WHITE P APERwww.idc.com Making the Case for Flexible Next-Generation Transport Networks Sponsored by: CienaF.508.935.4015 Sterling Perrin May 2005P.508.872.8200 EXECUTIVE SUMMARY New business initiatives and competitive pressures to become more efficient and productive are forcing enterprises to seek new types of network services. In particular, enterprises are showing significant interest in advanced data services, andGlobal Headquarters: 5 Speen Street Framingham, MA 01701 USA are adopting such offerings as metro Ethernet services, IP VPNs, Layer 2 VPNs, and VoIP technology as a replacement for traditional PBXs. At the same time, businesses continue to rely heavily on the more traditional voice and data services that are well understood and widely deployed throughout their networks. Changes in customer demands are causing carriers to dramatically alter the way they architect their networks. In addition, carrier requirements to cut their costs — both operational and capital expenses — are causing the further reevaluation of networks. The best network solutions for carriers are ones that meet their customers needs for next-generation services and also address their own requirements for lower capital and operational costs. Enabling new services, while maintaining legacy services, is critical for NSP success moving forward. As voice and legacy data service revenue declines, NSPs need new services to fill the revenue void. More important, enterprise customers are demanding new services from their NSPs. If the incumbent provider doesnt have what a customer needs, they will spend their money with a new NSP that does offer it. The requirement for NSPs to support legacy services is clear from surveys of enterprise customer needs. Enterprises are not migrating to next-generation data services overnight. IDC expects that legacy data services, such as frame relay and ATM, will continue for many years to come. Enterprise requirements for new services to interwork with legacy services underscore this reality. In the environment just described, NSPs face many risks in making their NGN network decisions — and in not making them. For instance, they face the risk of making a wrong technology decision. Technology investments are expensive, and carrier capital budgets are limited. If they place a strong bet on a data service that doesnt take off, they face the risk not only of wasting the capital and operational dollars invested in that service, but also of missing the "next big thing" completely because they drained their resources on the wrong choice. NSPs also face the risk of making the right technology decision at the wrong time. It does NSPs no good to be right about an enterprise technology migration but be two years too late to market, or two years too early.