Integrated Access --A Sleeper?

By Khali Henderson

Posted: 04/1999

Integrated Access –A Sleeper?
By Gail Lawyer and Khali Henderson

Digital subscriber line (DSL) is being billed as the technology that will help lower
telecommunications costs for small and mid-sized businesses, while increasing the speeds
with which they can send and receive data transmissions. But there’s another technology
that some in the industry believe may catch the eye of small-business owners because it
promises to bring great cost savings while reducing the number of telephone lines they may
need to purchase and maintain.

That technology is integrated access. Integrated access technology allows for the
provisioning of multiple services, such as voice and data over a single line. Integrated
access works by consolidating all of an end user’s telecom traffic at the customer premise
and sending it to the service providers’ switches for distribution to the public switched
telephone network (PSTN), Internet or other data networks (see graphic, below).

Graphic: Network Architecture

"Everybody is enamored with DSL. But I think integrated access is a sleeper,"
says Jon Lowry, director of marketing for data services at ICG Communications Inc., an
Englewood, Colo.-based competitive local exchange carrier (CLEC), which launched its
integrated access service for small and mid-sized businesses in mid-January.

Lowry says integrated access technology has taken a back seat to development of
providing multiple voice lines via DSL. But he notes that with integrated access, a
company isn’t limited by the loop quality or distance to a specific central office (CO).

"The product will allow customers to optimize their network access costs because
they can do voice and data services over the same circuit," Lowry says.

ICG will be using the technology developed by a relatively new vendor, Fibex Systems,
Petaluma, Calif. With the Fibex technology, Lowry says, ICG will be able to provide analog
and digital voice services along with digital data services. Other services ICG will be
able to provide under the integrated access umbrella include high-bit-rate DSL (HDSL),
dynamic bandwidth allocation, fractional DS-1 Internet access and virtual private
networking (VPN).

ICG is in good company. Many other service providers have come to the table in recent
months with an integrated access offering specifically for the middle market.

Like ICG, IXC Communications Inc., Austin, Texas, announced March 1 the availability of
an integrated access product to small and mid-sized businesses through its retail channel,
Eclipse Telecommunications.

"Our integrated access further differentiates Eclipse; our business-to-business
[segments] are, by extending more and more benefits [that were] once enjoyed only by large
companies to small and medium enterprises, one of the fastest-growing market
segments," says Valerie Walden, senior vice president of switched and private-line
services at IXC.

In fact, there are more than 86,500 "middle market" companies, which are
defined as companies with 100 to 999 employees, according to International Data Corp.
(IDC), Framingham, Mass. And in 1998, 87.3 percent of middle-market companies purchased
Internet access, IDC notes in a recent report, "The U.S. Middle Market: IS
Infrastructure, Spending and Internet Usage."

Eclipse’s targets are businesses with telecom service bills of $3,000 to $5,000 a
month. It expects its integrated access service to help these companies shave up to 30
percent off their bill through bundled service discounts, more efficient use of bandwidth
and a reduction in CPE.

Eclipse will offer voice, Internet access and services, frame relay and private-line
services over a single access point using integrated access technology from a variety of
vendors, including Cisco Systems Inc., San Jose, Calif.; Newbridge Networks Corp., Kanata,
Ontario; and VINA Technologies, Fremont, Calif. CPE installation, maintenance and
configuration are available.

In a similar announcement March 2, Frontier Communications, Rochester, N.Y., says it
will turn up local digital telephone service in eight major metropolitan areas in
Califor-nia to offer business customers a bundled package of data (frame relay, private
line, web hosting), Internet, long distance and local telephone service–all on one bill
and one access line and one network. The California offering is not the first for
Frontier, which already offers integrated access to business customers in 14 cities. In
fact, the company first offered integrated access to New York businesses in November 1997.
Bill Hammond, vice president of product management-CLEC services, says Frontier will bring
the service to another 14 cities (for a total of 36) by the end of the year.

Hammond notes that while other companies are offering integrated access service,
Frontier is positioning this offer against the regional Bell operating companies (RBOCs),
which are prohibited by regulations to bundle long distance and local services.

In addition, he says the primary benefits of integrated access–multiple services on
one platform and one access point–is only as good as the back office that provides it.
"The secret is being able to provision and bill it," he says. "Without a
level of experience you are going to have difficulty."

Frontier, he explains, has more than 100 years in the local service business and more
than 10 years in long distance as well as the strengths of its Internet acquisition
GlobalCenter.

"We are differentiating ourselves from an operating standpoint, not with a glitzy
name," Hammond says.

Glitzy or otherwise, branding efforts also are part of the integrated access movement.
AT&T Corp., for example, announced the launch of its Integrated Network Connection
(INC) service in late January. While some say INC is a reaction to well-named convergent
service strategies announced in June by Sprint Corp. and in September by the MCI WorldCom
Inc., it seems to have more in common with the unbranded products of ICG, Eclipse and
Frontier. Unlike MCI WorldCom’s On-net or Sprint’s Integrated On-Demand Network (ION),
which also include integrated access features, INC is positioned more like a product and
less like an overriding philosophy about the future of network services. Nevertheless it
is being viewed as an important move for AT&T in stemming losses among business
customers to these high-profile and other integrated services offerings.

"Integrated voice and data networks are becoming a prerequisite for phone
companies to compete," says analyst Jeffrey Kagan, Atlanta. "AT&T customers
have been approached by MCI WorldCom and EQUANT (Atlanta and Amsterdam), with attractive
offers for managing voice and data so AT&T needs to step up to the plate or risk
losing valuable high-margin business customers."

INC provides businesses with a single "plug-and-play" interface to combine
voice, frame relay, asynchronous transfer mode (ATM), private-line and Internet protocol
(IP) traffic. INC initially will support up to 40 voice calls simultaneously with 512
kilobits per second (kbps) of data and IP traffic using an AT&T-owned ATM multiplexer
located on the customer’s premises.

Trials of INC are under way and will continue through the end of June; availability is
expected in the second half of 1999. The service initially will carry voice, frame relay
and IP traffic. Private-line, ATM and video communications will be added later.

"AT&T is allowing customers to add traffic to their networks at a lower
incremental cost that was previously possible, providing businesses with a cost-effective
way to increase productivity," says Tim Murray, AT&T’s vice president of Business
Network Services, noting that savings of 10 percent to 20 percent can be realized by
consolidating multiple services over a single T1. "AT&T also is managing the
equipment. So we take the investment risk for our customers."

On Target

Clearly, an integrated access product finds a home among the large enterprises, which,
by virtue of the services they use, can take full advantage of its benefits (see sidebar).
A small business, for example, has little use for private-line services or native frame
relay, notes Jilani Zeribi, network services analyst, Current Analysis Inc., Sterling, Va.

However, he predicts "the small- and medium-sized business market is likely to
appreciate the convenience and cost-effectiveness of an integrated voice/data
service."

"Unified billing, combined with a single point of contact, also will appeal to
smaller businesses that do not have the resources to maintain a full IT [information
technology] department to manage their connectivity needs," he says.

On the other hand, service providers are counting on advanced services moving
down-market. Some mid-sized businesses already are fairly dispersed now, says IXC’s
Walden. The larger the number of locations under one company, the greater the need will be
for frame relay to support its distributed local area network (LAN) or wide area network
(WAN), she explains.

Gail Lawyer is executive editor of X-CHANGE Magazine, PHONE+’s sister publication
covering the competitive local exchange carrier market. Khali Henderson is editor-in-chief
of PHONE+ Magazine.