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IS-3: Crossing Borders: Successful Strategies For International Expansion
Frank Estes
770-671-1888, ext. 224
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Company Overview
Founded in February 1997. Developed OSP with with major telephony vendors in 1998. Product offering in commercial service since March 2000. Industry leader in OSP solutions. Open solutions developer. OSP is in use by AT&T, WorldCom, NTT, Primus, Fastconnect, and others.
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The Constraining PSTN
Today, service providers maintain two distinct and separate networks; one for delivering data traffic and another for voice traffic. Each network requires its own equipment, circuitsand customer care systems. However, the declining economy and lack of capital investments budgets are causing carriers to look at core transport models and a single point of access fordata, voice and other new communication mediums.
Carriers are seeking to:
- operate one network;
- consolidate voice and data traffic;
- deliver new services to their customers quickly and efficiently, and;
- move the higher margin voice traffic onto the existing, lower cost IP networks
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Today
Access network
Data Services
Multi Service
Voice Services
DataSwitch
IP Backbone PSTN
Class 5 Switch
Class 4 Switch
Gateways
Service Provider’s Today
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“Show Me the Money”
0
200
400
600
800
1,000
1,200
1,400
1997 1999 2001 2003
Billions US$ Year 2003 : Data service revenue will retain only 1/7 as Voice
Source : Internet Telephony Gateways[Action Information Services]
VoiceData
Year
Revenues ComparisonRevenues Comparison
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Market Challenges
Service Providers (SP’s) need to maximize geographical service coverage to enable any subscriber to reach anywhere.
SP’s need a solution which is future proof (H.323, SIP, …). Privatization and deregulation are increasing competition and competitors. IP Packet Networks cost significantly less to build, maintain and operate. Yet,
service providers need a solution which allows future development, but does not cannibalize existing PSTN investments.
Integration of existing OSS and BSS systems into time tested and proven legacy systems.
The VoIP market in 2001 was worth 9,634 million minutes of traffic, an 81.5% increase from the previous year (source: TeleGeography, Inc., 2002).
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Current Market
Greater than 90% of VoIP traffic uses H323 (Source NTT Comm.)
The economic advantages of packet telephony are driving both the access and core networks away from Circuit switching towards packet. Carriers are moving voice services to packet networks to reduce upfront and operational costs. A recent study found that packet voice equipment was 70% less expensive than traditional voice equipment, and data access lines were 60 to 80% less expensive than voice lines. In addition, maintenance of packet networks was 50% lower, while provisioning was in excess of 70% less (Source AT&T).
Developing solutions based on open industry standards will unite an otherwise fragmented market and allow the industry to focus on serving customer needs through better quality features and value-added services (Business Week).
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Current Market
SignalSignal
ClearinghouseClearinghouse
VoiceVoice
Internet
AccessAccessLayerLayer
TransportTransportLayerLayer
ControlControlLayerLayer
ITSP-ZITSP-A
Voice remains the killer application, as old habits are hard to change
(Usage vs. flat rate).
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Current Market
The Telecom market is recovering from “BoIP” as the speculative amateurs are driven from the market and Telecom professional no longer fear the venture and capital funded amateurs. The Telecom companies are investing in proven technology that compliments, not revolutionizes their current infrastructure and back office systems.
BoIP:Bubble over IPBoIPBoIP::
Bubble over IPBubble over IPBoIP:
Bubble over IPBoIPBoIP::
Bubble over IPBubble over IP
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A Market Solution!
"Our VOIP strategy using OSP has enabled us to expand our global network coverage while minimizing the investments required in international fiber optic cable facilities, circuit switches, and other costly network equipment associated with the expansion of a traditional circuit switched network."
John Melick, President, Primus Telecommunications, November 6, 2001.
What do Service Providers need in order to meet today’s market requirements ?
An open, secure, scalable IP inter-connection solution which can be easily integrated with the existing PSTN network, network expansion plans, and proven external provisioning and billing
systems.
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A Market Solution!
On October 10, 2002, NTT Worldwide Telecommunications Corporation (NTT-WT), a wholly owned subsidiary of NTT Communications Corporation (NTT Com) will launch a multi-protocol/multi-vendor compatible VoIP service for interconnection among carriers/Internet Telephony Service Providers (ITSPs) that use different types of protocols and VoIP equipment.
The global VoIP market has been growing rapidly and it is expected that IP telephony will become the next generation network (NGN). However, difficulties in interconnection among different VoIP protocols and vendor equipment have been a major obstacle in the service development of VoIP. NTT Communications Clearinghouse (NTT-CH), provided by NTT-WT, will offer a new VoIP clearinghouse service eliminating this barrier …..
TOKYO, JAPAN –– On October 10, 2002, NTT Communications Press Release
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The New Public Network
ON -NET
High Speed, Optical Core
POP
POP
POP
POP
POP
POP
POP
POP
POP = POP or CO
CUSTOMERS
Cable
PSTN
DSL
ATM
Open StandardExchange Mechanism
OFF NET
VOICE
VOICEPartner
OFF NETDATA PUBLIC
INTERNET
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Vendor EH.323 GK
Service Order MonitoringSystem
Service Order MonitoringSystem
Existing Clearinghouse
server
CDR
New clients
international leased circuits (IPLC) or Managed IP-BB*
NTT Communications Clearinghouse Platform
H.323 GW
Vendor AH.323 GK
…
Existing clients
New
CDR
H.323GW
H.323GW SIP
ClientSIP
Client
Vendor FSIP Server
Billingsystem
Protocol conversion equipment
New Clearinghouse servers
Attachment
H.323 GK: H.323 compatible gateway keeper * Internet can be used if thequality is confirmed.SIP Server: Session Initiation Protocol server GW: VoIP?voice over IP) gatewayCDR: Call detail record
Vendor AH.323 GK
H.323 GWH.323 GWH.323 GWH.323 GWH.323 GW
Vendor CH.323GW
Vendor BH.323 GK
Vendor DH.323GW
An Example of International Expansion
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Case Study, VoIP Expansion Value Proposition
Circuit Switched Network
- Capital Investment (HIGH)
- Interconnection Cost (bandwidth) (High)
- Separate Voice and Data Networks
Open Standard VoIP Network
- Capital Investment (Low)
- Interconnection Costs (bandwidth) (Low)
- Digital Security
- One Network
- Multi-protocol and open
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By the Numbers
Traditional Next GenerationPSTN Carrier Packet Transition
Carrier details $ per Month $ per Month
Four POP's Interconnectivity w/ E-1 connectivity Four POP's Interconnectivity w/ IP connectivity(London, New York, Los Angeles and Tokyo) $290,000 $22,800 (London, New York, Los Angeles and Tokyo)
(6 Mps, per UUNET)
Connectivity Costs: Connectivity Costs:2 Million Calls $0.14500 $0.01140 2 Million Calls5 Million Calls $0.05800 $0.00456 5 Million Calls10 Million Calls $0.02900 $0.00228 10 Million Calls
Additional POPOne E1 $48,000 $5,700 One 6 Mps, UUNet
Connectivity Costs Additional POP: Connectivity Costs Additional POP:2 Million Calls $0.02400 $0.00285 2 Million Calls5 Million Calls $0.00960 $0.00114 5 Million Calls10 Million Calls $0.00480 $0.00057 10 Million Calls
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By the Numbers (continued)
Connectivity Costs
$0.00000$0.02000$0.04000$0.06000$0.08000$0.10000$0.12000$0.14000$0.16000
2 Million Calls 5 Million Calls 10 MillionCalls
E1 Voice Circuits($48K ea.)
IP Packet Circuit (6Mps $5.7K)
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Case Study: Live Network Implementation
(1)
(2) Authentication
(6) CDR
Retail AAA
(5)
(6) CDR
AAA
(4) H.323 Call Connection
OSP Server
GCH Settlement Back-end Systems
(6) CDR
(6) CDR
Gateway/Gatekeeper(Member B –Call Termination)
(6) CDR
(3)Call Routing/ Authorization request & response
Gateway/Gatekeeper(Member A –Call Origination)
Global Clearinghouse
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TransNexus Information
Thank you, Merci Beaucoup, Danke, Danku, Gracias
Frank Estes
Vice President
TransNexus, Inc.
678-358-5251 (cellular and office)