your service edge
DESCRIPTION
Your Service Edge . Broadband Voice Opportunities and Provisioning. The Bundled Services Requirement Steven Shaw Director, Market Development. Presentation Outline. Opportunity for Broadband Voice MMDS Direct: Connect the small business/ residence - PowerPoint PPT PresentationTRANSCRIPT
Your Service Edge Broadband Voice Opportunities and
ProvisioningThe Bundled Services
RequirementSteven Shaw
Director, Market Development
Presentation Outline1. Opportunity for Broadband Voice
– MMDS Direct: Connect the small business/ residence
– MTU/MDU Opportunity: LMDS hybrid solutions to reach the small business/residential
2. The Requirement for Bundled Telephony Services
3. Provisioning: An operator’s view– Connecting the pipe– Managing the end points
Opportunity Overview
The Small Business Opportunity
Residential103,590,000
Small Business(1-99)
7,900,000
Mid Business(100-499)846,683
LargeBusiness15,302Yesterday
Today
Broadband marketplace
• Worldwide demand is growing rapidly
• Consumer broadband cable and DSL lead pack
• High speed internet access is “addictive”
Broadband demand
Market
Broadband Subscribers
46.7
37.0
27.7
5.011.0
18.9
0
10
20
30
40
50
2000 2001 2002 2003 2004 2005
Broa
dban
d H
ouse
hold
s (M
illio
ns)
Fiber Satellite Fixed Wireless DSL Cable
Source: Forrester - Consumer Broadband Hits Hypergrowht in 2001 (10/6/00)
Subscriber
ATMT1/
DS3/OC3
ATMMMDS
Voice over Broadband:A MMDS focused solution
Cell Site Regional
Switching Center
Jetstream CPX-1000
Class 5 Switch
ISP Facilities
PSTN
Internet
Regional Packet Access
NetworkIAD
ATM DS3/OC3
Capture SMB &
Residential
RegionalSwitching Center
JetstreamCPX-1000
ATMDS3/OC3 Class 5
Switch
ISP Facilities
Business customers (Tenants)
Analog voice
IAD
T1
Voice PBX
IAD LMDS, U-NII, DEMS, 38
GHz
n x T1 or DS3
Mini- DSLAM
BuildingBasemen
t
Regional Packet Access
Network
Broadband voice:An in-building -focused solution
PSTN
Internet
MTU/MDU Total Available Market Voice & Data Services: $10.7 Billion
Source: Jetstream Communications estimateNote: TAM Includes fraction of MTUs with 6-10 tenants, all MTUs >10 tenants and all MDUs >50 households
Service Revenue Segment
BroadbandVoice
BroadbandData
CommercialMTU
$6.8 Billion $2.8 Billion
ResidentialMDU
$472 Million $381 Million
Hotel/Hospitality
$0 $275 Million
Total: $7.272 Billion $3.406 Billion
Commercial MTU Segment• While 2.8M businesses reside in 750,000
MTU buildings….• 1.5M businesses in 150,000 buildings
may justify an on-site capital investment• The other 1.3M are better off being
served by direct/MMDS solution• Therefore: About 20% of SBs can be
targeted with an MTU solution
MTU: The ‘Church’ of DSL(The Place Where All of DSL’s Sins are Forgiven!)
DSL is the Preferred in-building technology:• Avoid the RBOC Bureaucracy
– No more CO collocation expenses; loop qualification uncertainties and provisioning delays
• Short, in-building copper lengths allow for full-speed DSL– 2.3 MBPS SDSL, Full speed ADSL, 6+ MBPS VDSL
• DSL Provides longer reach/distance than LAN technologies– 4000+ feet distance reaches almost 100% of tenants in all-sized
buildings– Ethernet maxes out at 300 feet on a cable, requiring more switches
• Most buildings have Cat-1 or lower grade wires in place– DSL runs over Cat-1, 3, 5 or Cat “Junk” – Ethernet requires Cat 3 or Cat 5
Residential Multi-Dwelling Unit (MDU) Market Segment• 20% of U.S. households live in MDU• 2.75M MDU Buildings in US comprise
20.5M households• 75% renter-occupied, 25% owner-occupied
• 27.5% of all MDUs reside in CA and NY• Highest % in Northeast & CA• Strong new construction growth in TX,
FLA, CA and GA• Only 5% served today by a single MDU
service provider
Residential MDU: All About Focus2.2% of buildings=46% of MDU households
# of Rental Units on Property
# of Properties
% of Total Properties
# of Apartments
% of Total Apartments
2 1,558,700 56.58% 3,093,200 15.03%3 366,030 12.2% 1,025,900 4.98%4 341,350 12.39% 1,436,800 6.98%
5-9 281,500 10.22% 1,897,700 9.22%10-19 107,170 3.9% 1,462,540 7.12%20-29 38,000 1.38% 916,750 4.45%30-39 18,166 0.66% 604,240 2.94%40-49 14,431 0.52% 702,790 3.41%50-99 26,694 0.97% 2,009,400 9.76%
100-199 19,804 0.72% 2,952,300 14.34%200-299 7,775 0.28% 1,948,400 9.47%300-399 2,966 0.11% 1,058,800 5.14%400-499 1,307 0.05% 605,130 2.94%500-749 723 0.03% 431,360 2.10%
750+ 307 0.01% 437,670 2.13%Total 2,754,923 100.00% 20,584,980 100.00%
2-4 Unit Buildings
2,236,080 81.17% 5,555,900 26.99%
50+ Unit Buildings
59,576 2.16% 9,443,060 45.87%Source: Nat’l Multihousing Council and The Yankee Group
Focus:46%
The Opportunity for Broadband Voice
“Free Internet is simply the cost of customer acquisition. In our model, if we can just sell tenants on our voice services and continue to give away free broadband Internet, we can still make a profit.”
Sean DohertyPresident of Urban Media
Inter@ctive Week, May 22, 2000
The Strategic Imperative for Broadband Voice• Vanilla internet service will commoditize in
the MTU market rapidly– No exclusive building access rights allowed under FCC
rulings– Multiple BLECs per building
• REITs and PMs have growing leverage– May be able to play multiple BLECs off one another
• BLECs will need to diversify their service portfolio to win in a competitive market
• And voice is where the money is…
The Case for Broadband Voicein the Commercial MTU• Triple Your
Subscriber Revenues
• Increase EBITDA 4-fold
• Lower your building breakeven point from 8 tenants to five
• Dramatically accelerate your time to profitability
Commercial MTU Data Only Voice and DataNumber of Tenants 20 20Percent Data Subscribers 50% 50%Percent Voice Subscribers 0% 25%Total Data Subscribers 10 10Total Voice Subscribers 0 10Avg. Monthly Data Revs $200 $200Avg. # of Voice Lines 8 Avg. Monthly Voice Revs 50 Total Monthly Data Revenues $2,000 $2,000Total Monthly Voice Revenues -$ 4,000$ Total Monthly Service Revs 2,000$ 6,000$
Revenue Sharing with PM 100$ 300$ Monthly n x T1 Service Costs $478 $956Voice MOU $0 $1,200ISP Expenses $500 $500Customer Service $60 $83Sales and Marketing $150 $250Operations, G&A $240 $720EBITDA 472$ 1,991$
The Case for Broadband Voicein the Residential MDU • Triple Your
Subscriber Revenues
• Increase EBITDA 6-fold
• Data-only residential model very difficult
• A voice revenue stream can become the difference between business success and failure
Residential MDUs Data Only Voice and DataNumber of Tenants 250 250Percent Data Subscribers 40% 40%Percent Voice Subscribers 0% 40%Total Data Subscribers 100 100Total Voice Subscribers 0 100Avg. Monthly Data Revs $40 $40Avg. # of Voice Lines $0 2.5 Avg. Monthly Voice Revs $0 30 Total Monthly Data Revenues $4,000 $4,000Total Monthly Voice Revenues -$ 7,500$ Total Monthly Service Revs 4,000$ 11,500$
Revenue Sharing with PM 200$ 575$ Monthly n x T1 Service Costs $1,434 $2,390Voice MOU $0 $3,750ISP Expenses/User $1,000 $1,000Customer Service $600 $830Sales and Marketing $400 $588Operations, G&A $480 $1,380EBITDA (114)$ 988$
Option 1: Acquire Local Exchange Voice Switch Facilities• PROs: Significantly improves service margins • CONs: Requires capex and in-house PSTN
expertise• Traditional workhorse Class 5 circuit
switches: Nortel DMS, Lucent 5E, Siemens EWSD
• Lower cost mini versions: Lucent VCDX, Nortel DMS10
• New breed of lower cost programmable Class 5’s: Taqua, Network Telco
• Long-term option: Soft switches as true Class 5 replacements– Requires functionality beyond current Class 4 tandem /
Internet offload applications
Option 2: Wholesale Voice Services• Focus on your role in the value chain
– Tenacious sales and marketing – owning the customer– Competitive advantage in reduced customer acquisition
cost via building presence– Time-to-market advantage in DSL provisioning
• Leverage the expertise of a voice CLEC– Many have wholesale / CAP heritages– Many have existing installed base of Class 5s and
operational competency in major MSAs– Partner for a win-win
Industry Perspective
“XO’s customer take an average of 1.5 services today and will likely be taking 3+ services as part
of the bundle”
“Average monthly revenues for a 12 line customer could go from $600/month today to $1,200 with the
bundle”
“We believe that XO will realize a gross margin in the 65% range for SME customers…with a payback period of
6-7 months”
Source: Bear Stearns Equity Research, XO Communications, Oct 2000
“XOptions” Bundled Service OfferingFrom XO Communications
Product Plan of ActionDevelop new “premium” bundled services offering
Includes local, LD, internet, web host to start
Bundled Services Provide:1. Change offering from
unit cost to bundle service price
2. Generate more revenue per subscriber
3. Entrench customers before competition
4. Reduce Churn
Provisioning
Why we care about provisioning• Installation, Configuration, Turn up cause big
problems, big headaches– 100,000 subs/year– 250 days/year to install – Requirement for 200 techs
• 2 installs per day• How many technicians do you need to install a
broadband solution?– One for telecom/wireless interfaces, demark line– One for data services, IP configurations
• Self install/config only way to get “hyper growth”– 46M connections by 2005 ?!?!?!
• Lower revenues/sub, must recoup costs quickly
Understanding Total Cost of Ownership
Source: Ernst & Young and Yankee Group studies
33%
25%
42% Fixed CostsCapital EquipmentNetwork Operations
For every $1 spent on Jetstream gear
Spend $1.68 on mgmt, net ops
Your Travel Support Systems
Ticketing
BillingCustomer
Loyalty
Flight/Fleet
Allocation
Order Management
System
Customer
Interface
(E-business)
Seat
Assignment
Flow Through ProvisioningSystem
Integration is key for provisioning
STEP A:
Specify DSLAM port for Voice
PVC:
Broadband Network EMS
WLL EMS JetEMS/JetWaySTEP B:
Specify CPX-1000 Voice PVC for
IAD
Voice PVC:
VPI 0, VCI 39
Voice PVC:
VPI 100, VCI 1001
Voice PVC:
VPI 100, VCI 1001
Voice PVC:
VPI 100, VCI 1001Voice PVC:
VPI 100, VCI 1001
Voice PVC:
VPI 0, VCI 39
Voice PVC:
VPI 100, VCI 1001Voice PVC:
VPI 100, VCI 1001
Voice PVC:
VPI 100, VCI 1001Voice PVC:
VPI 100, VCI 1001
Voice PVC:
VPI 100, VCI 1001
Data PVC:
VPI 0, VCI 38 Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012 Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
Data PVC:
VPI 200, VCI 1012
CoreSwitch
WLLEdge
SwitchEdge
Switch
CoreSwitch Core
Switch CPX-1000
IAD
ISP Facilities
SyndesisCoManageCommTech
CPX-1000: Manageability
B. SNMP Agent
Must be able to integrate with existing
systems
C. TL-1 Agent
A. CORBAUsed for Jetstream apps: JetCraft and JetVision
D. Command Line
1 PVC for data connection1 PVC for all voice connections
JetIAD
JetIAD
JetIAD
A Carrier’s View of Provisioning
CPX-1000
Class 5 Switch
LDS OSSSubscriber
request from Web
or Customer
Service
NMS
Broadband Network EMS
WLL EMS JetEMS/JetWay
Packet NetworkAggregation Edge, Core
PSTN
Management Systems
CPE (voice & data) Network
Voice over BB NetworkData Traffic
to Internet POP
ATMDS3/OC-3
Voice TrafficATM
DS3/OC-3
TDM T1GR-303
Flow-through Provisioning Interfaces
BillingOSS GatewayCustomer Care
Workflow
JS Management Protocol
Mass Subscriber Management• Bulk Provisioning
– Add or modify thousands of IADs at a time
• Bulk Monitoring– Monitor all IADs from a
single interface • Bulk Administration
– Control (lock/unlock) selected IAD resources
– Graceful firmware upgrade of thousands of IADs at a time
JetVision Server
Packet Network
JetVisionClient
IAD/CPE Management
Voice VC
SingleSingle VC for Voice & Management VC for Voice & Management• Voice Traffic
– ATM AAL2 – Separate channel per voice call– Dynamic bandwidth use
• Management Channel– Deterministic call control– Provisioning– Monitoring– Software download
VoiceVoiceDataDataManagementManagementJetstream ProductJetstream Product
IADIAD
DSLAMDSLAM
CPX-1000CPX-1000
Data Network/Data Network/InternetInternet
RegionalRegionalPacketPacket
NetworkNetwork
VoBB Provisioning Requirements• Time to Market is critical to generate
revenues immediately• Solutions must scale to meet growing
demands• Platforms (network elements,
management systems, comm. networks) must be robust, reliable, and secure
• Overall lifecycle costs must be controlled• Systems must integrate cleanly/effectively
to support today’s services, growth for tomorrow
Summary
Summary1. MTU is the target SMB market
– LMDS hybrid solutions to reach the small business/residential
– In building DSL distribution2. Bundled Telephony Services
1. Make subscribers more profitable2. Entrench your customers before competition
3. Provisioning: An operator’s view1. More than “connect the dots”2. Invest in flow through provisioning systems
Your Service Edge
Leading the Way in Voice over Broadband