Transcript Document

Your Service Edge
Broadband Voice Opportunities
and Provisioning
The Bundled Services Requirement
Steven Shaw
Director, Market Development
Presentation Outline
1. Opportunity for Broadband Voice
– MMDS Direct: Connect the small business/
residence
– MTU/MDU Opportunity: LMDS hybrid solutions to
reach the small business/residential
2. The Requirement for Bundled
Telephony Services
3. Provisioning: An operator’s view
– Connecting the pipe
– Managing the end points
Opportunity Overview
The Small Business Opportunity
Yesterday
Large
Business
15,302
Mid Business
(100-499)
846,683
Today
Small Business
(1-99)
7,900,000
Residential
103,590,000
Broadband marketplace
Broadband demand
• Worldwide demand is
growing rapidly
• Consumer broadband
cable and DSL lead
pack
• High speed internet
access is “addictive”
Broadband Households (Millions)
Broadband Subscribers
50
46.7
37.0
40
27.7
30
18.9
20
11.0
10
5.0
0
2000
Fiber
2001
Satellite
Source: Forrester - Consumer Broadband Hits Hypergrowht in 2001 (10/6/00)
2002
2003
Fixed Wireless
2004
DSL
2005
Cable
Voice over Broadband:
A MMDS focused solution
Subscriber
Jetstream
CPX-1000
ATM
DS3/OC3
ATM
MMDS
ATM
T1/
DS3/
OC3
IAD
Class 5
Switch
Regional
Packet Access
Network
Cell Site
PSTN
ISP Facilities
Regional
Switching Center
Capture
SMB &
Residential
Internet
Broadband voice:
An in-building -focused solution
Business customers
(Tenants)
IAD
Analog
voice
LMDS, U-NII,
DEMS, 38 GHz
ATM
DS3/OC3
IAD
T1
Voice PBX
Building
Basement
Mini- DSLAM
PSTN
Jetstream
CPX-1000
Regional
Packet Access
Network
ISP Facilities
n x T1
or DS3
Regional
Switching Center
Class 5
Switch
Internet
MTU/MDU Total Available Market
Voice & Data Services: $10.7 Billion
Service Revenue
Segment
Broadband
Voice
Broadband
Data
Commercial
MTU
$6.8 Billion
$2.8 Billion
Residential
MDU
$472 Million
$381 Million
Hotel/
Hospitality
$0
$275 Million
$7.272 Billion
$3.406 Billion
Total:
Source: Jetstream Communications estimate
Note: TAM Includes fraction of MTUs with 6-10 tenants, all MTUs >10
tenants and all MDUs >50 households
Commercial MTU Segment
• While 2.8M businesses reside in 750,000
MTU buildings….
• 1.5M businesses in 150,000 buildings may
justify an on-site capital investment
• The other 1.3M are better off being served by
direct/MMDS solution
• Therefore: About 20% of SBs can be
targeted with an MTU solution
MTU: The ‘Church’ of DSL
(The Place Where All of DSL’s Sins are Forgiven!)
DSL is the Preferred in-building technology:
• Avoid the RBOC Bureaucracy
– No more CO collocation expenses; loop qualification uncertainties and
provisioning delays
• Short, in-building copper lengths allow for full-speed DSL
– 2.3 MBPS SDSL, Full speed ADSL, 6+ MBPS VDSL
• DSL Provides longer reach/distance than LAN technologies
– 4000+ feet distance reaches almost 100% of tenants in all-sized
buildings
– Ethernet maxes out at 300 feet on a cable, requiring more switches
• Most buildings have Cat-1 or lower grade wires in place
– DSL runs over Cat-1, 3, 5 or Cat “Junk”
– Ethernet requires Cat 3 or Cat 5
Residential Multi-Dwelling
Unit (MDU) Market Segment
• 20% of U.S. households live in MDU
• 2.75M MDU Buildings in US comprise 20.5M
households
• 75% renter-occupied, 25% owner-occupied
• 27.5% of all MDUs reside in CA and NY
• Highest % in Northeast & CA
• Strong new construction growth in TX, FLA,
CA and GA
• Only 5% served today by a single MDU
service provider
Residential MDU: All About Focus
2.2% of buildings=46% of MDU households
# of Rental Units
on Property
Focus:
46%
# of
Properties
2
1,558,700
3
% of Total
Properties
# of
Apartments
% of Total
Apartments
56.58%
3,093,200
15.03%
366,030
12.2%
1,025,900
4.98%
4
341,350
12.39%
1,436,800
6.98%
5-9
281,500
10.22%
1,897,700
9.22%
10-19
107,170
3.9%
1,462,540
7.12%
20-29
38,000
1.38%
916,750
4.45%
30-39
18,166
0.66%
604,240
2.94%
40-49
14,431
0.52%
702,790
3.41%
50-99
26,694
0.97%
2,009,400
9.76%
100-199
19,804
0.72%
2,952,300
14.34%
200-299
7,775
0.28%
1,948,400
9.47%
300-399
2,966
0.11%
1,058,800
5.14%
400-499
1,307
0.05%
605,130
2.94%
500-749
723
0.03%
431,360
2.10%
750+
307
0.01%
437,670
2.13%
Total
2,754,923
100.00%
20,584,980
100.00%
2-4 Unit Buildings
2,236,080
81.17%
5,555,900
26.99%
50+ Unit Buildings
59,576
2.16%
9,443,060
45.87%
Source: Nat’l Multihousing Council and The Yankee Group
The Opportunity for
Broadband Voice
“Free Internet is simply the cost of customer
acquisition. In our model, if we can just
sell tenants on our voice services and
continue to give away free broadband
Internet, we can still make a profit.”
Sean Doherty
President of Urban Media
Inter@ctive Week, May 22, 2000
The Strategic Imperative for
Broadband Voice
• Vanilla internet service will commoditize in the
MTU market rapidly
– No exclusive building access rights allowed under FCC rulings
– Multiple BLECs per building
• REITs and PMs have growing leverage
– May be able to play multiple BLECs off one another
• BLECs will need to diversify their service
portfolio to win in a competitive market
• And voice is where the money is…
The Case for Broadband Voice
in the Commercial MTU
• Triple Your
Subscriber
Revenues
• Increase EBITDA
4-fold
• Lower your building
breakeven point
from 8 tenants to
five
• Dramatically
accelerate your
time to profitability
Commercial MTU
Data Only
Voice and Data
Number of Tenants
20
20
Percent Data Subscribers
50%
50%
Percent Voice Subscribers
0%
25%
Total Data Subscribers
10
10
Total Voice Subscribers
0
10
Avg. Monthly Data Revs
$200
$200
Avg. # of Voice Lines
8
Avg. Monthly Voice Revs
50
Total Monthly Data Revenues
$2,000
$2,000
Total Monthly Voice Revenues
$
$
4,000
Total Monthly Service Revs $
2,000 $
6,000
Revenue Sharing with PM
Monthly n x T1 Service Costs
Voice MOU
ISP Expenses
Customer Service
Sales and Marketing
Operations, G&A
$
EBITDA
$
100
$478
$0
$500
$60
$150
$240
472
$
$
300
$956
$1,200
$500
$83
$250
$720
1,991
The Case for Broadband Voice
in the Residential MDU
• Triple Your
Subscriber Revenues
• Increase EBITDA
6-fold
• Data-only
residential model
very difficult
• A voice revenue
stream can become
the difference
between business
success and failure
Residential MDUs
Data Only
Voice and Data
Number of Tenants
250
250
Percent Data Subscribers
40%
40%
Percent Voice Subscribers
0%
40%
Total Data Subscribers
100
100
Total Voice Subscribers
0
100
Avg. Monthly Data Revs
$40
$40
Avg. # of Voice Lines
$0
2.5
Avg. Monthly Voice Revs
$0
30
Total Monthly Data Revenues
$4,000
$4,000
Total Monthly Voice Revenues $
$
7,500
Total Monthly Service Revs $
4,000 $
11,500
Revenue Sharing with PM
Monthly n x T1 Service Costs
Voice MOU
ISP Expenses/User
Customer Service
Sales and Marketing
Operations, G&A
$
200
$1,434
$0
$1,000
$600
$400
$480
$
EBITDA
$ (114) $
575
$2,390
$3,750
$1,000
$830
$588
$1,380
988
Option 1: Acquire Local Exchange
Voice Switch Facilities
• PROs: Significantly improves service margins
• CONs: Requires capex and in-house PSTN
expertise
• Traditional workhorse Class 5 circuit switches:
Nortel DMS, Lucent 5E, Siemens EWSD
• Lower cost mini versions: Lucent VCDX, Nortel
DMS10
• New breed of lower cost programmable Class
5’s: Taqua, Network Telco
• Long-term option: Soft switches as true Class 5
replacements
– Requires functionality beyond current Class 4 tandem /
Internet offload applications
Option 2:
Wholesale Voice Services
• Focus on your role in the value chain
– Tenacious sales and marketing – owning the
customer
– Competitive advantage in reduced customer
acquisition cost via building presence
– Time-to-market advantage in DSL provisioning
• Leverage the expertise of a voice CLEC
– Many have wholesale / CAP heritages
– Many have existing installed base of Class 5s and
operational competency in major MSAs
– Partner for a win-win
Industry Perspective
“XOptions” Bundled Service Offering
From XO Communications
“Average monthly revenues for a 12 line customer could go
from $600/month today to $1,200 with the bundle”
“We believe that XO will realize a gross margin in the 65%
range for SME customers…with a payback period of 6-7 months”
“XO’s customer take an average of 1.5 services today and
will likely be taking 3+ services as part of the bundle”
Source: Bear Stearns Equity Research, XO Communications, Oct 2000
Product Plan of Action
Develop new “premium” bundled services offering
Includes local, LD, internet, web host to start
Bundled Services Provide:
1. Change offering from
unit cost to bundle
service price
2. Generate more revenue
per subscriber
3. Entrench customers
before competition
4. Reduce Churn
Provisioning
Why we care about provisioning
• Installation, Configuration, Turn up cause big
problems, big headaches
– 100,000 subs/year
– 250 days/year to install
– Requirement for 200 techs
• 2 installs per day
• How many technicians do you need to install a
broadband solution?
– One for telecom/wireless interfaces, demark line
– One for data services, IP configurations
• Self install/config only way to get “hyper growth”
– 46M connections by 2005 ?!?!?!
• Lower revenues/sub, must recoup costs quickly
Understanding Total Cost of
Ownership
For every $1 spent on Jetstream gear
Spend $1.68 on mgmt, net ops
33%
42%
25%
Source: Ernst & Young and Yankee Group studies
Fixed Costs
Capital Equipment
Network Operations
Your Travel Support Systems
Ticketing
Flight/Fleet
Allocation
Order
Management
System
Seat
Assignment
Customer
Interface
(E-business)
Customer
Loyalty
Billing
Integration is key for provisioning
Syndesis
CoManage
CommTech
Flow Through Provisioning
System
STEP A:
Specify DSLAM
port for Voice
PVC:
JetEMS/JetWay
Broadband
Network EMS
WLL EMS
STEP B:
Specify CPX-1000
Voice PVC for
IAD
Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
Voice PVC:
Voice PVC:
Voice PVC:
VPI 0, VCI 39
VPI 100, VCI 1001
VPI 100, VCI 1001
IAD
Voice PVC:
VPI 100, VCI 1001
Edge
Switch
WLL
Voice PVC:
Voice PVC:
VPI 100, VCI 1001
Core
Switch
Voice PVC:
VPI 100, VCI 1001
VPI 100, VCI 1001
Voice PVC:
VPI 100, VCI 1001
Voice PVC:
Data PVC:
VPI 0, VCI 39
VPI 200, VCI 1012
Data PVC:
VPI 0, VCI 38
Core
Switch
Data PVC:
Data PVC:
VPI 200, VCI 1012
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
Edge
Switch
Core
Switch
ISP Facilities
CPX1000
Voice PVC:
Voice PVC:
VPI 100, VCI 1001
VPI 100, VCI 1001
CPX-1000: Manageability
A. CORBA
Used for Jetstream apps:
JetCraft and JetVision
B. SNMP Agent
C. TL-1 Agent
D. Command Line
Must be able to integrate
with existing systems
A Carrier’s View of Provisioning
Management
Systems
Billing
Customer Care
OSS Gateway
Workflow
Subscriber
request
from Web
or
Customer
Service
NMS
JetEMS/JetWay
Broadband
Network EMS
WLL EMS
CPE (voice & data)
LDS OSS
Flow-through Provisioning Interfaces
Network
CPX-1000
Packet Network
Aggregation Edge, Core
JetIAD
JetIAD
JetIAD
1 PVC for data connection
1 PVC for all voice connections
TDM T1
GR-303
Voice Traffic
ATM
DS3/OC-3
ATM
DS3/OC-3
JS Management Protocol
Data Traffic
to Internet POP
PSTN
Class 5 Switch
Voice over BB Network
Mass Subscriber Management
JetVision
Server
JetVision
Client
• Bulk Provisioning
– Add or modify thousands of
IADs at a time
• Bulk Monitoring
– Monitor all IADs from a single
interface
• Bulk Administration
Packet
Network
– Control (lock/unlock) selected
IAD resources
– Graceful firmware upgrade of
thousands of IADs at a time
IAD/CPE Management
Single VC for Voice & Management
•
Voice Traffic
– ATM AAL2
– Separate channel per voice call
– Dynamic bandwidth use
•
Management Channel
–
–
–
–
CPX-1000
Deterministic call control
Provisioning
Monitoring
Software download
Regional
Packet
Network
Data Network/
Internet
DSLAM
Voice
IAD
Data
Management
Jetstream Product
VoBB Provisioning Requirements
• Time to Market is critical to generate revenues
immediately
• Solutions must scale to meet growing demands
• Platforms (network elements, management
systems, comm. networks) must be robust,
reliable, and secure
• Overall lifecycle costs must be controlled
• Systems must integrate cleanly/effectively to
support today’s services, growth for tomorrow
Summary
Summary
1. MTU is the target SMB market
– LMDS hybrid solutions to reach the small
business/residential
– In building DSL distribution
2. Bundled Telephony Services
1. Make subscribers more profitable
2. Entrench your customers before competition
3. Provisioning: An operator’s view
1. More than “connect the dots”
2. Invest in flow through provisioning systems
Your Service Edge
Leading the Way
in Voice over Broadband