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ISPs: Market scenario

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VoicenData Bureau
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Innovating...And Say Goodbye!




As competition grows, ISPs around the world are rapidly moving
from being mere Net-access vendors to becoming providers of

next-generation services.




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Internet

Service Providers (ISPs) have sprung up in impressive numbers

as the Internet and the WWW have grown dramatically over the

past few years. Local, regional, and national ISPs compete for

a diverse array of business and consumer accounts. Today, at

the turn of the millennium, they are poised to compete with

old-line telecommunications companies as well as a new group

of emerging company types. While they face serious challenges

in hanging onto their current businesses, on the other hand,

they may be ideally positioned to gain significant new businesses.



The telecom

picture has entered an era of rapid change. Voice-over-IP (VoIP)

services are in increasing demand. Unified messaging solutions

represent another major opportunity. And a horde of next-generation

solutions, such as leased-applications, software on demand,

and managed network services are set to be offered by a mosaic

of company types. It does appear that those ISPs that simply

stand still will not survive in the rugged, competitive landscape

of the new diverse telecom market.



A Global

Deregulated Market




The telecom market is a true global market-there are companies
that try to reach all corners of the globe and customers who

demand world-wide services. As a result, telecom is undergoing

rapid and extensive changes across the globe. The United States

started the ball rolling with the

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Telecommunications

Act of 1996, which caused a dramatic transformation of the US

telecom industry, in many cases, with unexpected results. The

wave of Mergers and Acquisitions (M&As) has spurred telecom

companies to expand their product and service lines in an effort

to maintain their customer base and find profitable new markets.



Europe is

undergoing deregulation, albeit at varying rates in different

countries, but is not lagging behind the US in the way some

may think. European deregulation started in earnest in 1997

and will be under way in almost all countries by the year 2000.

Asia, although beset by currency and other financial crises,

still features a lot of consolidation and deregulation (two

earmarks of the US market). The current, slower economy is weeding

out the smaller players while the big ones are becoming stronger.

It is important to note that Asia has the widest variety of

telephone line penetration rates in the world, and the current

economic situation has caused many governments to liberalize

their telecom markets to stimulate competition.The next

year is being heralded as "the year of the IP build-out";

infrastructure spending is estimated to be in the range of $200

to $300 billion over the next three years. Although the bulk

of the spending is expected in North American and European markets,

significant long-term opportunities are also perceptible in

markets in Asia. In all markets, increasingly inexpensive and

plentiful bandwidths, along with improved routing and switching

capabilities and intelligent networks, herald the continued

convergence of computers and communications. As a result, the

entire telecom market, characterized by various vendor types

is quite complex. Starting from exchange traffic companies,

local exchange companies to wireless service providers, next

generation carriers and cable-access television providers, everyone

wants to exploit the tremendous opportunity! But each of these

has its own core focus and key challenges and none can serve

all people all the time.



The Challenge





Where does that leave the ISPs? In the glass-half-empty scenario,
they must compete with one another and defend their enviable

positions in the Internet market against all comers. They must

continuously work on lowering costs while simultaneously building

their infrastructure. They must figure out a way to offer traditional

telephony services and convince customers they are viable in

those markets. They have low revenues and low investment capabilities

compared to the very large companies among the traditional telephony

providers.




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In the glass-half-full

scenario, they dominate Internet traffic-the hottest thing in

telecommunications since the invention of the telephone. They

typically have strong brand equity, whether locally, regionally,

or nationally. They (unlike the local phone companies) are used





to providing sophisticated services



without

having to provide the basic, wired infrastructure that enables

the connection. As



the trend toward voice conversations over the Internet emerges,
they are the de facto providers of a certain percentage of traditional

telephony. Internet services have been perceived as enhanced

services, providing a premium to the lucky service providers.

This is likely to change as Internet services become more standardized.

But the current hands-off government policy toward the Internet

will most likely continue, so Internet growth should not be

hobbled by unwarranted interference.




But Internet

services and telephony represent only slices of the overall

opportunity the diverse telecom companies are targeting. Unified

messaging, for example, encompasses voice-mail, e-mail, fax,

basic and mobile phone services. The unified messaging environment

delivers all these services to the desktop; the palmtop; faxes;

and of course, telephones. Unified messaging requires a single,

logical message store and interoperability among media types.

It needs intelligence for general, systemic message management

as well as personal call management to handle inbound calls

intelligently. Complete solution providers in the unified messaging

space need to deliver best-in-class web clients and browsers,

messaging applications, mail messaging software, call processing

hardware, message store databases, and computer hardware platforms.Though VoIP

services appear to be less complex than unified messaging, it

is replete with challenges. It also represents an enormous opportunity,

with almost all businesses and many consumers demanding voice

and data communications. VoIP currently suffers from lack of

standards, especially in the areas of cross-platform billing

and customer authentication. Network latency problems, commonly

associated with routine data transmission, are unacceptable

when it comes to VoIP. Mapping between IP addresses and telephone

numbers is another key challenge in this market. VoIP solution

providers must deliver web clients, a billing system, gateway

and gatekeeper solutions, IP translation databases, and serious

hardware platforms.



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Things intensify

further with the surge into next-generation services. A road

map for this emerging market shows a need for Web-enabled customer

care; trouble-ticketing/help-desk functionality; LAN and WAN

management; leased applications; and value-added applications

such as information aggregation, search and retrieval, and the

enabling of e-commerce. Delivering end-to-end solutions for

next-generation services involves independent software vendors,

system integrators, network equipment providers, and computer

hardware platforms. High-level concepts such as workflow solutions,

GroupWare, and ERP reside with basic, critical tasks such as

e-mail filtering and virus protection in the next-generation

environment. To ensure faster marketing and successful deployment

of proven solutions, service providers are turning to integrated

solutions based on best-in-class applications, practices, and

platforms.



Business

and residential customers also seem to be increasingly looking

to single companies to provide a complete solution that meets

their needs for a broad set of services especially data/IP and

video. These customers are also looking for quality-of-service

guarantees.



ISPs that

plan to be successful in the coming months and years will need

to consolidate or diversify so they can provide the demanded

total solutions, or emerge as the best in their class so they

themselves can be part of those solutions.

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