REDMOND, WA, July 11, 2002 — The communications sector has seen tough times in recent years. Various reports indicate the total market value is less than half what it was in 2000 and service providers face growing customer and shareholder expectations, plummeting profits and strangling debt from having overbuilt infrastructure.
Yet most analysts agree that telecommunications is a growth industry that will rebound due to the overwhelming demand for communications services. As telecommunications companies look to the future, forward-thinking companies such as Microsoft are preparing for this opportunity.
The industry challenges are daunting, but the confluence of software and advanced networks presents an amazing opportunity for telecommunications companies and network service providers to reduce costs and offer exciting new services, says Pieter Knook, corporate vice president for Microsofts Network Service Provider (NSP) and Mobile Devices Division.
Microsoft, for instance, plans to deliver those reduced costs and new services with integrated products and tools, such as Microsoft Visual Studio .NET and Microsoft Windows 2000 Server. Such products are designed to simplify processes for carriers, and mark an ongoing and newly refocused commitment to partnerships with telecommunications companies, which is helping to develop compelling new services to customers.
Highlighting Microsofts success are recent customer announcements including Deutsche Telekom and Verizon Communications.
Microsoft continues to provide support for industry technology standards and use its long history of strategic communications industry investments to deliver an integrated and comprehensive strategy. With this commitment and growing support, Microsoft and the communications industry are aligned for success, industry observers say.
Merging Servers, Services and Devices
With corporations and consumers clamoring for innovative services, and new industry-wide wireless, broadband and fiber-optic upgrades now complete, a new business opportunity awaits network service providers. Microsofts plan calls for combining powerful server computer technology with new communications and Internet services, as well as mobile computer and wireless devices.
To help ensure that products are more integrated with these services, Microsoft earlier this year combined its Network Service Provider (NSP) division, which markets servers and services to communications companies, and the Microsoft Mobile Device Division, which is responsible for mobile and wireless products. This new team is guided by Knook.
The combined division’s goal is to work with carriers to develop a series of new services, such as Internet-based voice, unified messaging, wireless data, hosted call centers or billing and provisioning tools. They will also provide technology solutions and support, as well as the partnerships and vision to help transform the telecommunications industry.
New Communications Products, Programs and Partnerships Abound
A key component of this strategy is the PocketPC Phone Edition, which enables Microsofts portable computer software to make and receive wireless phone calls. These calls use network capacity and minutes, creating demand and new revenue streams for service providers. The proliferation of similar devices will be a boon to service providers eager to maximize network traffic and garner greater revenue from new consumer and business services.
The new line of .NET-connected software being created by Microsoft, such as Microsoft BizTalk Server, is allowing service providers to develop new services and at the same time more seamlessly deploy and bill for them.
Many of these Microsoft technologies have proven cost effective for service providers to deploy alongside their legacy UNIX-based systems.
Microsoft .NET is the software for the next generation of computing that connects our world of information, devices and people in a more unified and personalized way, Knook says. .NET Services, servers, developer tools and solution offerings empower service providers to accelerate the delivery of XML Web services to customers cost effectively and while utilizing existing assets, leading to faster service delivery and increased return on investment.
Visual Studio .NET, a development tool for creating applications based on the Microsoft .NET Framework, enables communications and network service providers to develop their own XML Web services applications internally, reducing development costs while potentially increasing network usage and service revenue, Knook says.
Visual Studio .NET offers service providers the choice of developing their own services, though some may still prefer to resell and distribute services from Microsoft instead, to reduce development and infrastructure costs. Regardless, network service provider customers say Visual Studio .NET enables them to create advanced communications services much more efficiently.
Although many service providers recognize the power of Visual Studio .NET, the urgent need for immediate new revenue streams is undeniable. As a result, Microsoft has also developed solutions — preconfigured packages, combining software, hardware, support and installation and network design blueprints — to make the provisioning and delivery of services as easy as possible for carriers.
Apptix, a global provider of hosted messaging, collaboration and communications applications, was the first to take advantage of the new Hosted Messaging and Collaboration Solution, which provides companies with key business tools such as e-mail and mobile services. Utilizing the solution, Apptix has enabled service providers and outsourcers to seamlessly deliver hosted Microsoft Exchange 2000 Server and integrated collaboration, and real-time communications services to their customers.
“Through our work with Microsoft, we have a great competitive advantage to deliver Hosted Messaging and Collaboration Solutions to service providers. We can now offer profitable, value-added application and web services to our service provider partners, and have them up and running in just 30-60 days,” says Jason Donahue, CEO and President of Apptix.
The Microsoft Solution for Windows Web Hosting, a set of Web-hosting applications based on Windows 2000, offers similar opportunities improve internal operations while rapidly offering hosting services. Innerhost, a leading provider of hosting and application services, reduced call center volume from 800 calls per day to 400 and dramatically reduced their system-administrator-to-server ratio using the Active Directory directory service and the Solution for Windows Web Hosting.
Several leaders in the communications sector have planned much of their business strategy around the Microsoft software and solutions for advanced communications services.
Deutsche Telekom, the German communications giant and Europes largest phone company, has committed to use Microsoft .NET-connected software and solutions to develop Internet applications via its new T.NET service. Knook says that this landmark commitment to Microsoft technologies affirms the power of the Microsoft platform and .NET, including Visual Studio .NET and .NET Enterprise Servers.
A similar deal with KT, formerly Korea Telecom, the worlds number one broadband provider, promises new offerings such as Internet telephony, wireless data, broadband or high-speed Internet access and digital content based on Microsoft technology.
The momentum spanned continents when late last year, Verizon Communications, a major U.S. phone and Internet service provider, formed an alliance with Microsoft. Verizon plans to offer new and innovative digital services such as messaging, calendar functions and other personal companion-style services based on .NET and Windows XP.
To complement the new services, Microsoft recognizes the critical need for these leading communications companies to be able to successfully implement, provision and bill for these services in order to realize those new revenues. To meet this need, Microsoft offers BizTalk Server 2002, an application integration technology. BizTalk Server 2002 allows carriers to automate — and therefore reduce costs associated with — many processes involved with provisioning, or installing, and billing for services. BizTalk Server 2002 also enables carriers to orchestrate XML Web services and other internal applications.
Broadwing, a communications service provider, uses BizTalk Server extensively in its national network to support network monitoring, provisioning and service activation, according to Chief Information Officer Dave Torline. It allows Broadwing to tie in new applications with legacy Operational Support Systems (OSSs) and to enable Web-based transactions, allowing customers to order services and to pay or to check the status of bills on the Internet.
Nearly two years ago, Broadwing looked at solutions from traditional OSS middleware providers, Torline says, but chose BizTalk Server because it is based on XML and allowed the company to incorporate more features.
The BizTalk solution was 50 percent less expensive and 50 percent faster to deploy at Broadwing than competing solutions would have been. Torline said that because Broadwing already uses Microsoft technology, such as SQL, BizTalk was more appealing. “We feel it was more integrated,” he says.
Embrace of Standards is Essential
Microsofts interoperable suite of products and programs is based on key industry standards to make it easier for network service providers to successfully develop and deliver services. These standards also help carriers reduce costs and ensure a common foundation from which carriers may build their own applications. The standards that were committing to, such as XML, SOAP and UDDI, really set the framework for evolution, Knook says.
Jim Culbert, vice president of technology for MetraTech, a billing software and Web services company, agrees.
Developing on Microsoft .NET technologies and using open standards such as XML, SOAP, and UDDI, we were able to offer the first XML Web services-based billing, customer care, and revenue sharing software platform, empowering our customers to offer dynamic pricing plans, bill for new services quickly and reduce the cost of billing implementation and operations, Culbert says.
“Our customers, such as British Telecom Conferencing, Inc. (BTCI) and ACT Teleconferencing implemented solutions in a fraction of the time and cost of our competition. Our Web services architecture enables this, he adds.
These standards allow for rapid deployment of new applications by carriers and widespread adoption of them by businesses and consumers. Microsoft recently embedded in its software and products support for Internet Protocol version 6, the independently-developed technology standard that will underpin the Internet and improve Web-based voice services in the future.
By combining its strong computer and Internet industry knowledge with telecommunications partnerships and new innovative ideas, Microsoft believes communications companies and similar service providers will continue to work with Microsoft to provide advanced services and tap the huge opportunity that exists.
We have the ability to articulate a clear vision for what we think the future of technology holds, and in this case particularly, what the future of the Internet may look like, Knook says. Many telecommunications companies are attracted to working with Microsoft because of the vision surrounding .NET and because they believe we can make it real.
The communications industry, with Microsoft in its corner, has the vision and tools to battle back from its recent bludgeoning. New services and low-cost products such as powerful servers and mobile devices, coupled with the software companys support for industry standards and its willingness to jointly work toward solutions with its partners, have made Microsoft a well-known name in telecommunications circles.
Service providers are saying, Look, Microsoft is clearly the innovator and the leader in this new environment, and we want to work and be associated with what Microsoft is doing, Knook says.
New evidence, such as the acceptance of XML Web services, the greater availability of high-speed Internet connectivity and slightly stronger quarterly earnings reports by some major network hardware makers, potentially point toward an imminently stronger, smarter telecommunications industry.
And as companies in the sector seek to return to strength by serving the bandwidth needs of corporations, business users who need to check email from airports, and soccer moms who want to check dads calendar online, Microsoft stands ready as a helping hand.
