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Telcordia's Osmine Gold Mine

Light Reading
News Analysis
Light Reading
10/18/2000

Telecom monopolies may be dying out around the world, but some sources say there's one in the U.S. that's still going strong.

They point to the Osmine program, which aims to ensure that all of the network equipment used by RBOCs (regional Bell operating companies) can be managed by the same software programs.

It sounds great in theory, but in practice it's got a fatal flaw. A single outfit -- Telcordia Technologies Inc. -- runs the whole shebang. And that means that Telcordia is able to charge vendors a phenomenal entry price -- by all accounts, millions of dollars per job -- to gain access to the RBOC equipment market.

That in turn means that RBOCs get a narrower choice of equipment, since fewer vendors can afford to stump up the money to comply with Osmine. And, since smaller, newer companies are usually the ones with revolutionary technology, this can can make it more difficult for RBOCs to compete with alternative carriers.

A scandal? You bet. And the best way to come to grips with it is to start with a clear understanding of Osmine. The name stands for Operations System Modifications for the Integration of Network Elements -- quite a mouthful for what is essentially a group of aging, complicated, legacy software packages used for managing RBOCs' telephone networks.

The way things are set up, Telcordia can't go wrong. Thanks to RBOCs' historical reliance on Telcordia for infrastructure software, Telcordia's got a captive market for the packages that RBOCs need to manage their equipment. Likewise, if vendors want to sell their gear to RBOCs -- who represent two-thirds of some of their potential markets -- they have to go to Telcordia to get software developed that will make their equipment Osmine compliant.

For its part, Telcordia denies having any visegrip on the RBOC market. "I wish we didn't have competition, but we do," says Dennis Tinley, VP and general manager of operations support systems at Telcordia. But Tinley concedes that this competition is in the area of Telcordia's so-called next-generation networks (NGN) products, which include additions and upgrades to existing Osmine databases for use in packet-based data networks. For vendors and carriers already committed to Osmine legacy databases, Telcordia's the only game in town.

And most RBOCs still have a firm Osmine commitment. "It's a given that if you want to put a product on our network, you have to conform to Osmine," says Ted Zernhelt, a member of the technical and strategic planning staff at BellSouth Corp. (NYSE: BLS).

As a result, Telcordia can charge what it likes for developing software for vendors' equipment, and it likes to charge a lot, judging by the figures cited by startups. "We've budgeted $15 million for it," says Alnoor Shivji, founder, president, and CEO of Cyras Systems Inc.. "It's a monopoly, and there's not much negotiation that goes on," he adds. "They make a huge amount of money. It's really unbelievable how much they charge."

Telcordia denies its costs are high. "We offer a very high-value service," says Tinley. "Our rates are issued on a time and materials basis, and they're competitive with those of companies providing similar services."

Still, Telcordia charges so much money that startups wanting to target RBOCs have to remember to build it into their financing plans. Kestrel Solutions "discovered" Osmine a little late, after completing its first $10 million round of funding, according to Meldon Gafner, its chairman. The startup had to go back almost immediately and raise another $14 million to pay for its entry ticket to the RBOC market, he says.

Getting Osmine compliance isn't just fiercely expensive. It's also agonizingly slow. Despite Telcordia's claims that it's streamlined the Osmine process over the last three years, vendors complain it can take over a year to get products integrated. (Telcordia itself gives three months to one year as an average timeframe for integration.) Some vendors say there's a lot of work involved in writing different bits of code to cover the huge range of possible connections between their different devices and different Telcordia databases, each of which has its own peculiar interface. Others say they simply can't understand why it takes so long. "All they do is make a few changes to make sure they can recognise your command set. And they are trivial changes," says Shivji.

Once vendors have got Osmine compliance, they're hooked for life. They have to keep on stumping up more money to modify their software so that it will work with Osmine upgrades which come out of Telcordia four times a year. "If you're not in line, you miss the train," says Pam Dodge, director of product marketing at Astral Point Communications Inc., another startup that's paid up to play in the RBOC market.

Big, established vendors like Lucent Technologies Inc. (NYSE: LU) and Nortel Networks Corp. (NYSE/Toronto: NT) already have well-oiled Osmine compliance programs in place. But the huge price tag has deterred a lot of smaller optical vendors from taking the plunge. As noted, Astral Point, Cyras, and Kestrel have coughed up. So have Ciena Corp. (Nasdaq: CIEN) and NEC Eluminant Technologies Inc.. Others, such as Quantum Bridge Communications Inc., are seriously considering it. Getting a full list is difficult, because Telcordia won't disclose which vendors are in its exclusive Osmine-compliant club.

Vendors that have paid up say it's money well spent. Kestrel doesn't have to worry so much about competition when dealing with RBOCs, according to Gafner. Astral Point's Dodge says her company will recoup its investment in Osmine compliance "within months." This is not just because a small premium can be charged for Osmine compliance, although in some cases it can. Mainly, the sheer size of the RBOC networks guarantees big wins for vendors who qualify.

The bottom line is that RBOCs have to balance the benefits of having a system that can manage all of their equipment against some significant downsides -- having to pay more and wait longer to gain access to the latest advances in technology.

"Osmine is expensive. Something needs to be done to streamline the process," concedes BellSouth's Zernhelt. "It's a burden. We're getting to the point where the long lead times and the cost are going to keep us from being able to compete with carriers who don't need to comply."

So far, there's no evidence that any companies have taken their complaints about Osmine into formal litigation with the Antitrust Division of the U.S. Department of Justice or with the U.S. Federal Trade Commission. Telcordia's legal staff did not reply at press time to inquiries about whether or not there is pending antitrust litigation against the company.

A potential alternative to Osmine -- or a big improvement on it -- is being cooked up by an industry group called the Telemanagement Forum, in the form of a document called TMF509. It promotes a standard interface between equipment and carriers' management systems, based on Corba (Common Object Request Broker Architecture).

TMF509 is scheduled for publication later this month and has got some heavyweight backers, including Alcatel SA (NYSE: ALA), Ciena, Siemens AG (Frankfurt: SIE), and others.

Telcordia is also a sponsor of the document, although it hasn't made any commitments to implement its proposals. One of Telcordia's directors, Susan Kenan, acknowledges that there are efforts afoot to solve the problem of having to write countless bits of software to address different databases. Many Osmine databases "have no common format," she confirms. However, she declines to say whether Telcordia will adopt solutions that might open the RBOC management software market to competition, because details "haven't yet reached Telcordia."

Corba-based interfaces like the one being proposed by the Telemanagement Forum are already being used by software vendors such as Astracon and Syndesis Ltd. to achieve some of the same functions as Osmine in alternative carrier networks. There's no reason why this couldn't be extended to include RBOC networks as well, sources say. RBOCs, however, will have to make the first move, by demonstrating that they want to move away from Telecordia's current monopoly.

-- Mary Jander, senior editor, Peter Heywood, international editor, and Stephen Saunders, US editor, Light Reading http://www.lightreading.com

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