Infrastructural revamp drives telecom IT investments

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CIOL Bureau
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Key IT opportunities and issues for telecommunications
services providers between 2003 and 2006

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Our recommendations for key constituents include:

1. Vendors that serve telecommunications services providers must
keep the above three imperatives in mind
and demonstrate how their products and services provide superior value in
helping providers
achieve these
objectives. Investors should prioritize their related investments accordingly.

2. Services providers’ budgets, though comparatively large,
are not infinite, and should use the above criteria
to winnow IT spending, with particular emphasis on the second and third
imperatives (No. 3
consists of
the systems, procedures and expertise to provide enhanced levels of service and
support).

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These will result in long-term benefits, including superior
competitive positioning.

3. Enterprises know from experience that telecommunications
services providers often enact short-term, service-affecting
activities by focusing on making Wall Street happy, by improving margins by
cutting
staff (in inappropriate
amounts or positions), and implementing new IT systems before they are truly

ready for production environments. This
is an especially great temptation for providers the closer they
get
to the end of the fiscal year. Enterprises should favor providers that focus
their IT spending on
infrastructure
and improved customer service/support.

Our expectation is that major incumbent providers (ILEC, IXC,
cable providers) will continue to dominate the
telecommunications services landscape, but that intra-incumbent competitive
pressures to win market
share and
control costs will force them to modernize network infrastructure (and
associated OSS/BSS
systems) to
create new, flexible service offers they perceive to be those customers desire.
At select providers,
some of
these efforts are well under way. For instance, Giga has provided clients with
information on
AT&T’s
and
MCI’s
systems overhaul work.



On the product side, evidence of such activities includes:

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  • Many providers are
    introducing capabilities to support customer requirements for storage area

    networks (SANs).

  • Every landline
    provider is gearing up to introduce voice over IP (VoIP) on broadband next
    year (DSL, cable), and many are touting the enhanced edge network
    flexibility of new Multiprotocol
    Label
    Switching (MPLS) architectures.

  • Wireless providers are examining the benefits brought by
    location and presence-detection/awarenes technologies.

  • During the next 18 to 24 months, wireless and wireline
    providers are planning to work together to trial
    and introduce services and associated support systems that support
    seamless intermodal
    roaming
    and handoffs.

  • Impending
    regulatory requirements, such as wireless local number portability (WLNP)
    and Do Not
    Call/Fax
    (DNC/F) also require new infrastructure/systems support.

Additionally, competitive pressures will drive providers to
implement increasingly flexible, automated customer-facing
service support systems via portals. The emphasis on flexibility requires that
providers
examine implementing
architectures capable of supporting workflow (known as
"flow-through" in the
telecom
service management world) and Web Services throughout great swaths of their
supply chains.

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Since 2000, providers have suffered great pressure on both
their top and bottom lines, and this year offers no relief.
As the fiscal year draws to a close, it is rational to anticipate at least
half of the major
telecommunications
services incumbents will announce a new round of significant layoffs, and the

subsequent unemployment rate in the
telecom sector will hit a new record high.



Although long-term
structural
overhauls can provide great benefits to all telecommunications services users,
the compounding
effect of
infrastructure, systems and personnel changes has the potential to be
disruptive for customers in the
near
term. They should consider it both prudent and necessary to closely monitor
telecommunications services provider's
processes
and output associated with key functions, such as provisioning,
ongoing
network/service quality, trouble resolution and billing.

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