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Finding the Fast Lane
tele.com's first annual Service Provider Outlook
survey shows that speed thrills, at least
when it comes to offering broad access services.
by Jeremiah Caron. Jeremiah Caron is executive industry editor for tele.com. He can be reached at jcaron@cmp.com.
SERVICE PROVIDER PROFESSIONALS are famously busy folks these days. Deregulation and privatization have led to fierce competition. Ubiquitous Internet protocol (IP) networking has created rabid customer demand for more-better-faster. And the endless stream of mergers and acquisitions has made it all but impossible to figure out who's responsible for what.
Want more proof of how fast things are moving? Take a look at tele.com's Service Provider Outlook 1999 (SPO 99). Startup greenfielders are spending away, with Wall Street's approval (for now), while the incumbents labor to literally switch horses in midstream--a very swift stream at that. Add in the barrage of pitches they're receiving from gold-rushing technology suppliers, and it's a wonder these executives have any time whatsoever to deliver services. Fortunately, many of them (loyal tele.com subscribers all) did find time to help us determine the state of the high-speed services race by participating in SPO 99.
Our global survey shows an overriding desire to get broadband network access services up and running fast, which translates into this year or next. And providers aren't limiting their ambitions to just offering these services: They expect to reap profits from them immediately.
This services thrust is being bolstered by a significant buildout of the public network core or backbone, the area most respondents cite as the target of their greatest investments, easily beating out such areas as wireless service, circuit switching and carrier edge infrastructure.
The results also indicate that the broadband process probably requires a multipronged approach to succeed. The advent of digital subscriber line (DSL), cable modem and broadband wireless access technology should initially ease the local loop traffic jam. Ultimately, however, these services could create more demand--and possibly more congestion--as they release pent-up demand not just for faster access to the public network but also for more feature-rich applications. If that happens, and it may already be under way, more stress will be placed on the freeway system that is the public network's backbone, requiring that it be significantly upgraded. SPO 99 says that upgrade has already begun.
The survey has a global scope, having polled 250 business and technical managers randomly selected among tele.com subscribers. The participants came in all sizes and types, from long-distance carriers to regional Internet service providers (ISPs) and television broadcasters. Sixty-nine percent of the respondent organizations offer services to consumers, while 86 percent have business customers (see "Customer Targets"). More than half offer wholesale services to other providers.
SPO 99 ultimately focused on transmission speed as a fundamental issue driving customer demand and service providers' business plans. It effectively sought to find out: What is being offered? When and where? How much does broadband cost to deploy? What are the issues hindering deployment, and what's being done to internal infrastructures to support high-speed services?
The survey predictably showed that the vast majority of high-speed services are now focused on T1, ISDN and asynchronous transfer mode (ATM) connections (see "Changing Service Mix"). The top
applications are the equally predictable Internet-based virtual private networking (VPN) and Web hosting services. If the results prove correct, all this should shift in the next two years as greater emphasis is placed on deploying faster connections such as DSL, broadband wireless, T3 and cable modems, as well as ATM. Deployment of new T1 and ISDN links will correspondingly wane over the same period of time.
What is going to fill these pipes, for both businesses and consumers? Their favorite IP-flavored services. Providers, in fact, expect a dramatic increase in the use of IP voice and fax services, and a continued strong upswing in demand for their VPN and Web hosting wares.
Service Provider Outlook 99 Methodology
The goal of the tele.com Service Provider Outlook 99 survey is to gauge the deployment of high-speed network services, the level of infrastructure investment being made in support of such services and the expected economic impact on service provider business models.
A total of 250 respondents were interviewed by our partner, Reality Research/Channel Information Services. The survey sample was randomly drawn from the tele.com subscriber file. We qualified the sample by indicating that the respondents--personally or as a part of a group--must specify, recommend and/or purchase equipment and/or other support systems or services needed to launch and operate high-speed services.
Fifty-four percent of the respondents were from business unit/divisional management, with 46 percent from corporate management (see "Respondent Profiles"). The respondents also represented a mix of technical (49 percent) and executive management (51 percent).
The survey had a global scope: 180 respondents were from service provider organizations based in North America, while 70 were from organizations based in other regions. Next Page
See additional information on tele.com's SPO '99 respondents and more in-depth result graphs.
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