migration patterns

IN MARCH 2004, A DECISION BY THE D.C. Circuit Court of Appeals overturned the FCC’s Triennial Review Order dealing with UNE-P, resulting in negative impacts on competitive carriers operating under the leasing business model — causing stress for CLECs. As facilities-based providers offer more complete bundles of services and vendors drive down the prices of local and long-distance services, it is increasingly hard for competitive carriers to attract and retain subscribers.

Competitive carriers must migrate to new business models to deliver differentiated service offerings with greater value. Deploying next-generation network technologies and architectures also can drive down costs and increase revenue and profit margins.

Although there is no “one-size-fits-all” migration plan, there are some common elements that are critical for success in every scenario.

Current generation broadband equipment has been deployed using an overlay model, which was designed to localize capital expenditures and leverage targeted regions that were considered high-opportunity areas. The overlay model was appropriate during early market development when there was a relatively high level of uncertainty regarding subscriber adoption rates for xDSL and broadband demand was unclear. However, as broadband adoption rates have accelerated, carriers find themselves grappling with a less than ideal situation.

The key to a service provider building a sustainable competitive business model is based on convergence. Convergence is vital to enable new and highly differentiated services and reduce operating costs by running a single network rather than two distinct networks.

By tightly integrating POTS and DSL functionality at the chip level, a new approach lays a solid foundation for meshing all services. New broadband loop carrier (BLC) systems based on this technology allow efficient software-driven provisioning of both voice and broadband on every line, and provide an ideal bridge for efficient incremental migration from UNE-P to a UNE-L-based business model.

With DSL, POTS and VoIP universally available on every line, BLC platforms effectively integrate and go beyond the current combination of digital loop carriers, DSLAMs and media gateways, resulting in significant savings in capital expense, power and space. Because BLC platforms are designed to interoperate with a variety of legacy circuit switch equipment and softswitches, competitive carriers have maximum flexibility and minimal technology risk during the migration to a facilities-based UNE-L business model.

For competitive carriers that have to operate within tight margins, the capability for remote provisioning of lines in software is a key advantage. Unlike first-generation DSLAM-based deployments, a BLC platform simply can be installed in the colocation cage and then managed almost entirely via software. The cost of truckrolls and technician time is reduced greatly, and the hassles of coordinating physical access to the system are eliminated. The ability to provide DSL service as easily as a CLASS service results in faster service provisioning, higher customer satisfaction and shorter time-to-profit.

BLCs provide CLECs a high degree of flexibility to evolve new service offerings in response to emerging market demands, without having to reconfigure physically the deployed systems or incur costs of forklift upgrades. For example, carriers that want to evolve their voice networks can take advantage of the BLC’s integrated voice gateway capabilities, including support for both TDM and packet call control protocols.

A CLEC even can migrate individual customers from POTS services to IP-based services on a line-by-line basis — without the need for ever physically touching the installed line cards, or adding to or altering the customer’s equipment. The voice packetization is transparent to the subscriber.

BLC platforms also make it possible for system vendors to offer carriers innovative methods to manage ramp-up of costs and more effectively match cash-flow-to-revenue growth. For instance, a BLC can be deployed using a right-to-use software licensing model. The license is paid as customers take service, enabling carriers to manage incrementally a portion of the capital investment.

In addition, by offering “portability,” this licensing method allows carriers to manage the costs of subscriber churn, which is advantageous for CLEC carriers as they migrate toward facilities-based UNE-L business models and are uncertain of take rates and churn.

As a competitive provider decides on a path forward, it’s about building a “service delivery capability,” not just delivering voice, data and video services as we know them. These services are now commodities; service bundles will become commodities as well. Service providers need to build a capability to deliver new and differentiated services quickly and cost effectively.