking shape already with the emergence of ASPs that do not provide transport.

However, the telecom environment does not encourage proliferation of niche and vertical applications, which could generate significant revenue according to the Schema-TMI study. Theoretically, an open environment would allow retailers to mix and match applications from various vendors and service providers, enabling the dissemination of applications like those currently available in Internet and IT environments.

To fully realize the benefits of this type of open environment, the telecom industry needs to move away from the model of a single supplier providing applications on a single platform. An open environment with a plug-and-play software architecture would allow retailers and service providers to combine applications from different vendors and service providers, further differentiating their services.

However, delivery of such services would require industry agreement on a
"component-ized" network architecture for public networks–a proposal already under study by industry organizations, including the Intelligent Network Forum
(www.inf.org).

Mona Johnson is president of Technical Marketing Inc.
(www.tech-marketing.com), which provides market and technical analysis on advanced telecommunications products, services and related implementation issues. She also is executive director of the Intelligent Network Forum
(www.inf.org). She can be reached at mona@tech-marketing.com.