The Convergence of Networks: Telecoms' Road to IP-Based Services

Strategic Insights -

As the world moves towards a digital economy, telecommunications networks are evolving rapidly to meet the growing demands of data transmission. The convergence of traditional public switched telephone networks (PSTN), wireless, and internet protocol (IP) networks is underway, blurring the boundaries between separate networks. This convergence represents the "Nirvana" of networking, where a single, unified network offers a range of services, including voice, data, and multimedia. However, established carriers must modernize their networks to compete with upstart carriers that have a head start in building next-generation networks.

Key Takeaways:

  • Upstart carriers like Level 3 and Qwest are investing billions of dollars in high-capacity IP networks designed to cater to the growing demand for IP traffic generated by corporate intranets, business websites, and e-commerce.
  • These IP networks offer improved reliability and quality of service (QoS) features, allowing carriers to differentiate between low and high-priority traffic and provide service contracts tailored to each customer's needs.
  • Level 3 is building a long-distance IP network covering nearly 16,000 miles and linked to 50 local networks in the US, with plans to lay a transatlantic sub-sea cable to link the US and European networks.
  • Established carriers, such as Telstra and British Telecommunications, are investing in IP-based technologies and services to remain competitive, with Telstra awarding a $100m contract to Nortel for advanced IP networking products and services.
  • Carriers are keen to explore using IP to offer new high-value services, including application hosting, which allows businesses to outsource complex IT applications to an "application service provider".
  • Application hosting is an emerging trend, with carriers partnering with IT companies to provide hosted applications, such as SAP's software for accounting, billing, and human resources.

Statistics:

  • Level 3's long-distance IP network will cover nearly 16,000 miles and be linked to 50 local networks in the US.
  • The network will also be connected to a 3,500-mile long-distance network in Europe.
  • The transatlantic sub-sea cable will be used to link the US and European networks.
  • Telstra has awarded a $100m contract to Nortel for advanced IP networking products and services.
  • Qwest is partnering with Hewlett-Packard and SAP to offer SAP's software for accounting, billing, and human resources over its telephone network.
  • British Telecommunications has teamed up with Lotus, an IBM division, in an initiative called InterCommunity based on Lotus's popular Notes software.

Sources:

  • Financial Times Limited 1999
  • Nortel Networks
  • Level 3
  • Qwest
  • IBM Global Services
  • Telstra
  • British Telecommunications
  • Lotus
  • Hewlett-Packard
  • SAP
  • Commerce One