Voice-over-IP is the easy part. The hard part is the features.
zdnet.com
Nortel execs look ahead to the
'unified network'
By Erica Schroeder, PC Week Online
October 22, 1998 9:54 AM ET
ATLANTA -- The new Nortel Networks
used the stage Wednesday here at
NetWorld+Interop to outline the networking
company's plan for attacking both the carrier
and enterprise markets.
CEO and Vice Chairman John Roth and President David House spoke
in a joint keynote, outlining the path the newly merged Northern
Telecom Ltd. and Bay Networks Inc. will take in the enterprise and
carrier data markets and how Nortel Networks will tackle the emerging
voice-over-data market.
The two, noting that they are in "day 51 of the new Nortel Networks,"
pointed out four forces that are shaping not only their company but the
networking industry at large: globalization, deregulation, mobility (which
Roth called "the next era of wireless") and the "most exciting" area, the
Internet.
On top of these four forces, consumer behavior is changing, leading to a
change in the traffic coursing over commercial and corporate networks.
Data now accounts for 80 percent of the traffic on circuit switched -- or
voice -- networks, noted House. In addition, the basic economic model
of doing business is changing, he added. An online banking charge, for
example, costs only 1 cent, while the same transaction via traditional
methods costs $1. An online stock trade costs $15, while a traditional
trade costs as much as $75.
"There's real money to be made by moving your business to the Web,"
House said. But the economic forces driving this change are "putting
demands on the network that have not existed before."
Nortel is approaching this network-hungry market in four areas: data,
telephony, the enterprise market and the carrier market. But House
noted that between those segments, the "lines are blurring. Today we
see the integration of voice mail and e-mail."
"Today's network is really a unified network," said House, pointing to
the conflation of SONET, WDM (wave division multiplexing), routers,
remote access servers and switches on many carrier networks.
Not only are the voice and data markets converging, but the lines
between wireless and wireline services are blending. For example, Roth
cited cordless phones, wireless LANs, in-building wireless systems and
microcellular services.
Both Roth and House predicted that such convergence will pave the
way for application integration, such as PBXs on the LAN.
"At this [convergence] point, the PBX becomes a sort of a dumb circuit
switched device, a dumb dedicated device," said House.
But for such a model of software PBXs on data LANs to succeed, all
the functions available today on proprietary PBX systems -- such as
voice mail, call forwarding, and conferencing -- must be available on the
data network.
Indeed, just running voice-over-IP networks "is the easy part," said
House, noting that there are 450 discreet features and 4 million lines of
code on a Nortel Meridian voice-mail system. "The hard part is the
features."
Another big hurdle in the move toward integrating voice and data
networks is reliability and availability of data networks. Nortel's
network, which has 85,000 PCs, enjoys 99.9998 percent uptime on
WAN connections, with only one outtage in the last three years.
On the LAN side, remote access is available only 80 percent of the
time, and on the enterprise LAN Nortel can only get 99.8 percent
availability. "This is the issue," said Roth. "We've got to get these levels
up."
One of the problems for implementing voice and data on the carrier side
is cost. This year, 80 percent of the traffic on networks is data, while
only 20 percent is voice. In 2001, 80 percent of the revenue on carrier
networks will be from voice, while only 20 percent will come from data.
"The revenue is still on voice," said Roth. "The networks are being
chewed up by data traffic."
To illustrate this, Roth pointed to the cost of sending the data contained
on a CD ROM 3,500 miles. The cost over the public switched
telephone network today is $27.08, with the transmission costing 94
cents, with the rest going for billing, access charges and so on. The cost
of transmitting the same data over an IP routed network is $1.98, and
the transmission cost therefore becomes 50 percent of the total cost.
To meet this demand, Nortel is introducing increasingly high-end
products. It has developed a 10G-bps SONET switch and introduced
data capacities at 160G bps on a single fiber earlier this year (and that
will increase to 320G bps by the end of the year).
Such high-bandwidth access will be primarily enjoyed by businesses.
"Don't expect to see fiber to the home anytime soon," said Roth, even
though the demand for high-bandwidth services exists in both the small
office and home markets.
To address those markets, and to help in areas where DSL is not an
option due to poor lines, Nortel is developing the "1-Meg Modem." The
product, which boasts data rates of 1M bps, is just beginning to be
shipped ship to service providers. Nortel has received $1B in orders for
it, and $180 million worth of them will be shipped this year. In addition,
Nortel is developing cable modems, thanks to its acquisition of Rapid
City.
But it is wireless that has captured the imagination of both Roth and
House.
"Wireless is really the next frontier," said Roth. "Already the industry is
looking ahead and saying what's next after voice."
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