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The circuit-to-packet migration plan stems from the convergence activity that is underway throughout the greater industry. There is no question that circuit-based services such as voice, ATM, and frame relay will be around for some time to come, but there is aggressive movement going on with regard to packet migration. Companies are rapidly developing and rolling out service packages that rely on IP, softswitch technology, and packet-based services, including voice. The VoIP marketplace for wireless, Centrex, and PBX service alone is enormous. Now that the industry is back on its feet and money is moving in, this trend will accelerate. VoIP is a critical success component and not simply because it helps the telco reduce costs. It is critical because it facilitates the delivery of a new suite of converged applications and services that represent new revenue streams for the telco. There is nothing more important than that.
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Because of the diverse, multiprotocol nature of the metro marketplace and the ongoing evolution of the corporation from operating out of a single metro-based location to a distributed corporate architecture with offices scattered throughout customer locations metro has become one of the fastest growing market sectors for service providers. And because optical technology has taken root in the metro rather effectively, with low-cost, multichannel DWDM technology offering lower cost solutions due to optical s ability to reduce the total number of network elements under management control, it garners attention. Today, ILECs control
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more than 60 percent of all metro spending; this is a significant percentage of the overall market and deserves the attention it attracts. Furthermore, the fundamental local-loop technology for the metro is Gigabit Ethernet, and to be even more granular, switched Gigabit Ethernet. Service providers can simply drop a fiber connection in the basement of a metro office building, terminate it on a high-volume Ethernet switch, and deliver a broad range of high-bandwidth services to multiple customers in the building.
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Today the typical ILEC operates a wide array of disparate and functionally unrelated networks: the PSTN, the IP network, the ATM network, the frame-relay network, the ISDN overlay, the DSL overlay, the wireless network, the high-speed Ethernet access and transport network, and so on. Recent technological advances such as Multiprotocol Label Switching (MPLS) and Resilient Packet Ring (RPR) allow for many of these network infrastructures to be converged onto a reduced set of protocols and physical networks, a move that dramatically simplifies the complex management task that ILECs face. This complexity translates into revenue barriers because of service delays, QoS issues, and billing discrepancies. Anything that can be done to simplify the cloud is a step in the proper direction because it reduces overall operating cost and stands a good chance of increasing customer service levels because of reduced network complexity. The move to an IP infrastructure is clearly underway, but in many cases the telcos are reluctant to make big moves in that direction because of uncertainty over the business reasons for such a radical migration. In fact, there are relatively few valid business reasons for the migration to IP. The first is obsolescence: If a telco is facing a situation in which a switch in a central office is nearing obsolescence, then an IP overlay is probably worth considering. Or, if the telco is about to offer service in a greenfield (new, devoid of services) market, then IP is worth considering. Alternatively, if the service provider is facing a situation in which a switch is nearing capacity and will potentially require real estate expansion to accommodate the new equipment required, then IP is worth considering because of its reduced floor space requirements. Finally, if the service provider is operating in a region with a high degree of business penetration, or is in an area where fiber-to-the-home (FTTH) is being considered, then IP represents a serious advantage and should be considered as a key infrastructure component.
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