Redefining Carrier Class

Posted: 12/1999

Redefining Carrier Class
By David Gunning

The current definition of "carrier class," which focuses primarily on the
physical characteristics and attributes of telecommunications equipment (power
consumption, earthquake survivability, etc.), is based on an antiquated view of the
telecommunications industry. For decades, network operators and vendors have worked to
comply with the various Network Equipment Building Standards (NEBS), European
Telecommunications Standards Institute (ETSI) and similar country-specific requirements
set by various regulatory bodies. These "hand-me-downs" from the monopoly days
often were deployed to protect national or monopoly interests, effectively preventing
competition by raising arbitrary barriers to entry.

With the fresh wind of competition blowing through the industry worldwide, such
practices are waning. Competition has brought with it a slew of new carriers for whom the
physical characteristic-based definition of carrier class represents only the bare minimum
competitive requirements for today’s markets. This new generation of competitive carriers
is focused primarily on gaining market share based on their ability to provide a rich set
of services at competitive prices and, most of all, promise a level of service and support
that the long-established incumbents have failed to deliver.

The need for the term "carrier class" remains, however, to differentiate the
requirements and needs of public telecommunications operators from those of enterprises
and private network users. Given the rapid and accelerating changes taking place in the
telecommunications industry, the term "carrier class" takes on new meaning and
demands redefinition to accurately reflect the current and evolving requirements of
competitive carriers worldwide.

A New Class of Carrier

What makes today’s carriers different? The key word is "service." This
applies to both the service portfolio, which the operator delivers, and the level of
service (customer care) it seeks to provide to its customers. The traditional service
portfolio (predominantly voice with some data) is going to change and change drastically,
as the Internet becomes more central to business and our lives. Over time, carrier
networks will evolve to an Internet protocol (IP) infrastructure for all services.
Delivering the services customers want today and planning for the future service portfolio
requires a future-oriented network platform.

This new platform must be able to support multiple services (IP and legacy voice and
data), be packet-based, boost network capacity and optimize network utilization. However,
having a future-oriented platform isn’t enough. Success ultimately depends on the
operator’s ability to provision, assure and bill for services. Many existing operators
today are constrained by their business support systems and are unable to support new IP
services, bundled voice and data services or a single bill. Emerging operators, on the
other hand, are looking to their business support systems as a source of competitive
advantage and differentiation. This is a key component of the revised "carrier
class" definition. It’s not just the boxes, it’s the whole system, and specifically,
its ability to enable an operator to compete and win.

What Carrier Class Means Today

How does this obsession with service and customer satisfaction manifest itself in the
new carrier network? Carriers are increasingly looking to new technology as a potential
source of competitive advantage, and are eagerly engaging with start-up equipment vendors
whose products will allow them to provide differentiated services. In parallel, the
investment community is looking to invest in new operators who are building new
infrastructures to be more competitive. "We have little interest in investing in new
CLECs (competitive local exchange carriers) who wish to build networks in the same way and
using the same infrastructure solutions as the established players. We don’t see
sufficient possibility for differentiation," says David Baum of Prism Ventures,
Westwood, Mass.

New network operators, who are not encumbered by legacy equipment or legacy services,
are focused on taking market share away from the incumbents using innovative and emerging
technologies. They strive for flexible solutions that can deliver any service a customer
may demand (within reason). With the explosion–and inevitable predominance–of IP traffic
on public networks, moving to packet-centric infrastructures soon will be a requirement
for all carriers. Packet networks, which convert and transmit all traffic (including
circuit-switched voice calls) in a packet format, allow network operators to dynamically
provision network resources on a prioritized basis. This approach leads to a much flatter
network architecture that distributes intelligence, as opposed to the hierarchical model
of the circuit-switch network in which intelligence is centralized.

New service providers will live or die based on their ability to differentiate
themselves from the incumbents. As a result, customer care and business support systems
become a matter of survival. This is also an area where new operators have some advantage
over the incumbents, since they don’t have to support multiple legacy systems with
multiple databases. Today’s competitive carrier has the opportunity to deploy a single
integrated business support system in which the customer front-end (order entry and
fulfillment), service provisioning and assurance and the billing and collection functions
all are interconnected. These integrated support systems also allow new operators to take
these capabilities even further by allowing end customers to directly access some of these
functions themselves. For example, network operators can offer a "self-service"
environment in which end customers can change their service portfolio or certain
parameters within the service level agreement, monitor performance information relating to
the service and view their monthly bill in real time.

Flexibility Defined

The physical characteristic/attribute-oriented definition of carrier class remains
important. However, to make the term "carrier class" more relevant to today’s
new class of carriers, it must be expanded from a purely physical definition to one that
encompasses the ability of a system to provision, deliver, manage and bill for the wide
range of services that customers are requesting. Ultimately the new definition of carrier
class revolves around flexibility: the flexibility to respond to customers’ needs whatever
they may be; the flexibility to offer new, exciting, rich services; the flexibility to
link network operations with the business support system; the flexibility to allow
carriers to compete and succeed in a rapidly changing world.

ROUNDTABLE

The most important regulatory issue for 2000 is …

"The most important regulatory issue for wholesale competitors/resellers in 2000
will be access reform. The cost of access to local networks, especially incumbent LEC
networks, remains an important component of the economics of interexchange service,
irrespective of whether those costs are borne directly by payment of access charges, or
indirectly, by payment of prices to facilities-based carriers, which reflect changes in
access pricing."

–Mitchell F. Brecher, partner, Greenberg Traurig

"The resale of local telephony services at reasonable rates. Many of the resellers
of long distance services from the 1980s have reinvented themselves as CLECs, offering a
wide variety of services. Problem is, very few, if any, can profitably resell the ILECs’
local services. Therefore, the most important regulatory issue facing wholesale
competitors/resellers in 2000 will be the strong enforcement of the 1996 Telecom Act. The
FCC should stick to its guns and not allow the ILECs to offer competitive data or long
distance services until they first meet all the provisions indicated in Telecom Act
checklist."

–Fred A. Joyce, principal, Joyce Telecom Group LLC

"The regulatory framework is for the most part pro-competitive. The key will be
implementation and follow-through at the network deployment and operational levels, as
well as rapid dispute-resolution procedures that mitigate, rather than contribute to,
uncertainty. In addition, conditions attached to RBOC (SBC Communications Inc.-Ameritech
Corp.) and IXC (MCI WorldCom Inc.-Sprint Corp.) mergers will likely have indirect, but
quite meaningful, impacts on the CLEC operating environment."

–Jonathan Atkin, telecommunications services analyst, Ferris, Baker
Watts Inc.

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