CEWC _Ethernet Business_case_Alcatel.ppt
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  • In the grand scheme of things there are, however, more other problems whose solution could have an even more dramatic effect in the operators’ profitability. Indeed, the reality is that the NOC or BAS costs, as important as they are, in the whole picture of Operator finances, hardly represent anything worth to write home about. Indeed most of the Operator costs are in planning, installing, and operating the physical, non electronic assets of it’s infrastructure and in particular it’s access network. If one wants to make a significant dent in the income statement, one has to look into the real costs of the network: the cost of fiber and wires in the outside plant, and all what it takes to keep them alive. We often forget to look into the obvious. Sometimes because we are convinced that there is nothing to do about it. Then we concentrate ourselves into another part, that we consider we should look into, because we believe that we have an effect on it. In the case of Data Services this has been the NOC (Network Operations Center) costs of Frame Relay. Traditional IP vendors have argued that the provisioning savings in avoiding the multiple point and click operations to set up a VPN are so dramatic as to justify the migration from Frame Relay and ATM into MPLS. However, the ugly reality is that Data services are so expensive, because they have always required a specialized access network. The cost of this parallel network for Operators has been tremendous. Typically it can be above 50% of all the OPEX attributed to the service. The main culprit has been the requirement for higher bandwidth, when compared to Residential, for all these services.

CEWC _Ethernet Business_case_Alcatel.ppt CEWC _Ethernet Business_case_Alcatel.ppt Presentation Transcript

  • Enterprise Ethernet Services: Is there a Business case?
    • Rolando Oliver
    • VP IP Support and Tec. Mktng.
    • Europe & South
    • [email_address]
  • Our talk today…
    • Ethernet Interfaces have become the technology of choice for Services today
      • They support both Ethernet Generic Services, such as VPLS, and IP-VPNs
    • Many changes in the industry affect the Business case for Incumbents and Alternate Providers alike
      • The impact is at different levels in the Capex, Opex, and Revenue
    • We will discuss:
      • The technology evolution
      • 3Play and its impact in Capex and Opex
      • The Evolution of Demand for Ethernet based services
    View slide
  • Ethernet: Transforming Itself Bob Metcalf’s First design
    • Others come and go!… Ethernet thrives!
    • 300 million Ethernet ports installed
    • 802.3.XX Standards are impressive (so many that they are double letters now)
      • Coax, copper, fiber, SONET/SDH, Wireless, 10MB,100MB, 1000MB, 10000MB, ?
    View slide
  • MPLS and Ethernet
    • Scalability
    • Restoration
    • QoS
    • Manageability
    COAX Enterprise & Campus HUB BRIDGE SWITCH MPLS Residential, Enterprise, Carrier & WAN
  • IP Video is a Strategic Priority for our customers
    • No question, Video services offer the most significant ARPU growth potential for our customers .
    • New revenue from new services
    • Customer loyalty through bundling
    • Long term growth potential from yet to be identified new services
  • Triple-Play Network Architecture: Basis for Business
    • 3Play Requirements are also Business Requirements:
    • Q o S
    • Reliability
    • Scalability
    • Manageability
    • Capacity
    BSA = Broadband Service Aggregator BSR = Broadband Service Router BSA BSA BSA IP BSA NGN Internet Video Network Management VPLS IP DSLAM 5750 SSC Subscriber Services Control BSR BSA = Broadband Service Aggregator BSR = Broadband Service Router BSA BSA BSA IP BSA NGN Internet Video Network Management VPLS IP DSLAM 5750 SSC Subscriber Services Control BSR BSA = Broadband Service Aggregator BSR = Broadband Service Router BSA BSA BSA IP BSA NGN Internet Video Network Management VPLS IP DSLAM 5750 SSC Subscriber Services Control BSR
  • Facilities are the Single Highest Services Cost! Costs mainly related to the Facilities: Mainly Access!
  • Convergence: New Scenario for Data Services
    • Data Services have been considered “Special”
      • Different Bandwidth
      • Different reliability
    • Transport and Access overlay networks have been built
    • Economies of scale were often doubtful
    • Specialized A to Z organizations were created
    • 3Play changes this landscape for the first time
    • Services developed for residential (Broadband) are also attractive for Business
    There is a migration over time: low speed FR -> Broadband DSL, High Speed FR and ATM -> Ethernet Fibre links
  • Enterprises Have Targeted Ethernet RHK Enterprise Business Study (2005) Key Results: Why Choose Ethernet? The four most important decision factors are: WAN Bandwidth requirements continue to increase WAN Ethernet can help reduce IT costs End users are willing to increase WAN services spend IF total IT spend can be reduced WAN Ethernet is supporting enterprise-wide applications BANDWIDTH IS THE NAME OF THE GAME: this is the definite advantage of Ethernet!
  • World Wide Shift Towards Ethernet: Drives Carrier Revenues from traditional data services over separate infrastructures are eroding Service providers want to deliver a richer set of services and scalable bandwidth over more efficient network to maximize revenue and profit potential, and to ensure competitiveness Enterprises want to better control telecom expenditures and roll out new applications by leveraging more cost-effective communications technologies Enterprises want more flexible communications infrastructures to face uncertain market conditions HEAVY READING Carrier Ethernet Equipment Market Outlook August 2005
  • Putting it all together
    • There are many possible Business cases
    • Most important conditions influencing the business case are:
      • Incumbency
      • Regulation (strong regulatory environment, unbundling, co-location, etc)
      • Legacy Services Presence (how developed is the existing services structure, how ready are the customers to up-grade, etc)
      • Demography (how planned are the urban agglomerations, centralized business sectors, etc)
      • Competitive environment (how well established or how well endowed is competition)
      • Business strategy
  • Business Case Parameters: Revenue
    • Demand for Ethernet services (generic services, IP-VPNs with Ethernet access) is clear and strong
      • Strong demand for more Bandwidth
      • Customers are willing to pay, but they want more price performance: they want to do much more with little more
    • Strong demand for VPNs (IP, Ethernet)
      • Market wants the flexibility of Ethernet interfaces: agile adaptation to a changing environment => Ethernet is particularly well suited
    • There is a challenge for operators to execute well:
      • The incumbents must transition and keep their market share coming from legacy as they do so
      • The alternate provider must select the right markets and prove agility and imagination when developing services
  • Business Case Parameters: Capex
    • Technology to build Ethernet based IP infrastructures is mature and more economical than other alternatives
      • Economies of scale have shifted to Ethernet technology (cost of interfaces, applicability to enterprise, residential, carrier)
      • 3Play is pushing even more the Ethernet learning curve (QoS, Carrier Class, Scalability)
    • For the incumbent the possibility is to share CAPEX with 3Play, DSL Inter-working for Business and Residential
    • For the alternate provider technology is there to assist in selecting niches for agile and targeted deployment
  • Business Case Parameters: Opex
    • Technology is there to reduce OPEX for Business Services either by sharing with residential (3Play) or by allowing targeted and agile deployments for Alternate Service Providers
      • For incumbents
        • 3Play allow for convergence
        • Virtualization allows for VPNs for Business and Residential
        • Difference between Residential and Business is blurring especially at lower speeds
        • All this increases the Economies of Scale for Operators
      • For Alternate Providers
        • Ethernet reduces the number of different interfaces required
        • Get advantages from the Ethernet infrastructure deployed by the incumbents
        • Can pack more services in a single access
  • Conclusion
    • Ethernet MPLS based networks are the clear choice for Service Providers for Ethernet Generic Services or IP-VPNs
      • Technology is the norm for 3Play
        • Brings substantial Sharing and learning curve benefits
      • Clear Economies of scale from Enterprise interface volumes
    • Definite advantages both for Incumbents and Alternate Providers
      • Clear demand for Ethernet based VPNs
      • Reduced Capex from sharing and mature technology
      • Reduced Opex from sharing with 3Play and Ethernet granular interfaces
  • www.alcatel.com