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Top 7 Technology Trends for 2007

New Developments May Be Closer Than They Appear
12/27/2006

Bob Wallace

Unlike predictions of big technology changes in the telecom industry and beyond that may or may not materialize, our seven top technology trends for 2007 are much closer than they appear and portend to redefine rapidly the landscape for service providers in the near term.

While some of the select seven are high-profile and others have yet to gain the “visibility” needed to be labeled industry trends, all are expected to help decide how service providers do business and, more importantly, if that business is profitable.

There was no scientific process or algorithm employed here. Instead, we chose to poll the best and brightest industry minds — the people who see things before they become front-page news — and combined their business/technology thinking with relevant industry events from last year to select our Top 7 Technology Trends for 2007.

Here they are (in no particular order).

Carrying Ethernet Forward

The implications for carrier Ethernet are broad. Carrier Ethernet is a business service/access technology. It can be a transport method for both business and residential services. And it’s shaking the network to its very core.

A recent Infonetics Research study of 25 top-tier service providers in North America, Europe and Asia Pacific provides forecasts that Ethernet eventually will dominate the metro space, as SONET/SDH slowly but surely declines over the next 10 to 20 years, with the percentage of access or collector rings that are Ethernet jumping from 32 percent in 2005 or earlier to 60 percent in 2007 and beyond.

“The trend is clear: Ethernet is growing in the access space to the detriment and displacement of SONET/SDH, as service providers continue to look for ways to reduce operating expenditures and enable new revenue streams,” says Michael Howard, principal analyst of Infonetics Research. “And now that the No. 1 technical issue that was plaguing service providers rolling out metro Ethernet networks last year — QoS — is being addressed by manufacturers, the Ethernet adoption curve is speeding up.”

Howard is referring to the fact that many equipment makers have added new QoS features based on OAM standards, dramatically improving end-to-end QoS with carrier-class Ethernet products. “As a result, QoS dropped from the top of the list of technical challenges last year to No. 7 this year.”

The Metro Ethernet Forum has helped advance the carrier-class Ethernet cause by certifying products for compliance with widely agreed upon specifications. This helps vendors and telcos rest more easily and speeds deployments.

Connecting With the Customer

Lost almost completely in discussions about construction of networks and deployment of services is the customer. While the communications industry continues to jawbone about the importance of the customer, the fact is that over the last few years, operators have worked hard to move away from direct, hands-on customer support, either to outsourcing or implementing more self-support applications, notes Teresa Mastrangelo, principal analyst at broadbandtrends.com.

“While this has reduced costs, it has also removed the opportunity to ‘touch’ the customer,” she adds.

Yet with telcos and cablecos going head-to-head with residential bundles and both large and small service providers competing for SMBs, connecting with the customer has never been more important.

Proper training of technical and call center support personnel as well as spending more time educating customers at install time can go a long way toward elevating the customer experience. “From a technical point of view, operators will need to make sure that both their customer service representatives and field technicians are properly trained on the technology before opening up new markets,” says Mastrangelo. “With rampant competition for video service, it will be essential that they get it right the first time. Every telco should survey its own employees about their own video service and determine what are the most frustrating experiences related to customer service and installation — and make a point not to repeat them. That is how they will win and keep customers.”

Large providers may need to take the added step of finding ways to appear more “local” in an effort to reconnect with customers. That could include coordination between service groups (voice, data and video), integration of call centers so that it is not painful to reach the proper person for assistance, and more local support in terms of customer service. “There is nothing more frustrating than having a problem in Virginia and talking to someone in California who doesn’t have a clue about anything in my home/neighborhood,” laments Mastrangelo.

Exorcising the Lack of Back-Office Flexibility

Service providers long have been struggling mightily to launch and enhance news services for businesses and consumers using back-office environments that are about as flexible as jury duty and as friendly as a bill collector.

The scenario for too many telcos is a series of siloed, service-specific billing and OSSs, typically with limited horizontal integration that has been done internally. This scary picture makes achieving forward progress akin to running in waste-deep water. Add in business-critical bundling efforts for triple- and quad-play offerings, and the picture quickly turns into a horror flick.

The main options, which are both far less than appealing, include continuing expensive and time-consuming integration of vertical systems or starting from ground zero and eventually jettisoning legacy systems once the new ones come online.

AT&T Inc. chose the ground-zero approach for the high-stakes deployment of its U-verse services, according to Jeff Weber, the telco’s vice president for products and strategy.

“We built an entirely new suite of systems, including ordering, billing and provisioning, as part of a start-from-scratch effort,” says Weber. “It started with the announcement of U-verse and continues today.”

Weber notes that as of November, the new inventory management system still talked to AT&T legacy systems, but didn’t indicate how long that connection would be maintained.

So what technology trend can help all size service providers build back-office brawn? According to The TeleManagement Forum (TMF), the answer is its Next-Generation Operating Systems (NGOSS). Through this NGOSS effort, the TMF is working with several telcos, such as France Telecom, through its Catalyst program to find standard means to solve today’s problems ASAP.

While standards efforts like NGOSS take time, the TMF is working hard to make back-office challenges far less of a front-office headache.

Mastering Middleware

Though it’s tough to properly define and describe, it’s crystal clear that the IPTV deployments of all tiers of providers are heavily dependent upon middleware.

In the simplest of terms, middleware is the glue that holds things together, which is especially critical given the multivendor, multicomponent, multidimensional nature of the IPTV ecosystem.

“Middleware is critical to the successful deployment of IPTV, because it functions not only as the bridge between the headend and transport infrastructure, but also because it serves as the subscriber’s interface to the service,” explains Jeff Heynen, directing analyst of broadband and IPTV for Infonetics Research. “Because so much is demanded from the middleware, not including the potential to add new services and applications in the future, it shouldn’t be surprising that it is really the critical piece to IPTV deployments, next to content, of course.”

And if telco TV deployments, such as the massive efforts by AT&T and Verizon Communications Inc., go as planned, so goes the IPTV market.

Infonetics forecasts IPTV service revenue and service provider capital expenditures to increase dramatically, with sales of IPTV equipment skyrocketing from $371 million to $6.8 billion between 2005 and 2009. If challenges are met successfully, the firm says the number of IPTV subscribers worldwide will double every year from 2005 to 2009, when it will reach 68.9 million.

The progress of middleware providers, including Microsoft Corp., Minerva Networks Inc. and Myrio, will go a long way toward determining just how fast telco deployments will happen and how quickly their offerings will evolve beyond providing a picture, user interfaces and programming guides.

Optimizing Optical Networks

The optical network has been around for years and is expected to be around for several more. But it’s getting a remodel. And it’s going to take more than just a coat of paint to cover the problem.

Ridding the optical infrastructure of its largely static nature to make it a more flexible foundation will require continued technical advancements in several infrastructure areas. With the broad appeal and broader deployment of Ethernet services, it’s time to make the underlying transport work with IP the way Ethernet does. Achieving that goal in 2007 means going beyond the network edge to the metro and long-haul cores, analysts agree.

“Today’s optical infrastructures, especially those here in the U.S., were architected for PSTN-based voice and private line services. They’re pretty much point-to-point and highly centralized,” explains Deb Mielke, principal analyst with Treillage Network Strategies Inc. “IP-based applications, in contrast, are highly distributed by nature (especially emerging IP-based video systems like IPTV and products like Cisco’s new TelePresence offerings). And, as we know, enterprise networks in both the data center and at distribution points have found Ethernet to be the best transmission fabric to move IP around.”

That’s why, Mielke concludes, optical networks need to change — they need to be highly distributed, implement Ethernet or Ethernet-like capabilities like ROADM and 10gbps Ethernet. “These steps are needed to rid the current optical infrastructure of its ‘static’ nature and move it into a more flexible and dynamic future.

Proliferating Peering

VoIP peering became a hot topic in 2006, with a variety of companies launching services to enable IP telephony providers to connect with multiple carriers with ease. Get ready to hear more about VoIP peering this year. And, just so you’re not behind your in-the-know peers, understand that the next hot area in this realm is expected to focus on video.

Stealth Communications Inc. CEO Shrihari Pandit, founder of the Voice Peering Fabric (VPF), says video peering is now on the horizon. In fact, Pandit says video peering already is offered within the VPF, but that in 2007 “we hope we’ll play a larger role within that growing industry.”

Video peering is the same basic idea as VoIP peering. It’s all about connecting service providers. But in the case of video, those peering connections will be between the content or application providers and network operators, says Pandit, adding that video peering applies to video conferencing as well as stored video. The combination of the migration of content to the IP domain and the expected trend toward video peering will allow for easier distribution of content over the Internet and/or IPTV networks, he says. “With IP, you can move away from dedicated connections and also move away from satellite-based communications,” he adds, referring to the satellite-based headends cable companies use today to get their video feeds.

Noting niche content is expected to be one of the key benefits of IPTV over broadcast-model cable systems, Pandit says video peering will allow for more specialized content and for custom advertising. While ad insertion can be used to add content on a satellite-based system, Pandit says that’s “definitely more complex” than it would be to customize content in an IP-based, video peering scenario. He adds that digital ad insertion must be done locally, so it’s more complex, whereas video peering insertion can happen at any point on the network.

“YouTube is a public Internet phenomenon,” says Hunter Newby, chief strategy officer at interconnection company telx, who spoke to xchange in November prior to the Verizon/YouTube relationship being formally announced. “Verizon is looking to cut a deal with YouTube. I bet my life Verizon will get YouTube direct and not use the Internet. So it will be a direct-connect, fiber-based connect, with no Internet hops in between. That’s known as private peering, or direct connect. [But] over time, peering will evolve with video just as it has with VoIP.”

Wearing in WiMAX

Few wireless technologies have generated more interest from more industry segments — service providers, vendors and customers — than WiMAX, culminating in the WiMAX World Forum this past fall.

While mobile video is much more of a here-and-now than WiMAX, this standards-based wireless technology offers a wide swath of service providers the ability to reach not just consumers but also business users with broadband access that can deliver a wide variety of services.

Although numerous technologies have been over-hyped and over-promoted as the really next big thing, huge endorsements from Tier 1 service providers add credibility to emerging technologies. And WiMAX recently won such an endorsement when Sprint Nextel Corp. announced plans to build a nationwide WiMAX network using gear from Intel Corp., Motorola Inc. and Samsung Corp. But, it should be added, the value of WiMAX extends far beyond just the telcos and their traditional suppliers and applications.

“The killer application here is really a killer network with killer devices,” says Diana Hage, director for wireless and RFID services at IBM. That comment carries extra weight as it comes from a traditional application provider.

Hage explains that IBM already has been asked to develop applications that harness WiMAX to enable mobile workforces, handle wireless payments, integrate RFID with supply chain systems and enable the hosting of instant messaging for enterprises.