Where Is the World Headed?

Convergence

Perhaps the most talked about trend in the industry today.

One of the most important facets of convergence is the seamless integration of

the wireline and the wireless networks. Communication carriers can select from a

range of broadband two-way wireline and wireless architectures. With broadband

personal satellite systems, Multichannel Multipoint Distribution System (MMDS)

and Local Multipoint Distribution System (LMDS), users as well as service

providers who always wanted wires for phone and Internet, are increasingly

looking at wireless as the primary mode of voice, broadband data, and video

services. MMDS is being seen as a viable broadband service delivery option.

Wireless

Once a luxury only for the rich, wireless cellular is

becoming more and more accessible to the masses. A survey conducted recently

indicated that 6 out of 10 Americans would like to switch to cellular as their

basic phone if price was the same. However, complete displacement of wired

phones will not happen unless wireless can carry data as smoothly and as fast as

fixed line phones.

It is expected that by 2005, in the US, of the total calls

made, 25 percent will be from wireless.

IP Telephony

VoIP is bringing about the real convergence of voice, video,

and data for advanced communications applications and is dramatically changing

the telecommunications industry as Internet telephony can provide voice services

at 1/27th the cost of today’s circuit-switched networks.

The biggest drivers of VoIP are, deregulation and

globalization of economies, and the emergence of sophisticated users. VoIP

services are being provided by the traditional telcos, the ISPs, and the

"Next Generation Telcos" (those who only offer telephony services over

IP). The "Next Generation Telcos" are coming up incredibly fast and

are offering PC-to-Phone, Phone-to-PC, Phone-to-Phone, and Fax-to-Fax

applications like unified messaging, Internet call waiting, Internet faxing,

Internet IVR, Internet videoconferencing, and Internet call centres.

Undoubtedly, VoIP is where the world is headed for. The

worldwide market for VoIP products is estimated to exceed $1.8 billion by the

year 2003. IP telephony could take as much as 43 percent of total global

telephony communications, with as many as 236 million users. Revenues from VoIP

are likely to explode from $480 million in 1999 to $19 billion in 2004.

Presently it is the mass-market consumer who is driving the growth of IP

telephony. But by the year 2001, when voice quality is not questionable, and is

integrated with other data and video services on the Internet, the business

community will drive IP telephony.

Broadband

One of the bottlenecks in fast, cost-effective, and

multi-media communications is broadbanding. But things like ISDN, Internet, and

Ku-Band satellite space are changing markets for broadband services,

specifically to the small business and home segment. Broadband services, which

are defined as network access speeds over 200 Kbps, is a rapidly emerging

demand.

The traditional telcos are now coming up with newer broadband

plans around DSL. DSL providers are now racing to cover entire US with DSL, and

offering sops like waiving equipment and installation charges for long-term

commitment. However, the threat from cable TV service providers looms large,

especially due to delay in the DSL modems getting off the ground. Apart from

cable TV, they are now offering new services like digital video,

video-on-demand, and high-speed data services.

Monolith phone companies are now trying to re-structure

themselves to become nimble-footed so as to develop and market



products and services. High-speed data access is forecast to grow at an almost
100 percent rate, especially in the small business and home segment. It is

estimated that high-speed access providers will have about 15 million

subscribers by the end of this year in the US. And sale of high-speed modems

will be above $4.5 billion by the end of next year.

Government Regulations

Inefficient state monopoly carriers have historically charged

high prices and are now being forced to transform.

Suddenly, there are too many countries allowing competition

in basic voice services. Everybody is setting up pan-continent networks and

getting into international tie-ups for continent-wide services. This in spite of

market shares of these PTTs coming down, and they been forced to slash prices

drastically. Though the future of callback and international simple resale

companies is itself under question with IP telephony gaining extremely fast

popularity, the emerging truth is that market forces, rather than government

regulations, are becoming the guiding force for communication service providers

today.

Satellite Communications

Ambitions in this area have been high and motives noble. Yet,

there is still a long way to go as far as utilizing satellites for personal

communications is concerned. Global Mobile Personal Communication Services (GMPCS)

via satellite was said to be the answer to the limitations associated with

terrestrial networks. It was said that out of the 1.5 billion homes worldwide,

only 500 million had telephone service, 50 million were waiting for services,

and 250 million could not afford service. Over 50 percent of world population do

not even have access to a telephone.

It is believed that over 50 GMPCS service providers, with

over 2,000 satellites during the next ten years, and an investment of about $140

billion (about $25 billion already invested) would have taken care of a lot of

the unmet demand for messaging, narrowband, and broadband telecom services.

However, everybody knows the status of GMPCS today. Major

obstacles continue–technical impediments, signal interference, sound quality

and security issues, country specific regulatory issues, marketing and pricing

issues, etc. And there seems to be no solution in sight even though the original

propagators of this technology refuse to give up.

Bandwidth

Telcos, cable TV companies, ISPs, and other network providers

are bringing broadband services to business and residential customers. In the

commercial segment the growth in demand for new fibre or copper is curtailed

primarily because these large users have completed most of their initial

installation. Again, in offices, fibre is increasingly the backbone of choice,

since only fibre is capable of supporting the aggregated bandwidth requirement.

However, technology developments in copper UTP make fibre-to-the-desk (FTTD) an

uneconomical option. According to reports, FTTD will not be there in the next 5

years. Fibre is very popular in campus networking, and will continue to be so.

In the small business and home segment, due to the growing

popularity of Internet and various services associated with it, demand for more

bandwidth is on the upswing. For the single family homes, its still UTP and

co-ax which is ruling the roost, again because of their cost and increasing

capabilities. In the multi-dwelling units (apartment type), it will be a mix of

copper and fibre. Inside the apartment, copper is being used, and for the

apartment backbone (which is much simpler than a commercial building backbone)

both copper and fibre are being used.

The total market for premise cabling is expected to go up from $2.2 billion

in 1998 to $5.6 billion by 2004. The business premise cabling will be a bigger

market, the growth will be much higher for the home segment. By 2004, the home

segment will be as much as 38 percent of total cabling market compared to less

than 3 percent in 1998. In the commercial segment, the cable distributors and

cable designers will continue to influence buying decisions. In the home

segment, distributors of home cabling products have had very few products. Now

LAN implementers and electrical contractors are aggressively getting into

this.