November 21, 2013
Telcos that try to move incrementally into an IP network transformation may have a harder time proving the business case than those that are willing to make bolder moves and combine the transition from TDM to IP with a major upgrade to broadband access and the introduction of new services, according to a vendor closely involved in the process.
Metaswitch Networks has been helping telcos of all sizes move into the VoIP space and explore its revenue potential for some time. The company, now known for a lot more, first made its mark in the US in that area. (See: Metaswitch Formally Joins CloudNFV Effort.)
The one thing that strikes me about my recent conversations with Metaswitch folks and its announcement of ongoing support for telco clients' legacy Class 5 central office switches is that there is no one-size-fits-all approach to how this is done. Each telco is facing its own challenges and opportunities in taking an inevitable step. (See: Metaswitch Offers Legacy Switch Support.)
In fairness, these conversations began because Metaswitch was eager to shoot down claims by Genband Inc. that the business case for IP transformation could be made almost solely on the reduction in commercial power costs from replacing old gear. (See: Genband Plots Funding of TDM Death March.) But the benefit extend much farther, and Kelsyn Rooks, director of product marketing for IP transformation at Metaswitch, shared the overriding conclusions with us.
First, he says, "the overall business case is very specific to the individual carrier." Also, the carriers that have had the greatest success have been willing to adopt a bolder vision of transformation. Not only have they replaced TDM switches, but they've also adopted high-speed broadband and revenue-generating services such as IPTV. That's why Metaswitch believes being able to assemble the business case for IP transformation requires a keen understanding of the carrier's entire cost structure. "It becomes a matter of putting together multiple building blocks."
On the power front, few of the telcos that have worked with Metaswitch can justify the cost of going all-IP based on power savings alone. Those savings vary widely depending on where the carrier is located -- i.e., the hostility of the local environment and the price of commercial power, which also varies -- and even the extent to which the telco has modernized its broadband access facilities, which also consume power.
But, wait, there's more. Many carriers won't buy into a transformation project unless they can see a payback in the first two or three years. A power payoff can take up to 15 years -- if it comes at all. "If you are looking at that kind of timeframe, you need to start thinking about whether you want to start replacing the old gear with hardware-based appliances or, in a 10-year time frame, are we going to be talking about a software-based network?" The risk of launching a project with a 10-year payback is winding up with something quite outdated.
The bad news from the vendor perspective is that there is no single business case or approach that can be adopted everywhere, so vendors have to adopt a consultative approach that delivers some degree of customization. The good news is that many carriers can find savings and benefits somewhere. One telco actually made its transformation business case solely by collapsing central office sites and eliminating multiple leases.
"There is no one size fits all" on power savings or anything else, Rooks said. "You have to take it carrier by carrier."
— Carol Wilson, Editor-at-Large, Light Reading
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