Ethernet, media focus force telecom shift

Content network directions, Carly Fiorina on telecommunications leadership all in a day's travel.

First of three-part series: Managing Editor Jim Duffy is taking a whirlwind tour of telecom events in New York this week. Yesterday at the Yankee Group conference the changing role between customers and service providers was a hot topic. Meanwhile a block away at the UBS Warburg Global Communications Conference, ex-HP chief Carly Fiorina was talking about leadership and the changing telecom business.

NEW YORK -- Three telecommunications conferences in midtown Manhattan this week reveal an industry at a turning point - as it shifts to a media-centric focus and as Ethernet changes the very economics of the industry.

Corporations will have to change the way they deal and interact with service providers and vendors, according to presenters at the Yankee Group Telecommunications Industry Forum. As the service environment changes from one based on communications to that based on media or content, enterprises will find that they are not doing business with the usual suspects.

“You can’t necessarily view the communications provider as the center of this new universe,” says Berge Ayvazian, Yankee group chief strategy officer.

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First of three-part series: Managing Editor Jim Duffy is taking a whirlwind tour of telecom events in New York this week. Yesterday at the Yankee Group conference the changing role between customers and service providers was a hot topic. Meanwhile a block away at the UBS Warburg Global Communications Conference, ex-HP chief Carly Fiorina was talking about leadership and the changing telecom business.

NEW YORK -- Three telecommunications conferences in midtown Manhattan this week reveal an industry at a turning point - as it shifts to a media-centric focus and as Ethernet changes the very economics of the industry.

Corporations will have to change the way they deal and interact with service providers and vendors, according to presenters at the Yankee Group Telecommunications Industry Forum. As the service environment changes from one based on communications to that based on media or content, enterprises will find that they are not doing business with the usual suspects.

“You can’t necessarily view the communications provider as the center of this new universe,” says Berge Ayvazian, Yankee group chief strategy officer.

As service provider business models transform from communications-centric to media- or content-centric, service providers and vendors will be required to be participants in a federated ecosystem of application, media, content, communications and device vendors. Many more companies, including new entrants, will play a role in the overall service experience, which will likely change the way enterprises contract for services or buy products.

The key for service providers is to capitalize on trends such as Web 2.0, says Phil Marshall, vice president of enabling service provider technologies at Yankee Group. They will also have to get used to not necessarily managing or controlling the ecosystem or the customer experience as they do today – nor will it be economically ideal to do so.

“Service providers who maintain a walled garden pay a premium for excessive network investments and to control devices,” Marshall says.

Their subscriber-based business models – those based on average revenue per user – are likely to be disrupted, Marshall says. They’ll have to build a service portfolio around this federated ecosystem and shift their business model from subscriber-centric to one that’s community-centric.

And though service providers are preparing for this mixed and multimedia service experience by migrating to a network architectures based on IP Multimedia Subsystem (IMS) standards, Marshall says traditional Session Initiation Protocol-based IMS is not optimized for it because it facilitates the expensive “walled garden” approach. Instead, a media- and community-centric model requires a more open environment, he says.

There will be consequences

A block away, talk of imminent change – and the consequences of not embracing it – were evident at the UBS Warburg Global Communications Conference. Ethernet, for example, is changing the economics of networking, says Marc Randall, president and CEO of 10 Gigabit Ethernet pioneer Force10 Networks during a session at the conference.