Wednesday, February 16, 2005

The VoIP Revolution: 2005

The exact number of VoIP (SIP) over broadband service providers has grown to somewhere between 300 and 400. While the exact number is not known, one only needs to perform a Google search for VoIP service for your home town to find that there are about 3 to 4 per market. At 235 major markets in the US, the estimate seems believable.

Many of these companies are using a proxy server to interconnect to Softswitch services offered by Qwest, AT&T and Level3. These suppliers control the call state and PSTN terminations for a per call fee. These fees range between 0.53 and 1.5 cents per terminated call. Most companies charge a minimum per month that comes to around $15,000 per month regardless of the usage. Most of these VoIP over broadband service firms have no way to accurately account for completed calls. This leaves them open to whatever charges the IP delivery carriers wish to charge that month. It is rather similar to the early days of the Internet. There are methods of accurately accounting for these calls. However, these methods call for SS7 A-links and expensive equipment and software. They are by no means practical for the typical VoBB provider.

The VoBB provider is attempting to grab as many customers as possible and as soon as possible. Make no mistake; it is land grab time in the broadband world. Each acquired customer should fetch between $1000 to $1500 per customer when the VoBB service company owner finally decides to cash in. It is expected that service providers will spend all of their investment in customer acquisition at the expense of IOCs and RBOCs. The customers they gain will be sold, ostensibly, to CLECs and WiMax carriers. The CLECs and wireless carriers (read Craig McCaw’s Clearwire) will be trying to gain critical mass in their respective markets. RBOCs will use their purchases to gain entry to those pesky IOCs that are beginning to poach on the RBOCs formerly politically protected empires. The IOCs stand to lose the most in this game. They are currently valued at about $3000 per customer. That valuation will be cut to a half or a third when all of this shakes out. Sell your IOC shares now before it is too late.

The VoBB providers have another advantage: no regulation at the state level. This translates into no expensive lobbying (or other forms of compensation) of the PUCs in each state. It means no state taxes on the “Internet” based service. It means no USF and Al Gore tax that go to support government pork projects and deliver little other benefit to US citizens. RUS funds will go to DSL deployments, keeping the rural and underserved connected to the rest of the world.

This year will see the surge of VoIP deployments that will revitalize the industry from a manufacturer’s standpoint. However, the rise in VoIP service means fewer and fewer operational jobs in the telecommunications industry. VoIP service does not require the level of technical support previously necessary when DMS100s and 5ESS switches were plentiful. One only needs a couple of good IP router engineers (CCIEs need not apply) and some good systems people. A typical company with 100,000 customers will only need about 4 or 5 technical support people. Customer service is going to be Web based for the most part and billing will be directly to a credit card. No need for CIOs and expensive IT staff. With this massive shift in relative expense, the RBOCs will have to reduce their cost structure before the end of 2006. That translates into massive layoffs in customer service, IT, engineering and switch support. RBOCs will be transformed into DSL service providers over the next 3 to 5 years. This will require very little staff.

It is the Wild, Wild West out there. The revolution is here. This should be interesting at the very least.

Thursday, December 30, 2004

VoIP Is Ready For Prime TIme

Naked DSL and Cable Modem Service Boon to VoIP

If you have not yet tried VoIP service for your residence or business, try it now. Many of the leading VoIP service providers offer unlimited service for $24.99 (USD) per month. The quality of service is now in the outstanding range. The new Linksys (CISCO) QoS features make a dramatic difference (once you get past the abysmal technical support offered for firmware upgrades) in the quality of the VoIP call. You will find you can have several PCs surfing the Net while maintaining excellent voice quality on at least 2 simultaneous calls.

Of course this all depends upon the quality of the IP network implemented by your broadband service provider. In most cases, the RBOCs have the best IP infrastructure (albeit sandwiched within ATM and SONET transport). DSL service providers tend to provide better service to those choosing VoIP alternative carriers. This is rather ironic given that these carriers have the most to lose in this VoIP revolution. Cable modem service providers continue to have difficulties with their networks during the peak hours of 2:30 pm to 8:30 pm. These networks are being upgraded and will soon make the leap past the bandwidth offered by the DSL carriers. Of course, this will soon be followed by RBOCs finally abandoning their ATM infrastructure in favor of pure IP networks comprised of Gigabit Ethernet rings providing 10Mbps and better service using ADSL2+ or better last mile services.

You can obtain your telephone service adapter at numerous locations including WalMart and Sam’s Club. These outlets offer specials, rebates and discounts as well. You may also sign up for service on-line from such carriers as Vonage, AT&T, VoiceWing and BroadVOX. The offerings are now in the “very strong” category. I strongly suggest you at least try the service. I will also recommend CISCO routers for business usage and the Linksys WRT54G (not the GS) for wireless home service. The WRT54G has the best new firmware features for VoIP QoS.

You cannot surpass the value for these services. Due to recent FCC rulings, you will not pay the extra Federal, State and local taxes that bloat your local telephone service fees. Vonage now offers basic 9-1-1 service that actually works. Just remember to purchase a small battery back-up unit for your router and telephone adapter. This should get you through at least 4 hours of local power outage and give you the same emergency service you now enjoy from your local carrier.
You can get one number service, call forwarding, voice mail, on-line call detail records, 800 number services and what amounts to the most customer friendly service you have ever experienced. Try the service. I will blow you away.

Wednesday, November 10, 2004

FCC Ruling Will Force Increase in Competition

This week's FCC ruling regarding VoIP will light a fire under all carriers to implement broadband transport and VoIP for all customers. While some customers in hard to reach areas will remain in what the WSJ article terms "stone age telephony", most urban and suburban areas will need to convert to VoIP over broadband ASAP. Alternative carriers, CLEC, SLEC and Vonagish pure IP plays will begin to under cut the traditional carriers during 2005. Most of the archaic ILECs will refuse to meet the challenge, mostly due to fear and uncertainty. Ther will be a resurgence in capital investment within the CLEC and alternative carrier market segment to meet the renewed challenge to "cherry pick" at the best and most lucrative of the local exchnage carrier's customers.
These local exchange carriers will resist the change until it begins to significantly effect new revenues. By the time this occurs, it will be too late for those "stone age" carriers to recoup their best customers. There is a ray of hope that the USF will fund the operations of the old style carriers. However, it is not likely that investors will flock to place their capital in the hands of those that did not plan for this outcome.
The Bush Administration got off to a poky start on telecom policy, but Federal Communications Commission Chairman Michael Powell seems to be revving things up. The latest example is an Internet vote he won yesterday that has the potential to reshape the industry from the ground up.
At issue is a new technology known as Voice Over Internet Protocol, or VOIP. Put simply, VOIP allows consumers to place telephone calls over the Internet -- and it's growing like gangbusters. One of the leading providers, Vonage, requested that the FCC declare its product an "interstate service," and Mr. Powell won the votes to do exactly that. Yesterday's ruling is the first time the FCC has exempted an Internet voice service from state regulation.
We're all for federalism, but if there ever was a candidate for national regulation under the Constitution's Commerce clause, this is it. Our telecom network spans the country and is operated by national companies, yet it is still regulated by 50 mini-dictators known as state utility commissions. Charged with protecting the "public interest," these busybodies have a license to micromanage every firm that's ever conjured up a dial tone. The resulting web of regulation has retarded innovation and growth.
State regulators still have the right to set local phone rates, and many exercise the prerogative by keeping prices artificially low. Phone companies are forced to make their business customers subsidize their residential customers, at the same time making enough money to reinvest in their services. Businesses simply pass their own higher costs along to consumers via higher-priced goods and services, while everyone gets stuck with stone-age phone service.
Phone companies can also be required to make annual or quarterly reports to 50 separate bodies on their revenues and assets in each state; can be subject to 50 different quality of service requirements, 50 different rules on how to send bills, and 50 different tariffing regulations. California, which has never seen a rule it didn't like, requires phone workers to wear a special badge.
Today's FCC vote exempts Vonage, and by extension other VOIP providers, from this mess. That's a blow to state regulators, who've been so eager to envelop VOIP that some states, such as Minnesota, refused to wait for the FCC and went ahead with their own VOIP regulations. The FCC ruling should invalidate those efforts, as well as any going forward.
More broadly, yesterday's vote also advances Mr. Powell's deregulatory agenda. The FCC chief has long argued that true competition was never going to come from giving consumers a choice between a Bell and a Bell look-alike, but from giving them a choice among different technologies -- cell phones, traditional land lines, cable telephony, VOIP.
The phony "competition" that came out of the 1996 Telecom Act -- which forced local phone companies to unbundle their networks and lease them to competitors at artificially low rates -- was plagued by fights over rates and infrastructure, and led to an investment coma. Contrast this with VOIP, where cable providers have been only too happy to work with companies like Vonage that want to offer Internet phone services over their lines, and where real competition and investment are already thriving.
The vote will also assist the spread of broadband. Americans have been looking for a reason to make the switch to high-speed cable or DSL, and the promise of $25-a-month unlimited phone service (as VOIP provides) is proving to be a killer incentive. Meanwhile, the emergence of such rivals has spurred the Bells to more quickly upgrade their own equipment for broadband so that they too can offer VOIP.
The real beauty of the FCC's decision is that it sidesteps the usual hand-to-hand combat over deregulation. Many a brave FCC chief has attempted to cut back the jungle underbrush of local regulation, only to get ambushed by powerful state interests. By declaring VOIP free of meddlesome state control from the start, and assuming victories in the inevitable state legal challenges, the FCC can now sit back and wait for the technology to grow on its own. That's already happening, with an estimated 800,000 consumers using VOIP by the end of the year, and 17 million by 2008. Companies have already proven to be early adopters; Ford, Boeing and Bank of America have all announced they'll be using VOIP networks.

Monday, October 25, 2004

Qwest Begins Direct IP Voice Service

Qwest bows VoIP termination service

Jeff Baumgartner, CED
“Qwest Communications International has launched a termination service it will offer to wholesale customers that carry VoIP traffic.
The Qwest IP Voice Termination Service is designed to help those providers terminate voice calls worldwide without taking a transition that typically involves three steps: converting IP to time division multiplex, conversion back to IP for traveling long distance, and then converting back to TDM for termination on the telephony network.
With the termination system, Qwest said its customers can hand over IP voice traffic directly to the telco, which, in turn, will transport it over its OC-102 network and terminate the calls to the public switched telephony network.
Qwest said it can terminate calls in 250 countries. “
This is groundbreaking news. For the first time, a major carrier will be forgoing standard telephone lines and their associated charges in favor of direct IP interconnection. This is simply brilliant strategy. It should also send a clear signal to investors of companies such as Vonage that they are soon fall behind in the VoIP customer land grab. Is the direct interconnection of carriers through IP transmission far behind? Broadband Parasites will no longer have an advantage over the RBOCs, ILECs and CLECs. Cable companies will be able to interconnect to last mile carriers through IP as well, dramatically increasing the quality of the voice connection. All carriers should immediately convert to VoIP systems or face massive loss of customers to the far lower cost of VoIP service.

VoN Conference 2004 and the State of the Industry

The VoN 2004 conference was held in Boston last week. The event was heavily attended in comparison with past years, which were sparse at best. This conference of voice-over-packet evangelicals has not yet achieved the status of a SUPERCOM or CTIA, but it will undoubtedly be THE conference in 2005.
There was no shortage of VoIP solutions for the enterprise and small business customer. There were even a few turnkey vendors represented as well. I consider these companies more of a VoIP To-Go vendor. They are the ones that set up all of the equipment and back office. You do the sales and marketing, billing and customer support. It will be interesting to see how this PSINet version of VoIP works out. There were many problems with the PSINet model, not the least of which was porting customers to another platform once a company’s critical mass was reached. PSINet tended to own the customer through IP addresses. I suspect the same will be true of these new VoIP service providers.
The state of the industry and the rapidity at which real phone companies are converting to VoIP is perplexing. I was fortunate enough to be able to speak with several principals with the major manufacturers of switching technology. They all said the same thing. Carriers are installing VoIP switches just enough to make them operational, but are not readying their network infrastructure for purely VoIP traffic. They are sitting on the investment, more or less. But why would RBOCs, ILECs and CLECs go to the trouble of installing these systems without deploying products? The answer is rather complex.
Vendors are currently selling most of their wares to “Greenfield” operators in Asia or Eastern Europe. These are the same areas where wireless service greatly expanded in the 1990’s. In a “Greenfield” operation, one can install a VoIP switch, network infrastructure and OSS, back-office and billing systems with relative ease. Since no service previously existed for these customers, they are not as exacting with regard to quality. In many respects, the unrefined network carrying VoIP traffic begets a call quality similar to that of a wireless phone anyway. Customers are happy with what is perceived to be land-line quality that is just as good as the wireless phone; the exact opposite of the North American paradigm. Most vendors agree that these sales have seen their apex and are on the wane. So when will North America see a VoIP revolution?
Large enterprises are a target market for most of the switch manufacturers. However, an increasing number of “Broadband Parasites” are opening for business. These companies are Vonage clones that buy a small VoIP switch on credit, hook it up in the cheapest CLEC collocation site, and begin offering service that amounts to a shared VoIP PBX. The service is attractive because it is cheap and somewhat novel at this point. There are several negatives to the long term outlook for these companies.
First, these companies are typically in violation of Federal law in that they do not offer any CALEA safeguard, no E911 capability and are spoofing the Caller-ID at layer 5 to avoid paying termination charges to the last mile carrier when the call (usually) goes off-net. CLECs are desperate for the revenue and turn a blind eye to the practice. The CLEC will offer cheap PRI service to the Broadband Parasite and treat them as if they were a private PBX. To prove my point, just try to return a call from a VoIP user by using the Caller-ID you get when receiving a call from them. You are usually connected with the main desk of the Broadband Parasite. This is outright fraud and is costing RBOCs, ILECs and some facilities based CLECs Billions of dollars per year. For some reason the US Department of Justice has failed to pursue these companies. This fraud is being practiced by most major long distance carriers as well. Actually, the little guys learned it from the big guys who have been ripping each other off for years.
The next problem with Broadband Parasites is a looming inability to gain free access to transport providers’ networks. The transport provider is any company that connects a home or business to the Internet. These are either DSL or cable modem service suppliers. For the most part, this is the group of all cable TV, phone and DSL companies. When KaZaA (the forerunner to SKYPE VoIP service) was at its most popular, bandwidth utilization on most transport providers’ networks was at a peak. Nearly every RBOC, ILEC, CLEC and cable company had extreme customer dissatisfaction due to KaZaA, edonkey, morpheus and many other peer-to-peer services taking up all of the available bandwidth. Packet shaper technology was introduced from companies such as Packeteer. Packet shapers allowed a transport provider’s customers to use the service, while making those customer’s computers undesirable as sources for “entertainment” content. Transport networks were virtually unusable without packet shapers protecting the network borders. There is a parallel with VoIP expansion.
Transport providers will upgrade their networks with Session Border Controllers. The best of this class of packet traffic shapers will permit deep packet inspection at layer 7. Transport providers will undoubtedly control the flow of traffic through their network. If that traffic does not generate revenue for the RBOC, ILEC, CLEC or cable company, it will be at the bottom of the quality heap. The transport providers will control call quality and certainly favor their own VoIP offering in the packet flow.
Most carriers are in agreement that the Broadband Parasites will grab a certain amount of the “early adopter” market share. As call quality and support become an issue due to packet shaping by the transport provider, Broadband Parasite subscriber numbers will taper off. VoIP customers will begin to favor their transport provider as the better value. At this point, the Vonages of the world will sell their customers to the highest bidder in a classic exit strategy. Due diligence regarding the network design and infrastructure of these Broadband Parasites will be critical in the acquisition of VoIP customers. Carriers that do not currently have their own VoIP infrastructure will assume they can assimilate their new purchase into one big happy company. This will be possible only after extensive IP network redesign. One could get away with simply linking the networks, but the resulting call quality would be undesirable. What this all amounts to is a back-door sale of a switch to the RBOCs and ILECs that purchase VoIP customers as assets.
What will the rise of VoIP look like in the industry? First, the Broadband Parasites will rise. This is already in motion. Then the transport providers will see their bandwidth become over used by non-revenue generating outsiders. Transport providers will implement session border controllers (SBCs) to restrict access by Broadband Parasites while finally offering a VoIP product of their own. Customers will remain rather static until the transport providers begin to buy up the Parasites for their customer base. Transport providers that fail to begin to change their network transport infrastructure now, will find it nearly impossible to do so under the strain of assimilating the VoIP Parasites. Those companies will lose their market share, and most likely their companies to the opposition. The opposition in this case will be the cable service provider, wireless data provider, ILEC or CLEC that has the ability to serve the same customer.

Monday, October 18, 2004

New VoIP Billing Systems: Another Stake in the Heart of the Old Guard

The Internet boom of the late 1990s brought about some interesting changes to the IT paradigm. You know the one where there had to be a highly paid CIO and armies of IT techno-weenies running the billing system, customer contact/care systems, etc.? Tape transfer, re-coding and printed bills ruled the day. Billing errors cost shareholders of the big companies millions every fiscal year.

The first true white knight was Portal’s Infranet product. However, at a $1 million plus price tag and video “convergence” zealots ruling the IT wings at many carriers, the larger companies shied away from complete billing system overhauls.

Fast forward to VoN 2004. Today we see PC and small server based systems that can use VoIP switch data over an Ethernet link. These systems cost a fraction of the old ones and require little if any maintenance. If one pairs these systems with terabyte storage systems from such companies as EMC, you have, quite literally, the exact same systems as the RBOCs currently have…..only better. The new Broadband Parasites will have a clear advantage over existing carriers. Their shareholders and customers will be the direct recipients of the advantage.

The new systems are so impressive, they should be considered for existing companies as well. They are cheap, reliable and easy to maintain. They use standardized operating systems (UNIX variants) and reliable relational data bases. This new generation of systems has superior customer support built-in. This alone should make the 21st century VoIP carriers better suited to deal with disgruntled RBOC, ILEC and CLEC customers yearning for the days when they could actually get a problem solved when they called their carrier.

So, what do we now have with regard to VoIP solutions?
1. Less expensive voice switching systems due to lower hardware, feature and maintenance costs.
2. Less expensive operational systems due to better integration with network management systems (better technical problem monitoring and resolution).
3. Less expensive billing and customer support systems.
4. Lower operating costs with respect to SG&A.
5. Newer, faster product development.
6. Increased revenue due to removal of target market boundaries.

Look for VoIP pricing to hit $19.95 before the end of the year. Companies could add a suite of VoIP components in 2005 and begin writing off the old assets as they fall into disuse in the subsequent fiscal years. Shareholders would see constant improvement in margins and revenue over a multi-year period.

TI Draws First Blood in VoIP Architecture Battle

"Fall VON, BOSTON (October 18, 2004) -- Texas Instruments Incorporated (NYSE:TXN) (TI) announced today its next-generation architecture for Voice over Cable (VoCable) products, extending its strategy to provide cable operators with feature rich technology for integrated voice and high speed data services on a single platform. The single chip Puma IV architecture, built upon TI´s current market leading VoCable product offering, capitalizes on TI´s strength in DOCSIS® hardware and software, digital signal processor (DSP) technology and Telogy SoftwareTM for Voice over IP."

This is groundbreaking in that the speed of packet assembly and decoding will increase by an order of magnitude. This will directly improve the quality of the voice calls over the Internet and bring VoIP calls transmitted over a private network to carrier grade performance. I look forward to similar products from Broadcom, TI's main competitor.

Broadband industry leaders OCCAM and Paradyne have both standardized on the Broadcom chipset for ADSL2+ loop carrier systems. DSL modem manufacturers could use either the TI or subsequent Broadcom integrated chipsets to absolutely nail the quality of VoIP over open networks. This is as significant as CISCO's strides in MPLS technology.

The Weight challenged lady is warming up. Carriers need to forklift their old architecture ASAP!

VoIP Switches, Assest Write-Off and Carrier Response

The 2004 VoN (Voice over Network) Conference began yesterday in Boston. I plan to visit the exhibits on Wednesday. I expect to see all kinds of new and exciting equipment and services. What I do not expect to see is a forum regarding the mass adoption of VoIP technology by any telephone company.

It is not difficult to identify the immense savings a company can achieve through the rapid (during a single fiscal cycle) adoption of VoIP switches. However, the telephone companies see a large write-off of assets as being a large road-block to the rapid adoption of voice over network services. The assets written off would be the switches, installation, transport (ATM and SONET) and the oldest, non-GR303 loop carrier equipment.

Equipment manufacturers that have been manufacturing the old Class 5 switches will be dragging their feet as well. Those companies face the loss of billions of dollars in annual revenue if carriers relieve themselves of the burden of unreasonable maintenance and hardware upgrade fees.

VoIP is quite the populist movement in the US. I like using Jeff Pulver’s tag of Broadband Parasites to describe the new wave of companies that will offer 21st century services to both residential and business customers. These carriers will use the DSL line or cable modem of a subscriber and add the value of VoIP. Any person running a small office or home office will undoubtedly adopt Vonage or some other service within the next 18 months.

When this adoption takes place, the carriers that have not added VoIP service will lose those customers forever. They will be seen as the DSL supplier only. Those carriers will then have only one product to sell in a heavily contested marketplace. This has to be a far worse position to be with no hopeful prospects than the prospect of writing off assets.

It is critical that all carriers currently providing TDM based voice services shed the financial burdens placed upon them by Nortel and Lucent. This immense expense of operating the old technology will become so burdensome, companies such as Verizon, SBC and BellSouth will have to react to the change in the marketplace. Reacting after the fact has historically cost public carriers dearly. This is currently evident in the airline industry. The big boys are being beaten by “low cost” carriers. This revolution was brought about by new companies buying newer jets and systems that are far less expensive to operate. Airline hubs seat prices have dropped from nearly $1000 per seat, to about $150 per seat round trip. Sound familiar?

VoIP service will be adopted and will be adopted more quickly by a larger number of customers than previously projected. They will adopt it because the quality is acceptable and the price is about 25% of what they are currently paying. Carriers that simply graft on a VoIP switch to their current infrastructure will be carrying more expense than phone calls. Broadband Parasites will dominate the market. The investment community already believes in this trend and has awarded a record $105 million in new financing for Vonage. So why are the major carriers dragging their feet? Whatever the reasons, the VoN conference will be fascinating.

Thursday, October 14, 2004

VoIP Is The Next Internet Revolution

This year has seen a huge VoIP technology shift. VoIP is causing a smaller version of the economic boom similar to what the Internet caused in the 1990's. This tehnology revolution could greatly reduce expense and directly increase shareholder value within publicly held telecommunications companies. These gains have already been relaized to some extent within Level3 and Global Crossing. But what about the thousands of other RBOCs, ILECs, CLECs and rural telcos? Recent evidence suggests that there is a reluctance to change within the largely parochial telecom engineering community. This appears to be causing the US to lag behind most other countries in the world with regard to VoIP conversions. US telecom companies have been adding token VoIP systems to their networks, but have yet to perform a "Forklift" of their existing systems. There is a body of evidence to suggest that conversion to these newer technologies could achieve an order of magnitude in terms of expense reductions and shareholder ROI. So, the question arises "Why are they not converting older systems?"

Network equipment manufacturers, CISCO and Juniper, have solved the quality and reliability problems. I have heard the difference with my own ears. The technology even works well with legacy carrier systems. Why do these companies insist on maintaining older, very much more expensive systems?

The problem is not technical in nature. The VoIP switch and network equipment manufacturers do not seem to have project management teams as they did when they converted to the early Class 5 switches. Everyone from the smallest rural telco to the largest RBOC is in need of someone to hold the carriers' hands through a conversion to this new technology. The engineering staff in much of the industry is not IP centric and does not understand the basics of either telephony or Packet transmission. Professional Project Management may be the key. The solution lies in the management of projects, creating new products, redesigning outdated ATM and SONET networks, auditing current telephone switches, conversion to new technology, training and education of existing staff and converting older network management systems to newer and easier to maintain ones.

Where the previous revolution hinged upon the technology, the new changes will be brought about through project management. This Industry is in deperate need of a catalyst to pick it back up again. Investors are wary of a return of the corrupt practices of the largely shell telcos in the 1990s. These investors will return if they see a concerted effort on the part of boards and CEOs to re-define a company to meet the challenges of the new century.

Wednesday, September 22, 2004

R.J. Walker, CEO Teliserve Posted by Hello

Voice over IP The Answer For Telcom Shareholders

There is no other technologly or product that will return shareholder value as the newest generation of voice over IP telephone switches. These switches replace 100 year old technology, dramatically reduce operating expenses (including 10% or more reductions in workforce), and are the best hedge against the onslaught of cable telephony. Telcos should seriously consider rapid conversion and forklift of legacy telecommunications systems. Many companies had thought they could collect revenues from their outdated systems because these systems provided only POTS (plain old telephone service) and their customers did not require advanced features. VoIP has burst that bubble buy enabling any company with a little credit or capital to compete with even the largest of carriers.

Public telephone carriers that retain old technology such as Nortel DMS or Lucent 5ESS switches is costing shareholders significant return on their investment. These ancient technology switches must not be added to as some carriers have done, but must be fork-lifted out of the telephone company's central offices as soon as possible. Companies that fail to do so will be supplanted by very low cost carriers within the next 18 to 24 months. Any current telephone company customer with a cable modem or DSL connection will switch their service in a manner similar to the long distance frenzy of the 1980's and 1990's. Failure to upgrade to an IP infrastructure is tantamount to corporate suicide. Shareholders should demand upgrades to the telephone companies' telephone switches, transmission infrastructure, workforce education, billing systems, operational systems and network management systems. This is not an expensive prospect as it may seem.

Most companies are managed and staffed by persons not familiar with and even frightened by this new technology. It is critical that these groups be re-trained for this brave new world of telephony. Teliserve is a consulting concern that can re-train internal staff and relieve a company of its internal reluctance to evolve. Teliserve will train and educate management, engineers, accounting personnel, customer service representatives, installers and maintenance crews.

While IP technology is considered black magic by some senior executives, network equipment manufacturers such as Cisco and Juniper have mastered the protocols and technologies that are necessary for creating reliable and cost-effective network infrastructure. The new paradigm will evolve over time to incorporate this IP technology as the sole means by which telcos deliver service to business and residential customers. ATM and SONET have proven too expensive and limiting as core transmission technologies. IP technology is an order of magnitude less expensive in every category, and is now just as reliable as ATM and SONET protocols. Conversion to an IP core transmission technology along with adoption of the latest ADSL standards and voice over IP delivery service could be the greatest single method for a significant increase in competitive advantages.

TeliServe is a telecommunications service company that can coordinate all aspects of defining target markets and products, technical definition, network product evaluation, equipment procurement, staff adjustment, education, technical training, network management tools, billing system and financial system integration, maintenance and support. Teliserve has teams of experienced financial, operational and technical resources who can reduce a telco's risk for conversion.

Contact R.J. Walker at for more information