Transcript Annotation

Telecommunications
Industry Brief
Strategic Challenge
How to keep up with the pace of change?
High uncertainty about future
Planning is limited
No time to make decisions
Reacting is insufficient
Difficult to catch-up as pace
increases
Traditional strategies of
“build and defend a
position” are inadequate
Tough competition penalizes
mistakes
Fortresses No Longer Exist
Intel could try to
defend its fortress…
…but chooses not to
• Superior technical
capabilities
• “Only the paranoid survive”
• Advantage is assumed temporary
• Substantial capital barriers
to entry
•
•
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• Dominant market share
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Strategy is complicated and surprising
Price cutting in NICs
Innovation into MMX technology
$500 million investment in over 50 media,
Internet and graphics companies
Downmarket microprocessors for under
$1,000 PCs
Expanded product line
Laptop-specific microprocessor
New, “cheap” chips
New “express bus” chips
Time Pacing
Common experience
• Need for change is not
anticipated
• Initiating change takes
too long
• Change frequently
loses momentum
* Footnote
Source:Sources
Myths
Best practice
• Best solution is to
react to events as
quickly as possible
(event triggered)
• Drive change with internal
metronome (clock driven
change)
• Monitor own processes and
the market for rhythms
• Set the pace
• Choreograph transitions
Time Pacing Examples
Company
Activity
Pacing
Addition of new
manufacturing capacity
Builds new facility every
9 months
Opening of new retail
outlet
Opens 300 stores each
year to hit target of
2,000 by year 2000
Launch of new products
40% of sales from
products launched in last
5 years (in 1997
achieved 49%)
Jack Welch’s calendar
Like seasons of the year,
Welch manages through
a rhythm of regular,
seasonal activities
Improvisation
Common experience
• Innovative ideas
suffer from poor
execution
• Company aspires to
lead, but always
seems to follow
industry
• “Analysis-paralysis”
Myths
Best practice
• Successful companies
are run by a braintrust
of a few, smart senior
executives
• A few rules, neither
bureaucracy nor chaos
• Structure key outcomes with
responsibilities
• Structure key activities with
priorities
• Success is driven by more
information (real time), not
less and fact-based debate
• Success is driven by an
army of revolutionaries
• Successful companies
• Operate on the fly
• Limit information
• Eliminate conflict
Improvisation – Semi-Structure Examples
Company
Limited set of rules
• Strict product development priorities
• Products released in three stages – internal, beta, full
launch
• Priorities managed, not projects – spontaneous content
encouraged
• “We live on the edge”
• Clear ranking of which types of molecules are research
priorities
• Maximum number of molecule types pursued at any
one time
• Projects “killed” according to step charts
F
I
L
M
S
(The Crying Game
Pulp Fiction
The English Patient
Chasing Amy
Cinema Paradiso)
• Movies must
• Center on a basic human condition and a flawed, but
sympathetic character
• Have a clear beginning, middle, and end
• Disciplined financing (50% more efficient than
industry standard)
Probing
Common experience
• Annual strategic plans
are created, then filed
and ignored
• Strategic plans are
often wrong in
hindsight
• Short-term
performance pressure
takes priority over
future thinking
Myths
Best practice
• Planning predicts the
future
• Build vision of business, not
industry
• Probe the future
• Wide variety (time and
content) of low-cost probes to
create insight
• Constant, thin attention
• Hypotheses and evaluation
metrics tied to probes
• Planning is a waste of
time, it is better just to
react
• 5-week schedule, 5-month
plan, 15-month intuition
Probing Examples
Company
Examples
• “You’ve got to experiment…strategy is about buying options…then picking
the best ones to pursue” – John Browne, CEO
• Drilling experiments on Andrew oil field led to revolutionary horizontal
drilling technique
• Used limited JV with Safeway to experiment with integrated food and fuel
convenience stores
• Schwab’s approach is to use market to fine-tune new products; as a result,
they “release products at a blistering rate, some hit and some wither, but the
flood keeps coming” – Forbes
• Develop experimental products/services in-house
• Futures trading
• Market Buzz
• AdvisorSource
• Uses alliances for further experiments
• IPOs with Goldman Sachs
• Direct life insurance with Great West Life
• Gates calls probes “feelers”
• “You’ve got to make sure you have feelers out to see when things are about
to achieve critical mass”
• Currently limited backing of three different video compression technologies
• Creates probes with internal projects, alliances, and acquisitions
• Both shorter term probes and “Blue Sky” projects
Making Probing Happen
Future focused
meetings
5 years
Acquisitions
3 years
Futurists
2 years
Scenario
planning
18 months
6 months
Market
research
Alliances/
JVs
Pilot markets
Experimental
products and services
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•
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Design a probe portfolio
Range of time frames
Range of technologies
Range of probe types
Always low cost
More random probes when
more uncertainty
• Measure results
• At some point, accelerate
investment in direction of
probe or eliminate it
Regeneration
Common experience
Myths
Best practice
• New business
opportunities
suffocate in shadow
of legacy ones
• New businesses
succeed only when
isolated from
traditional ones
• New businesses
thrive while
traditional businesses
languish
• Diversification is
successful when
managers build and
extend a tightly
woven set of
competencies
• Drive successful diversified
growth when
• Traditional businesses are
combined with new approaches
• Multiple growth paths are
traveled
• 3 Rs: rearchitecture,
recombination, and refresh are
used
• Thinking is modular
• Existing businesses are culled
• Roadblocks on
previously successful
growth paths
Regeneration Examples
Company
Examples
• Recognized modularity of brewery, wholesale business, and retailing/hospitality
skills
• Diversified into resort hotels, restaurants, nursing homes, and health clubs based on
retailing/hospitality skills
• Divested smaller, less profitable brewery operations
• Diversified into high-volume, low-cost, in-store banking outlets with supermarketstyle service sales force
• Newly trained salesforce used to re-vitalize traditional branch network
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Entry into luxury market with Lexus, built on
Discarded, experimental, midsize, Asian market product platform
New dealerships, brand images, styling, technology
Rearchitected selected engineering features
Refreshed lower priced name plates with Lexus technology
• Sophisticated combination of varied mutations, recombinations, and refreshers
• Combined camera skills (optics technology, management of dealers, high-volume
assembly) and new copier product
• Combined print engines from copiers with new laser printers product and OEM
channel into print engine business
• Refreshed copier business with sophisticated control technology from laser printers
• Recombined dealer management, high-volume assembly, copier and laser printer
technology to launch fax machines business
Agenda
 Local Services and Strategies
 Long Distance Service and Strategies
 Integrated Carrier Strategies
 Voice over Whatever
Local Market Dynamics
 Large, slow growth market
 Competition really just beginning
 Lots of M&A activity

SBC/Pac Bell/ SNET/ Ameritech

Bell Atlantic/ NYNEX/ GTE

WorldCom/MFS/Brooks

AT&T/ TCG/ TCI
ILEC Local Market Revenues
$98.6 Billion, 1997
Access
33.6%
Toll
10.2%
Dir Revenue
4.3%
Local
Services
51.9%
Revenues for ILECs only, excludes non-telecom revenues
ILEC Local Services Market
$51.1 Billion, 1997
Dial tone
70.1%
Local P/L
3.3%
Features
9.2%
Termination/
connections
13.3%
other
0.2%
Residential - 54%
Business - 42%
Pay phone
3.9%
What Defines the CLECs?
 The Telecom Act of 1996 transformed CAPs into CLECs
and created the rise of an integrated carrier approach.
It also sparked the entrance of other “new” competitive
local exchange carriers- both start-ups and existing
carriers.
 CLECs are among the fastest growing , and are clearly
the first wave of Integrated Carriers because they were
able to leverage existing infrastructure to offer a
broader portfolio of services.
 CLECs are diverse; different target markets, service
mixes and technology solutions.
 Competition is driving carriers to unprecedented
levels of business, service
and infrastructure complexity
CLEC Revenue Mix
1997 & 2000
1997- $3.1B
Systems
Integration
13%
Data
5%
Special &
P/L
38%
2000- $9B
LD/Toll
23%
Data
6%
Systems
Integration
7%
Special &
P/L
24%
LD/Toll
15%
Switched
access
7%
Local
Exchange
22%
Domestic Revenues Only
Switched
access
11%
Local
Exchange
29%
CLEC Profiles
Geographic service area
Key Customer Focus
Sales Organization
Intermediate
• East Coast emphasis
with extended Frame Relay
to the West Coast and Texas
• Nationwide Frame Relay service
through the UNISPAN consortium
• The target market for Intermedia is
businesses with between 50 and 500
lines that can ultimately be served
on-net.
• Also targeting larger accounts with
its inter-city data services and
internet services
• 365 Intermedia sales people
and a total of 617 sales
people when Shared Tech.,
LDS, and national Tel are
added
• 102 Sales Offices located
throughout the US
ICG
• Regional carrier
• Focuses on clusters in Ohio
Valley, Texas Southern
California; Colorado;
North Carolina; Alabama;
and Tennessee.
• New network in Atlanta for
1998 and no additional
networks planned
• Primarily focuses on Tier I
and Tier II.
• Sells to small and medium-sized
businesses of 5 to 100 lines with a
strong emphasis on accounts with
15 to 50 lines.
• Utility agreements will bring on
Multiple-dwelling units as a target
market
• ICG is trying to leverage its existing
client relationships to sell bundled
solutions.
• Sales force is estimated
at roughly 300+.
• Also leverages its
relationship with utilities to
expand into residential and
business markets.
TCG
• Nationwide footprint covering
28 of the 30 largest MSAs.
• BizTel footprint-206 areas
including 96 of the top 100 MSAs.
• Focus on Tier I cities some
emphasis on Tier II and
Tier III cities.
• New emphasis on regional corridors.
• Target larger businesses (550 lines
or more) in certain verticals such as
Financial Services, Healthcare,
Education, Gov’t and Media
companies.
• Other Key market is on-net
small/medium businesses (500 lines
or less.)
• Very limited residential play.
• Sales channels include both
direct sales force (689+ sales
representatives) and agents
and resellers (approx. 2000.)
CLEC Profiles
Geographic service area
Key Customer Focus
Sales Organization
GST
• Regional player-mostly West and
Southwest U.S. and Hawaii.
• Not looking to go national.
• Mostly Tier II and Tier III cities.
• Target SMBs business-between
2 to 200 access lines.
• Continue to serve wholesale and
retail businesses.
• Sales force approx. 290
• Focus on customer care and
“holding-the-hand” of
the customer.
E-spire
• Southeast and Southwest U.S.
• Tier II and III cities.
• Accelerating roll out in 98.
• Targeting small to medium
businesses spending.
• Targets firms in professional services,
health care, gov’t, and financial
services.
• No interest in residential.
• Sales and Marketing staff grew
from 56 people in 1996
to 277 people in 1997.
USN
• Regional focus - Midwest,
New England, and Mid Atlantic.
• All TRS based.
• Target businesses with 2-10 business
lines.
• Focus on providing full bundles and
superior customer service.
• Direct Sales focus.
• Sales force grew from 206
in 1996 to 426 in 1997.
Key Market Trends and Influences Affecting
the CLEC Market
 Wall Street
 Deregulation
 Mergers and Acquisitions
 Alliances and Partnerships
 Integrating the product portfolio
 Network Build-out
 Growth- Can they sustain their current growth and will
they be able to manage and survive their growth
Wall Street and Deregulation
 Wall Street
 Pressure to show profit- EBIDTA positive



None of the CLECs EBIDTA positive except for TCG
Wall Street looking for a return on investments
Push towards deployment of success-based capital
 Deregulation
 Telecom Reform Act of 1996

Required the RBOCs to open the local markets via resale, UNE
and facilities based

Competition in the business market. Cherry-picking the profitable
customers. Residential markets have seen very little to any
competition.
Deregulation (Continued)
 8th Circuit court interconnection rulings

Removed the ILECs burden of recombining UNEs and placed
that burden on the competing carrier. Ruling now under
consideration by the Supreme Court.

Interconnection pricing in the hands of the state regulatory
commissions. Leaves competition fragmented and makes a
national TSR or UNE local entry strategy difficult.
 RBOCs into Long Distance

RBOCs need to meet 14 point checklist to gain entry into inregion Long Distance,

FCC vs. SBC granted RBOCs the ability to immediately enter inregion. Overturned on appeal.

RBOCS plannin ressive attack of the in-region long distance
market. Expecting to take most
market share in the small and medium
business market and the consumer market.
Mergers / Acquisitions and Alliances /
Partnerships
 CLECs are positioning themselves both to be acquired or to
acquire. Are the CLECs looking for an exit strategy?
 Acquisitions, alliances, and partnerships have allowed for
quick, lower-cost entry into new markets
 Large IXCs continue to look to the “CAPs turned CLECs” as
an access alternative to the ILECs
 Internet’s demand for dedicated access, the call for
alternatives to the PSTN, and the lure of the ISP retail
business have driven many CLECs to acquire ISPs

ICG/Netcom, Intermedia/Digex, MFS/UUNET, TCG/Cerfnet, RCN/
UltraNEt and Erols
 Challenge is integrating acquisitions. Importance of a
seamless entity to customers
Network Build-out: Expansion Today;
Growth Tomorrow
 Still in the Build Out Stage for Most CLECs;

Many Are Expanding Into New Cities, Others Are Consolidating
their existing networks to Ensure Seamless Regional corridors
 Third Tier Cities Now the Focus of New CLEC
Opportunities (i.e., Cities With 750,000 Population or
Less); Tier 1 and many Tier 2 cities saturated
 Move into Switched Services & Long Distance helping
to achieve profitability and positive cash flow while
traditional CAP segment faces threat from IXC
acquisitions
Network Build-out: Expansion Today;
Growth Tomorrow (Continued)
 Yankee Group Forecasts More MFS-Style Exit
Strategies for facilities-based CLECs. Network buildout is expensive and it is less expensive to buy the
networks
 Move towards 3rd generation CLECs- dropping in
switches and leasing the fiber between the switches.
Allows for a faster turn-up time and generation of
positive cash flow. CLECs to look for in this category
include: US LEC; Allegiance; and Focal
Network Expansion:
Growing CLEC Switch Deployment
Number of Switches
600
600
520
500
410
400
320
300
200
210
100
100
0
1995 1996 1997 1998 1999 2000
Installed Base,
Switches
Can the CLECs Survive Growth?
 Managing Growth

Customer Growth- can they meet customer expectations and
demand

Market Growth- Are they going too fast too quickly? Do they
have the resources to maintain their current pace or are they
trying to be everything to everyone? Example being US ONE
which crashed and burned
 Ensuring Quality while Maintaining Growth


Leased Networks
Manage unbundled elements- need to own the customer
end-to-end and control the customer’s entire experience
 Talent: Finite number of talented people in the industry
Local Exchange Market - 2000
$44 billion
ILECs
88.9%
CLECs
3.6%
IXCs
7.4%
CLEC revenues EXCLUDES MFS & MCImetro (MFS and MCImetro included in IXCs);
revenues for dial tone ONLY,EULC, taxes, and toll are not included
CLEC Market
Dynamics 36 to 48 Months
 Multiple facilities-based
CLECs in major Tier 1 and 2
cities

Tier 3 cities offer some growth
opportunity
 UNEs widely available
 RBOCs have gained Inregion LD relief
 Technology increases
bandwidth
 Potential for oversupply of
inventory
 Bandwidth & Exchange
prices fall
 CLECs Employing Exit
Strategies
 Increased IXC / ILEC
Partnerships
Long Distance Market
1997 Long Distance: The $86.7 Billion Market
Data
Other
Inbound
1%
15%
Outbound
4%
9%
Carrier Services
5%
Wholesale
Private Line
6%
10%
VPN
4%
Residential
Business= 54%
Residential= 46%
46%
1997 Business Long Distance: $46.7 billion
Outbound
16%
Inbound
Private Line
29%
18%
Other
VPN
2%
7%
Data
8%
Carrier
Services
9%
Grew approx. 10.9% from 1996
Wholesale
11%
Key Segment Growth (1996-97)
13.3
14
12
11.9
1996
10
$ in bn
1997
8.6
7.2 7.5
8
7.4
6
4.8 5.1
3.5 3.5
4
2.95
3.7
2
0
Inbound
Outbound
Private Line
VPN
Wholesale
Data
Business Long-Distance Market Shares (1996)
Sprint
11.4%
WorldCom
Others
10.2%
3.9%
MCI
23.2%
AT&T
51.3%
The Big 2 = ~85%
AT&T: Consolidations and Acquisitions,
in defense of the core business
 Divesting non- core assets and businesses

AT&T Universal Card to Citibank

AT&T Solutions customer care to Cincinnati Bell

Termination of Direct TV marketing agreement
 Acquires TCG and Defines Local Business Entry Strategy
 Paid $ 11.3 billion in stock
 Time to market a key factor in influencing the acquisition
decision
 AT&T gains Cost efficiencies, Local network coverage, and
Local market experience
 TCG gains scale, access to the AT&T brand, and easier
access to capital and other resources
Sprint: Looking for Partners?
 With MCIWorldCom merger, Sprint falls further behind
 Existing Local properties not all that attractive
 However, with its LD brand, Wireless assets, and local
presence, it is well positioned to partner or merge with:

LECs with national ambitions

Foreign PTTs that are seeking a US presence
 WorldCom acquires MCI to become the leading integrated
carrier
 MCI spurns GTE and leaves BT standing at the altar
 Overnight, MCIWorldCom becomes:

the second largest LD carrier with 25% share

the largest CLEC, with 56% share

the leading global ISP

Fourth largest international telco
WorldCom and MCI– A comparison
Assets
WorldCom
MCI
Long Distance
• $7 Billion Annual revenue (1997)
• former Wiltel wholesale LD
• $16.5 billion annual revenue (1996)
• $7.06 billion in consumer revenue
• 9.4 million households
Local
•
•
•
•
•
•
•
•
•
•
•
Estimated 1996 CLEC revenues of $1.9 bn
52 MFS Metros
34 Brooks Metros
23 markets under development
7500 on-net buildings (est)
75 Class 5 switches
25% of all competitive access lines
CLEC (Metro) Revenue of $450 million
Presence in 36 cities
Local switched service in 32 cities
30 Class 5 switches
WorldCom and MCI– A Comparison
WorldCom
MCI
Internet
• UUNet, largest global ISP
• 50,000 business customers (access and
hosting)
• Compuserve Network Services
• ANS ISP
• Provides transport to America Online,
Earthlink, Microsoft Network
• $500 million in Internet Revenue
• 400,000 dial-up customers
• Private wholesale services to 25-35%
of all ISPs.
• $200 million estimated revenue
• Sold to C&W as part of EU approval
International
•
•
•
•
• 200 settlement agreements globally
• Licenses in UK, Germany
• Top bid on Embratel
Wireless
• Choicecom
• Few of its other LD or CLEC acquisitions
have major wireless play
60 settlement agreements globally
$470 million in revenues
Metro infrastructure in 12 cities
UUNet’s European backbone in 10 cities
•
•
•
•
•
Holds on wireless licenses
Nationwide Cellular Services (a reseller)
Operates in 15-20 markets
400,000 subscribers
Paging reseller (through PagNet),
over 600k subs.
RBOCs into
Long Distance
Telecom Act of 1996
New Competitive Telecom Services Market
 “An act to promote competition and reduce regulation
in order to secure lower prices and higher quality
services for American telecommunications consumers
and encourage the rapid deployment of new
telecommunications technologies”

IXCs, Cable and CAPs Allowed to Enter Local Exchange

IXCs with more than 5% of the nations presubscribed lines is not able to
joint market local and long distance services until RBOCs are granted
in-region relief

Mandated LEC Resale at Fair and Reasonable Prices

RBOCs Enter Out-of-Region Long Distance immediately

RBOCs Open Local Markets in Exchange for In-Region Long Distance
 Pressure of New Integrated Telecom Market
Beyond Resale/Bundling to Service Innovation
RBOC Entry into Long Distance
Offering
Services
Approved
Services
Wholesale
Supplier
In-region
Launch
Ameritech
• Announced it will begin
offering long distance
in Missouri;
• Marketing Alliance
with Qwest (in-region)
• 45 States
• WorldCom
• 1999
Bell Atlantic /
NYNEX
• 34 States
• 34 States and plans to
file in Minnesota and
Oklahoma
• Sprint
• 1998?
• 39 states and
applications pending in
Vermont and Alaska
• AT&T
• 1999
Bell South
-----
SBC / PacTel
• 5 States
• 5 States
• Sprint
• 1999
US WEST
• NONE
• Marketing Alliance
with Qwest (in-region)
• 34 States
• Frontier
Card
• Williams?
• Qwest?
• 1999
Leveraging Established Customer Relationships
to Provide New Services
Biggest Hurdle for the RBOCs
OSS Access and Interconnection
 Required under the Act

ILEC must provide access to its OSSs on terms that are just
reasonable, and non discriminatory
 RBOCs have been frustrated in their 271 applications
by OSS issues:

Not able to show flow through of orders and service transactions
from CLECs
 Push for National Gateway in some quarters, but who
pays the bill?

Call for Standards by many parties (NARUC, ATIS, etc.)
 Manual processes pre
te
Conclusions
 Nice try but too early. Not likely to make first-round
approval based on Track A (of two tracks) benchmarks
 Lack of ‘competing providers to residential and
business subscribers’ by companies that ‘offer
services predominantly over their own telephone
service facilities’

Competition and interconnect deals are with competitors that are
focused on business

AT&T, has stopped marketing to residential customers in the six
markets where it resells ILEC services to the residential market
 the Yankee Group believes that the first approval for
RBOC entry into in-region LD will be around 4Q98 or
early 99. BANY is most likely
to succeed
Integrated Carrier
Strategies
&
Large Business
Market Issues
Do Large Biz Customers Care About
Service Integration?
 If Given A Choice:

70% of Businesses Say They Would Use One Company for All Their
Communication Needs

Key Reasons:



Less Effort to Manage the Network
68%
One Stop Shopping
62%
Lower Costs
59%
source: YC100 1996
…but Price isn’t Everything
How important to the purchasing decision are the following
factors? 5= very important
1 = not important
5
4.8
4.7
4.2
4.2
4
4.1
Service quality
Carrier responsiveness
Pricing
3
Ease of doing business
2
Service in major
locations
1
Source: YG WSTA Survey 1996
Long Distance Integrated Carriers
Brand
Local
Internet
Wireless
Enhanced
Telephony
Video
AT&T
MCI
MFS Worldcom
Sprint
One Rate/True
Value Bundles
AT&T.All
TCG and TCI
Digital Link
Project Angel?
WorldNet
MCI One
Friends & Family
Worldcom
Sprint Sense
MCI Local
MFS
Brooks Fiber
Internet MCI
UUNET
AT&T Wireless
Cellular/PCS,
Alpha/2-way
Paging
800, Network ACD,
SDN,
500 True Conn.,
Voice Messaging
Nationwide
Choice Cellular
Cellular, Nextwave
PCS, Alpha
Paging
800, Network ACD 800, VPN
VNet, Vision,
MCI One,
Voice Messaging
Sprint Local
ION
Broadband MANs
Sprint Internet
Passport
Sprint Spectrum
PCS
Alpha Paging
TCI
Other CableCos?
Primestar/
NewsCorp??
?
800, Network IVR,
VPN, Voice Act.
Dialing, Voice
Messaging
NA
Wholesale Services
Wholesale
 All facilities based LD carriers, whether they are
national or regional in nature wholesale LD services to
each other, to smaller carriers and to resellers
 Over time, the four largest LD carriers have increased
their revenue contribution from the wholesale channels
 Frontier’s agreement to sell capacity to Level 3 is an
example of the renewed focus on wholesale by smaller
LD carriers such as C&W and LCI
Wholesale (Continued)
 New entrants such as Qwest, IXC, Williams and Level 3
will expand the wholesale market but will also put
significant price pressure on wholesale rates
 New services such as IP, and new entrants in local and
LD market are expected to feed the demand for
wholesale service
 We estimate the wholesale market to be around
$ 8.3 billion
ELDP Diversification Strategies
 IXC Communications

in addition to carrier’s carrier services, offering switched, freephone,
calling card and data services

Looking to acquire smaller retail players
 Qwest Communications

direct retail plays through VoIP, dial-around

acquisitions of LCI, SuperNet

looking to enter the large corporate market
 Williams Companies

leverage already large network integration business
 Level 3 Communications

purchased Data CLEC XCOM
Voice Over Whatever:
Demand for Alternative
Voice Services
Key Issue: What is the current status of Voice Services
Over Alternative Networks (TCP/IP, Frame Relay
and ATM)?
Not
Likely
29%
Both
52%
Voice
36%
Both
49%
Deploye
d
31%
Conside
ring
26%
Voice
19%
In Next
6
Months
14%
Fax
12%
Fax
32%
Voice
20%
Both
66%
Fax
14%
Key Context Issue: How much data is moving
over TCP/IP, Frame Relay and ATM today...
% traffic
>50
26 to 50
11 to 25
1 to 10
0%
20%
40%
60%
80%
% respondents
PL
Intra/ Managed
Internet
FR
ATM
Key Context Issue: How much data is moving
over TCP/IP, Frame Relay and ATM in 5 years...
% of traffic
>50
26 to 50
11 to 25
1 to 10
0%
10% 20% 30% 40% 50% 60%
% respondents
PL
Intra/ Managed
Frame Relay takes over
Internet
FR
ATM
Key Issue: How much voice traffic will migrate to
VSANs over the next five years?
% of traffic
>50
26 to 50
11 to 25
1 to 10
0%
5%
10%
15%
% respondents
PL
Intra/ Managed
Internet
FR
Slow migration of voice, for all services
ATM
Fax keeps pace
% of traffic
>50
26 to 50
11 to 25
1 to 10
0%
5%
10%
15%
20%
% of respondents
PL
Intra/ Managed
Internet
FR
ATM
Key Issue: What are the reasons
for choosing VSANs?
Save Money
Better Bandwidth Utilization
Support Multimedia
Improve Network Management
0% 20% 40% 60% 80% 100%
IP Telephony MOUs as a Percentage of Total
Consumer MOUs (1998-2005)
16
14
12
10
% of LD
8
MOUs
6
4
2
0
15
12
9
7
3.5
0.4
0.8
1.9
1998 1999 2000 2001 2002 2003 2004 2005