MetaSwitch eNews - June 2008

In this issue I would like to introduce Garry Kim, editor in chief of IP Business Magazine, as our new front man for eNews. In each issue, Gary will be contributing his reflections on the state of the industry to enhance the eNews publication.

Gary has worked closely with MetaSwitch for a number of years now and is helping us develop our online community via eNews & Facebook. That being said, I will continue to oversee newsletter operations and invite your emails on topics of interest, feedback and anything else for that matter! I hope you like the change and will join me in welcoming Gary to eNews.

Letter from the Editor

By Gary Kim
Editor in Chief, IP Business Magazine

Most of us think that wireless substitution is a big deal. But the problem might not be as big as some think, says Patrick Monaghan, Yankee Group senior analyst. "We find that switched access telephony in the United States has decreased by 17 million lines from 2005 to 2008 and is expected to continue to lose another 10 million by 2011, but wired voice lines overall have only dropped two percent year-over-year from 2005 to 2008."

Competition is a very real issue. But wireless substitution is not the bigger part of the line loss picture, Monaghan argues. The issue is less "cord cutting" and more "switching". That’s a provocative notion, as it suggests line loss erosion primarily is a matter of competitive pricing, rather than wireless substitution.

There are other contributors, to be sure. Some second lines have been disconnected as users switched from dial-up Internet access to broadband. And some lines have been abandoned in favor of mobile services. About 15 percent of respondents to a recent Yankee Group survey reported that they no longer have wireline phone service.

But it is market shares to cable providers that represents the big driver of ILEC line loss, Monaghan says. Introductory triple play offers that essentially give away, or deeply discount the phone service, have proven attractive. Up to a point, it still is going to make sense for most telcos to suffer through some line loss rather than drop prices across the board. "Letting your competitors take some share" still makes business sense.

Nor is it clear that that will change. A rational observer would still argue that telcos will continue to provide a majority of consumer lines in the U.S. market in the future (the situation in Europe is different). Whatever technology underpins those lines, it might remain the case that lost share is a lesser evil than across-the-board price matching. At least up to a point.

There is sound thinking behind the tactic of "merchandising" video to protect margins on voice, as there is logic for a cable operator to merchandise voice to preserve video margin. Maybe more thinking needs to be done about ways to create VoIP services that likewise can be merchandised to protect legacy voice lines as well. Does anybody have ideas on that score?

Business Model Transformation Now is Key

Gary Kim, Editor in Chief, IP Business Magazine

There is a perceptible shift in the telecom industry's focus away from cost reduction to business model transformation and revenue growth, say Stuart McIntosh and Ekow Nelson of the IBM Institute for Business Value.

Where in 2002, 34 percent of telecom providers said business model transformation was a source of value, 69 percent of polled telecom industry executives in 2007 said it would be the primary driver of value in the industry going forward. Not so long ago, the top issues were challenges such as revenue growth, operating expense reduction, capital expense reduction and even debt loads. Now, an overwhelming majority of polled telecom executives (72 percent) say business model transformation requires extensive collaboration with external partners. That is a stunning change for an industry that historically has had a "not invented here" approach to innovations.

Maintaining the Edge: Voice Quality Management in a VoIP Environment

The migration to next-generation IP networks has been a gradual one, as carriers have balanced new service deployment with the reality that the IP world lacked comprehensive and cost-effective quality management systems and standards. This has been especially true of voice quality management, with adoption of VoIP moving rapidly ahead of efforts to diagnose problems.

VoIP actually has emerged as a popular service at a time when the very meaning and markers of voice quality are fluctuating. The great success of wireless services is believed by many people to have created an environment in which something less than the extreme reliability and high quality of voice calls on the landline network is acceptable. If that is true, VoIP thus far probably has both benefited from that notion and helped strengthen it.

But when VoIP is delivered over a wireline connection - typically a broadband service with multi-Megabit per second bandwidth - shouldn't users have a right to expect traditional wireline-like quality from VoIP services? And shouldn't carriers be able to deliver that level of quality on a consistent basis?

Bresnan Communications: a case study

Business Voice and Beyond: How Bresnan Communications utilized the MetaSwitch Platform to enter the commercial voice business

Bresnan is the nation's thirteenth largest MSO, serving over 320,000 customers in Colorado, Montana, Wyoming, and Utah, including nearly 7,000 data and telephone business customers. Bresnan had been very successful providing both residential and business video and data services and had recently begun selling residential voice services.

Bresnan saw its next opportunity in providing voice service to the business community. This meant selecting a next-generation switching and applications platform that would simultaneously be transport and access agnostic. In addition, due to the rigorous terrain of the region and distributed nature of their subscriber base, Bresnan needed a solution that provided Emergency Stand Alone functionality to ensure business voice service would remain operational in the event of transport outages.

After a process of extensive research and RFPs, Bresnan selected MetaSwitch as its strategic platform for converged voice services to business customers. As a result of this selection, Bresnan Communications was able to rapidly enter the business voice market with a flexible and extremely reliable platform.

See MetaSwitch at NXTcomm!

Learn how MetaSwitch can give your network an energy boost by visiting us at NXTcomm in Las Vegas, June 17-19, Booth #SU6726. And don't miss out on our NXTcomm speakers: