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Targeting the Second Trillion. Bhawani Shankar Senior Analyst GartnerGroup-Dataquest. Agenda. Telecoms Market overview Trends and directions Technology vs. Market What does all this mean?. Telecom Market Overview.

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bhawani shankar senior analyst gartnergroup dataquest

Targeting the Second Trillion

Bhawani Shankar

Senior Analyst

GartnerGroup-Dataquest

agenda
Agenda
  • Telecoms Market overview
  • Trends and directions
  • Technology vs. Market
  • What does all this mean?
telecom market overview
Telecom Market Overview
  • A $1.18 trillion market—telecommunications represented 58% of all global IT revenue in 1998 and is forecast to reach nearly $1.94 billion by 2003
  • The telecom industry is well over 100 years old, as are many of its main players, but is changing faster than ever before

Systems and

Peripherals 16%

Others 3%

Services 18%

Applications 5%

Telecommunications

58%

worldwide telecommunications market 1998 2003
Worldwide Telecommunications Market—1998-2003
  • Telecoms Services will continue to represent the largest sector as more and more markets are opened to competition, but this generates further opportunities for equipment manufacturers

Millions of Dollars

Services

Carrier Equipment

Enterprise Equipment

worldwide telecommunications market 1998 20031
Worldwide Telecommunications Market—1998-2003
  • While the United States and Europe remain the largest markets, growth will be fastest in Asia/Pacific and Latin America, which will both show CAGRs around 20%

Millions of Dollars

ROW

Canada

Latin America

Japan

Asia/Pacific

Europe

United States

market accelerators and inhibitors

Economic Uncertainty

Standards Uncertainty

Regulatory Bias

Convergence

Globalization

Liberalization

Economic Necessity

Market Accelerators and Inhibitors

Talking Point

market trends telecom services
Market Trends—Telecom Services
  • What are the factors shaping the worldwide market in telecommunications?
    • Variations in teledensity represent enormous opportunity for growth
    • Rampant liberalization of high-margin markets leads to fierce competition—attack is the best form of defense, familiarity an advantage
    • 50% of traffic in the backbone is data, but voice still accounts for $0.90 of the dollar
    • Enterprise traffic growing 300% to 500% per year
    • Internet offers challenges and solutions
    • The consumer rules (definitely)

Talking Point

packetisation trends
Packetisation Trends

Applications

  • Voice Telephony
  • CTI, IVR
  • Streaming A/V
  • Call Center
  • Unified Messaging

Packetized Voice

Over

Frame Relay

Over IP

Over ATM

IP-BasedNetworks

IP-BasedNetworks

Intranets

The Internet

Extranets

Phone to Phone

PC to Phone

PC to PC

voip reality vs hype
VOIP: Reality vs. Hype

Technology Hype Cycle

VOIP

Peak of

Inflated

Expectations

Technology

Trigger

Slope of

Enlightenment

Trough of

Disillusionment

Plateau of

Productivity

2002

1999

Time

bt spain phase 1
Replicate a traditional SS7 Network: Phone to Phone (transit, bus voice, LNP)

MGC

BT Spain - Phase 1

International:

10 Carriers

Indirect Access:

50 Interconnect Points

SS7

International

Networks

IP Tel

GW

SS7

DMS

100

BT Tel.

high capacity

IP Network

SS7

PSTN

SS7

IP Tel

GW

MSIS

SS7

ISDN

PRI

IP Tel

GW

MSIS

PBX

IP Tel

GW

Direct Access

Mobile

Networks

SS7

MSIS

Fix to Mobile

3 Operators,  8 Interconnect Points

bt spain phase 2
Add Phone to PC, PC to Phone, PC to PC, Soft PBXs, H.323 videoconferencing, NetMeeting support...

PC voice

GK

Java Phone

MGC

SS7

IP

PSTN

BT Tel.

high capacity

IP Network

SS7

IP Tel

GW

MSIS

Soft PBX

IP

SS7

International

Networks

SS7

IP Tel

GW

IP Tel

GW

DMS

100

IP Tel

GW

SS7

ISDN

PRI

MSIS

PBX

Mobile

Networks

SS7

MSIS

BT Spain - Phase 2
enterprise voice cost savings
Enterprise: Voice Cost Savings

Local

PSTN

PBX

Data Network

Voice Card + Router

Local

PSTN

PBX

Gateway

ip pbx timing
IP PBX Timing

Percentage

IP/PBX for less

than 100 desktops

100

75

Approximately

308,000

systems in 2004

IP/PBX for more

than 100 desktops

50

25

12.5

Less than 3,000

systems in 2004

0

1999

2000

2001

2002

2003

2004

2005

2006

Years

access the need for speed

LAN User

100

Cable

10

xDSL

T1

1

ISDN

0.1

V.90

V.34

V.32

0.01

1998

1999

2000

2001

2002

2003

Year

Access: The Need for Speed

Power Remote User

Bandwidth

(Mbps)

Production Remote User

slide16

DSL: The Early Look and Feel

Enterprise Small Office

US West: An Example Service

• First company to offer a widely deployed, commercial xDSL service

• Available in 14 states, 60 cities as of mid-1999; about 50,000 subscribers

• Flat-rate pricing enables always-on access

• Pricing begins at $20 per month for 256-Kbps data rate; full ADSL (1 Mbps up, 7 Mbps down) is $840 per month. Additional charges: $20 per month Internet access, $70 installation, $250to $300 for modem

• Nonstandard approach

• Uses PairGain, Cisco routers/modems and Newbridge switches

ADSL

Modem

SDSL

Modem

Splitter

Copper

Loops

DSLAM

NSP

Central

Office

PSTN

Data

Network

slide17

DSL Evolution

SDSL

G. Lite

ADSL

User

Provider

User

Installation

Up to 1.5 Mbps

640 Kbps

128 Kbps

Data Rate — From the Home

Up to 1.5 Mbps

8 Mbps

1.5 Mbps

Data Rate — To the Home

$300

Hardware Cost (2004 estimate)

$250

$100

Monthly Service Cost (2004 est.)

$40 to $300

$125

$30

Loop Length (feet)

24,000

12,000

18,000

Standards Status

Now

Now

Now

Now

Now

Now

Availability

slide18

The Cable Alternative

Cable

Modem

  • Fiber Node

Neighbors

Fiber

Optics

Head End

Equipment

Data

Network

@Home: An Example of a Service

  • Cable ISP
  • Available through major cable operators — e.g., AT&T/TCI
  • • 620,000 subscribers, 17 million homes passed (as of June 1999)
  • Content-oriented, channel format; “AOL-like”
  • Acquired Excite, Internet portal
  • Download at 1.5 to 3 Mbps (shared)
  • $40 per month, $100 installation charge, $300 cable modem typical pricing
  • Several @Work options; Internet access, remote access, Web hosting
  • Cisco technology
  • Key component in AT&T/TCI cable data strategy

Coax

Cable

TV

Distribution

slide19

What about Wireless?

Fixed Terrestrial

MMDS/LMDS

Point-to-point

Line of sight

Central Office

Satellite

Business: Two-way via satellite

Central Office

Residence: PSTN upstream, satellite downstream

slide20

Satellites - The NexGen “Internet in the Sky”?

User Terminal

Terrestrial

Networks

Gateway

slide21

Customer

Care &

Billing

Telcordia

Accounting

Gateway

PublicSignalingNetwork

Call

Agent

SS7

Gateway

Network

OSSs

MGCP

ISCP

MGCP

MGCP

Announcement

Server

Voice/IP

Cisco

HFC Network

IP

IP

Network

Telco

Set top box

V

  • Full OS Support
  • Carrier-class voice quality
  • Robust multi-service IP
  • backbone
  • Virtual Class 5 Central Office Switch
  • Integration With PSTN IN For Existing Services.
  • Internet access services

The Next Challenge: VoDSL/ Cable - Videotron Architecture

wireline leads wireless evolution

IP/Data

50%

Voice

(100%)

Wireline Leads Wireless Evolution

Incumbents Mainstay

Becomes IP-Based Networks

Wireline

Incumbents Start

Evolution to IP-Based

Networks

New Entrants Using

IP-Based Networks

Wireless

3G Network

Lower $/MOU

Mass-Market ISP/E-Commerce

Sub-$100

Devices

Browser Technology

Adoption

Micro-Browser

Adoption

Air-Interface

Improvements

Incumbents Focused

on Voice

Mass-Market Voice

2002

1988

1995

1998

2008

mobile technologies coping with demand
Mobile Technologies:Coping With Demand

2 Mbit/s

384 Kbit/s

UMTS

115 Kbit/s

EDGE

57.6 Kbit/s

GPRS

9.6 Kbit/s

HSCSD

GSM

Theoretical Data Rate per User

1999 2001

Number of Users per Cell

the role of caching appliances
The role of caching appliances
  • Efficient caching solutions will precede large-scale roll out of fast access technologies
  • In the consumer sector, http/web caching will be the main contributor to improved user-response times
  • Caching appliances will widen the ISP bandwidth sweet-spot
  • Application-specific caching appliances will start to impact from 2000 onwards
where are we headed
Where are we headed?
  • Circuit to Packet Migration
    • Designing ‘optimal’ networks
    • What is the NexGen Business Model
    • The System Integration Challenge
    • Integrated Networks need Integrated Skills
    • Interoperability
    • Lookout for regulation!
  • Access Bottlenecks to Core Fibre
    • Network design, plan challenges
    • New applications, new solutions, new markets
    • How to fill a pipe with $$?
  • People issues, HR: a HUGELY underestimated challenge

Conclusions