The Fall COMPTEL show in Dallas this week featured the usual product releases and deal announcements, but behind the usual show bluster was a light breeze of optimism amongst the sales and marketing folks clustering around the booths and, more importantly, deal drivers hanging out in the conference suites of the Gaylord Texan. The question is, is that optimism merely a false hope in a sluggish economy?
There's good reason to think that it's not false optimism. Behind the bigger deals announced at the show--with Neutral Tandem's purchase of Italian IP transit provider Tinet SpA and PAETEC's Monday morning announcement that it was acquiring Cavalier Telephone--was the acknowledgement that IP based technologies are the best way to meet the exponential increase in demand for bandwidth, and wholesalers need to provide that IP connectivity.
Another factor is the need to stay competitive. "The U.S. is a tightly competitive market and wholesalers need to get out internationally," said Mike Kane, Senior Director, Strategic Solutions at Neustar, an addressing and registry provider with a particular interest in the issues around IP network expansion. The acquisition of Tinet by Neutral Tandem will give the U.S. wholesaler a global end-to-end, IP based network. "You can see the behaviors, with PAETEC's investment...they're all trying to extend their footprint."
Kane has some particular concerns around the pell-mell speed at which many companies are going after the IP space. When we spoke, he had just finished speaking on a panel discussion called "The Future of IP Networks" in which challenges to network expansion were addressed--including the IPv4 to IPv6 migration, IP routing issues, and how to get the same reliability from IP as one does from TDM. Kane, and Neustar, advocate for a centralized routing policy to address these issues as well as the issues of globalization of networks.
Rushing to take advantage of the IP market, he feels, will result in the creation of "islands of IP resources, islands of legacy TDM, and islands of wireless resources" that defeat the idea of seamless end-to-end IP connectivity.
It's not hard to extract from that scenario the possibility that all the up-front acquisition, all the up-front capex that carriers and service providers across the industry are putting money into now, with the idea that it will pay off later in terms of more efficient networks capable of scaling to meet demand, will not ultimately generate the level of revenue or cost savings on the other end--because they'll have to pay to get onto those islands, so to speak, in terms of access fees and/or additional switching investments.
Neustar has worked for the past two years on building the centralized policy layer they feel should be implemented on top of IP networks, and there is awareness of that need. "We're seeing a rebirth in looking at the prioritization layer by companies... to see a path as to how they can implement these services," Kane said.
Another notable trend at this fall's COMPTEL show was the growing presence of cable in the competitive telecom space, particularly Time Warner Business Class and Charter Business. A brief chat with one of Time Warner's directors confirmed that they were indeed looking at moving into the wholesale space.
"Cable operators ... are becoming more self-reliant," Kane said, although they tend to operate differently from other industries. "Cable is different. There's a lot of following the leader. ... This ‘going it alone' making IP a connection idea is a ‘follow the leader' type of thing, but it opens up the opportunity for us to talk to them."
The move also signals that cable is looking to be competitive in the burgeoning IP space as well. And while competition in itself can be good, the speed at which the industry is moving to adopt and offer this growing technology could cause a trip up down the road.--Sam