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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony

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To: Stephen B. Temple who wrote (1427)10/2/1998 3:02:00 PM
From: Stephen B. Temple  Read Replies (1) of 3178
 
SS7 Key Enabler for Next-Generation Network Services


SS7 now stands to play an important part in
next-generation networks, permitting
introduction of more advanced services and
helping improve the interoperability between
the public switched telephone network (PSTN)
and Internet protocol (IP)-based networks.

While signaling system 7 (SS7) out-of-band
signaling protocol represents one of the biggest
advancements in telephony since Watson was first
summoned, its importance sometimes takes a back
seat to sexier technologies du jour. Yet, it's SS7
that ensures a call can be completed before it is
even switched from the local loop, and it's SS7 that
makes networks less likely targets for fraudsters.

In addition to improving network efficiency, SS7
now stands to play an important part in
next-generation networks, permitting introduction of
more advanced services and helping improve the
interoperability between the public switched
telephone network (PSTN) and Internet protocol
(IP)-based networks.

As an enabler, SS7 particularly will be important to
carriers in the rollout of sophisticated
voice-activated products and technologies, says
Marc Regberg, vice president of Venture
Development Corp. (VDC), a Natick,
Mass.-based research house. The expansion of the
voice messaging into "unified messaging"--the
convergence of voice mail, e-mail and fax--along
with "personal assistant" voice services has created
a new market segment that will be key to service
providers in differentiating themselves in the
marketplace, Regberg says.

While the heyday of unified messaging still is to
come, Paul Stockford, principal analyst for the
Cahners In-Stat Group, a Scottsdale, Ariz.-based
consultancy, agrees with Regberg that hardware
and software addressing the market is starting to
emerge. He points to the mid-August partnering of
Lucent Technologies Inc., Murray Hill, N.J., with
Sun Microsystems Inc., Palo Alto, Calif., as
definitive proof. The two companies have stated
that they will develop a unified message platform for
telcos and Internet service providers (ISPs) that will
make it possible to send, receive and manage
electronic, voice and fax messages from any
telephone or personal computer (PC).

Citing only Unisys Corp., Blue Bell, Pa., as a
contender today in the telco market, Stockford says
Lucent needed to respond quickly because the
Sierra product from its Octel Messaging Division is
aged and does not support unified messaging.

Carriers can expect more such announcements,
Regberg says. "We're happy with the fast pace," he
says. "There is a price curve for early adopters, but
as prices come down and functionality increases,
we expect to see more products and users."

While Stockford agrees, he offers a dash of
skepticism about the pace. "The incumbent LECs
(local exchange carriers) are not as far along in as
they could be because many are still nursing old
[voice messaging] systems," he says. "CLECs
(competitive LECS), meanwhile, may actually have
an advantage here as their networks are newer or
just being built out."

Several of these CLECs are building out networks
that are betting on IP to best PSTN. While
IP-based carriers such as Level 3 Communications
Inc., Omaha, Neb., and Qwest Communications
International Inc., Denver, are putting a bundle of
Wall Street greenbacks on IP, VDC's Regberg
categories some of the early IP efforts as "lacking
hard data" and "a lot of hype." He cites the
adventures of NetSpeak Corp. "an example of
hype that was not backed with real numbers."
Backed by such big-name players as Munich-based
Siemens AG and Motorola Inc., Schaumberg, Ill.,
the Boca Raton, Fla.-based company's stock shot
from high single digits to the low 30s before
dropping down again when its product did not
deliver as expected, Regberg recalls.

"IP is still a market to keep an eye on," he says.
"You must when players like Cisco [Systems Inc.],
Ascend [Communications Inc.] and Lucent say
they're interested. IP telephony will be an important
market, but who will be the leaders? [IP pioneer]
VocalTec [Inc.] has seen its stock fall, so
sometimes it's not so good to be a pioneer."
VocalTec's stock has fluctuated as high as 33 and
as low as 81/2.

Despite some rocky going, VDC
telecommunications analyst Pete Dickson says SS7
remains a key enabler for IP telephony gateways.
Mike Margolis, president and CEO of Tekelec,
Morrisville, N.C., concurs, saying that SS7 will play
a major role in the convergence between IP-based
networks and the PSTN.

Margolis says he "is gratified to see SS7 as the
pre-eminent command and control technology
endorsed by data switch manufacturers as they
enter the PSTN with IP-based solutions." SS7 is
the best chance for interoperability between these
two networks, delivering feature transparency to IP
networks and new data solutions to the PSTN, he
says.

Embracing LNP

Local number portability (LNP) also will drive
competition in SS7 networks.

"In any country where competition has been
mandated, LNP is what makes competition
something worth mandating," Regberg says. "It's an
enormous task, from choosing the technology to
deploying and implementing, but the result [which
lets consumers keep their telephone numbers even if
they change carriers or locations] will be more
innovative and robust service offerings at a lower
cost to consumers." Embracing LNP should pay off
with greater bandwidth for T1, frame relay and
asynchronous transfer mode (ATM) as well as a
growing acceptance of computer-telephone
integration (CTI), he says.

A government mandate calls for LNP
implementation in the top 100 metropolitan service
areas (MSAs) by New Year's Eve, and Regberg
says consumers can't wait. "There have been all
sorts of horror stories," he says, "(such as)
customers moving a quarter-mile away and not
being able to take their phone numbers with them.
This will all end with LNP."

While achieving permanent LNP will reduce a lot of
the finger-pointing between the incumbent LECs
and other service providers, Regberg says an
argument that is just beginning is one that bus
architecture carriers should support. While Versa
Module Europe (VME) has been the favorite
standard for years, Regberg says major suppliers
such as Hewlett Packard Co., Palo Alto, Calif., and
Motorola have started giving stronger consideration
to CompactPCI for their SS7 applications, in part
thanks to its smaller footprint and rugged nature.
CompactPCI also should warrant consideration
from service providers because it supports "hot
swapping," which lets them change out faulty
components without disrupting service.

For vendors of SS7 products to deliver to the
greatest extent possible, VDC suggests that they do
not go at it alone. Instead, they should form more
alliances and strategic partnerships, Regberg says.
The new pairings should not be just between
vendors--such as the recent pairings of Ascend and
the former Cascade Communications Inc., Bay
Networks Inc. and Northern Telecom Ltd.
(Nortel), or Cisco and Summa Four Inc.--but also
with systems integrators and applications
developers. This kind of creative pairing is more
likely to give service providers a choice among a
broader suite of advanced subscriber services, he
says.

"Service providers, if given their choice, would
rather deal with a one-stop shop for all their needs,"
Regberg says. "These partnerships are more likely
to deliver what they need."
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