Next-gen switch market heats up

Telecommunications Americas, June, 2004 by Sue O'Keefe

In preparation for Telecommunications[R] magazine's "Class Wars: New Opportunities for Softswitches" roundtable at SUPERCOMM, we asked panel moderator Chris Nicoll of Current Analysis to pinpoint the opportunities for next-gen Class 5 switches.

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Q: What have been the major changes in the VoIP/softswitch market over the past year?

A: One of the biggest changes is that VoIP has gone from pretty much a niche to close to mainstream in one key market--the enterprise--and from geek toy to credible niche in another--consumer. On the enterprise side, one surprise is that Cisco, long shunned in the service provider community as having no voice experience, is a major player in enterprise voice, while in the consumer space Vonage has over 135,000 lines active and has nearly nationwide coverage in the United States and most of populated Canada.

Q: What specifically are carriers demanding from their softswitch vendors?

A: This is not rocket science: features, reliability and operational integration capability. What I expect to see increase as a requirement is transparent compatibility with the Class 5 network for the incumbent carriers and primary line capability for the alternative carriers.

Q: Will MSOs become a new source of revenue for softswitch vendors going forward?

A: I'll repeat something I have said before in your magazine: MSOs are the main credible threat to the incumbent telcos. The MSOs represent a strong market opportunity for the VoIP vendors.

Whatever Happened to FTTP?

The talk of last year's SUPERCOMM was the joint FTTP (fiber to the premises) RFP issued by Verizon, BellSouth and SBC Communications. According to Infonetics Research, PON (passive optical networking) revenue surged 240 percent from 2002 to 2003 to $182 million, mostly on growth in North America. With all the ballyhoo surrounding PON, how far have the RBOCs' initiatives come?

Chose AFC for active component portion of FTTP rollout, has ordered initial equipment. A recent Yankee Group report predicted Verizon would reach at least 350,000 customer locations in 2004, spending $150 million on equipment. The RBOC has vowed to pass 1 million homes with fiber in 2004.

Chose Alcatel for the active component portion of its rollout. Announced it would deploy FTTP in at least five cities this summer, with potentially limited greenfield deployments in the second half of 2004. First announced rollout under FTTP initiative was Pabst Farms, a 1500-acre planned community in the Milwaukee suburb of Oconomowoc, which was scheduled to begin this summer.

Has continued deploying FTTC (fiber to the curb) using PON equipment from Marconi (AFC subsequently purchased Marconi's FTTC product line). BellSouth appears to be waiting for the FCC to grant its petition to free FTTC from unbundling requirements.

Join Telecommunications[R] magazine for "Class Wars: New Opportunities for Softswitches" on Tuesday, June 22, from 3:30 p.m.-5:00 p.m. in Room S501 at McCormick Place in Chicago.