From packets to streams

A new focus on services and content, rather than simple transport, is radically changing how we buy and provision communications.

In this business, we love to have debates about technologies—in particular, transport technologies. Which is the better choice for broadband—cable or DSL? Will VPNs kill frame relay? What standard will allow us to effectively prioritize IP traffic over shared internetworks?

These are all valid questions, and it will be interesting to see how transport technologies evolve in the coming years. If we focus exclusively on transport issues, we’ll miss the bigger picture of how life is changing for communications managers.

That’s because transport issues are increasingly becoming the concern of carriers and other service providers—not corporate communications staffs. The growing use of managed networks means that someone else is worrying about how traffic gets from point A to point B. Who cares whether your voice calls are traveling over an ATM core or not? You’re just buying a service. If the carrier can meet your requirements for quality, reliability and price using tin cans and strings, more power to him!

Voice is a service. Intranet application access is a service. A secure VPN with a third party is a service. Carriers are realizing that they make money on such services, as opposed to merely leasing T1 lines. Corporations, at the same time, are finding it very attractive to buy such service, since it’s more and more difficult to maintain the staffing needed to build their own services on raw, leased transport. That’s why we’re using the term “service provider” more frequently, rather than “carrier.”

Beyond services lies content. When you use an ASP over the Internet, the network “service” your using is simple Web access. However, the content you’re accessing has much greater economic value than a typical Web site. There’s money in content and carriers know it. The problem is that they don’t get a piece of the action … yet. As things stand today, they just move packets from one end of a pipe to the other. It’s a low-margin business, and they’re not going to keep their stockholders happy if they don’t do something to change it.

AOL is the prime example of how content adds value to transport. Many of us scoffed at AOL’s chances as the Internet grew, and other service providers did a better job of delivering fast Internet access at a low flat rate. But AOL’s business model factors in content. Yes, it makes money for providing a dial-up service. Its revenue is based on the content and applications it provides. That’s why AOL can buy Time Warner, while most of its erstwhile ISP competition has slipped into oblivion.

Cable TV provides a similar paradigm. If you want to watch a championship fight, you pay your cable TV company for that content. If you want to use a $500-a-month ASP, you pay the ASP. Your carrier gets nothing—except more bits to carry at razor-thin margins.

So, here’s what the carriers are planning. They’re going to build more intelligence into their networks, so that they can get a better handle on exactly what’s flowing across their networks. They want to be able to prioritize, meter and even bill based on services and content—not just transport. That is, they want to get out of the packet business and into the “stream” business. Those streams may be pay-for-play multimedia. They may be VPNs for vertical-market business exchanges. They may be online games. They may be ASPs. Whatever the content or service may be, carriers want in on it.

To respond to this new objective, vendors such as Cisco, Lucent and Nortel—as well as newcomers with names likes Aplion, CoSine and SpringTide—are offering carriers service-centric networking platforms. These platforms enable carriers to activate and deactivate IP services and/or content to their customers on a highly granular basis.

If carriers adopt these new platforms, it will have a major affect on how corporate communications managers conduct operations. Instead of reconfiguring their own routers and firewalls, they’ll simply make a call to a service provider who will be able to instantly activate the new service. In fact, using a new generation of Web-based provisioning software, carriers may even let customers activate new services themselves by clicking options on a Web page.

While the speed and simplicity of this new approach to service and content provisioning may be quite attractive, communications managers should be aware of its potential downside: so-called “account control.” In other words, once the provisioning of all your network service is closely locked into your carrier’s intelligent network, you’ll have a tough time changing over to someone else.

Keep a close eye on the changes taking place in carrier networks and market offerings. As they transition from moving packets to delivering streams, some very attractive value propositions may emerge. Just be careful that you don’t lose control of your communications destiny in the process.