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Bolder Is Better for IP Transformation

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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jhodgesk1s 11/21/2013 | 4:44:39 PM
Re: Risk factor Carol, I believe you are correct in assuming Metaswitch is talking about a operator without a wireless network. I also agree there is no single TDM replacement business model template, so clearly the "bolder" approach won't work for all. The bottom line for me is a fixed operator making most if not all revenue from a 30 year network needs to find the most cost effective solution with the best business case sooner vs. later. Instead, maybe Older is Better for IP Transformation.
brookseven 11/21/2013 | 4:27:58 PM
Re: Risk factor Okay talk about missing the point.

Look a voice switch is a voice switch and in fact it does not matter whether there was a radio or a wire attached to it.  You guys are missing the point of why do ANY investment in wireline voice switching.  Carol, I get your point about the small carriers.  Metaswitch is already doing well there.  My point is in the large carriers.  

My proposition is that 5Es and DMSes will be NOT replaced.  What will happen is that a "voice switch" will be used. That voice switch will switch VoIP, but there if you are a large carrier you are buing wireless infrastructure not wired.  So buy a bit more and run the lines that you need to into that switch. 

So remember - there is no difference between a voice switch for wireless and one for wireline.  Localization of the switch no longer matters (otherwise Vonage could not exist) since the largest cities take what is now trivial amounts of traffic to run voice.

People need to stop thinking in the box.  A Wireless Voice Switch can be hooked up to any source of voice - even a POTS line.

Finally, AT&T isusing the old UMC-1000 as replacement line bays so it doesn't matter if there are no line cards available for DMS or 5ESS.  And by the way it can do POTS to VoIP but nobody cares.  After the Class 5, the DLC is the next product to go the way of the dodo.  So, Calix and Adtran can forget about getting approvals as a DLC in AT&T and Verizon.   It is simply not worth it to the carrier and they will do something else instead.

seven

 
spc_isdnip 11/21/2013 | 3:41:03 PM
Re: Risk factor Seven, the LTE network is just a radio access network relying on wireline (glass) backhaul and the PSTN for the rest of the call.  So it commands investment, but they have to maintain a PSTN too.  Metaswitch's benefit to the ILEC does not all, or even mosty, come from "eye pee".  It comes from being much newer than the ancient VAX-era legacy switches they're keeping alive.  One kilowatt can run a Metaswitch core (call agents plus TDM to IP gateway and IP switch) handling probably tens of thousands of lines. 

However, much of an old Class 5 is analog line cards.  That function is still in demand, but again newer gear (think Adtran TA-5000) can do VoIP to POTS at a higher density and with much less power consumption than a 5E or vintage DMS. Again, it's the newer chips.  The 5ESS design was obsolete before it volume shipped in 1982.
TeleWRTRLiz 11/21/2013 | 3:15:57 PM
Re: Risk factor OK. I think I wrote an article about this same topic 12 years ago at Telephony. It's freaking me out. It's crazy how fast and how slow this industry moves at the same time.
Carol Wilson 11/21/2013 | 3:00:16 PM
Re: Risk factor I'm not the VoLTE expert, so I'm on thin ice here, but the real goal for AT&T is to shut down its TDM switches and move everything onto its IP network. Whether the access to that is via a wrireless network or U-Verse is going to depend on where the consumer lives, I assume. They aren't going to upgrade everyone to U-Verse and where they don't, they'll go VoLTE, for sure.  I assume Verizon is the same thing - wireless access where the wireline network can't be cost-effectively upgraded. 

But I think Metaswitch is talking about carriers who don't operate national wireless networks. 

 
brookseven 11/21/2013 | 2:43:47 PM
Re: Risk factor  

Carol,

If you were AT&T would you not be better off building out your VoLTE network and sharing that infrastructure with your wireline voice (which is declining)?

seven

 
Carol Wilson 11/21/2013 | 2:24:46 PM
Re: Risk factor When you consider the IP transformation is inevitable, the question is when, not if. What Metaswitch is saying is that going all in creates more possibilities for new revenues sooner rather than later, and that's always the best way to make a business case, on new money. 
[email protected] 11/21/2013 | 2:14:51 PM
Risk factor Bolder would also be riskier, is how I imagine many folks would look at it. But how many network operators can afford NOT to take risks these days? Caution could be a riskier strategy...
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