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Bhawani Shankar Senior Analyst GartnerGroup-Dataquest

Targeting the Second Trillion. Bhawani Shankar Senior Analyst GartnerGroup-Dataquest. Agenda. Telecoms Market overview Trends and directions Technology vs. Market What does all this mean?. Telecom Market Overview.

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Bhawani Shankar Senior Analyst GartnerGroup-Dataquest

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  1. Targeting the Second Trillion Bhawani Shankar Senior Analyst GartnerGroup-Dataquest

  2. Agenda • Telecoms Market overview • Trends and directions • Technology vs. Market • What does all this mean?

  3. Telecom Market Overview • A $1.18 trillion market—telecommunications represented 58% of all global IT revenue in 1998 and is forecast to reach nearly $1.94 billion by 2003 • The telecom industry is well over 100 years old, as are many of its main players, but is changing faster than ever before Systems and Peripherals 16% Others 3% Services 18% Applications 5% Telecommunications 58%

  4. Worldwide Telecommunications Market—1998-2003 • Telecoms Services will continue to represent the largest sector as more and more markets are opened to competition, but this generates further opportunities for equipment manufacturers Millions of Dollars Services Carrier Equipment Enterprise Equipment

  5. Worldwide Telecommunications Market—1998-2003 • While the United States and Europe remain the largest markets, growth will be fastest in Asia/Pacific and Latin America, which will both show CAGRs around 20% Millions of Dollars ROW Canada Latin America Japan Asia/Pacific Europe United States

  6. Economic Uncertainty Standards Uncertainty Regulatory Bias Convergence Globalization Liberalization Economic Necessity Market Accelerators and Inhibitors Talking Point

  7. Market Trends—Telecom Services • What are the factors shaping the worldwide market in telecommunications? • Variations in teledensity represent enormous opportunity for growth • Rampant liberalization of high-margin markets leads to fierce competition—attack is the best form of defense, familiarity an advantage • 50% of traffic in the backbone is data, but voice still accounts for $0.90 of the dollar • Enterprise traffic growing 300% to 500% per year • Internet offers challenges and solutions • The consumer rules (definitely) Talking Point

  8. Packetisation Trends Applications • Voice Telephony • CTI, IVR • Streaming A/V • Call Center • Unified Messaging Packetized Voice Over Frame Relay Over IP Over ATM IP-BasedNetworks IP-BasedNetworks Intranets The Internet Extranets Phone to Phone PC to Phone PC to PC

  9. VOIP: Reality vs. Hype Technology Hype Cycle VOIP Peak of Inflated Expectations Technology Trigger Slope of Enlightenment Trough of Disillusionment Plateau of Productivity 2002 1999 Time

  10. How big will VOP be?

  11. Replicate a traditional SS7 Network: Phone to Phone (transit, bus voice, LNP) MGC BT Spain - Phase 1 International: 10 Carriers Indirect Access: 50 Interconnect Points SS7 International Networks IP Tel GW SS7 DMS 100 BT Tel. high capacity IP Network SS7 PSTN SS7 IP Tel GW MSIS SS7 ISDN PRI IP Tel GW MSIS PBX IP Tel GW Direct Access Mobile Networks SS7 MSIS Fix to Mobile 3 Operators,  8 Interconnect Points

  12. Add Phone to PC, PC to Phone, PC to PC, Soft PBXs, H.323 videoconferencing, NetMeeting support... PC voice GK Java Phone MGC SS7 IP PSTN BT Tel. high capacity IP Network SS7 IP Tel GW MSIS Soft PBX IP SS7 International Networks SS7 IP Tel GW IP Tel GW DMS 100 IP Tel GW SS7 ISDN PRI MSIS PBX Mobile Networks SS7 MSIS BT Spain - Phase 2

  13. Enterprise: Voice Cost Savings Local PSTN PBX Data Network Voice Card + Router Local PSTN PBX Gateway

  14. IP PBX Timing Percentage IP/PBX for less than 100 desktops 100 75 Approximately 308,000 systems in 2004 IP/PBX for more than 100 desktops 50 25 12.5 Less than 3,000 systems in 2004 0 1999 2000 2001 2002 2003 2004 2005 2006 Years

  15. LAN User 100 Cable 10 xDSL T1 1 ISDN 0.1 V.90 V.34 V.32 0.01 1998 1999 2000 2001 2002 2003 Year Access: The Need for Speed Power Remote User Bandwidth (Mbps) Production Remote User

  16. DSL: The Early Look and Feel Enterprise Small Office US West: An Example Service • First company to offer a widely deployed, commercial xDSL service • Available in 14 states, 60 cities as of mid-1999; about 50,000 subscribers • Flat-rate pricing enables always-on access • Pricing begins at $20 per month for 256-Kbps data rate; full ADSL (1 Mbps up, 7 Mbps down) is $840 per month. Additional charges: $20 per month Internet access, $70 installation, $250to $300 for modem • Nonstandard approach • Uses PairGain, Cisco routers/modems and Newbridge switches ADSL Modem SDSL Modem Splitter Copper Loops DSLAM NSP Central Office PSTN Data Network

  17. DSL Evolution SDSL G. Lite ADSL User Provider User Installation Up to 1.5 Mbps 640 Kbps 128 Kbps Data Rate — From the Home Up to 1.5 Mbps 8 Mbps 1.5 Mbps Data Rate — To the Home $300 Hardware Cost (2004 estimate) $250 $100 Monthly Service Cost (2004 est.) $40 to $300 $125 $30 Loop Length (feet) 24,000 12,000 18,000 Standards Status Now Now Now Now Now Now Availability

  18. The Cable Alternative Cable Modem • Fiber Node Neighbors Fiber Optics Head End Equipment Data Network @Home: An Example of a Service • Cable ISP • Available through major cable operators — e.g., AT&T/TCI • • 620,000 subscribers, 17 million homes passed (as of June 1999) • Content-oriented, channel format; “AOL-like” • Acquired Excite, Internet portal • Download at 1.5 to 3 Mbps (shared) • $40 per month, $100 installation charge, $300 cable modem typical pricing • Several @Work options; Internet access, remote access, Web hosting • Cisco technology • Key component in AT&T/TCI cable data strategy Coax Cable TV Distribution

  19. What about Wireless? Fixed Terrestrial MMDS/LMDS Point-to-point Line of sight Central Office Satellite Business: Two-way via satellite Central Office Residence: PSTN upstream, satellite downstream

  20. Satellites - The NexGen “Internet in the Sky”? User Terminal Terrestrial Networks Gateway

  21. Customer Care & Billing Telcordia Accounting Gateway PublicSignalingNetwork Call Agent SS7 Gateway Network OSSs MGCP ISCP MGCP MGCP Announcement Server Voice/IP Cisco HFC Network IP IP Network Telco Set top box V • Full OS Support • Carrier-class voice quality • Robust multi-service IP • backbone • Virtual Class 5 Central Office Switch • Integration With PSTN IN For Existing Services. • Internet access services The Next Challenge: VoDSL/ Cable - Videotron Architecture

  22. IP/Data 50% Voice (100%) Wireline Leads Wireless Evolution Incumbents Mainstay Becomes IP-Based Networks Wireline Incumbents Start Evolution to IP-Based Networks New Entrants Using IP-Based Networks Wireless 3G Network Lower $/MOU Mass-Market ISP/E-Commerce Sub-$100 Devices Browser Technology Adoption Micro-Browser Adoption Air-Interface Improvements Incumbents Focused on Voice Mass-Market Voice 2002 1988 1995 1998 2008

  23. Mobile Technologies:Coping With Demand 2 Mbit/s 384 Kbit/s UMTS 115 Kbit/s EDGE 57.6 Kbit/s GPRS 9.6 Kbit/s HSCSD GSM Theoretical Data Rate per User 1999 2001 Number of Users per Cell

  24. The role of caching appliances • Efficient caching solutions will precede large-scale roll out of fast access technologies • In the consumer sector, http/web caching will be the main contributor to improved user-response times • Caching appliances will widen the ISP bandwidth sweet-spot • Application-specific caching appliances will start to impact from 2000 onwards

  25. Where are we headed? • Circuit to Packet Migration • Designing ‘optimal’ networks • What is the NexGen Business Model • The System Integration Challenge • Integrated Networks need Integrated Skills • Interoperability • Lookout for regulation! • Access Bottlenecks to Core Fibre • Network design, plan challenges • New applications, new solutions, new markets • How to fill a pipe with $$? • People issues, HR: a HUGELY underestimated challenge Conclusions

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