Succession VoIP Services


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Succession VoIP Services

  1. 1. Position Paper Succession VoIP Services The dramatic downturn in the global economy over the last three years has created a number of formidable challenges for telecommunications service providers. Service providers, today, find that survival depends on their ability to generate new revenue opportunities, while at the same time cutting costs and protecting existing service revenues from commoditization and competition. This paper describes how service providers can utilize Nortel Networks Succession* VoIP Services and Multimedia Communication Services portfolios to increase their revenue-generating potential by rapidly deploying new services on both their current TDM and next-generation packet networks, addressing the need for new revenue streams, protecting existing service revenues, and reducing costs by enabling an intelligent circuit-to-packet migration.
  2. 2. Introduction costs, they now recognize that continued Service providers can create new revenue existence requires a new strategy that opportunities immediately, build enter- The first three years of the new millen- focuses on revenue creation and revenue prise and consumer service demand, and nium have not been kind to telecommu- retention. drive service volumes. Service providers nication service providers. Service can introduce packet into their network providers have encountered significant With over 38 Succession customers glob- for potential revenue generation, while challenges during this period, including: ally, Nortel Networks is a market leader in also continuing to address the need for the loss of business and residential land- delivering Voice over IP (VoIP) solutions. cost reduction. line connections to cable modems and Our success in the global marketplace is a mobile and alternative carriers; the direct result of our portfolio’s ability to With a comprehensive portfolio that commoditization of long distance and meet market requirements, deliver solu- includes the only true “Superclass” other basic services; and increasing sales tions customers want, and provide them softswitch, along with scalable multi- and marketing costs driven by the growth at the cost and scale they require. service gateways and the Multimedia in customer churn rates. Communication Server 5200 application Recognizing that the economic downturn and media server, Nortel Networks is in For example, the META Group reports has dramatically changed the market a unique position to deliver its services that, for the first time in history, the requirements for VoIP technology, Nortel vision, providing the opportunity for number of wireline phones in the US Networks is introducing the Succession service providers to address their chal- dropped during 2000/2001 and the VoIP Services portfolio to add new lenges of revenue creation, revenue number of access lines decreased by revenue-generating opportunities to the retention, and cost reduction. approximately 4.7 percent.1 In addition, sustainable cost reductions Succession Probe Research reports that, “The per- already offers. The Succession VoIP Nortel Networks is the only vendor minute charges for IX (interexchange) Services portfolio—including Succession globally with the end-to-end solution voice calls have declined from $13.3B in Centrex IP, Succession Voice over IP necessary to deliver the Class 4/5 service 1984 to $5.26B in 2001, reflecting the Virtual Private Networks, and Succession transparency and full regulatory compli- reduction in the per-minute charge as well Primary Voice—enables service providers ance to protect existing service revenues, as some migration of landline IX calls to to leverage current network infrastructure and also deliver the innovative and mobile and the increased use of e-mail to investments to further improve the cost- compelling multimedia enhanced services replace IX calls.” This implies that those effectiveness of delivering these new required to meet the demand for the companies which derive significant services. Additionally, when coupled creation of new revenue opportunities. revenue from long distance services will with Nortel Networks Multimedia As seen in Figure 1, Nortel Networks most likely suffer revenue erosion.2 Communication Services—including Succession VoIP Services enable the Personal Communication, Multimedia deployment of next-generation services to So, what are service providers doing to Business and Broadband Multimedia both TDM and Voice over IP customers. address these challenges—i.e., to keep Services—Succession VoIP Services port- It is the deployment of these next-genera- their basic services from being commodi- folio enables service providers to deliver tion services that generates new revenue tized and to hold onto their core business innovating and compelling multimedia opportunities and enables a seamless, and residential customers? enhanced services as well. demand-driven evolution to a packetized To address the challenges of the new network, along with its sustainable cost millennium, service providers are Succession VoIP Services reductions. searching for solutions that create new Nortel Networks new Succession VoIP Meeting enterprise and revenue streams and retain existing Services portfolio enables service providers consumer service needs revenues, while leveraging their existing to deploy next-generation services ubiqui- Nortel Networks carrier-hosted Succession infrastructure as much as possible. tously on both their existing TDM VoIP Services portfolio is designed to Whereas service providers previously infrastructure as well as on their next- meet the needs of today’s consumer and focused on cutting capital and operational generation networks. enterprise customers who are demanding new ways to communicate. 1 What’s Wrong With Telecom? (Impact: US), META Group, November 4, 2002 2 Probe Research Client Alert - The ILECs Hit a Revenue Dilemma: Where Are Access Charges Going?, Probe Research Inc., October 25, 2002 2
  3. 3. Overlay new services to get started... Accelerate to volume deployments with Succession Communication Server 2000 Converged • Increased scalability MCS 5200 desktop • Simpler to own and operate • Increased network utility MCS 5200 CS 2000 PSTN Packet network Packet network PVG or MG 4000 CICM Converged desktop Web clients IP clients PC clients IP phones Figure 1. Succession VoIP Services strategy Consumers want to improve the of these enhanced services while retaining greatest revenue and market share growth management of their communications so their investment in existing phones and opportunities. that they have more control over how and voice services. For enterprise customers, this research when others can contact them. Consumers And, both enterprises and consumers want shows that enterprises are most willing also want to simplify their communica- these capabilities today. Neither customer to pay an incremental price for services tions, eliminating the need to have segment is willing to wait until VoIP is that enhance employee collaboration different contact numbers for each everywhere or give up any of their existing and mobility capabilities. Enterprises are communication device (home phone, services. They want the full service set particularly interested in services such as office phone, cell phone, etc.), as well as they have today as well as next-generation call screening and routing, multi-party the way that they contact others. In addi- services. conference calling, and instant file tion, consumers want to take advantage of transfer. According to the research multiple media (including text, video, and It’s not enough, however, just to provide (see Figure 2), enterprises will pay $5 voice) in a single communications session. service providers with new, innovative to $9 per feature over the cost of their services. Vendors must also provide inno- Enterprises—regardless of their size— existing Centrex or PBX. vative services for which consumer and want to improve collaboration for enterprise customers are willing to pay. These research findings also show that geographically dispersed employees and, residential consumers are the most willing in doing so, increase productivity; increase Services customers will pay for to pay an incremental price for services the mobility of their workforce; and The Succession VoIP and Multimedia that simplify and enhance communica- reduce communications operations costs. Communication Services portfolio is tions. The market research indicates that In particular, enterprises want to provide based on just that—delivering the services consumers are willing to pay $2 to $7 per the same advanced communication for which consumers and enterprises are feature (see Figure 2) over the cost of their services to all their employees anytime, willing to pay. Nortel Networks, in existing broadband service offering for anywhere, and give the employees more conjunction with Pollara, Inc., has services such as click to dial, one voice control of their communications. conducted extensive primary market mail box, and video calling. Enterprises also want to reap the benefits research to determine which next-genera- tion services will offer service providers the 3
  4. 4. Enterprise willingness to pay Consumer willingness to pay • Remote access • One voice mail box The Multimedia Communication Services $5 - $9 per feature $2 - $7 per feature • Real time call handling • Click to dial • Plug-and-play phones • Multi-party conference calling portfolio is a multimedia feature-rich busi- • Multi-party conference calling • Video calling ness and residential hosted service suite • Call screening and routing • Call screening and routing that can be used separately or in conjunc- • Instant file transfer • Application sharing tion with Succession VoIP Services. The suite of Multimedia Communication Services includes: Multimedia features that will deliver market share • Personal Communication Services, growth potential and new revenue opportunities which enable a Web-based personal agent that allows users to easily manage who can contact them and how the call is completed • Multimedia Business Services, which enable a carrier-hosted services bundle that allows enterprises to simplify and Add features on top of existing phones for greatest customer value enhance their communications capabilities Figure 2. Services enterprises and consumers want and will pay for • Broadband Multimedia Services, which enable a carrier-hosted services bundle that allows consumers to leverage The primary market research also shows multimedia power of complementary their broadband service to simplify and that—although they differ in areas such devices such as personal computers. From enhance their communications as feature prioritization and willingness an end-user perspective, exploiting familiar capabilities to pay—small, medium, and large enter- user interfaces can dramatically increase prises, as well as consumers, are unani- the service adoption rates of new services. Both the Succession VoIP Services and mous in their willingness to pay for Multimedia Communication Services multimedia services that can be integrated New hosted business and can be “mixed and matched” to meet the with existing telephones. In other words, residential service suite individual needs of each service provider. enterprises and consumers want the best Succession VoIP Services is a feature-rich Succession Centrex IP of both worlds—i.e. to keep their existing business and residential hosted services Nortel Networks Succession Centrex IP phones and still take advantage of multi- portfolio that provides carriers with new, is a hosted service offering that combines media services that are incorporated with revenue-generating opportunities and the rich feature set and high reliability of a their voice service. This point is critical enables an intelligent circuit-to-packet Centrex solution with the next-generation because it indicates that enterprises want migration. The Succession VoIP Services capabilities of Voice over IP. to leverage their investment in their portfolio includes a suite of three hosted existing, feature-rich phone systems as Succession Centrex IP supports over 200 business and residential services. The suite much as possible, while consumers want existing Centrex features and is compat- of Succession VoIP Services includes: to be able to continue to depend upon ible with existing billing and provisioning the reliability of their existing phones. • Succession Centrex IP, which enables systems. In addition, Nortel Networks a full suite of hosted business voice Centrex IP Client Manager (CICM) is The ability to combine the best values of services supported on the DMS-100 family as well the telephony device with the capabilities of new multimedia devices is a key • Succession Voice over IP Virtual Private as the Succession Communication Server component of Nortel Networks Network (VPN), which enables hosted 2000 and Succession Communication Succession VoIP Services strategy. By voice networking and cost-effective Server 2000 - Compact softswitches. This combining Nortel Networks Succession converged access for enterprises enables service providers to offer Centrex VoIP and Multimedia Communication • Succession Primary Voice, which IP services directly from their DMS today Services, service providers can now deliver enables full Class 5-compliant primary and to leverage this investment as they a range of new services to enhance line services migrate their networks to packet. existing phone systems by exploiting the 4
  5. 5. Succession Voice over IP VPN Centrex IP Nortel Networks Succession Voice over IP $160M VPN enables the replacement of costly leased private lines used to connect PBXs $140M and key systems with secure IP-VPNs. The combination of the extensive voice $120M Without Centrex IP VPN translations capability of the Succession Communication Server 2000 $100M with H.323 multi-vendor IP PBX networking capability allows multiple 1 2 3 4 5 voice networks to be collapsed onto a single, managed packet infrastructure. The Succession Voice over IP VPN service, Figure 3: Impact of adding Succession Centrex IP to 500K lines installed base therefore, reduces network connections, simplifies call routing, connects seamlessly For service providers, Succession Centrex moves, adds, and changes that Succession to remote locations, and streamlines IP delivers an easy, cost-effective migration Centrex IP provides (up to $150 per network management. The Succession path to VoIP by permitting them to move based on Nortel Networks internal Voice over IP VPN service also delivers leverage their existing DMS infrastructure analysis). both PBX and Centrex feature inter- while also providing a clear migration working by leveraging standards such as Succession Centrex IP also provides the QSIG GF, H.323, and DPNSS (UK only). path to a Succession packet network. enterprise with a venue that can increase In addition, Centrex IP allows service With Succession Voice over IP VPN, employee productivity and reduce expenses providers to create added revenue oppor- service providers can cost-effectively through enhanced mobility. A detailed tunities by enabling new services, such as manage multiple enterprise voice networks cost analysis by Nortel Networks shows mobility, to address the rapidly growing consisting of IP PBXs, PBXs, and Centrex. that the cost of Centrex IP for an enter- mobile workforce of their enterprise By providing a natural increment to offer- prise is up to 35 percent less than the customers. Additionally, Succession ings such as Centrex and TDM voice cost of deploying an IP PBX in the first Centrex IP paves the way for service VPNs, the Succession Voice over IP VPN 24 months. providers to offer Centrex services on a service enables service providers to cost- national basis across a carrier-grade IP Succession Centrex IP service effectively grow their small and medium network—cost-effectively linking regional provider business case enterprise customer base while extending small and medium branch offices with The Succession Centrex IP service their service reach out-of-territory. corporate headquarters. The new services provider business case is based on a five- delivered by Succession Centrex IP, year study of a 500K line installed base With the Succession Voice over IP VPN combined with the full suite of existing of Centrex users. As seen in Figure 3, service, large enterprises can benefit from Centrex services, provide a feature richness the business case shows that a 10 percent operational cost savings and lower leased that cannot be matched by competitors’ penetration of Centrex IP services offers line charges by outsourcing the manage- IP PBXs, allowing service providers to a potential increase of $41M dollars to ment of their voice network. Multi-site protect their installed Centrex base and service provider revenue by year 5 of the enterprises can benefit from the simplified the revenues it generates. study. The deployment of Succession and centralized routing and dial plan Centrex IP also provides a positive cash management provided by the Succession For enterprises, Succession Centrex IP is flow contribution in the first year and Voice over IP VPN service. In addition, compatible with their installed Centrex an overall payback period of 1.4 years. small and medium enterprises benefit from base, enabling a lower cost, lower risk Succession Centrex IP yields rapid the cost-effective converged access into the migration to VoIP. Enterprise customers paybacks with a modest investment carrier for all their voice and data needs. using Centrex today also realize cost because it allows the service provider Based on Nortel Networks business case for savings from the reduced expenses of to retain existing Centrex services and a 21-site enterprise, Succession Voice over provides the ability to augment them IP VPN provides an annual operations with new services, such as mobility. savings of $729K and a discounted payback period of less than one year. 5
  6. 6. Succession Voice over IP VPN service service set that presents revenue-gener- With Personal Communication Services, provider business case ating opportunities for new market entry. service providers can now expand their The service provider business case is based By supporting full Class 5 functionality— service offerings for traditional phones, on a new-build network for the Succession including LNP, E911, and CALEA— creating incremental revenue opportuni- Voice over IP VPN service alone. As seen in Succession Primary Voice also provides ties. For service providers with both Figure 4, the business case shows a positive significant competitive service differentia- mobile and landline offerings, Personal operating cash flow in the first year and a tion. Succession Primary Voice also Communication Services allow them to discounted payback of just over 2 years. enables a graceful circuit-to-packet evolu- deliver a bundled service to their wireline If Succession Voice over IP VPN is treated tion, with service transparency and seam- and wireless customers, increasing the as an incremental service to an existing less integration into existing service potential average revenue per user and network, the payback drops to about provider billing and provisioning systems. reducing customer churn. 1.5 years. Succession Primary Voice service allows For the consumer, Personal Communi- Succession Primary Voice consumers to enjoy the feature-rich, reli- cation Services provide end users greater Nortel Networks Succession Primary Voice able primary line services they have come control over how and when they are service provides full Class 5 regulatory- to depend on…without any compromise. reached, while simplifying the way they compliant residential voice services for reach others. Personal Communication Personal Communication Services Services also address the consumer’s new markets and enables competitive Personal Communication Services provide problem of having a different contact VoIP services for existing markets. a Web-based personal agent that allows number for each communication device, Succession Primary Voice is applicable for users to easily manage who can contact including office phone, home phone, both ATM or IP network infrastructures them and how the call is completed. and mobile phone. By providing a single and supports a variety of access options, Personal Agent provides enhanced call address for all communication devices, including: Integrated Access Devices for screening and routing capabilities by Personal Communication Services enable VoIP access, standard DOCSIS-compliant allowing users to define rules to redirect user-based rather than device-based cable Multimedia Terminal Adapters for incoming calls (based on call attributes services. cable Multiple System Operators, and such as caller ID, time of day, etc.) from a the Succession Media Gateway 9000 for single directory number (or SIP address) Multimedia Business Services copper-based packet access. to their most convenient communications Multimedia Business Services allow enter- device. prises to efficiently utilize multiple media Succession Primary Voice provides service in a single communications session— providers with a proven primary voice sending and receiving video, instant messages, text, and images, all while Discounted cash flow collaborating in real time. $100 With Multimedia Business Services, $80 point-to-point video calling from a user’s desktop is as simple to use as clicking on Net income $60 a name in a personal or group directory, without the need for special rooms or $40 NPV complicated dialing procedures. Multimedia Business Services also facilitate the sharing US$ (M) $20 of files, images, text, and other content $0 by geographically dispersed individuals, including the following features: -$20 Capital cost • Instant Messaging, which allows text -$40 notes to be sent and received amongst one or more recipients, even while they -$60 are engaged in an active call Year 1 Year 2 Year 3 Year 4 Year 5 • Whiteboarding, which facilitates collab- oration through the sharing of text and Figure 4. Succession Voice over IP business case graphic objects in a common workspace 6
  7. 7. • Web Push, which enables users to display Web pages on other users’ Annual revenue screens during active calls $180 • Instant File Transfer, which permits the sending and receiving of files from $160 remote collaborators, even while the $140 Millions US currency user is engaged in a voice/video/multi- $120 media session with that individual $100 In addition, Multimedia Business Services provide the ability to use a combination $80 of a telephone and a PC to participate in $60 BMS only a multimedia call. Service providers can $40 PC only provide, and their customers can utilize, MBS only multimedia and collaboration capabilities $20 BMS and PC without displacing the existing voice BMS, MBS, and PC $0 infrastructure. 0 1 2 3 4 5 6 Multimedia Business Services provide Figure 5. Broadband Multimedia/Personal Communication/Multimedia Business service providers with significant compet- Services—Carrier Business Case itive differentiation by enabling innova- tive and compelling multimedia-enhanced services that augment existing voice over broadband in a Voice over IP infra- Combined business case for service offerings. Multimedia Business structure. Broadband Multimedia Services Personal Communication, Services allow service providers to offer provide service providers with the key Multimedia Business, and hosted multimedia services, opening new service differentiation necessary to accel- Broadband Multimedia Services revenue opportunities and maximizing erate deployment of broadband services. The combined business case shows how the market potential for these service Personal Communication, Multimedia Service providers can also utilize offerings by enabling video and collab- Business, and Broadband Multimedia Broadband Multimedia Services to offer oration features for traditional phones. Services can add value to both a service home office customers a more cost-effec- provider’s enterprise and consumer services For the enterprises, Multimedia Business tive communications service. Broadband portfolio. This business case represents a Services dramatically increase the produc- Multimedia Services allow broadband local exchange carrier deploying these three tivity of geographically dispersed teams service providers to offer a new, billable Multimedia Communication Services to while reducing the need and associated service for the consumer market. enterprise, residential, and SoHo customers travel costs for participating in face-to- For the Small Office/Home Office within a Tier 1 Metropolitan Statistical Area face meetings. (SoHo) consumers, Broadband (MSA). The service pricing and penetration Multimedia Services provide affordable assumptions were generated using analysis Broadband Multimedia Services advanced communications over an from Nortel Networks primary research Broadband Multimedia Services provide existing broadband connection. study of 600 enterprises and 600 residential solutions to address the unique commu- nications needs of today's broadband For the consumer, Broadband Multimedia and SoHo users. As seen in Figure 5, these subscriber. Broadband subscribers are Services provide affordable multi-user services provide positive cash flow in the demanding these new services to help communications over an existing broad- second year of operation and have a five- them manage their many communica- band connection. In addition, the graph- year NPV of $37.6 million. tions devices, applications, and contacts. ical interface available with Succession Succession VoIP Services Scaling Using Session Initiation Protocol (SIP) Internet Voice makes traditional residen- So, if service providers can realize next- capabilities, Broadband Multimedia tial calling features easier to use. generation service revenues today, why do Services deliver key telephony features they need to evolve to fully packetized including call forwarding, call hold, call networks? The answer is simple—a service transfer, call waiting, and caller ID—all provider cannot cost-effectively scale these services by using overlay or edge networks. 7
  8. 8. Nodal limitations of TDM do not effec- customer base, driving added revenue packetization of their entire network. tively allow carriers to deploy ubiquitous opportunities through offerings such as Service providers can leverage existing IP services. national Centrex IP or global Voice over IP network assets and minimize capital risk, VPN. Service providers are positioned to while economically and intelligently Network packetization is required to ensure realize improved margins on existing migrating to packet. Doing so will lower a sustainable business case for the introduc- services and faster out-of-territory expan- their operational costs, increase service tion of multiple services on a mass market sion, further improving their business case. scalability, and facilitate deployment. basis. Network packetization not only enables effective scaling, it also enables the Nortel Networks Succession portfolio is centralization of service management, greatly Summary not standing still. Nortel Networks has improving operational efficiencies as well The Succession VoIP Services strategy has responded to the changing market realities as bandwidth utilization. Packetization also been developed based on solid market by delivering the revenue-generating increases network utility with a single, truly research and customer input to address opportunities required by service providers converged network from which any service the challenges faced by service providers and the next-generation services demanded can be offered. today—generating new revenue opportu- by their end users. nities, while at the same time cutting costs Succession VoIP Services position service and protecting existing service revenues. providers to realize immediate benefits from new service revenues and, in parallel, The hosted business and residential invest in the packetization of their networks. services delivered by the Succession VoIP Through network packetization, Succession Services portfolio allow service providers VoIP Services allow service providers to to accelerate next-generation service more cost-effectively address a larger revenues today, without requiring the In the United States: Nortel Networks 35 Davis Drive Research Triangle Park, NC 27709 USA In Canada: Nortel Networks is an industry leader and innovator focused on transforming how the world commu- Nortel Networks 8200 Dixie Road, nicates and exchanges information. The company is supplying its service provider and enterprise Suite 100 Brampton, Ontario L6T 5P6 customers with communications technology and infrastructure to enable value-added IP data, voice Canada and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and In Caribbean and Latin America: Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. Nortel Networks 1500 Concorde Terrace More information about Nortel Networks can be found on the Web at: Sunrise, FL 33323 USA In Europe: For more information, contact your Nortel Networks representative, or Nortel Networks Maidenhead Office Park call 1-800-4 NORTEL or 1-800-466-7835 from anywhere in North America. Westacott Way Maidenhead Berkshire SL6 3QH *Nortel Networks, the Nortel Networks logo, and the globemark design, and Succession UK are trademarks of Nortel Networks. All other trademarks are the property of their owners. Copyright © 2003 Nortel Networks. All rights reserved. Information in this document is subject to change In Asia: without notice. Nortel Networks assumes no responsibility for any errors that may appear in this document. Nortel Networks 6/F Cityplaza 4, GSA Schedule GS-35F-0140L Taikooshing, 1-888-GSA-NTEL 12 Taikoo Wan Road, Hong Kong NN103280-101503