Taming complexity

As telecoms networks converge around IP, software companies with the know-how to organise the complexity thrown up by this shift are doing a roaring business. US software company Telcordia Technologies is one such organisation, and not satisfied with dominating its local market with software solutions such as caller ID, wireless number portability, and tollfree traffic, CEO Mark Greenquist talks to Comm. about expansion into international markets and the growing importance of intelligent software

Telcordia’s CEO, Mark Greenquist is keen to see the company’s US-centric approach becoming globalised. Currently international activities account for 15-20 per cent of overall revenues

The world of operating and business support systems (OSS and BSS) has for a long time been an unglamorous one, dismissed as a back office function that was necessary, but hardly the stuff of moulding and inspiring services in the telecoms space. However as competition grows around the world and networks evolve to adopting IP as the core building blocks of their networks, software companies such as Telcordia are finding themselves en vogue – helping service operators draw closer to end-users while improving network efficiencies.

Telcordia offers an end-to-end portfolio of software, services, and research spanning key OSS functions, including planning and engineering; fulfillment, service delivery; and service management. Owned by private equity firms Providence Equity Partners and Warburg Pincus, and with business in international markets accounting for 15-20 per cent of Telcordia’s overall business, the company is keen to leverage its success in the US to other parts of the world where market liberalisation is creating a flurry of activity.

“It’s an obvious equation,” comments Mark Greenquist, CEO of Telcordia. “As new licences are awarded there is greater competition, and once you have competition in place there is a requirement for mechanisms such as number portability. So there is a similar kind of trend in emerging markets as we have seen in the US,” he adds.

Telcordia has already been instrumental in providing technology solutions for the implementation of number portability in significant emerging markets such as Egypt, Saudi Arabia and India, and has scored similar successes in Brazil and Argentina.

In Egypt, the National Telecommunications Regulatory Authority (NTRA) selected Telcordia’s Number Portability Clearinghouse as the centralised repository for number porting last June. The NTRA selected the consortium of Giza Systems and Telcordia to carry out the project following a competitive bidding process.

The NTRA’s contract was Telcordia’s ninth implementation, having been the first company to introduce number portability in the world in 1994.

Under NTRA’s contract, Telcordia provided its Number Portability Clearinghouse solution and implementation services.

“Efficiencies are becoming more important, while margins are being squeezed. Add this to an increase in complexity in terms of the types of services that are now being delivered over telecoms networks, and you start to understand why it is becoming a critical matter to monitor and manage intelligent networks closely,” Greenquist suggests.

The OSS market is a pretty fragmented one, resulting in numerous technology providers offering solutions that may or may not overlap with systems service providers have already paid for and operate. The ability for software solutions to integrate into larger infrastructure is imperative, and agility in this respect may help an operator differentiate itself from a competitor.

“Service providers know that they need to do something with respect to being more competitive in the markets they operate. Issues such as a fast time-to-market for a new service are becoming more and more crucial,” explains Graeme Verroken, Telcordia’s vice president for sales and alliances in the EMEA, APAC and India.

“Dynamic management of networks allows service providers to assess whether offerings are viable or not very early on.”

Etisalat in the UAE offers a good example of a service provider that looked to improve its network efficiency prior to the entry of competition. In June 2006, the telecoms operator became the first to deploy the latest release of Telcordia’s Network Engineer product at that time, in order to drive operational efficiencies and lower total cost of ownership.

The solution helped Etisalat optimise its fibre network in order to quickly roll-out services, such as IPTV, and streamline its operations, having been utilising the Network Engineer solution for several years. The solution is an end-to-end geospatial network planning and engineering offering for the management of telecommunications networks, helping to simplify network operations, increase customer satisfaction and pave the way for the creation and deployment of new revenue generating advanced services.

As markets have evolved in the Middle East and Africa, as they have done in other geographies around the world, there is evidence that former monopolies that mastered their supply chain management are ultimately the ones that have become the most successful. It has become clear that asset efficiency is crucial, and that the best utilisation of those assets impacts service providers immensely.

Maarten de Wit, director at management consulting firm Oliver Wyman in Dubai is all-too-familiar with the service provider inefficiencies present in the Middle East at this point in time. “It took six years for mobile penetration rates to rise from 50 per cent to 100 per cent in Western Europe. In the Middle East, that same growth has taken just three years,” de Wit states.

De Wit estimates that monthly ARPU in the GCC is in the range of around US$50, while its stands at US$29 in Western Europe and just US$8 in India. Costs attributable to generating those revenues amount to US$22.50, US$17.40 and US$4.70 respectively, highlighting just how inefficient the operations of service providers in the GCC are. Given the absence of handset subsidies, commissions or other specific costs, it appears that the high operational costs experienced by service providers in the GCC must be accounted for through their inefficient manner of operation.

“Operators in the GCC are still able to run at a profit because of the amount they are able to charge subscribers. However, as pricing becomes impacted by growing competition, those days won’t last forever and service providers will have to look at improving their cost bases in order to remain viable,” de Wit concludes.

While there is a significant amount of overlap between general IT solutions, and those tailored specifically to the telecoms sector, the complexities involved in the rollout of communications networks requires specialisation to be built up in this area.

Verroken believes service providers know they need to do something with respect to being more competitive, with issues such as fast time-to-market becoming more crucial

“We’re not coming from an enterprise background,” comments Greenquist. “We are coming from a telecoms background and thus possess a better understanding of the nuances of dealing in this area. What we sell, essentially, is the ability to become operationally efficient.”

So while efforts are being made in the Middle East and across other emerging markets to improve OSS, companies such as Telcordia believe the level of adoption remains at a relatively low level. “The issue today is not as large as it will be in the future,” contends Greenquist.

Telcordia is not waiting for the industry to wake up and realise the benefits of its solutions, having chosen instead to continue innovating and moving into important new markets over the past few years, including service delivery platforms (SDPs), IMS (IP Multimedia Subsystems), and hosted MVNOs (mobile virtual network operators). Last year, for example, Telcordia penned a deal with mPortal, a provider of mobile content and applications for mobile network operators, MVNOs, content providers and enterprises, offering MVNOs a one-stop source for mobile content services.

Telcordia selected mPortal’s Springboard Content Delivery Manager and Springboard Content Catalogue to further enhance the Telcordia Hosted Solution for MVNOs. The addition of mPortal’s solutions was aimed at enhancing Telcordia’s own data offerings and the ability for MVNOs to launch high-revenue content.

Thus its diversification over the years has expanded Telcordia’s portfolio of products to such an extent that there is no single company that competes with it directly across all the lines of business it is in; rather it has particular competitors for particular business sectors.

These developments have not gone unnoticed by the wider enterprise IT community, and on occasion speculation has mounted that Telcordia may be an acquisition target. SAP, the German ERP (enterprise resource planning) company, is one such organisation that has previously been linked to Telcordia, but so far no deals have been ratified.

“The space that we are in is vibrant and growing,” says Greenquist. “I don’t see us doing anything too different as we move ahead. OSS, service delivery platforms, number portability; these are our strong points, and service assurance is another important area to us,” he adds.

As a privately-held company Telcordia does not release earnings publicly, though it is estimated that in the year to end-January 2007 it recorded revenues of US$730 million to US$740 million and earnings before interest, tax, depreciation and amortisation (EBITDA) of US$160 million to US$165 million for the financial year. If accurate, these figures would represent a fall in revenues from US$790 million and EBITDA of US$185 million for the previous year.

“We have a US-centric approach and we are now globalising it,” says Greenquist. “The secret sauce is not the assurance solutions in themselves, it is their ability to drive efficiencies within telecoms providers.”

Telcordia background

Telcordia Technologies, formerly Bell Communications Research (Bellcore), is a telecommunications research and development (R&D) company based in New Jersey and created on January 1, 1984 as part of the 1982 Modification of Final Judgment that broke up the Bell System.

Bellcore was a consortium established by the Regional Bell Operating Companies upon their separation from AT&T. Since AT&T retained Bell Laboratories, the operating companies wanted to have their own R&D facility. Bellcore provided joint R&D, standards setting, and centralised government point-of-contact functions for its co-owners, the seven Regional Holding Companies that were themselves divested from AT&T as holding companies for the 22 local Bell Operating Companies.

Bellcore’s initial staff and corporate culture drew heavily from the nearby Bell Labs locations in northern New Jersey, plus additional staff from AT&T and the regional operating companies. In 1997, the company was acquired by Science Applications International Corporation (SAIC). Since it no longer had any ownership connection with the Bell regional companies, the name was changed to Telcordia.

Stakes in the company were subsequently sold in November 2004 to Providence Equity Partners and Warburg Pincus, which currently both hold equal stakes in the company.

Telcordia is a chief architect of the telecoms system in the US, and has pioneered many of the telecoms services used today, including caller ID, call waiting, mobile number portability and toll-free telephone number (800) service. Telcordia’s expertise lies in managing large, complex projects across the operations and communications spectrum.

Telcordia offers products and services in the areas of network planning and engineering, service assurance, delivery, fulfilment and data management and operations support.

Telcordia’s software products are designed to solve communications problems, support complex operations missions and system interoperability issues.

Innovation milestones

1. Telcordia holds more than 880 US and international telecoms patents.
2. Telcordia developed the Multipurpose Internet Mail Extensions (MIME) standard for sending multimedia e-mail attachments.
3. Telcordia inventions enable three-way calling, call waiting, and caller ID.
4. Telcordia software handles 100 per cent of the US toll-free traffic volume.
5. Telcordia invented Advanced Intelligent Network (AIN) technology.
6. Telcordia is a pioneer of the original ATM cell concept and its adoption as the protocol for broadband packet networks.
7. Telcordia helped define the standards that enable wireless customers to “roam.”
8. Telcordia deployed the first commercial Network Access Points (NAPs).
9. Telcordia helped define Asymmetric Digital Subscriber Line (ADSL) technology.
10. Telcordia invented the high-speed Internet technology that ensures faster data transfer and prioritises network traffic.
11. Telcordia invented Synchronous Optical Network (SONET).
12. Telcordia invented Virtual Local Area Network (VLAN) technology.
13. Telcordia developed the VoIP softswitch architecture, dramatically lowering the costs of IP phone calls.
14. Telcordia led the way in creating LSSGR and TR303, industry standards that have led to unprecedented operational efficiencies.