July 1, 2004
By Tara Seals
Chris Peabody’s boss at Georgetown University used to ask every telecom vendor that came through the door the same question: “How much above free is your service?”
Peabody, once director of networks at Georgetown and now director of enterprise services at consultancy L Robert Kimball and Associates, says cost still is a top priority for learning institutions, since they are all non-profit, but that doesn’t mean they’ve stopped buying telecom. The Pelorus Group agrees and estimates vendors and service providers will be vying for nearly $3.5 billion in campus network budgets by 2005.
“In most universities, particularly the large ones, you’re really dealing with multiple clients,” says Peabody. “There are students, the faculty, the administrative staff and the research community, and they all have different needs. The key to success here is understanding how each specific program operates and talking to people at all levels, from the basic engineer to the CIO.”
Analyst Irwin Waxberg, author of the higher education study for Pelorus, segmented the market into several types of campuses to find out how to address it. “One campus may be mainly research, while a campus at the same university might be a small liberal arts college,” he says.
Waxberg was able to identify three types of communications areas on campus. Administrative networking involves payroll, student records and departmental workings - the same needs large enterprises have. Academic communications include online classes, alumni portals and e-learning tools. Research computing means the production and movement of vast amounts of data, and is the thrust behind the bandwidth-hungry Internet2 initiative to develop and deploy advanced network applications and technologies specifically for research and higher education, led by a consortium of 200 universities working with industry and government.
Within these, opportunity is ripe for service providers and indirect channels providing a variety of services. Areas to focus on are: offering universities new ways to make money, helping them attract top students, saving them money in network management, and providing solid security and disaster recovery options.
Academic needs especially are becoming important for universities because they provide new profit centers. “Web-based classes mean the campus is collecting money because it’s reaching students that may never have gotten to campus, even out of state,” says Waxberg. “Students on campus use software as learning tools; Teachers put up assignments, so it’s part of the academic process, driving efficiencies. They’re also trying to build and keep ties with alumni using the Web. The more ties you have, the more money they’re going to donate.” Macromedia Inc. for instance offers its Flash-based multimedia collaboration platform, Breeze, to the education vertical via VARs and other channels. Webenabled Breeze is flexible in its ability to lay out content and can incorporate Web camera streams, participant lists, chat windows, notepads, whiteboarding on slides and video, and allows users to move around and resize content windows.
“Teachers use this to help the education process, so you can bring learning to a much wider audience, and you don’t have to be there to receive an education, or you can be more efficient” says Kevin Lynch, Macromedia’s vice president of elearning and collaboration channels. “Cal Berkley did a study where they issued on-demand information ahead of time for the classes, and then the classroom time was highly interactive. What you don’t want to do is have a professor stand up for 50 out of 60 minutes writing on the whiteboard and everyone takes notes, it’s not a great use of that facility.”
Qwest Communications International Inc. sells Internet access and other services to universities through a special education sales force and the Qwest Business Partner Program. Caroline Rinker, director of marketing for the education vertical division, says video services are hot for e-learning. “A lot of colleges with remote campuses will have video conference connections between them, to teach classes that way,” she notes.
Finding new profit areas is becoming more critical than ever as universities lose a traditional cash cow: the resale of local and long-distance services to students. “That market is gone, for three to five years now, because of email, IM and cell phones,” says Peabody. “Millions of dollars were made, and they’re gone.”
Universities are looking to offer communications services that are compelling in the face of mass disconnection. CrystalVoice Communications offers one such solution, a remote extension VoIP product. “Most VoIP is done over a managed network, as opposed to the real raw Internet,” explains Steve Zola, president and CEO at CrystalVoice. “What CrystalVoice does is deploy software solutions for high-quality voice transmission over variable conditions in the Internet. So we can expand the reach of most managed voice installations. Cisco for instance is selling IP phone systems and Call Manager, but the question becomes what happens when employees leave the walls of that physical location. And we can offer portability and mobility.” In the case of the University of Arkansas at Pine Bluff, it installed a wireless network and Cisco Systems Inc. Call Manager with IP phones for all the students.
To add value, the school deployed CrystalVoice’s Click to Talk product, a software download from the university home page that allows people to call a student’s phone from a soft phone over the Internet. “So this gives toll-free access to anyone who wants to reach the university across the world,” says Zola. A second product, Remote Extension, allows calls to student phones to ring on a laptop if the person is traveling or home on vacation. “It’s really added a lot of value to what they’ve already deployed,” says Zola.
BroadSoft Inc.’s vice president of marketing, Scott Wharton, notes some service provider customers are using the company’s BroadWorks VoIP platform to offer a similar functionality. “Reach a student on the cell phone since that’s the primary, but then we’ll say all right, we’ll give you one number and you can take it with you wherever you go, so as you move off campus or move dorms, it will ring your Wi-Fienabled laptop or home phone,” says Wharton. “We have universal Wi-Fi and universal laptop usage, and sophisticated users, so here’s more soft phone usage. Why not put everyone on IP telephony? There’s an opportunity for the universities to get back on top with IM, video and simplification of the network.”
Another unique challenge the education market faces is the need for a competitive advantage with features such as Wi-Fi access. “They have a trade-off to make between how can they best use legacy infrastructure to control costs versus replacing it with new technology to increase bandwidth - that trade-off keeps them up at night,” says Waxberg. “Communications and IT are looked at as a competitive advantage, not just a necessity. There are a growing number of students who look at the computing capabilities on campus as part of their decisionmaking process. Can I work in my dorm? Do I have to go to the library? Administrations aren’t willing to even consider cutting these budgets.”
High-bandwidth access also is critical for research institutions to compete, especially due to Internet2, which moves large amounts of data, voice and video around and requires certain throughput. Other national initiatives such as ACUTA, the Association for Communications Technology Professionals in Higher Education, and EDUCAUSE promote the advancement of higher education by promoting the intelligent use of information technology. That means more bandwidth and more convergence. Thus, many universities need help with getting to a common transport infrastructure and integrating wireless and wireline networks from a cost and maintenance standpoint, Waxberg says.
Qwest and WilTel Communications Group Inc. are members of Internet2. WilTel, brand-new to the enterprise market and to education, hopes to gain an advantage in smaller markets thanks to its recently expanded access capabilities, Extended OnNet, which can bring universities online in Tier 2 and Tier 3 cities. It also has partnered with Teligent Inc. broadband wireless, applicable to underserved markets. “Many of the larger universities typically aren’t in Tier 1 markets,” says Scott Pullman, education vertical market manager for WilTel.
“The University of Oklahoma is in Norman, [and the University of] Missouri is in Columbia. Being in a rural area, [Extended OnNet] helps them keep their costs down by being able to link directly into one of our facilities and pick up services there.” Cost, a top factor in education, also comes in the form of management.
WilTel hopes to address the logistics of running a big network as well. It will use its OC192 backbone with MPLS IP VPN capabilities to go after customers and consortiums in four key areas: professional services (design of the network, staging and implementation of CPE, whether low-end routers or high-end optical gear, and IT staff on a temporary or permanent basis to implement and maintain the network); performing fiber builds (between facilities intrastate or longhaul); network services such as IP transport, MPLS IP VPN, wave and data services, and some legacy Layer 2 products; and full, outsourced management of the entire solution.
“Building a network out and then operating it for you is a core competency,” says Tony Tomae, senior vice president of marketing at WilTel. “We have a strong NOC and an e-care tool to allow associations or consortiums or universities to manage their network online.”
“We come in and say, OK, how do you want to use it, and the sales engineering staff will design the network and then we’ll help with the implementation,” says Tomae. “We make sure the project is completed.”
Many universities are going IP to reduce management overhead and save money. “A lot of universities are very decentralized, so the decision-making is decentralized,” explains Wharton. “So if one school puts in one vendor and another does another, you have IP PBX islands that don’t talk to each other. So there’s a lot of interest in a centralized VoIP system with a single management structure. Also this way, the university could then wholesale VoIP internally to hospitals and different constituents.”
College CIOs also lose sleep over security issues, says Waxberg. “The reliability and security reputations of service providers are very important to them,” he notes. “An educational institution is a big bull’s-eye. Every hacker in the world wants to break into a famous institution. They get as many hackers as NORAD. They’re continually being hit.” Finally, disaster recovery has become a crucial issue. “Universities using Internet 2 are using massive amounts of bandwidth, and one of the things they’re concerned with is disaster recovery,” says Wharton. “So they want to use something like BroadWorks as a backup for their phone systems. A lot of people that work with universities have positions in national security, working on bioterrorism or first responder research, so these people need to be reached in an emergency. And they can use BroadWorks as an alternate phone system to reroute calls or plug in IP phones.”
Carriers, resellers and agents may still have to answer “how much above free?” but the market still is lucrative.
“These universities don’t perceive a single strong leader, because they don’t measure by market share,” says Waxberg. “They will describe an industry leader as a company with a strategic vision for the higher education networks and one that will offer innovative solutions to the challenges they face. They do not believe there is such a company that has stepped up for this just yet. So there is a great opportunity here.”
Selling Public School Districts through E-rate
In “K-12” public education, libraries and school districts can take advantage of E-rate, a federal communications funding program that uses $2.25 billion in universal service fund fees collected from telecom carriers, to carry out the federal mandate to bring broadband to every school in the nation.
“We collect these monies and then turn them back to the FCC, says Patty Williams, channel market manager for Qwest Communications International Inc. “Schools and libraries can apply to help with bringing telecom into the classroom.”
Administered by the Schools and Libraries Division (SLD) of the Universal Service Administrative Co. (USAC), a non-profit corporation appointed by the FCC, the E-rate program gives carriers, service providers and channel partners the opportunity to sell into these districts, but understand how the program works is the first step.
The school applies for specific eligible products or services from three categories: Dedicated Internet access is considered Priority 1, along with “Telecommunications,” a category that covers general T1 connectivity, voice services and point-to-point circuits.
“Internal Connections,” with Level 2 priority, covers equipment and services needed to run labs or applications.
School put together a technology plan showing how the products and services will fulfill their telecom needs for the future, and those plans have to be approved by the state department of education to make sure they meet state and national needs for education.
Once approved, the schools can post requests for proposals at the SLD Web site during the yearly RFP window, which runs roughly November to February. RFPs must be posted for 28 days, after which vendors are free to respond with bids and negotiate contracts. Deals must be written, signed and resubmitted within that three-month period.
When the RFP window closes, the government sifts through the applicants and decides which ones have priority, based on products and services requested and school district need. Money allocation is partly determined by the number of students schools have in the national school lunch program – the poorer the school district, the greater the amount it’s eligible for.
Eventually, decision letters are sent to let schools and libraries know they’re getting the money. If a school is denied, contracts automatically become null and void.
E-rate funding gives rise to more opportunities than just what the government is willing to pay for. “They have massive subsidies from universal service where they have IP networks and nothing to run over it,” says Scott Wharton, vice president of marketing at BroadSoft Inc.
“A lot of these schools have broadband into every classroom but no phone line.”
Thus, a possible sale is VoIP. “A lot of elementary and high schools are capital-constrained, so they’re looking to reuse some of the CPE they have, making analog phones into digital handsets via adaptors and rolling out IP voice, so they can make calls through the school system on-net,” says Wharton.
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