All-IP to deliver savings, eventually:Telecom

Don't expect short-term phone bill reductions as Telecom eases over to an all-IP network.

Don’t expect short-term phone bill reductions as Telecom eases over to an all-IP network.

“One can expect that, as prices tend down in the face of competition, we’ll be able to drop our charges while retaining our margin,” says Telecom technology chief Murray Milner in a classically cautious statement.

Issues "related to investment” naturally exist in the turnover to an internet protocol-based network, he says. But over time, the pricing structure will change as an outcome of IP adoption.

Benefits to be gained more immediately from the project, being handled in partnership with Alcatel, will be in the potential rationalisation of the IT component of IT&T as the telecommunications component expands options. One large corporate customer with many widely distributed servers will be able to consolidate with the help of the IP facilities and will immediately save millions of dollars per annum – about 20 to 30% of its IT&T budget, Milner says.

IP allows a business to converge voice, video, data and other forms of information, which will give it more visibility of and control over its total IT&T budget, Milner says.

Large users may actually find their telecomms bill rises as they take advantage of IP services, but they should be able to reduce the total cost of ownership of IT and communication per desktop, he says.

Though millions of dollars of investment will be required in Telecom’s joint venture with Alcatel, only 30% or less of Telecom’s physical infrastructure of fibres, copper, cell sites and other buildings will need replacing, says Milner. “A lot of the structure capable of handling IP is already in position.”

And the residential or home-business PC user with thoughts of an improvement on scratchy voice-over-IP internet calls at no cost will have to wait a good few years anyway. “If we’re talking about IP service to the last person living out in the wop-wops, we’re estimating 2015-ish”, says Telecom’s general manager of network investments, Rhoda Holmes. But IP service is likely to be available in the form of high-speed ethernet to businesses in Auckland Wellington and Christchurch by the end of this calendar year, she says.

The other two “business cases” firmly established are for a transtasman core IP network and a next-generation DSL implementation.

Holmes says she was misquoted in another publication as saying “effective IP networks are hard to find at this time”. There is no real difficulty with the technology, she says. Rather there are no complete business/technology models overseas that are agreed on as best practice.

“If we look around the world there are successful transitions to IP at various stages of development. We can’t yet look and say ‘that’s the best; we’ll do it exactly like they have’. That’s what I meant by that remark.”

The New Zealand exercise does have its pioneering aspects, Holmes says, but these lie rather in the business model than the technology. Telecom’s relationship with Alcatel is a partnership with agreed outcomes, she says, unlike “the usual arrangement, where the vendor tries to sell as much product as possible and the carrier tries to keep the costs down. This arrangement is based on outcomes and there are risk and reward elements put in place to ensure those outcomes happen.”

Alcatel general manager Colin Henderson says this model is potentially exportable as a competitive advantage for the company in the international market.

The biggest technology issue is quality of service, Milner says, agreeing with TelstraClear’s Rob Julian. This means appropriately prioritising different kinds of traffic according to their importance to the customer.

Security too is an important issue, he says. “We’re looking at a range of different solutions to implement full perimeter security with role-based authentication.” No one can get onto the network without authenticating themselves, and then they will only be granted specific rights to run the kinds of application for which they are authorised. Multiprotocol layer switching (MPLS) will be used to label each packet with user identification and the application, so the risk of interference is minimal.

The company will look at tools to defend against denial-of-service attacks, including Telecom’s own SafeCom network product. No mention was made of the local DoS-detection tool from Esphion, recently demonstrated to the armed forces of five countries at the JWID event.

A good deal of the investment will be in accommodating existing infrastructure and services to work alongside the IP component, Milner says. While this could be seen as giving rivals like TelstraClear an advantage without the weight of legacy systems, they will have to develop a broad range of services from scratch, when Telecom already has those, ready to link in with IP, he says.

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