OSS/BSS: The New Frontier

The telecommunications industry is rich in acronyms, one of the best known but also the most underappreciated is probably OSS/BSS (Operational Support Systems/Business Support Systems) or OSS for short. Nothing is less glitzy but also more critical to keep a network up and running than a performance management application or an alarm system. Nothing sounds less exciting but at the same time is more instrumental in deploying new services than a trouble-ticketing system or mediation software. Most recently, the Director of converged services for a large carrier told me that 80% of the work to take new services to market lied in the operational aspect (provisioning, billing, monitoring). No surprise then that worldwide, carriers are spending in excess of $30B per year on their OSS infrastructure. According to the TeleManagement Forum (TMF), for every one dollar spent on OSS software, an additional $1-4 is spent on integrating that software into an existing environment. Needless to say that this a one-time effort that is repeated by all carriers around the world.

Just as communications service providers had to adapt their existing OSS to deploy IP VPN, VoIP, and 3G services, the recent mergers have added yet another challenge. But the most difficult of these transformations lies ahead of us: IP TV and Fixed Mobile Convergent (FMC) services are just being readied and their complexity is of another magnitude, due in part to the value chain going outside of the traditional network boundaries (content, advertisement, partnerships, circle of trust). This is the new frontier. Flexibility and agility are paramount features of the Next Generation OSS to be able to rapidly deploy, monitor and bill for new services that we can't even fathom today. As for IP TV and VoIP, I actually believe that superior customer service and simplified customer experience will be key differentiators for carriers. The simple reason is: for any product and services, the easier it is for you to interact and purchase (without the sticker shock), the more you consume, but we are still very far away from that experience.

A few years ago, when we looked at how Sun was going to address these upcoming challenges for our customers, we were obviously not going to throw hundreds of thousands of consultants into this problem, but instead looked at how open standards, innovation and participation could bring us closer to the solution. With our industry partners and TMF's endorsement, Sun has been leading the OSS/J initiative to simplify OSS integration by maximizing usage of Java-based middleware and other IT technologies (XML, SOA). Some of the carriers actively participating are: BT, CANTV, Covad, Vodafone. The first results were beyond our expectations (see a recent article about these benefits), and as carriers are going through the second or third deployments, the results are even greater. From a Sun perspective and to be brutally honest, we have reduced part of the multibillion dollars integration tax (where Sun was not playing - doesn't have, won't have an army of consultants) into a $800 million dollars middleware opportunity (where Sun has changed the financial value proposition of software delivery) that is helping the entire industry make operational support systems truly operational. Couldn't have done it without the community of developers working hand in hand with standard bodies like TMF. I recommend you check the announcements from Sun and our partners at the upcoming TeleManagement World in May in Nice to know how we are taking this to the next stage, big news coming!

Why is network identity important?

Just about every small, medium and large company in the developed world is hugely dependent on the internet: communications, supply chain, design, marketing, finance, sales, support, and other critical business activities are using the internet to increase efficiency, scale, and economic growth. Consumers, citizens, communities and families are now relying on the network to better communicate, learn, share knowledge, and increase mobility. The reliance on the network means that outages and virus outbreaks are simply no longer acceptable. Phishing and pharming among other network criminal activities are responsible for companies and consumers losing billions of dollars.
Figures don't include lost opportunities due to consumers' and suppliers' wariness of internet-based transactions. Authentication is one of the biggest pushes by online watchdogs. In a recent conversation with Paul Mockapetris who co-wrote DNS, we discussed how DNSSEC can better guarantee that the information retrieved from a web site actually came from the intended web site and not from an imposter. A user can eliminate spam by opting to receive e-mail only from people who have authenticated their identity. To put it simply: strong authentication means trust, trust means more transactions.

Why does it matter to carriers and their partners?
According to the Liberty Alliance Project there will be 1 billion Liberty-enabled devices and
identities by the end of 2006, specifically:

• 120 million citizen identities in the e-government sector
  
• 585 million identities and devices in the mobile and telecommunications
  sector
  
• 72 million online service provider users able to leverage Liberty identity
  specifications
  
• 20 million Liberty-enabled identities in the technology and business sectors
  with organizations managing a variety of B2B and B2C services

Communication service providers manage more identities than anybody else on the network. The advent of converged networks is making the distinction between network subscriber (who pays the DSL bill?) and network users (who downloads what?) more important from a security, personalization, and reporting standpoint. While transforming their networks to support triple or quadruple play, carriers need to work with partners to develop circles of trust that will increase participation and transactions. At CTIA last week, Lucent and Sun showed a prototype demonstrating their collaboration to simplify subscribers' access to wireline and wireless services whether they are based on web, mobile telephony, IPTV or IP Multimedia Subsystem (IMS) architectures. Over the next months, I will discuss other solutions and how Sun is helping carriers simplify identity management, improve subscribers' experience, and monetize their networks.

Why is participation important?
Why is music download on phone handsets measured in billions of dollars (compared to the paltry music download business on PCs, even with iTunes)? Because phones are authenticated (with a Java SIM card), content and network providers can ensure legitimate use of media content. Earlier this month, Movielink and CinemaNow have offered consumers the opportunity to download new movies at the same time as they were hitting the DVD shelves. The DVD industry, like the CD, floppy disk, VHS, and LP industries before, is poised to disappear sooner or later. The participation on the network is changing the way digital content is created, managed, distributed, and consumed. The result is more revenue for content creators as authentication and convenience fuel commerce. In turn, the success of music download on the wireless network can happen on all networks for all types of multimedia content.
Network identity should not be under the control of only one company (a la Passport) or even one single industry (banks and governments have a role to play in federating network users
identities).

To finish on a humoristic yet important note, here's a clip describing what identity should not be.

New data retention rules for European service providers

The European Union recently passed a new legislation to force fixed-line, mobile, and internet service providers to keep details of their customers' communications for up to one year
(only 6 months for IP based communications) for the prevention, investigation, detection and prosecution of terrorism and organized crime.

The data retention directive defines the data required to be kept to:

• trace and identify the source and destination of a communication,
  
• identify the date, time and duration of a communication, and
  
• identify the type of communication, location and type of communication device The content of the communications will not be recorded. I counted over 44 data points to be stored based on the type of communication network used!

The European Union countries will now have until August 2007 to implement the directive, and according to the legislative text: "it is appropriate to foresee that Member States reimburse demonstrated additional costs incurred in order to comply with the obligations imposed on them as a consequence of this Directive". Still the new directive will have a deep impact on the European communications industry. As an example, since text messages are delivered via the SS7 network, data should be retained for one year. Over 100 billion text messages were exchanged in the EU last year, even with a minimal 1 KB of data for each (hopefully we'll learn from Y2K here), it's a new 100 TB of data to be stored. How many emails and VoIP calls will the 230M internet users in the European Union send every 6 months is certainly in the same order of magnitude as are fixed and mobile phone calls (terminated or not). In total, it's probably several Petabytes of new storage to be deployed in the carriers' infrastructure.

Today, over 1/3 of the world's data is archived on Sun storage tape library equipment thanks to our recent acquisition of StorageTek, and Sun can help reduce the strain on the carriers' staff, budget... and sanity. The upcoming IMS infrastructure will improve the management of subscriber data across all applications and networks, and reduce the need to develop usage collection in multiple silos.

Communications service providers can also use the new stringent data retention rules and turn them into a competitive weapon rather than another cost center. By collecting usage data from multiple applications and networks in a single place, carriers can unlock vital business intelligence on how their subscribers are using their networks. This directive represents an
opportunity to re-think revenue assurance and seriously address revenue leakage and fraud management across all networks.

Mega deals are reshaping the telecom landscape

It's time for a quick recap:

• Sprint to buy Nextel for $36B- December 2004
• SBC to buy AT&T for $22B - January 2005
• Verizon to buy MCI for $6.8B - February 2005
• Telefonica to buy O2 for $32B - October 2005
• AT&T to buy BellSouth for $67B - March 2006

The telecom industry is responding to price decline, revenue loss and intensified competition by consolidating itself like there's no tomorrow.
The strategy reminds me of Barbara Tuchman's Guns of August. A Pulitzer prize winner, the book provides a detailed account of the first month of World War I during which the generals made battle plans and decisions based on previous conflicts ignoring the technology changes which resulted in mass slaughter.

The industry is in the middle of a massive technological transition, going from old-fashioned circuit-switched networks to more advanced IP-based networks to offer services including video, voice, high-speed Internet access, and wireless. The trend is also putting price pressure on equipment makers, because open standards, IP-based gear is generally cheaper than the specialized equipment it replaces. As the number of service providers continue to shrink, they are regaining buying power and are squeezing out deep discounts from their suppliers.

The carriers' consolidation is now starting a Network Equipment Providers (NEP) consolidation as illustrated by Cisco acquiring Scientific Atlanta and the merger talks between Alcatel and Lucent. The last combination could create the world’s biggest telecom equipment maker with customers and operations around the world and with strengths in voice, video and data across wireless and broadband networks. The potential new company would bring strong wireless, broadband and IMS assets to address Fixed Mobile Convergence opportunities, but the merger would also create the world's largest network system integrator to better compete against IBM. Because of overcapitalization and the high cost of raising capital, the carriers are looking at outsourcing as a solution to manage their infrastructure. Alcatel, Lucent, Ericsson, Nortel, and others have dramatically increased their services capabilities to a point where it represents 30% or more of their total revenues.

There's room for more consolidation especially to build global players with Ericsson, Juniper, Ciena, Tellabs, and Motorola (test: who is acquiring whom?). What Huawei and ZTE could do is everyone's guess, but let's not forget that prices are driving this market and the Chinese equipment makers are not to be underestimated. In this environment, Sun is the partner of choice for the NEPs and already provides carrier grade equipment and integrated software to reduce cost and complexity of the next generation network infrastructure.

DNS servers in web 2.0

Domain Name System (DNS) is the Internet directory: it points people and applications to resources on public and private networks, for example allowing you to type “www.sun.com” instead of //209.249.116.195 in your browser. DNS is like virtual “electricity” for the Internet. Without DNS, mail could not be delivered, ATMs and cash registers would go offline, and few networked applications would function.

There are an estimated 7.5 million external DNS servers on the public Internet only. Communication service providers are heavily relying on DNS to point users to their favorite web site, video streaming server, ecommerce portal, or VoIP buddy on the other side of the planet. An overloaded DNS slows down the overall response time and affects the user experience. And this is the best case scenario: in 2004, a widespread Akamai DNS issue prevented popular website addresses like Yahoo, Google, Microsoft, Fedex, Xerox, and Apple to be resolved. In April of last year, Comcast suffered a DNS outage. In May, Google was out of commission for 15 minutes (that's pretty big compared to telco standards). Four out of five of the DNS servers in the world are vulnerable to hacking attacks.

How is this going to evolve ?
If today's 80 million registered domain names seem to represent a daunting task to manage, ENUM will dramatically increase this by providing a single number that can be translated
into the DNS system so there will be a single point of contact for an individual, be it telephone, mobile, instant messaging, or email. So how about managing 2 billions of these now ? Telecom carriers seek a simple addressing mechanism to help them deploy IP-based services such as multimedia messaging service (MMS), push-to-talk, and session initiation protocol (SIP)-based voice service. They also need to be able to implement these services across different technology environments such as global system for mobile communications (GSM), code division multiple access (CDMA), and fixed-line. ENUM makes all of this possible. To put it simply, DNS will be even more critical for all our future networked interactions.

What does it mean from a business standpoint ?
When DNS is under attack or just slow to respond due to increased traffic, the network service provider is the first one to be blamed. The user perception is "the network is slow" even though the connection is probably humming at 5 or 10Mbps or more. Next, "the web site is slow" while the web and application servers are running just fine but the DNS servers are collapsing under the load during the shopping season (and the cash register is not ringing up). As we are
increasing our reliance on the network, customers' frustration can only worsen unless service providers are tackling this issue rapidly.

How to address it ?
Today, Nominum and Sun announced an agreement to deliver record breaking industry-leading DNS and DHCP software to wireline, wireless and cable operators around the world. Sun Fire servers powered by AMD offer the choice to run Solaris 10 or Linux, and our most recent
innovation with CMT based servers will provide unrivaled performances.

Spring VON in San Jose

The Spring 2006 VON Conference and Expo is opening its doors this week in San Jose. Several of my team members will be speaking at the event covering topics like security, ROI,
and competition for IP Communications. Jeff Pulver managed to make VON "the" voice over IP
conference and meeting point for the industry, and this year's spring conference
will probably set another record for all the VON venues so far.
Each new year seems to be poised to become the inflection point for VoIP adoption. Today's 16
million VoIP subscribers are still a small fraction of the over 200 million broadband users and an even tinier part of all the 3 billion+ worldwide phone lines. The 16 million figure doesn't include the 74 million Skype registered users (with a record 5 million users connected at the same time),
or the over 70 million monthly users of Yahoo Messenger who can now make PC-to-phone
calls. But what will speed up VoIP adoption moving forward ?

• Improve and simplify customer experience. Guaranteed quality of service, (good) customer service, security, and safety are the traditional Plain Old Telephony Services (POTS) features, but today's VoIP services don't always provide that level of service. On top of that, since VoIP prices are going for the floor, service providers need to provide a unique customer experience for IP Communications including video, collaboration, unified messaging, call manager, virtual call center, web services integration, directory, and calendar to create potential for premium prices. Sun provides the Java based middleware software that powers all these applications, but we are also driving creation of innovative services through our Open Service Delivery Platform program.
  
• More mobile handset supporting VoIP with WiFi capabilities. For instance,
  with RIM adding
  WLAN capabilities to its blackberry phones, it means one more step closer to
  fixed mobile convergence. The more recent announcement of RIM integration
  with Google talk is a good indication of what's to come in IP Communications
  partnerships. Carriers have to respond to these new services or risk to be
  disintermediated from their customers. Sun is part of the expert group which is
  working on JSR 180 to
  define the APIs to enable SIP-based applications for Java handsets. Stay tuned
  for more on this soon.
• Open standards based infrastructure and services. What happened to the internet in the 90s, will happen to IP Communications which are just the next level up. I recommend reading the discussion on Jonathan's blog to draw the parallel with documents as well. This is all converging anyways. Open standards are also introducing new and aggresive competitors that require a new and different response from the telcos: buddy list, ring and ringback tones, personalized services for specific communities,integration with all digital content (music, video, TV).
  
• And as far as performance, reliability, and low TCO: it's rock solid carrier
  grade servers and Solaris 10 integrated with SAF-compliant highly available software plaftorm. If you combine this with our newest CMT servers, you got yourself an eco-friendly engine to profitably deploy any IP Communications solution.

AT&T agrees to buy BellSouth for $67 billion

Never a dull moment in this industry, really :-)
Today's AT&T's announcement to acquire BellSouth didn't come as a surprise, but a few numbers are just mind-boggling:

• 67 as in $67B price tag for BellSouth, nearly 7 times Wall Street's 2006
  cash-flow forecasts, an 18% premium that AT&T is offering for each BellSouth
  share.
• 1600 as in $1,600 paid for each BellSouth's subscriber: 7.2M long distance, 9.9M local, 2.9M DSL, 22M wireless (40% of Cingular's 54M users).
  
• 310,000 as the number of employees who will work for the combined company if
  the deal is approved. Tough times ahead if DT's negotiations are of any indication.
• 130 as in $130B in annual sales for the new AT&T (Verizon Communications clicks at $75B), BellSouth's profits fell over 30% last year. AT&T will now be in the Top 10 Global 500. NTT, the second telecom company in the list, barely makes the top 20.
• 10 as in the 10th anniversary of the 1996 telecom act. 11 as the number of occurences of the word "Internet" in the actual text to compare to the 284 (broadcast) "Television"s. No mention of IP TV or VoIP.
  
• 22 as in the 22nd anniversary of the AT&T break-up. The purchase of BellSouth would recombine the former "Ma Bell" with four of the seven original Baby Bells regional telephone companies. Verizon is certainly looking at Qwest and Alltel to stay in the game.

What's ahead for the new company and the industry overall ?
Some of the $2-3B/year savings will come from data center consolidation.
AT&T and BellSouth together will need to integrate and manage the identities of 70M local, 30M long-distance, 10M broadband and 54M wireless customers on a convergent IP network. "Technology changes and convergence are shaping a new competitive dynamic and creating tremendous opportunity", said Duane Ackerman, chairman and CEO of BellSouth. AT&T is now creating a serious rival to the cable operators with the 10M broadband users (and the 54M Cingular subs) who could pay for TV services. That's a lot of eyeballs for content owners and advertisers.
As the newly combined telco giant is integrating networks and services, the billing, CRM and other OSS/BSS applications are going to require some significant re-architecturing to support subscribers and services. SBC and Cingular have been participating to OSS/J projects to integrate off-the-shelf software they bought overtime. More on how OSS/J can reduce Capex and Opex for carriers.
Finally, AT&T will apply a lot of its weight to the discussion of net neutrality.
AT&T is vehemently debating over the future of the Internet, and along with Verizon, wants to create a "toll lane" on the Internet, in effect charging content providers like Google extra for guaranteed service. Ed Whitacre (AT&T CEO) drew attention last year when he told Business Week magazine that "for a Google or a Yahoo or anybody to expect to use these pipes for free is nuts". There's a lot of room for participation here...