Data Voice Solutions

On Tuesday, Jan. 23, telecom industry veteran Marc J. Zionts, CEO of Cantata Technology (News - Alert) delivered an incisive and insightful keynote address at the INTERNET TELEPHONY Conference & EXPO East 2007, being held from January 23-26, 2007 at the Broward County Convention Center in Ft. Lauderdale, Fla. The theme of Zionts’ address was “Creating Next Generation Services from Now Generation Networks: Practical Steps for Service Provider and Enterprise Network Evolution.”

“Today I want to talk to you about where next-generation networks are going, but from the perspective of next-generation now,” Zionts said.

“The reality is that we can look toward the future where networks are going, but we’re all in business today and our customers are in business today,” Zionts said. “How do they evolve, how do they go forward, and what are some of the drivers for that? What are some of the technologies that will enable that to happen?”

“When we think of some trends in this industry and where things are going, the first thing that comes to mind is that we’re seeing some real changes going on,” he said. “Most of us have been going to these conferences for a very long time. But when you see some real numbers pop up that catch your attention, you know that the trends are starting to move in the direction we need to see for a major change in the market and in the industry. Specifically, if you look at the migration to IP Communications, there was a recent Yankee Group (News - Alert) study in which they said that about 75% of enterprises have migrated to IP or are in some way, shape or form moving to IP. So, the vast majority of businesses are catching on. That’s a very important trend.”

Zionts continued by saying: “Next, we’re starting to see next-generation services driven by Generation Y. Is anybody in the room a member of Generation Y?”

No one raised their hands.

“None of us here in this auditorium are members of Generation Y - and yet, these young people are having a huge impact on telecom and the world,” he said. “We can’t necessarily relate well to the younger generation that’s comfortable with the newest communications developments. Before Generation Y there was Generation X, and none of us are them either. And yet we’re the ones working with and developing the technologies. So, we really have to think carefully about where things are going.”

“You’re starting to see multimedia services everywhere,” Zionts said. “If you have kids, look at how they’re using the computer and the cell phone. The notion of where they’re headed is a very important one. I’m convinced that none of my children will ever own a ‘tethered’, corded phone. It doesn’t make sense to them; they just don’t understand why people talk on phones that are attached to walls. In fact, they ask me if TV remote controls used to be attached to TVs! They just don’t get it. And when today’s kids are on the computer, ‘doing homework’ they’re simultaneously doing instant messaging with a dozen people – and, by the way, part of that IMing really does have to do with homework, making it a collaborate process. That’s how they work through it. They’ll be wanting to do the same things when they grow up and get to work, when they’re on their cell phone and are mobile. So, applications are changing.”

“I recently talked with the CIO of one of the largest banks in the U.S.,” Zionts said, “which has 8,000 people in its IT department. He said to me, ‘The greatest challenges we face are with our young recruits. They have more power and more bandwidth at home than they do at work. It wasn’t that way five years ago. People didn’t have broadband at home. Look, I have 50 megabits per second coming into this building, but the problem is that 3,000 people share it.’”

“Young people get more bandwidth at home, and their computers are rich multimedia devices that can do anything but are bogged down running applications at work,” Zionts said. “My bank CIO friend said, ‘To provide the tools that these people need is a tremendous challenge. We’ve got to figure out what they need, how they work, and none of the people in the IT department necessarily relates to that.’ So I think this is a huge trend if you think about it.”

“You’re starting to see services really increasing towards generating revenue,” he said. “What I think is interesting are next-gen services such as ringbacks and ringtones. Music ringbacks are just coming to the U.S. A music ringback service is where you dial somebody, instead of hearing the ringtone, you’re hearing what they want you to hear – a custom ringtone. It first appeared on wireless, and now it’s coming to wireline and even VoIP.”

“Interestingly enough, of all of the smart people in this room who are in the industry, none predicted one of the great ‘killer apps’ of mobility, SMS, or the Short Messaging Service,” he said. “It was an accidental killer app. No one really predicted the immense popularity of ringtones either. Some of these services are driving billions of dollars in revenue, and we industry experts didn’t necessarily predict any of them. I’d like for all of us to keep that in mind, because when I start thinking about what’s starting to appear, such as video messaging, and multiparties and having chats on my mobile phone, I realize that perhaps a person my age is not the best judge of what’s happening, and that I must seek information elsewhere as to what people are going to use.”

“Last week I was in Taiwan,” Zionts said, “and one of our customers there sells a service which plays music in the background of the call, so when you call somebody you can pretend that you’re somewhere else. When you call home you can say, ‘I’m in the airport,’ and you can play your ‘airport track’ in the background with airport announcements going on! There’s another track where it sounds as if you’re in a meeting room and there are a lot of people talking. I sort of laughed and asked who would possibly buy such a service, and yet it’s a service that Taiwan Mobile offers. This isn’t intuitive to me at all. But that’s what is going on in the world today. The key thing about all this is that services are starting to drive revenue. That’s good because, ironically, a lot of IP technology reduces core revenue for carriers. They have to offset that by selling next-gen services.”

VoIP Becomes an ‘IT Thing’

“VoIP is becoming an ‘IT thing,”’ Zionts said. “We often in this industry talk about voice and data coming together and the whole notion of convergence. This is probably one of those cases where there’s not convergence per se - it’s more of a ‘collision,’ because the skills are different and the parties involved are different. We’re finding that the carriers are not talking to traditional network people. CIOs in the enterprise are talking about providing a ‘customer service.’ That’s a radical change in how you do business. Some very large carriers have seen some very significant changes, and I don’t consider it a nice convergence – as I said, it’s more of a head-on collision.”

IMS on the Horizon

“We’re all talking these days about IMS, the IP Multimedia Subsystem (News - Alert), the single service architecture for wireline and wireless,” Zionts said. “We’re all interested in it, and I’m confident that IMS will be widely available between 2008 and 2016. People are starting to migrate in that direction. I can’t predict when exactly we’re going to get there, and I don’t think anybody else can, either.”

“What I do know is that businesses are still focused on some key fundamentals,” he said. “Very specifically, a service provider must increase revenue per user. Many services that a carrier can introduce these days may just be cost-reducing. They can certainly offset the costs of they can reduce churn. But then regarding the development and deployment of new services, how does a provider differentiate its offering? If you introduce a service, and six months later everybody else has introduced it too, then what are you going to do next? Can you get something out there very quickly? This becomes very important, and it’s hard to do alone; you need partners to succeed.”

“Enterprises are interested in performance and productivity,” Zionts said. “Reducing cost and complexity is very important. To me the most interesting thing about the enterprise world is that the last time there was a catalyst for major change in the enterprise was Y2K. Much of the core infrastructure is nine and ten years old. Interestingly, businesses experienced a tremendous increase in productivity after Y2K because they installed new systems to deal with Y2K, and the unexpected benefit was more productivity. Businesses today are sitting on a lot of cash and I’m hoping that VoIP also becomes a catalyst not just for them to upgrade their communications infrastructure, but to get them to start thinking about their whole IT infrastructure.”

“But from my perspective, there hasn’t been an enterprise ‘boom’ since Y2K,” Zionts mused. “1997, ‘98 and ‘99 were the glory years, when everybody was spending money thanks to that great motivator, fear. But since then there hasn’t been a great catalyst. So, the systems are getting old, many people have milked them for as long as they can, and now it’s time to start spending again. We’re guilty of it ourselves – we recently did a change to our Oracle (News - Alert) system. One of our people called it our ‘Oracle 911 Upgrade’. It was the latest software, but we had skipped a whole bunch of upgrades in between. What a nightmare! Why did we skip them? Because there wasn’t a catalyst or a driver to move us, at least not until we started doing some communications things that required us to finally catch up.”

“So, there are many challenges for both service providers and enterprises,” he said. “I talk about both of these communities because we’re increasingly finding commonality between service providers and enterprises, all because of IP. We’re starting to call them the ‘Carrier-prise.’ A lot of services can be offered by a carrier that were found in the enterprise in the past, and vice versa. So, there’s a lot of change going on here.”

Hybrid Networks Forever!

“People want to go where the network is going,” Zionts said. “What I don’t believe happens very often is that people migrate from TDM [Time-Division Multiplexing] of the old circuit-switched world to next-gen IP in one ‘flash cut.’ It just doesn’t happen. Even if you try to move a business and you throw away all of your old stuff, you soon realize that the build-out of the new stuff is going to cost more than you thought it would. And then the project gets delayed and the budgets come under pressure, and then you start trying to save money by removing a few pieces from your plan, and by the time you get down to it, you’ve removed most of what you wanted. Only in perhaps a greenfield office can one simply jump completely into a next-gen environment, but even then you need the capability to talk to the older stuff in other organizations. Similarly, the network as a whole exists right in the middle of the great transition. And that ‘middle’ will exist for the rest of my career.”

--------

Richard Grigonis is an internationally-known technology editor and writer. Prior to joining TMC (News - Alert), he was the Editor-in-Chief of VON Magazine from its founding in 2003 to August 2006. He also served as the Chief Technical Editor of CMP Media’s Computer Telephony magazine (later called Communications Convergence) from its first year of operation in 1994 until 2003. In addition, he has written five books on computers and telecom (including the Computer Telephony Encyclopedia and Dictionary of IP Communications). To see more of his articles, please visit his columnist page.