Top 10 Disruptive Technologies for 2006 By Dr. Jerry Lucas January, 2006 It's the new year -- and time for Billing World & OSS Today's top 10 disruptive and or high profile technologies for 2006 and their impact on OSS/BSS. 1. IPTV
During the last two years we have seen small ILECs deploy IPTV in roughly 100 locations in the United States. The largest installation is probably the SureWest operation in the Sacramento, Calif., area, with 30,000 subscribers. Thus far, most IPTV operations have competed against relatively weak cable systems (limited channels, poor reliability and the like). Now AT&T (old ILEC SBC) in 2006 is preparing to take on the big cable operators in major U.S. markets with its IPTV architecture, using fiber to the node (FTTN) technology, delivering at least 24 Mbps using ADSL 2+ and/or VDSL. AT&T has or will have done most of the easy work, deploying the fiber part of the FTTN architecture. It's expensive -- costing AT&T $ 6 billion to $ 7 billion -- but not technically challenging. The hard parts that remain are many: deploying DSL with QoS and compression (MPEG 4) to match a cable or DBS HDTV offering; getting the Microsoft thick client set-top up and running; and deploying OSS/BSS (or what video veterans call middleware) in order to deliver personalized video, advertising and other experiences that make IPTV different from cable or DBS. Bottom line, will IPTV disrupt the cable or DBS business or contribute significantly to the profits of a tier 1 telco like AT&T in 2006? No. The new AT&T will realize it has more to gain in 2006 by focusing on traditional residential and business telecom markets than massively rolling out IPTV that's not ready for prime time. Today IPTV cannot outperform cable or DBS. 2. FTTP OK, if IPTV isn't ready and remains technically risky, what about Verizon's' fiber to the premises (FTTP) approach of matching the cable and DBS offering with almost the same broadcast video architecture? On the positive side, Verizon got its FTTP network up and running in Keller, Texas, a small town 30 miles north of Fort Worth. It's similar to the offering of the cable company, Charter Communications, but costs less (180 channels at $ 44 a month plus taxes). Verizon offers the triple play (voice, Internet and TV), whereas Charter only offers TV and Internet, not voice. On the negative side, investment analysts and even cable executives don't understand how Verizon can succeed with its telco TV strategy. Note that Verizon's stock fell more than 20 percent in 2005. Here's the business case problem: Verizon will likely have to spend $ 4,000 per subscriber for network costs alone, pay more for content and force price slashing by the cable operators. First, consider content or programming. Telcos don't have leverage with content owners. Programming is available but at a cost reported to be 25 percent higher than what cable pays. Worse yet, telcos have to take and pay for all those extra channels that have little viewer attention, whereas cable does not. For example, Discovery has 10 different versions or channels. Cable doesn't take all of the options but telcos must, to get the prime channel. Regarding leverage with the broadcast TV networks (ABC, NBC and CBS), telcos have none. The networks aren't going to drop Comcast with its 20 million-plus viewers to go solely with Verizon and 30,000 viewers. One other thing: Comcast and the No. 2 cable operator, Time Warner, have lots of home-owned content, but telcos have none. Also, consider competition. As soon as Verizon got a franchise for Fairfax County, Va. (a suburb of Washington, D.C.), Cox, the county cable company, filed with the FCC for a cable rate regulation waiver. The FCC rarely refuses such waiver requests involving a competitive environment. Cox will not only match what Verizon offers (triple play and channels) but it can also slash prices in neighborhoods where Verizon is turning up service. So is FTTN a disruptive technology in 2006? No. Verizon will come to the same conclusion AT&T did: there is more to lose if you turn your back on conventional telecom markets. And the only way to beat the cable companies is with IPTV -- technology that's a work in progress. Both Verizon and AT&T will go slow with telco TV in 2006, and will probably blame the slowdown on the local franchising requirement. 3. WiMax About every 10 years a new idea for fixed broadband wireless access gets hyped up, the FCC is petitioned to assign or reassign spectrum, investment dollars flow to new carrier start-ups, and then the idea goes bust. In the 1970s it was Multichannel Multipoint Distribution Systems (MMDS) for wireless cable TV. In the 1980s it was XTEN at 10 GHz for wireless data access and wireless local loop at 2 GHz. In the 1990s it was Local Multipoint Distribution Systems (LMDS) at 28 GHz. Pioneering fixed wireless carriers come and go, but the terrestrial wireless access vision lives on. This decade we have WiMax, made possible by applying the latest in microwave technology and wireless LAN access. If you are not a telco or a cable company with a broadband offering, or a mobile wireless provider offering 3G Internet access, WiMax is for you -- or so it seems. To determine whether WiMax is a disruptive access technology that would create a new business opportunity, you have got to face two critical issues. First, no one has ever made money as a service provider in the terrestrial fixed wireless access business; second is the lack of spectrum. WiMax radio infrastructure in theory can operate in licensed or unlicensed spectrum ranging from 2 to 11 GHz. In reality, you have to review country by country what spectrum has been allocated by frequency band and bandwidth. Also the laws of physics point to spectrum above 3 GHz as usable for economic mobile service. The laws of telecom business say also that carriers will bid billions of dollars at auction time for spectrum suitable for cellular service. So, here's the spectrum available for WiMax. Outside the United States, spectrum for fixed WiMax has been allocated in the 3.5 GHz region. In the United States, there are scraps of licensed spectrum in the 5 GHz region, as well as the unlicensed 2.4 GHz band that is heavily populated with Wi-Fi devices. The only big block of usable WiMax spectrum in urban areas is controlled by Sprint. Sprint over the years has accumulated 2.5 GHz licenses covering 80 percent of big cities (including New York City and Los Angeles) from the WorldCom bankruptcy, Nextel merger and elsewhere. Sprint had agreed to roll out wireless broadband in order to get FCC approval of its Nextel deal. So, unless you're Sprint, you either have to wait for the FCC to allocate new spectrum for WiMax, which is highly unlikely, or look to rural areas where snippets of spectrum at 5 GHz are available, or look at developing countries where lots of spectrum is available and broadband access is lacking. So is WiMax a disruptive technology for 2006? Not in the United States. Urban and suburban areas have copper or cable broadband that's cheap relative to WiMax, and rural areas have little broadband, so WiMax technology disrupts no existing service. As for Sprint having to meet the FCC deadline of coverage for 15 million subscribers by 2009, the FCC has never enforced such deadlines. WiMax deployment, come the end of 2006, will be almost the same as today except in very rural areas of the United States and in other countries. 4. IMS IP Multimedia Subsystem was 2005's hottest buzzword in the network equipment community, and now in 2006 it's spreading to the OSS/BSS community. But first, IMS means different things to different industry players. The 30,000-foot view of IMS is that it's a next-generation architecture heavily utilizing the next- generation IP signaling protocol, Session Initiation Protocol (SIP). IMS helps to make multiple networks (particularly wireless and wireline) look like one, and it can serve as the next-generation service delivery platform for bundled services. An analogy for telecom veterans: SS7 is to the Advance Intelligent Network (AIN) of the 1990s as SIP is to IMS today. In order to understand IMS as a disruptive technology (or more accurately, a disruptive architecture), it's useful to review its origins. IMS was initiated by the Third Generation Partnership Project (3GPP), consisting mostly of European wireless providers and their vendors. Except for mobile Internet access, GSM, 3G and W-CDMA are not IP-based. But in order to do simultaneous voice and data (multimedia), you need an IP signaling protocol (SIP). Furthermore, wireline-based IP switches (softswitches) didn't interface with mobile wireless subsystems (Home and Visitor Location Registers, etc.). So the solution to all these problem areas is IP Multimedia Subsystems. Now enter the equipment vendors, who address both wireline and wireless carriers and who know that wireline players want to offer wireless service but often don't have a wireless network infrastructure under their control. IMS solves the problem of a wireline player wanting to seamlessly offer a service bundle with someone else's wireless infrastructure. Lastly, enter wireline service providers looking for a service delivery platform for bundled IP services, including VoIP, IPTV, Internet access and wireless. Also, cable companies now realize that their 2003-2004 PacketCable architecture for multimedia service didn't include SIP, so they jumped on the IMS bandwagon as well. As covered by Ed Finegold, Billing World & OSS Today's Editor-In-Chief, in the October issue, IMS is going to take a while to be fully deployed by all. Having made this point, where will you see the first IMS success story as a disruptive technology? IPTV ILECs are interested, but my take on IPTV is that it is not really ready to take on the big, strong cable franchises. Currently, cable companies are focused on rolling out voice, and you don't need IMS to do that. Mobile wireless infrastructure is not SIP-enabled, so IMS will be on hold except for some trials, like push-to-talk services. The real soft spot is the enterprise space, where fast service delivery, QoS, IP Centrex, presence, integrated wireless/wireline service and more can come together in a marketing plan with ROI for an IMS investment. 5. Fixed-Mobile Convergence A killer app that's got all service providers' attention is fixed-mobile convergence (FMC). A particularly attractive spin is an integrated Wi-Fi/mobile wireless phone, using mobile wireless on cellular infrastructure when you are out and about, and Wi-Fi for free when you are in your home or office. Here's the basic problem with this stellar vision: what's in it for mobile wireless providers? They get 30 percent of their revenue from users who are in reach of an office phone or are at home, often without wireline service to begin with. Besides, are mobile wireless providers going to end up subsidizing the dual-mode Wi-Fi cellular phone, only to see revenue shrink? Yes in some environments, and no otherwise. So where is FMC going to become a disruptive technology? College campuses! Cellular phones have all but killed the campus-run phone business. Students arrive on campus with a cell phone and use it as their primary phone. So here is how college phone operators will get a new life with FMC in 2006: students will get almost free Wi-Fi phone service on campuses, and when you stray outside the Wi-Fi footprint or go off campus, the phone shifts to cellular service. Why would a cellular operator support this business model? The answer: to secure the right to put cell towers on campus (or use a university's rooftop space) for its radio infrastructure. This is a win-win situation for the college or university, and for the lucky cellular operator that gets the real estate to operate on campus. The real battle will be this: whose customer is the college student? Does the student get a telephone number out of the college PBX, or a cellular number where the call first goes through the cellular switch? 6. Mobile TV It looks like three of the big four wireless carriers (Verizon Wireless, Sprint, and Cingular) will have built their high-speed wireless network infrastructure in 2006, creating the scene for critical-mass mobile TV. Verizon says its EVDO network is available now in 84 markets with populations of more than 100,000, Sprint says that its EVDO network will reach half the United States by early 2006, and Cingular is starting to roll out HSDPA. In addition, by the end of 2006 Qualcomm will be rolling out Media Flow over its 700 MHz TV channel along with Verizon, and Crown Castle (the cellular tower owner) is likely teaming with Cingular. This sets the stage for mobile TV with promised programming from ESPN, Disney, NFL and literally hundreds of others. The real issue is not whether mobile TV will be disruptive, but which business model will win. The business models could take the shape of a cable model (different content packages with providers getting a percentage based on subscribers), an a la carte model (pick your own mobile TV channels), or an advertisement-based model (ESPN assembling all those sports fans for advertisers). Regardless of the business model, no wireless service provider has a revenue management or assurance program in place today for mobile TV revenue distribution and more. 7. VoIP No telecom technology in recent history has been more disruptive to the telecom industry than VoIP, particularly regarding regulatory issues such as CALEA, E911, USF and taxation. In 2004 it was VoIP over DSL with Vonage leading the way, and in 2005 it was free voice from Skype. This year it will be cable VoIP with Comcast. Here's what's going to shake up the regulators and legislators: Comcast will be turning up its VoIP offering en masse and phasing in its national IP backbone. Not only will Comcast be utilizing this IP backbone, but other cable companies will also be interconnected. So, what's the disruption? End-to-end VoIP over cable that doesn't touch the PSTN. Note that almost all definitions of VoIP as telecom service assume that a call originates or terminates on the PSTN for the purpose of taxation, regulatory mandates and so on. But for many calls, cable VoIP will bypass the PSTN. 8. Peer-to-Peer Video The guys at Skype just don't stop with new, disruptive network technologies. First, they had peer-to- peer music (KaZaa), then peer-to-peer voice (Skype), and now it's peer- to-peer video in support of eBay's business. Every ecommerce company will follow with peer-to-peer video to support its sales efforts, and it will be for free! 9. ENUM Electronic Number Mapping (ENUM) has been floating around for years with little traction. With the global penetration of broadband and VoIP, 2006 may set the stage for a consortium of players to create their own pseudo-public ENUM. Note that with broadband you get static IP addresses. ENUM maps these IP addresses to telephone numbers for IP network-to-PSTN interconnection. Why hasn't public ENUM taken off, when it's obviously in the public interest to have network interoperability among service providers? For starters, no one is really in charge. We are talking about global networking, and even the U.S. numbering system is part of the North American Numbering Plan (encompassing the United States, Canada and the Caribbean). Dealing with authentication, defining what's a carrier (telecom or information service), accommodating lawful intercept and the like are difficult issues within one country, let alone multiple countries. OK, why could this year be the year of ENUM or private-club ENUM? VoIP clusters (Skype, cable and so on) are reaching critical mass on the retail side, and almost all backbone (wholesale) traffic will be VoIP. This sets the stage for next-generation peering models among carriers to avoid transit fees, and enterprise-to-enterprise peering to avoid wholesale carriers altogether. Stay tuned in 2006. If ENUM gets traction, a whole new generation of OSS/BSS for provisioning, intercarrier settlement, carrier customer service, CALEA and more will be needed. 10. IPv6 The last of the top 10 disruptive technologies for 2006 is IPv6. This technology has been floating around for years, just like ENUM. In short, our current IP packet protocol, IPv4, was written in 1981, and not only is it running out of gas (address space) but it is only best-effort packet delivery, and it's not secure. IPv6 was started in 1995 by the IETF as the IP protocol of the future, with 128-bit addressing (versus 32 bits for IPv4), security, addressing of applications (not just devices), QoS features and more. So why IPv6 this year? Well first, it's not going to replace IPv4 in a flash cut, nor will it be highly visible on the Internet in 2006. But if you are in the IP space (a service provider, network equipment vendor or OSS/BSS player), you had better get to work on IPv6 now. Here are three reasons why. First, the federal government has mandated that all IP equipment and service must be IPv6-enabled by year 2008. The federal IT budget this year is $ 32 billion, and a significant portion will be allocated for IPv6 upgrades. Second, the 2008 Olympics will be hosted in China, and it will be multicasting the event over IPv6. And third, we are likely to see 2 billion wireless phones and devices on the planet by year's end, many in need of static IP addresses. IPv4 can't even begin to meet this address space need. Only IPv6 can do it. IPv6 will have a disruptive effect. Applications will be developed that rely on IPv6 for security, QoS and more. If you are a service provider and aren't IPv6-ready, your network will be as obsolete as TDM is today. These are my top 10 disruptive technologies for 2006. If you need an update on these developments, then plan to attend our seminar, Understanding Next-Generation Network Technologies for Non-Engineers. Go to www.telestrategies.com for agenda information or to register. Meantime, all of us at Billing World & OSS Today wish you a happy new year! Copyright 2006 Telestrategies, Inc. Billing World and OSS Today
