Infrastructural revamp drives telecom IT investments

Key IT opportunities and issues for telecommunications

services providers between 2003 and 2006

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).

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:

• 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.

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.