TC3 Part 3: UNIFI Communications- An Interesting Global VoIP Network Provider

Introduction:

UNIFI Communications is not a well known telecom brand name. Yet the company handles one billion minutes of annual global traffic  from over 100 million subscribers, through 22 peering locations or “points of presence.” That makes it one of the largest IP, international carriers in the world! The accomplishments, innovations, and future directions from this 13 year old company were described in an interview during the second day (September 19th) of TC3.

TC3 (Derek Kerton) Interview with Adrian Shatku of UNIFI:

UNIFI Communications operates a global network which provides wholesale services to operators and large enterprise customers all over the world. Their global VoIP network reaches over 250 countries via bilateral interconnects, which connect targeted consumer and enterprise end customers.

The company has invested significant capital to finance the expansion of its international network on a worldwide basis and as a reseller of telecom traffic to the wholesale market. UNIFI’s physical network is composed of segments that are built, bought and aggregated. They have a regional focus to either aggregate or build network capacity as needed.

UNIFI has gained direct contact with many nation-wide telcos in Latin America, Eastern and Western Europe, Asia and Africa. Through those business relationships, UNIFI has expanded its network with other countries and gained multiple strategic relationships. UNIFI has also established successful routes in remote countries such as Albania, Poland, Turkey, Cameroon, Morocco, Nigeria, Sierra Leone. As a result, the company provides fixed and mobile infrastructure solutions to Western, Central and Eastern European countries, Caspian Sea regions, Africa and the Middle East. Russia is a new target market for the company.
UNIFI offers service creation tools that enable operators and Independent Software Vendors (ISVs) to develop their own applications – either internally or through a developers’ network.  The UNIFI Network was said to be “one of the world’s largest international Cisco-powered networks for Internet telephony.”

The company also markets an increasing number of retail telephony solutions and services, including wireless. Adrian said that smart phone usage is skyrocketing and may drive UNIFI’s revenue and profit margins in the near future.  As a result, wireless/mobile connectivity has become increasingly important to the company.

The UNIFI Mobile App supports 2G, 3G, 4G-LTE, and WiFi. It connects targeted consumer and enterprise niche market customers with UNIFI’s global VoIP network so that they can make and receive voice calls from any Internet connected location. A Global Local Reach Number is used to make it appear as if the call is between parties in the same local country, even when it’s an international call.

UNIFY is targeting independently owned mobile operators to work with them to provide global VoIP and possibly enhanced voice services (like Rich Communication Service or RCS). The company is even considering becoming an MVNO (reselling a wireless carriers mobile voice/Internet services).

UNIFI Global VoIP network leverages public Internet connectivity and strategically located global international gateways to provide voice termination services at very competitive rates to many major destinations and niche markets, including locations where UNIFI flexibly adapts to legacy network architectures (see UNIFI Interconnection diagram below).

This is a block diagram of the Unifi global network.
Image Courtesy of UNIFI

In summary, UNIFI’s reliable and highly secure international network utilizes state-of-the-art fiber-optic network infrastructure to provide:

  • Global Coverage
  • High Quality & High Availability
  • Competitive Rates, Best Value Routing (BVR) & Carrier Neutrality
  • Flexible Interconnection (TDM, VOIP-H.323, VOIP-SIP, etc.)

To increase and diversify the range of products and services offered, UNIFI is currently evaluating innovative solutions with partner companies in the following areas:

  • UNIFY Mobile App and Support System
  • OTT Content Delivery Platform
  • Class 5 (local exchange) VoIP Switching Platform
  • Automatic Termination Rate Analysis and Loading System
  • Automatic Termination Rate Distribution System

Note: A video of this TC3 interview is at: http://www.youtube.com/watch?v=gWox_v9suCM


UNIFI’s Mission Statement:

A few days after TC3, Adrian wrote in an email to this author:

“As a nimble, rapidly adaptable, niche market telecommunications services provider, the Global Voice Network operated by UNIFI Communications must continuously seek to leverage the most innovative, secure, and reliable technologies available in order to support state-of-the-art telecommunications and technology services for individual, enterprise, and/or government customers to:

  • Communicate More Cost-Effectively

  • Conduct Business Anytime from Anywhere

  • Effectively Leverage Advanced Technologies”

Closing Comment:

Our 2013 TC3 coverage has tried to bring readers new content from this year’s event, while not repeating similar messages relating to carrier-vendor relationships, start-up partnerships with equipment vendors, or case studies that were discussed at last year’s summit. We think that UNIFI is a great example of interesting and fresh content. It’s a very intriguing wholesale global network provider that most folks have never heard of. Yet the company has a very interesting value proposition. We wish them success in their future endeavors.  Please express your opinion on these articles by posting a comment in the box below each of them.  Many thanks!

New Telecom Services that Capitalize on Broadband Connectivity – Part 3

Background and Recap

The theme of this three part series is to examine potentially new and different telecom services that enable telcos to particpate in the value chain created by broadband Internet access. Pressure is on telcos to build out their fiber based and/or mobile broadband networks for greater coverage and higher traffic carrying capacity. Yet it is other companies (and not the telcos) that are making money from the value added services and apps they’ve created which take advantage of the telcos broadband network. So are telcos nothing more than purveyors of a fat, dumb pipe? Or can they find new services that will generate revenues and profits? That is, can telcos transform a “dumb pipe” into a “smart pipe” which they can make money from?

Discussion

So far we’ve looked at different versions of the “connected home” as well as emerging devices pairing up with M2M Communications platforms to create new telco opportunities and business models. Of course, many telcos have entered the entertainment video market (via IPTV and/or RF video) and offer triple or quad play service bundles. There is also the often touted Location Based Services (LBS), which is to be coupled with mobile advertisements and directory services. Premium mobile video has also been tried (e.g. Qualcomm’s MediaFlow, Sprint TV), but hasn’t produced much revenue or profits.

Another potential telco opportunity is smart grid communications networks. Many alternatives are possible. It could be a private network for the electic utility, a shared public/private network or utility use of a public broadband wireless network. However, utilities seems to lack trust in telcos and prefer to operate their own communications network (sometimes outsourced to a 3rd party). For more on this topic, please see:

Integrated Critical Communications Infrastructure for Smart Grid at Connectivity Week

We think mobile broadband may finally give rise to wireless health care applications. Telemedicine is a great example of a wireless connected health solution, especially in developing countries, unserved or underserved rural areas. IEEE ComSocSCV will be featuring a very illuminating Telemedicine panel session at our Sept 14, 2011 meeting in Santa Clara, CA.

For quite some time, femtocells have been touted as a great way for telcos to get traffic off of their mobile data networks and onto a broadband wireline network. AT&T is offering free femtocells for iPhone subscribers that live in rural areas which lack 3G/4G coverage (my neighbor in Arnold, CA has one and it works very well- as long as you’re iPhone is within 10 meters of the femtocell). Andy Germano, Vice Chairman of the Femto Forum identified several possible femtocell services at the Connections 2011 conference, which include:

  • Secure home access
  • Virtual home phone
  • Virtual fridge notes,
  • Picture synchronization and
  • remote control.

Recently, a raft of telco provided cloud computing based services have been proposed. These include: private/public cloud, personal cloud, virtual private cloud, etc. We don’t think any of these will succeed unless the telco has lots of experience with IT hosting, managing data centers, service and support of IT enterprises. Very few U.S. telcos have such experience- probably only AT&T and Century Link (with the Savvis acquisition). Hence, we don’t see Cloud Computing as ripe for telco exploitation, at least not at this time.

Perhaps, the only Cloud related attribute that telcos might capitalize on is subscription based billing. Ironically, such pay as you go billing has always been used for long distance circuit switched voice calls, but is not used for broadband (other than for various data plans based). The basic concept is to manage billing in terms of a customer’s data traffic activity and therefore manage revenue dynamically.

Chris Couch, COO of billing vendor Transverse, cited an example of subscription based billing, “If a major tennis tournament is in town then you might want to subscribe to results or clips etc, for the period of the tournament, but you normally would not subscribe to a tennis subscription. This level of sophistication increases the flexibility of the offering and the understanding of the customer. It gives the customer choice.”

When asked how the cloud fit into this billing model, Mr. Couch replied, “It is a virtuous circle. The flexibility and resources of providing this as a cloud service means a lower cost base and the ability for service providers to climb the maturity ladder quicker. It is also the most effective option, in terms of investment in normal circumstances this kind of infrastructure would have a $5-10 million price tag.”

For more information on subscription based billing, please refer to:

Can subscription billing enable the new business models telcos require?

Analyst Opinions

We checked in with Harry Wang – a very astute Telecom Analyst at Parks Associates – for his thoughts on this provocative topic. Harry thinks that telcos do have several opportunities to diversify into new markets. Here are a few he ticked off:

1. Telco App Stores

These would enable telcos to distribute content across mutliple end user platforms. Ericsson is currently providing a “white labelled” app store for Sprint (and managing their network, too). Telcos are partnering with Get Jar– a third party aggregator of mobile apps. Harry also mentions Wholesale Application Community (WAC) – a global mobile carriers’ initiative to offer app purchases no matter what device platform or mobile carrier that a consumer uses.

FiOS Mobile Remote User Interface, Courtesy Verizon

2. Home based Services (part of the “Connected Home” scenario)

Home entertainment (video, audio, game playing, etc), home security monitoring, energy controls, personal emergency response (e.g. elderly person falling down or getting hurt) were cited as some possibities. Verizon’s FlexView is a specific example of a home entertainment service for FiOS customers. It is a Video on Demand (VoD) type of service that lets the customer purchase or rent videos, which can then be played on a number of end user platforms, including:

  • Personal Computers/Netbooks
  • Compatible wireless handsets (see image for example of FiOS Mobile Remote User Interface)
  • Compatible portable devices that support Microsoft® PlayReady® content access technology.

3. On line TV packages that complement telco broadcast video (IPTV or RF) and VoD

The telco would procure the content from a 3rd party and make it available over their triple play delivery network (e.g. FiOS, U-Verse, etc). The STB would play the OTT videos along with broadcast and VoD on TVs and other user devices/platforms. Note that this OTT video package can be offered outside of telco’s network-covered territory and serves to be a competitive response to OTT video service providers like HULU, Netflix or Amazon.

4. Becoming 4G- MVNOs

Telcos (and MSOs) that don’t have their own 4G network could buy pieces of it wholesale from a third party provider like Clearwire or LightSquared. This would help telcos like Century Link and XO Communications, that currently don’t have any wireless offerings for consumers or the mobile workforce.

5. Personal Cloud for consumers

Assuming the telcos can learn and understand what makes a good cloud experience for consumers, they could provide individual “personal clouds” that store the customers data, electronic documents, music collections, downloaded videos, photo albums, etc. User concerns include: security, privacy controls, reachability and cross platform access. Harry cited Newbay Software as an interesting company in the personal cloud space.

Interview with Harry Wang

6. Commercial Services for SMBs

These would encompass service bundles that include both fixed and mobile offerings. One example is SIP Trunking, offered by XO Communications and others. Provided by an Internet Telephony Service Provider, a SIP trunk connects an IP-PBX to the traditional PSTN. Other voice, data and video conferencing services are possible. SMB customer needs will determine the precise ones which are deployed.

Here is a ViodiTV interview with Harry Wang

Parks Associates VP & Principal Analyst Kurt Scherf is very optimistic about premium technical support services to be offered by skilled telcos. Kurt wrote in an email,

“This is a broadband-provided service that I think will help to generate positive cashflow for the broadband service provider by:

  1. Creating new revenue streams; and
  2. Helping to reduce incoming customer support phone calls when people have something typically considered “out-of-scope” such as a virus infection on their home computer.

Revenues from premium technical support services are projected to grow from $1.5 billion in 2011 to $4.8 billion in 2011.”

Closing Comment

We’ve identified many new and interesting services that telcos might provide. Their success or failure will depend on skill, agility and committment of the telcos. Customer service and support will play a huge role here.

It’s imperative that telcos continue to upgrade their broadband wireless and wireline networks to keep up with the exponential increase in data traffic. We wonder whether they will have the resources and commitment to also pursue new services, such as the many we have described in this three part article.

© 2011, Alan Weissberger

Will Level 3 with GC Be Able to Compete in the Business Services Market?

Level 3 Communications Inc. announced today that it would buy Global Crossing (GC) in an all stock-for-stock transaction valued at US$1.9 billion (after assumed debt). As part of the deal, which is expected to close by year end, Level 3 will assume $1.1 billion of GC’s debt. The two companies had combined 2010 revenues of $6.26 billion.

The new Global Crossing will continue selling its fiber optic network to other carriers, but also intends to offer a menu of transport, IP and data services, content delivery, data center, collocation and voice services to business customers. Global Crossing will provide capabilities such as managed services, Communications as a Service (CaaS), and inter-continental virtual private networking capabilities.

The combined entity would be a huge fiber optic network operator. It would own thousands of miles of fiber optic cable across 70 countries. Level 3 is strong in North America and Europe, while Global Crossing has a robust presence in Latin America. Global Crossing’s enterprise customers will help Level 3 increase its current client base, which includes major telecommunications, cable and Internet business customers.

The press release announcing the deal makes several bold claims up front:

  • Combination creates a premier global communications provider with extensive network reach, global scale and a comprehensive service portfolio to deliver enhanced capabilities to customers
  • Transaction creates significant value through synergies; results in substantial improvement to balance sheet and credit profile
  • Expected to be Accretive to Level 3 on a free cash flow per share basis in 2013
  • Combination will position Level 3 to better address expansion opportunities in key global markets

For more information, please see: Level 3 to Acquire Global Crossing

Comment:

Level 3 and Global Crossing are two fallen stars of the optical networking boom and bust. Both have been on a steep decline since mid 2000 when the fiber optic bubble burst. Bermuda based Global Crossing filed bankruptcy in 2002, but re-emerged two years later with a new financial backer — Singapore Technologies Telemedia -which currently owns about 60 percent of the company. Level 3 avoided a similar fate with a cash infusion from Warren Buffett’s Berkshire Hathaway. Yet it too has struggled to grow revenue and profits. Last year, losses at Level 3 hit $622 million and reached $176 million at Global Crossing. As profits have eroded, Level 3’s financial situation has grown more precarious. The company’s debt stood at approximately $6 billion in December, 2010 and $1.1B more with this acquisition.

Global Crossing has been moving more into the content delivery market in recent years. It signed a deal in 2009 with CDN vendors Limelight and EdgeCast that gave Global Crossing customers access to their services. Last year, GC purchased Genesis Networks, a video fiber network operator that specialized in providing end-to-end IP video transmission services for major networks.

In North America, the biggest impact would likely be to give Global Crossing’s enterprise and multinational customer base access to Level 3’s metro networks. The combined entity would also participate in the faster growing Latin American market. Given the growth of networked video, e.g. over-the-top (OTT) video and telepresence/ high quality video conferencing, a broader customer base would be a big positive. Netflix uses Level 3’s network to deliver its OTT streaming video to its subscribers. The acquisition may also improve its balance sheet by cutting overall costs.

Level 3 already has significant shareholder support since Global Crossing’s largest investor -ST Telemedia- has agreed to vote in favor of the acquisition. Once the deal closes, ST Telemedia is to nominate directors to the board, relative to the size of its stake.

Analysis:

Will the combination of two struggling tier 2 carriers enable the combined entity to compete successfully with AT&T, Verizon Business (in the U.S.) and large global carriers like Telefonica (Latin America) and Deutsche Telekom (Europe)? We are skeptical while others are more sanguine.

“This is the start of consolidation,” said Donna Jaegers, an analyst with the research firm, D.A. Davidson & Co. “It’s not enough to firm up pricing overnight, but it’s a step in the right direction.”

Level 3 CEO James Crowe is calling this deal “transformational” for both companies. On the analyst call to discuss the deal, Mr. Crowe was most excited about new sales possibilities for both companies, considering the greater reach of their combined networks. Global Crossing would provide 33,000 fiber route miles outside the U.S. that Level 3 could sell to its global customers, while Level 3 would offer more metro connections for Global Crossing’s North American customers. “What we’ve all been trying to do is get more deals in front of more customers, and the combined set of assets with many more [sales] people touching customers will accomplish that,” Crowe said.

Mr. Crowe told the NY Times in a phone interview, “This will be a company with modern Internet infrastructure, across three different continents, connected by undersea cables that we control.” He also said the potential cost savings could amount to $2.5 billion, with $200 million in the first 18 months. With an improved balance sheet, analysts believe Level 3 could refinance its debt to cut its interest rates $100 million to $200 million per year.

Brian Washburn, research director, network services, for Current Analysis , says the deal is a chance for Global Crossing and Level 3 to reverse the recent negative trends in their financial performance. “All lines of Level 3 business are declining or stagnant and the net losses are not improving,” Washburn said. “Their numbers are trending in the wrong direction. The Global Crossing acquisition is a good move — because they get all the assets, and yes, assume some debt, in a stock swap. But more importantly, Level 3 gets a to-do project — they will spend the next several months shaving costs out of their internal business to increase profitability and get the numbers heading in the right direction, even if overall top-line revenue remains stagnant.”

Arthur Gruen, Chief Economist of Wilkofsky and Gruen thinks that most telecom mergers and acquisitions provide much less “bang for the buck” than industry pundits believe. For sure, the investment banks that arranged the deal make money, but shareholders may not come out ahead. While Mr. Gruen didn’t specifically comment on this Level 3-GC deal, he recently told me that mergers in the media, telecom and retail industries seldom produced the expected cost savings and improved profits. TimeWarner-aol, Alcatel-Lucent are two recent examples of consolidations that didn’t work out.

We’ve observed that acquisition of this scale rarely go smoothly and realize the promised benefits. The consolidation of operations support and network management systems is one huge obstacle. Another is to merge two different corporate cultures. Level 3 will face key decisions regarding its personnel when its workforce is joined with GC’s. Layoffs are inevitable.

This merger of two long haul, fiber based network operators, leaves the new Level 3 without a wireless broadband strategy. If the mobile enterprise that analysts are talking so much about is a reality, then the combined company must offer mobile broadband access to participate in the growth of mobile devices, mobile apps and mobile computing.

For sure, this deal will spark new interest in other fiber based carriers that sell wholesale bandwidth to telecom carriers/ ISPs and also offer hosting, IP VPN and other business class services to enterprise customers. Examples of such facility based carriers include Cogent Communications, Savvis, and XO Holdings.

Bottom line, this merger is an important test for the fiber facilities based telecom industry, which has been plagued for years by overcapacity and weak pricing. It remains to be seen if that condition will persist. It will also be interesting to see if the new entity can succesfully compete with the large (tier one) global network operators previously mentioned.

Related Article:

Three Different Scenarios for Delivering Cloud Based Communications as a Service

Three Different Scenarios for Delivering Cloud Based Communications as a Service

“Communications as a Service”  or CaaS can include any type of communications delivered as a service based on a subscription model.  That is, Voice over IP (VoIP), instant messaging (IM), email, chat, web, audio and videoconference services.  It might also include telco network operations and management in the cloud.  Yet the term CaaS now means different things to different vendors/ service providers. We describe three scenarios for CaaS in this article; each offering a different set of deliverable capabilities for: Contact Centers, Audio Conferencing and Video Conferencing.  In a Closing Comment, we describe a fourth CaaS model that we believe telcos will use for cloud based operations and management of their own networks.

But what exactly is CaaS?   I like the definition from CaaS contact center provider Interactive Intelligence Inc: “The communications system and applications are hosted and managed by a provider in an off-premise data center, with the applications being provided to customers as a (subscription) service.  Payment is made based on a per user/per month charge.”

1.  CaaS for Contact Centers:

Interactive Intelligence Inc. is an IP communications software company that specializes in delivering both premise and CaaS contact center (what used to be called “call center”) solutions that may include call routing, IVR, outbound, chat, email, social media, quality monitoring, workforce management.  The company has over 4,000 customers across 90 countries.  In addition to the contact center, Interactive Intelligence also provides Enterprise IP Telephony and Business Process Automation capabilities.  For its hosted contact center solution, the company offers three different CaaS deployment models:  Remote Control VoIP (the primary equipment and telco circuits are located at one or more facilities operated by the hosting company), Remote Control TDM (customers maintain their existing PBX and incoming calls are connected via a bridged call to the agent) and Local Control VoIP (call control model with VoIP application server in a cloud resident data center).

Local Control VoIP Model
Local Control VoIP Model

Local Control VoIP gives the customer most of the advanced benefits of having an on-premise VoIP contact center system, even though the primary application server (Customer Interaction Center, or CIC) is located off-site in a hardened data center.  While calls come into equipment on the customer premises, call control is handled by CIC which is in the hardened data center.

For customers with exceptionally strong compliance or security requirements or who rely upon high bandwidth applications, the combination of features, functionality, and flexibility seem to be enticing. Since phones, network, gateways, proxy/media servers, customer information and call recordings remain at the customer’s facility, the amount of (sensitive) data that travels beyond the firewall and across the MPLS network is more controlled.  The customer’s telco lines also remain at the customer’s location. This works well when a customer has a preferred voice carrier, has existing contracts that must be fulfilled, or possesses many existing numbers they would prefer not to port or forward. Customers also avoid the costs of forwarding or bridging calls with the Local Control VoIP model.  IP MPLS is used as the communications protocol between the call controller in the Interactive Intelligence data center and the customer premises equipment (VoIP gateway to PSTN, Proxy/Media Server, Database Server, IP router to Internet, and IP phones).

In a recent email exchange, Jason Alley, Solutions Marketing Manager at Interactive Intelligence shared that the Local Control VoIP model has had the most traction, followed by Remote Control TDM (allowing for rapid deployment with minimal change) and then Remote Control VoIP.  He said that Interactive Intelligence’s CaaS offerings for the contact center all deliver excellent security, choice and flexibility over a proven and reliable software platform.  Jason told me there were several important advantages Interactive Intelligence had over its competition:

  • Choice of three different CaaS delivery models for the contact center; each addressing specific customer requirements.  This results in flexible deployment models to fit customer needs.
  • Unique “Local Control” model that gives customers greater control over their voice and data traffic with remote survivability.
  • Broad set of applications developed by Interactive Intelligence with over a decade of experience implementing advanced contact centers.
  • Proven, stable and growing provider of CaaS contact center services.
  • Ability for the customer to migrate their CaaS based solution to the premise, or their premise solution to the cloud, without losing their investment.

Jason shares, “We are seeing tremendous growth in our CaaS business. In fact it’s the fastest growing segment of our business today. Addressing customer concerns around security, predictability, choice and flexibility is playing a big part in that.”

2. CaaS for Audio Conferencing:

Global Crossing recently launched its version of Communications as a Service (CaaS) as the first phase of the company’s network-centric, cloud-based solution set. GC states on its home page, “CaaS is designed to deliver easy-to-use, integrated, customized communications options to enterprises around the globe.”  GC’s version of CaaS is actually an on-demand business service for audio conferencing.  This CaaS offering integrates three components:

  • Global Crossing IP Virtual Private Network (VPN), with enough capacity to handle converged broadband demands for today and tomorrow.
  • Session Initiated Protocol (SIP)
  • Global Crossing Ready-Access® – Audio conferencing provided in a predictable, shared-seat billing model that, for a monthly fee, provides global access to unlimited audio conferencing minutes for each user that accesses the service.

Among the features included with the conferencing service is “Global Crossing Connect Mobile,” offering users a standard application programming interface (API) so they can join or host an audio conference from compatible mobile devices by clicking on an icon. The mobile application also syncs meetings with users’ calendars.

Global Crossing says it’s using its own internal CaaS implementation in each of its locations around the world.  This results in decreasing the its annual telecommunications spend by 30%, according to the company’s statement. “The integration of CaaS Phase 1 into our global IP and SIP network allows for the creation and delivery of other services network centric services, and that’s what is coming in our CaaS Phase 2 offer later this year: You can expect to see presence, IM, sip based video, integration with PSTN/IP telephony and find me/follow me type features that an enterprise can consume in the combination most fitting for them…globally.” wrote GC’s Anthony Christie. Chief Technology and Information Officer for Global Crossing. He also said, “Global Crossing CaaS is integral to our global cloud solution strategy.”

3.  CaaS for Video Conferencing:

Managed VoIP provider 8×8, Inc. recently announced it will be offering SMBs (8 x 8’s target market) a new set of cloud-based video conferencing services that enable them to benefit from visual collaboration. The offering will potentially provide a new recurring revenue stream for resellers, partners and VARs. This new service offering will be based on 8×8’s voice and video IP service platform and the video conferencing/ Unified Communications capabilities provided by Polycom, Inc.

The 8×8/Polycom video conferencing solution will combine 8×8’s advanced, SIP-based communications services with the Polycom® UC Intelligent Core™ in a new “8×8 Virtual Room” service offering that lets customers add HD video conferencing as another extension to their regular hosted business communications from 8×8. The Polycom UC Intelligent Core enables high quality, reliable collaboration to help SMBs improve productivity and reduce costs.

Utilizing 8×8’s unified communications technologies, the service will make scheduling, initiating and managing continuous presence visual and high definition audio collaboration across multiple endpoints as simple as clicking on a web page or dialing into a conference bridge with the added appeal of a fixed low monthly fee for unlimited use. The 8×8 service will also eliminate the need for the customer to configure firewalls, open ports or utilize public IP addresses due to its advanced, built-in NAT/firewall traversal technologies. The offering will support multi-party continuous presence video conferencing services on a hosted, ad-hoc basis in a highly available and redundant manner, eliminating the need to purchase, maintain and operate expensive video bridging system.

“As many in the industry are aware, 8×8 has significant technological expertise in video communications which we’ve continued to leverage in current offerings such as our 8×8 Virtual Meeting web conferencing service,” said Bryan Martin, chairman and CEO at 8×8. “We are very excited now to take this expertise to the next level with an accomplished and respected leader like Polycom that has already made tremendous strides developing and deploying industry-leading high-definition voice and video platforms that scale from a single user up to large room conferencing equipment.”

For more information, click here.

[Editor’s note: 8×8, Inc. has been a pioneer and a long-term proponent for making video conferencing practical and have developed many iterations of the technology, one of which is highlighted in this video interview from 2007 with 8×8’s CEO, Bryan Martin].

Closing Comment:

There is another type of CaaS that we expect to see:  the outsourcing of most telco back-end management like provisioning, mediation, OSS, and BSSs from telco owned data centers to cloud resident data centers operated and managed by a 3rd party.  With telcos continuing to outsource management of their networks to Ericsson, NSN and others, we think its only a matter of time before they opt for cloud based operations management solutions.  Unlike so many other analysts, we don’t believe telcos will be successful as cloud based IT service providers.  This is because they have little or no experience with managing their customers IT needs or in IT hosting, have failed previously in attempts to deliver computing services (especially AT&T), and have accelerated the outsourcing of their own internal network operations to third parties.

Will 2011 Be the Year of Fiber to the Building?

Background:

Stimulated by predictions of exponential Internet traffic growth and advances in DWDM/ fiber optic technology, the dot com and telecom bubble years of 1998-2001 were marked by waves of optical network start-up companies that were very well funded by VCs and Angel Investors. Many of those companies were focused on Metro Optical network access, assuming that incumbent telcos and CLECs would build out their fiber plant all the way to the business customer premises- typically terminated in the basement of an office building in a densely populated metropolitan area. Needless to say, that didn't happen and almost all of those start-ups went out of business.

Fast Foward to the Present:

On December 29th, the WSJ reported that there's a resurgence of interest in metro optical networks. In an article titled, The Fiber-Optic Networks Regain Some Glow, the Journal states:

“After the telecom bubble burst a decade ago, fiber was a dirty word.” The author writes. “Now, the fiber-optic network business is enjoying a resurgence, particularly for metro fiber, the high-capacity lines that connect a city’s office buildings, data centers and cellular towers to the Internet.”

The WSJ article notes that there have been 14 acquisitions in the metro fiber industry this year alone and 45 since the fiber market began its turnaround in 2006. It states, "The deals have turned a market that once had many small participants and a few giants into one made up of a handful of regional and national players. Analysts say the consolidation has helped stabilize the prices fiber owners can charge customers like banks, phone carriers and universities that lease their networks."

What we found most remarkable about this and similar articles, is that we've never heard of the new breed of fiber facilities based telcos Zayo Group, founded in 2007, was reported to be one of the largest with networks in 27 states and Washington DC. They have acquired 15 smaller fiber optic companies in the short time it has been in existence.

Dan Caruso, CEO of Zayo, was quoted in the article. He said, "People lost so much money during the meltdown that most investors did not want to touch fiber-based telecom." How times have changed!

More on Zayo's value proposition at:
www.zayofibersolutions.com/metro-and-regional-dark-fiber-networks

In an article titled, 2010 Year in Review: CLECs bulk up on fiber and services, FierceTelecom reports that, besides Zayo, two other CLECs were very aggressive in expanding their fiber footprint. In particular, Lightower Fiber Networks, and Paetec (Nasdaq: PAET). The author says that CLECs are using M&A as a way to scale their respective businesses to target new larger business and wholesale opportunities. But we wonder if those bulked up CLECs will be able to compete with the larger players providing telecom services to business customers? Those include AT&T, Verizon, Comcast and TW Cable who are already offering a range of metro fiber bassed services, including "Carrier Ethernet."

Perhaps the most interesting of all the related articles and on-line posts on this topic is one by Rob Powell of Telecom Ramblings, titled Metro Route Mileage Leaders for Competitive Fiber Operators.

That post lists the top 20 metro fiber CLECs, ranked by total mileage for metro loops and laterals, but NOT counting long haul links. To no one's surprise, Level 3 leads the pack with 27,000 metro fiber miles, followed by TW Telecom with 21,000 miles.  Mr. Powell states that the list does not include the incumbents (e.g. AT&T, Verizon) and most cable operators (e.g. Comcast, TW Cable, others) – many of whom would obviously be at the top. Hence, this should be thought of as competitive metro fiber.

Editor's Note:  The Journal article includes a "Finding Fiber" illustration which states that Fibertech Networks has 6,000 route miles of fiber, while the Telecom Ramblings chart shows only 5,380 for that firm.
 
We were also intriqued by FiberLight's December 18th announcement of a new initiative to drive its fiber even deeper into its 21-market footprint .  The company is in the process of identifying an additional 8,000 near-network buildings to serve along the 4,200 route mile footprint it owns and operates.  That's a lot of new buildings that will get fiber based network access!
 
Read more at:  http://www.prweb.com/releases/2010/12/prweb4909464.htm

Rob Powell says that, "We know AT&T and Verizon have piles and piles of it and that the cable MSOs aren’t too far behind." But we wonder, how much of that fiber is actually lit, i.e. available for immediate deployment? And what percentage of business buildings currently have access to lit fiber?  Spurred by intense competition from the CLECs, will those large players light more fiber to big city buildings in 2011 and offer an array of business services that were expected to be available over 10 years ago?

What do you think?  Can competitive carriers alone bring fiber to the building or do the giant telcos and MSOs have to light their dark fiber to make 2011 the year of FIber to the Building?  And is there any place for independent telcos like Surewest?

Special best wishes for a Happy New Year!

An Interactive Chat With an Old School Instrument

Received a fascinating telemarketing call that I almost hung up on, but have been listening now for 30+ minutes. One of the only groups that can escape the do not call laws are the politicians. This call was from Tom Campbell, who is running for the governor of California. Instead of a recorded call, this brought me into a live, interactive chat room. Inside this chat room there were upwards of 22,000 listeners.

It truly was interactive, as it seemed like Campbell gave his callers at least 50% of the airtime. By pressing *3, anyone could join in with a question (there were call screeners). There was even interactive polling with the audience. According to the moderator, the top concerns of the listeners on the call were

  • 41% – the budget
  • 33% – the economy
  • 13% – the health care
  • 7% – water
  • 6% – education

What makes this fascinating is that it was so simple and sort of a back to future experience, as my phone proved to be a great tool for holding a one-to-many conversation; a computer wasn’t required; software plug-ins were not necessary and I could walk around with my speaker phone annoying the rest of my family with this virtual town hall meeting.     

Back to the Future – Software as a Service & Managed Services

Software as a Service (SaaS) is a popular Web 2.0 buzzword. It struck me at NTCA’s panel, Software as a Service: Creating New Revenue Channels, that Independent Telcos have been providing a sort of Software as a Service, really a Managed Service since their inception. Independent Telcos are starting to add on Software as a Service and Managed applications, such as network computing, disaster recovery services and telemedicine applications, to their first SaaS application; POTS.

panelists at NTCA 2009 Annual Meeting

Warren Lee, President and CEO of NeoNova Network Services, distinguished between SaaS and Managed Services. He echoed his talk at last year’s IP Possibilities regarding the importance of understanding what your goals are before you commit to a plan. Understanding your goals will help answer whether you should provide SaaS or Managed Services. The reason he said it matters is that if you provide SaaS, then you open yourself to competition from anywhere. If you offer managed services, you can differentiate on the local service you provide (e.g. hard to do a truck roll from China).

He compared the differences between traditional compute solutions versus one that lives entirely in the cloud. Warren called this type of computing, “Living in the Cloud,” as opposed to Cloud Computing. NeoNova is using this NTCA Annual Meeting & Convention to introduce its Network Computer and associated applications that live on a Telco’s servers and utilize its broadband; more on that in another article.

Susan DiFlorio, COO of FiberCloud, focused on small business applications that independent Telcos can provide in order to increase market size, increase broadband usage and effectively lower staff costs. She called outsourcing an opportunity for Independent Telcos, as businesses are looking to cut costs and simplify the complex. FiberCloud provides data center services to Independent Telcos.

Along these lines, FiberCloud has been beta testing, with five rural telcos, cloud computing applications from Microsoft (see this video interview with George Henny for additional background). They found is that they were trivializing the markets and didn’t understand the nuances of the differences in locales and customers. They engaged an external marketing firm to help them understand the needs of the customers and, as a result, they found some commonality between rural and suburban markets; for instance, most of the Telcos’ potential business customers have with less than 99 employees.

Donald Fendrick, CTO, National Wireline Accounts, Alcatel-Lucent, spoke of Telemedicine applications where monitoring devices transmit real-time medical information via broadband. The interesting thing about this approach is the potential detection or correlation of trends much sooner than the traditional occasional visit to the doctor. Fendrick suggested that some insurance companies will give co-payments for the Telemedicine Devices.

John Granger President of Mapcom suggested that Telcos could add visual locating services as features in hosted dispatch and network management and hosted security applications. Granger said they have extended their mapping platform to allow independent Telcos to offer this sort of value-add.

Jeff Wick of NexTech, who was in the audience, put an exclamation point on the panel by providing an explanation of how they are replacing complete computing infrastructures for small businesses. They provide all of the workstations and manage for a monthly fee. He said it was important to have a back-end system to make sure it all works. Some of the server infrastructure is hosted and some is on the businesses’ sites. The important point he made is that this service is easy to sell, because it is a low cost of entry for the small businesses.
 

Convergence – More Business than Technical Challenge for Smaller Operators

The challenges that small telcos face regarding the convergence of services onto a single platform was the subject of a panel featuring industry experts at the 2008 TelcoTV Conference. The overarching theme of the panel was the challenges surrounding convergence deal more with the business issues, as opposed to questions of technology.

Steve Pastorkovich of OPASTCO suggested that in order for independent telcos to have a powerful three-screen strategy, they need better and more affordable access to video content.

Warren Lee of NeoNova said, “Convergence should be the single greatest focus driving all of your businesses planning and decisions.” He went on to say that it is important for a telco to know what they are; are they a pipe provider or a full-service provider or some sort of hybrid between the two. He talked about the importance of telcos being able to easily add and generate revenue from multiple broadband services, such as Rhapsody, home security services, etc.

Lee stressed the importance of Business Management software to track things such as service profitability, customer support and return on investment. He recommended that telcos need new revenue modeling tools. He pointed out that planning has to transcend functions within a telco, so that there is cross-pollination between budgets.

Yue Chen, Director of Systems Engineering for Juniper Networks, echoed Lee by suggesting that it is important for telcos to align their network with their business.

Donovan Prostrollo of Calix said that it is necessary for telcos to think like the consumer in order to adapt to the changes in consumer behavior, competition, technology and regulatory. Prostrollo suggested that convergence is about a connected life.
 

Prospering in the Video Business

The WTA Spring 2008 Meeting featured a upbeat panel on the distribution of video by independent telcos. Gerald Duffy of Blooston, Mordkofsky, Dickens, Duffy & Prendergast moderated a panel that provided both the big and detailed picture of the video business. 

Ben Foster, VP of Sales and Marketing for Twin Valley Telephone, an early adopter of franchised IPTV explained how their system has achieved take-rates of 50 to 55% through bundling of local and long distance telephony, broadband and television.   Although they only make $3 to $4 per sub per month on their digital basic, this sets the foundation for additional margin features such as High Definition and PVRs. 

Foster explained that the in-home network, with its proliferation of noise-generating sources, such as furnaces and exercise machines, is as much of a challenge as the outside plant network. 

The Outside Plant Network is important as Catherine Button of Pannaway pointed out that the need for bandwidth is rapidly growing. She cited FTTH Council information that suggested that by 2010, the high-end capability of ADSL2+ will barely meet the lowest expected network bandwidths. As a result, Button suggested that FTTH is viable for not only greenfield (new infrastructure) deployments, but many brownfield (rebuilds) deployments as well.      

Shane Pierce of Falcon IP Complete explained the nuances of content acquisition and the various rights required from transport agreements (getting the content to the headend) and distribution agreements (right to distribute to consumers). He suggested that third-party aggregators streamline the process of obtaining distribution agreements to 60 to 90 days from what could take several years if negotiated directly with the content providers. 

Northeast Nebraska Telephone is one such company that is using an aggregator, NRTC, to offer IPTV. Northeast Nebraska Telephone has 14 analog cable systems that they found difficult to maintain and challenging to keep up to date in terms of providing competitive programming line-ups. They felt that a move to IPTV would help them spread the costs of their network over more services, while providing a better product to their customers. 

Tidbits from a U-verse Customer

 

So I am standing in the return line at a major Silicon Valley, big box retailer last night and a conversation with a late twenty-something guy, who is standing next to me, ensues. As it turns out, he is a current customer of AT&T’s U-verse IPTV service. Like my earlier video interview with uVerse customer Mark Snow, he seemed to be most impressed with the value of the service – i.e. how much he got for what he pays. 

He was impressed with the number of channels he receives and was especially pleased that the NFL Network was included as part of the bundle and didn’t require an additional charge like Comcast’s service does. Quality of the service did not seem to be an issue, although he did lament that he could not have two DVRs. He also complained that the VOD offering was nearly as broad as what Comcast offers. 

As far as new features, he says his girlfriend is the one who actively programs the DVR. He believed it was possible program the DVR by cell phone, but said they had never tried this feature, as they didn’t see any reason to do so. He also thought that the AT&T salesman had told of him a feature which he didn’t believe was possible (his words were “BS”). The feature was multiple viewpoints, where the customer could pick the camera angles. I told him that will be possible at some point. He expressed his desire to use this sort of feature for sporting events. 

Overall, he seemed to have a favorable impression of the service, as he expressed disappointment that he will not be able to receive it when he moves a few miles away from his current residence.