PTC11: Enterprise Services

Program link, with Grahame Lynch moderating, Drew Kelton and Diarmid Massey.

Grahame: enterprise communications, state of global markets?

Diarmid: 2010 has been a challenge, strong push to take cost out of network. We’re seeing established western companies taking cost out while Asian markets are trying to expand, find new markets.

Drew: Market in India: western-developed markets looking for cost efficiencies. We saw uplift in volume but price pressure. Consolidation is an opportunity, Indian global companies had opportunities. Bullish on enterprise space, need to be realistic about how to move forward with differentiated services. Was a balanced year, slightly better.

Grahame: hot services?

Diarmid: from cable worldwide, our business grows thru our partners, other telecom service partners. Growth of tablets, P2P, social networking is driving massive expansion on global IP network. Need more resiliency. Push for cloud services, means different things, demand also taking off as people understand more. Individuals, then multinationals looking for host-based services.

Drew: couple of perspectives. Market in India, market into/out of India. Market in India: 2500 enterprise clients market is growing in domestic business. Age of maturity, pure infrastructure issues, India will take a couple of leaps out, NPLS has some traction, banks; nothing exciting over core. More exciting: basic carrier services into cloud. International into-out of India, enterprise indirectly: opportunities to leverage distribution in India market. Geographically disbursed populus. Inbound distribution.

Grahame: cloud: supply side is big about cloud. Industry and user base disconnect?

Diarmid: yes. Big terminal/modem, where was intelligence. As individual users, we’ve come to know that Internet has functionality. Put it in a data center where I can… benefits not clearly explained to CIOs, also data privacy, availability or failure issues to client base, unknown value proposition.

Drew: Cloud isn’t centralized, availability of much more processing, storage at lower cost to wider audience, scale has changed. Use of capability (VMware, etc), little bit of maturity issue, DIY issue in India, infrastructure as an enabler? Types of apps in hosted environment is likely to happen. Where we start to see non-mission critical apps is where early adopters have opportunities, use of gmail in enterprise environment.

Grahame: confidence in infrastructure, quality of connections, particularly in other countries?

Drew: Indian way isn’t always appropriate response on international level. App-centric networking: can’t stop development, but minimize pain by not committing to certain terms that are inconsistent with Indian way. What’s going to happen with emerging markets, utilization, in wireless and 3G; we haven’t seen yet supply-demand. Local access is biggest issue.

Diarmid: consumers are demanding of our devices, expect wireless and Internet to be there. When it fails, causes major disruptions. Need resiliency. For most countries, is sub-sea, prone to disruption. Global infrastructure. Seeing evolution of mobile device as what most people have. Infrastructure is not capable of dealing with flat rate data plans. As networks evolve, increasing resiliency.

Grahame: rise of mobility is a challenge for multinational enterprise carriers?

Diarmid: they hate mobile devices. They get lost with sensitive data, networking challenges. From central control perspective, IT managers have a challenge. We’re not there yet in terms of how to deal, can’t stop people from using them.

Drew: Challenge by CIO to diverse customer base needs to be mindful of continuation of this trend. By 2015, 80% of content will be accessible by mobile. Disparity between 5-9s of fixed line but don’t remember the phone number, vs mobile that drops out. Implementation is mind blowing. Financial objective and outcomes: drive assets as hard/long as you can, oversubscribe (AT&T), there’s nothing free. As an industry, need to be a bit more considered.

Grahame: how important to own your own infrastructure?

Diarmid: decision long ago that it’s not going to happen. Gives opportunity to ¬†use partner services and integrate, interconnect. Have to play well with others. Managing your path with multiple providers is key to success.

Drew: economics and reality of trying to do it isn’t viable. Mobility: 10 years ago wasn’t an option. Utilization of partner-based assets will happen more and more. Don’t need to own it to operate it well. Going forward, huge ownership isn’t necessary, economics don’t work. Struggle to raise capital too.

Grahame: most enthusiastic about?

Diarmid: about solving some ideas we’ve had in the past, and how to structure about partnering. Few companies are good at it. Airlines work well together. In our industry, we need to learn that better: same look-n-feel, roaming charges, user experiences. Try to make the world smaller, create an ecosystem that works well.

Drew: I’m excited about moving to India, growth opportunity of country. B2B: every enterprise has end-user customers, B2B/E2C opportunities and transactions. Content to media exchange to cinemas to customers. Growth areas in B2B, 150M subscribers may want access to some content.

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PTC11: Wholesale – A Growth Sector?

Program link, Tim Stronge talks with Barry Tishgart.

Tim: Comcast is largest cable, one of largest retail VoIP & fixed lines in US. Wholesale?

Barry: impressed with diversity of carriers here. Comcast is involved in programming (golf channel, NBC/Universal) and cable (biggest segment, >$6B in revenue). We’ve always looked for new opportunities, this is a challenging market. Scale today enables us to do two things: IP transit and voice services termination and origination. Scale: can we put the right business model behind it, offering a set of services in that area.

Tim: Has Comcast always provided wholesale?

Barry: I was instrumental in getting this off the ground (last 3 years), most of our business has been in consumer market. Most targetted at small/medium business, now serving products into wholesale/carrier market. Not in enterprise space (yet).

Tim: you provide IP transit services, prices falling, what’s going on there?

Barry: as a new entrant, we don’t have a large revenue base here. Yes, there’s a lot of pricing challenges esp in US, it is competitive market, lots of capacity, carrier neutral facilities around the world lead to pricing compression. We tend to keep operating expenses pretty low, our customer base includes ISPs and all kinds of 10G E services. We’re US centric at this point. Remarkable similarity in other markets, rolling out metro E services, pretty uniform in US. Some backhaul, interconnect situations may lead to higher cost structures. TeleGeography does research in this area.

Tim: Voice termination: you’re getting out, not in? Prices low for this?

Barry: Pricing models that includes .000′s, it’s around scale and growth, built around customer needs. As a new entrant, our model involves detailed pricing scheme. Only able to do this because of our SIP network, sophisticated billing engine. There’s a lot of cool things going on with online video, taking certain shows that you’d pay for in one medium and moving to different devices, new boxes and gadgets. We’ve developed our own services, packaged with our own offerings.

Question: US is offering retail services for VoIP, cheap international calling.

Barry: we don’t package international calling, we offer local for one flat rate price. International is billed above that. We see those services in the market, based on averages.

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PTC11: International Wholesale Outlook

Program link, with Angela Partington moderating, Joseph Chan, Mark Halbfinger, Will Hughs, and Neil Montefiore.

Introductions all around. Industry is growing, prices dropping. Voice is commoditizing globally, data centers growing around the world. Voice is still core of telecom, data bandwidth 1:1 is email, bulk is Internet data. Video is broadcast, end game for voice is in 1:1 interaction (ISDN, but it wasn’t too successful). Look at IP growth, voice is falling into application bin, predictability is better than other apps, traffic isn’t what I have my eye on for growth planning.

Predictability of bandwidth use: huge impact, bandwidth used by old devices was low, now they’re 30x or 1300x the range. Huge jumps are related to local and national infrastructure. Guam Telecom (122K population) using 1 STEM1 every 60 days now. 4 years ago STEM1/STEM4, now IP forecasted to increase by factor of 4 in 4 years. Planning next needs are challenging, not meeting that need is more challenging. Mobile in Singapore came earlier, signaling was same challenge. In Dec. 2009, # phone cells doubled and more phones (most iPhones), not affecting us as much, we’re less developed. In Hong Kong, we have some serious utilization (highest air line cell services), also bandwidth (sports!). Radio (spectrum limitations) and wifi used to seemlessly between 3G and wifi, placed in phone booths. Massive broadband is broadcast. End-use applications using more data centers.

More people moving to ethernet, requirements will continue to grow. Lots of hype, players; gain access to customers who don’t have access through regular carriers, also a new marketplace. Will be interesting to see how mapping, online markets work, facilitation of how it’s going to happen and be dynamic. Multiple AS, ethernet (is simple), (Marc talking as fast as Joe, hard to follow here), working with 3 of the ethernet exchanges. Lots of enterprise tracking is still migrating, still carrying a lot of frame and telex. Limited bandwidth of major carriers in China, min 10GB.

Goals: we’re still carrying legacy, not necessarily promoting one over another, TDM traffic QoS (VoIP challenges this). Look at diff markets, worlds, apps. First thing to do is measure where each place is in development timeline. Some markets skip certain tech (Africa jumped to mobile). Lots of issues on end-user device. Many are working to set up standards in China. Detect spam and problems. More happening in developing countries.

How to make a profit in all this? It’s not just wholesale, it’s all traffic. Need to change the way we charge things. Look at QoS, what customers want, differentiate. Old models not going to last. Shift from broadcast to unicast, on-demand culture. All devices (TV, digital picture frame, ipod, multi-tasking environment at home) Need to rethink how we’re going to monetize that. Mobile advertising, telcos can monetize delivery of stuff. Organizational structure, deep packet inspection. Variable revenue against variable costs. We’ve depleted voice from equation, need to assure we can create a fixed cost structure for variable revenue. Mostly a last mile issue.

CDN? Belongs on carrier network, challenge is shift in use and source of content.

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