IP-VPN is calling

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At March's IDC European Telecoms Forum in Rome telcos and service providers discussed how they could squeeze more out of their customers.

By Antony Savvas

Since telecoms prices are dropping 25-30% a year, there is now an enterprise-buying climate, says Mark Winther, IDC group VP, worldwide telecommunications. Bandwidth is plentiful and Internet circuits better than ever, while there is a renewed emphasis on customer service.

Key industry areas which delegates were asked to consider included IP telephony, convergence, and broadband access. IDC presented research which showed that there were opportunities for both telcos and hardware suppliers to take advantage of growth in all three, providing they get their marketing and technical strategies right.

Regarding convergence, only 11% of companies in Europe have so far fully converged voice and data in their WAN, but another 11% plan to do so in the next 12 months. A further 37% plan to make the leap at a later date, but 41% have no plans.

This is not surprising - a tidy conversion from various infrastructures into one is not an option for most. Instead, companies are throwing everything they have into the pot - including X.25, ATM and Frame Relay - to enable as many users as possible to enjoy "pervasive" computing and connectivity from any location.

Winther also said that a typical pervasive computing contract would see the provider guarantee QoS to 800-1,200 connection points, demonstrating the potential business to the industry if it can convince companies of the benefits of moving to a single network instead of two separate ones.

The gradual approach can also be seen by the take-up of IP VPNs (see Fig. 1). When a company adopts an IP VPN it doesn't normally connect every employee to it immediately but in stages, dependent on its existing infrastructure.

In 2000 only 14% of European companies had an IP VPN, but by end-2002 this will leap to 42%. These are being used to create an extranet for trading partners, connect remote or mobile workers to the corporate network, provide basic Internet access to staff, and build an intranet for staff.

Regarding Voice over IP, Pim Bilderbeek, IDC vice president, European e-business and networking research, said that firms had a choice: an IP-enabled PBX, an IP/circuit-switched PBX, or a total replacement solution in the form of a soft-switch/fully packetised PBX. IDC reckons that 25% of companies have now adopted VoIP and that business IP telephony traffic will rise from 5bn min now to 25bn min by 2005.

The key message for delegates was not to be bogged down trying to sell new technology but to focus on the business benefits of more convenient applications built on services, like unified messaging, as well as cheaper calls.

Concerning broadband, Alcatel's global marketing director Bill Pearon said that only 0.3% of lines in Europe (500,000) have been unbundled in the local loop. Telcos and governments have focused on broadband infrastructure builds and legislation, but there is now a move to pay more attention to convincing businesses and consumers why they should have it.

However, Pearon said that telcos need to do more to make it cheaper to sign up DSL customers. A typical scenario would be that, of every 100 potential customers contacting a provider about DSL, only 20 would subscribe. Reasons for the poor take-up include lack of information about DSL, technical problems, poor service, and competition from areas like cable getting to the customer first. Telcos should aim for at least a 50% hit rate from initial enquiries to make DSL profitable.

Pearon added that providers also need to offer segmented broadband packages to business, which are distinct from the straightforward high-speed connection rates offered to consumers when it comes to marketing DSL. Service level agreements for broadband should be included.

For consumers and businesses, telcos must target a rich multimedia package, including services over DSL like VPNs, Voice over DSL, video conferencing, video on demand, multi-player gaming, MPEG, and TV.

Telecom Italia raised the theme of segmented services by presenting its new approach to DSL access. It is offering DSL to customers who aren't necessarily high Internet users by charging cheaper prices for a fixed number of connected hours every month. This is part of a strategy to grow its DSL market to cover not only access but also services.


Antony Savvas
Networks and Telecoms writer
Antony Savvas is a freelance networks and telecoms writer: a_savvas@yahoo.co.uk

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