ACG HotSeat with Alcatel-Lucent Kevin & Lindsay

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Due to some of the sequential year-over-year growth ALU had during a down economy, ACG wanted to do a HotSeat interview with Lindsay Newell and Kevin Macaluso from Alcatel-Lucent and get a deep dive into the key strategic drivers

ACG HotSeat with Alcatel-Lucent Kevin & Lindsay

Click to Play

Due to some of the sequential year-over-year growth ALU had during a down economy, ACG wanted to do a HotSeat interview with Lindsay Newell and Kevin Macaluso from Alcatel-Lucent and get a deep dive into the key strategic drivers

IPv6 Deployment: Are We Crying Wolf?

The migration from IPv4 to IPv6 has been a recurring topic for years with industry reps intermittently sounding the alarm of the imminent and potentially catastrophic depletion of IPv4 addresses. The prediction that IPv4 addresses would run out by 2005 (as some analysts claimed) clearly was just alarmist. Here we are in 2009 and the Internet world has not, like Henny Penny’s sky, come crashing down. Because of network address translation (NAT), which can translate public addresses to private addresses, IPv4 longevity has been extended. However, this extension is not indefinite, and, no doubts, the transition from IPv4 to the adoption of IPv6 needs to move forward. But as with all things technological, there must be transition. This is especially pertinent given the mission-critical nature of networks and the rapid growth of traffic, services (cloud hosting for one), and products that demand increasing amounts of bandwidth.

Why should service providers make the transition from IPv4 to IPv6? IPv6 offers multiple advantages: it removes the requirement for an infinite number of addresses, offers better renumbering, facilitates multihoming, performs internal topology hiding, prevents host counting, and eliminates NAT, which all add costs and complexity to a network. These advantages make it easier for SPs to deploy new applications without having to employ difficult work-arounds or deal with random failures that are prevalent with IPv4 and NAT. Another major and challenging issue is speed and scalability. Can NAT truly translate network to network fast enough so that there is no compromise in the reliability of connection?

In addition to promoting seamless connectivity and better scaling of networks and services, IPv6 provides service provisioning, network management efficiencies, and OpEx savings. If these are not reasons enough for conversion, consider competitiveness. IPv6 not only promotes business continuity, but also fosters tech innovation and growth. For equipment manufacturers, IPv6 advances the development and evolution of smart grids, intelligent buildings, sensor networks, and other hardware- and application-dependent technologies.

Spurring innovation is another key reason for adopting this protocol. Virtually unlimited (wink) address space is expected to drive cutting-edge advances in monitoring, tracking, and remote management software and applications. What innovation adds up to is potential dollars and market share for SPs; with an adaptable platform service providers can more easily deliver new and richer services and products.

Although IPv6 is the logical next step in the evolution of the Internet, IPv6 is not a panacea. Service providers do face limitations and costs with transitioning. During incremental deployment, IPv6 features cannot be effectively and fully utilized. Additionally, because IPv6 is not a scaled up version of IPv4, and the two protocols do not interoperate directly, some form of NAT is required to translate IP packet headers between them.

Another issue to consider with IPv6 is address distribution. And here, I’ll give a word of warning: initially, it was thought that IPv4 addresses would never be exhausted, but that has not proven to be the case. When devising an IPv6 address distribution system the industry needs to very prudent in its allocation so we are not in the same boat 5 to 10 years from now. If you don’t think that this can happen just look at the growth over the last five years of cell phones with IP addresses, not to mention the many other devices that will have IP addresses.

In spite of these transitional and other technical issues, IPv6 does once fully implemented offer service providers business and economic opportunities. The question is when will the stakeholders stop crying wolf and start coordinating an industry response to IPv6 transition?

SP's “Take Me Out to the Ballgame”

Boy oh boy, just when you just don’t think technology can get any better you hear that Cablevision is offering live streaming online Yankees’ games. First Manny getting benched and now this announcement. Folks, does baseball get any more exciting than this? Initially, these games will only be available in the team's home market, and, yeah, I know I won’t be able to take a break from toiling over my research to watch online, but a man can dream can’t he? Who knows, eventually, given end users’ expectation of on-demand services, all fans scattered globally may be able to grab their phone, laptop or any other gadget and watch every game online. Just think, never missing a Yankees’ game because it wasn’t nationally televised, sigh! I know some of you envious Red Sox fans are shaking your head and asking, “Ray, Ray, Ray, what’s your point?” Well, isn’t it obvious? Pickoff, of course.

Pickoff, to explain to nonbaseball fans — although I can’t imagine there being any — is a play that catches a runner off base. As end users continue to up the stakes in the types of services they expect coupled with the proliferation of next-gen mobile devices, high-speed connectivity, and data-intensive Web 2.0 applications, service providers’ networks cannot afford to be in a pickoff situation. SPs must ensure that their management tools, operating systems, middleware, databases, server platforms, network cabling storage arrays can accommodate the QoS and rate requirements of applications such as wireless broadband access, multimedia messaging service, video chat, mobile TV, HDTV content, digital video broadcasting, voice and data, and other streaming services for anytime, anywhere, and on any device delivery.

Meeting these requirements will be especially crucial when 4G, with infrastructure only packet-based, is eventually rolled out. With each user requiring bandwidths ranging from 100Mbps to 1Gbps, carriers will need even larger backhaul solutions. Successful pitching of new services will require specific equipment options to meet the coverage and capacity needs of different environments as well as allow SPs to continue addressing existing services.

Although there currently are no specific standards that define a 4G service, network or technology, groups are working on these specifications and plan to announce universal standards by next year. However, one thing is for sure right now: customers are consuming more band-intensive services and expect grand slam classes of service on par with business-grade IP services. Combine 4G with mobile phones equipped with high definition capabilities, well, it’s “Take me online to the ball game” — music to my ears!

Gorilla in the Managed Services Market

It’s not often the little guy gets the advantage, but in the case of managed services revenues, small businesses, which have been the “little guy” in the market, now have the edge. Worldwide, service providers are reporting decreases in all segments, on average, of -13.72% in their managed services revenues. But there is one segment that is the exception: small business managed services, which is proving to be the revenue gorilla in an otherwise depressed market.

Small businesses continue to see the economic benefits of outsourcing their IT, especially as many of them are directly affected by the credit crunch and are unable to secure financing for general operations and/or purchase of network equipment. Savvy service providers that anticipated this trend are now reaping the benefits. Small Office Managed WAN (CPE) Router Services increased 55.86%, sequentially, in Q1 2009.

As the costs associated with network complexity, metro Ethernet, IP VPNs, managed IP voice and IP security consume more of their IT budgets, SMBs recognize that outsourcing their network management to service providers is one way to improve their success and bottom line, avoid and manage risk, and improve their overall operational efficiency. For service providers, this recognition translates to new sources of revenues, that is, as long as they can address SMBs’ specific operational requirements, such as integration of software applications, data center consolidation, integration of other operational platforms, managed hosting, and managed network solutions, especially in the rapidly expanding areas of managed voice and security.

Verticals within the small business market also offer SPs another source of market share growth. Smaller banking and financial services institutions, manufacturing, telecommunications, and retail businesses are increasingly outsourcing their telecom services to lower their capital expenditures.

With competition eroding SPs’ profits, many are now looking to small businesses to grow their revenue and market share. Service providers are revising their business models to identify and target SMB market opportunities and designing strategies that deliver best-practices for services and products that address their specific requirements. With small businesses accounting for more than 50% of gross domestic product worldwide, capturing a piece of this “little guy” revenue share isn’t monkey business.

Juniper and Nokia Siemens Partnership: It’s All about Focus

The push toward addressing the carrier Ethernet market just got a boost with the announcement that Juniper Networks and Nokia-Siemens have formed a partnership to provide an end-to-end solution in the transport market. The joint venture is not only timely but opportunistic. Worldwide, there are approximately 2.7 billion mobile subscribers, and the growth is only expected to continue increasing, especially in emerging markets. It is estimated that Ethernet mobile backhaul equipment revenue will increase to $2.2 billion by 2010. With Ethernet being the future as a carrier class technology for backhaul, carriers, clearly, need to invest in and upgrade their networks. For equipment and product manufacturers like Juniper and Nokia Siemens these numbers not only present them with an opportunity to provide carriers and operators with a network management solution that saves carriers OpEx and makes managing their networks easier, but also gives both companies a significant advantage in expanding their global footprint in the transport market.

Both the increase of wireline and wireless services, such as mobile video, messaging, online gaming, which require significant amounts of bandwidth and thus make the dependence on T1 circuits an expensive vehicle for delivering 3G and 4G WiMAX services, and the worldwide increase of mobile subscribers that are demanding a high and consistent level of reliability and performance from their providers are main drivers behind the push for carrier Ethernet as both a transport vehicle and service offering.

Carriers repeatedly identify transport as being their single, most costly expense. Data services deliver lower per bit revenue than voice services, and carriers recognize that to realize profits they need to reduce the cost per bit of transporting data traffic. Carriers expect cost-effective, scalable Ethernet to drive down their operating expenses while letting them have the flexibility to turn on bandwidth, something that they never had with legacy networks in the mobile space. The Juniper and Nokia Siemens’ carrier Ethernet solution creates a more complete end-to-end solution for the MX & A-Series platform to deliver an efficient, seamlessly integrated, easy-to-manage unified carrier Ethernet solution that supports all services on a single network. It offers point-to-point, point-to-multipoint or multipoint to multipoint circuit with a full OAM functionality that is normally associated with SONET/SDH TDM-based infrastructure, which is cost effective and has the scaling advantage of a packet Ethernet switching infrastructure. The OSS, which is a critical component of their solution, has been developed to target those carriers that are familiar with a SONET/SDH network and are used to a point and click environment. As a function of the solution, the access network management system will directly interface to the access component, figuring all the necessary functionality of the system. In addition, this end-to-end solution allows Juniper to extend deeper into the enterprise network, for example, Ethernet demarcation via its MX product line.

Juniper’s current BX-Series should still have a market for service providers that are looking to extend MPLS to the backhaul, while this new venture will allow either company to offer a circuit transport-type Ethernet product with proper OSS.

Carrier Ethernet as a service is showing dominance, and as more companies want Ethernet for their multimedia communications, VoIP services, equipment manufacturers will feel more pressure to develop products and services to meet those needs. For Juniper and Nokia Siemens it’s all about focusing on their customers and developing a solution and enhancements that are “always relevant and better than anything on the market.” This alliance and single-minded focus can only benefit the carrier Ethernet market.

Data Center Efficiency: The Silver Lining Is in the Cloud

At the risk of being called a Pollyanna, I am going to go out on a limb and say that there are some positive outcomes of recessions. If nothing else, the current economic situation is forcing IT enterprises to take a hard look at their data centers and how they do business. With typical data center costs running approximately 25% of total IT budgets, increasing pressure from global competition, social responsibility and energy efficiency (“green”) demands, rapid technology changes, infrastructure complexity, information explosion, and user sophistication, enterprises are under pressure (if not duress) to find cost-efficient business solutions and models to operate their data centers. Cloud computing is one technology and service solution that offers enterprises a data center silver lining (go ahead and groan), which optimizes resources and drives efficiency.
With the proliferation of next-gen mobile devices, high-speed connectivity, and data-intensive Web 2.0 applications, more enterprises are recognizing the advantages of cloud computing. Three words, coincidentally A words, sum up cloud computing: anytime, anywhere, and adaptability. Cloud computing, whether private or public, is a model for provisioning processes, applications, and services while making IT management more flexible and responsive to the end user’s requirement of on-demand services regardless of location or the type of device the user is utilizing.

A cloud computing data center model enables rapid innovation, scalability, and support of core enterprise functions, resulting in significant economies of scale. Opex and capex savings are realized through the standardization of systems and software components. Virtualization reduces the need for additional hardware, software, and facilities as well as automation of server, network, storage, operating systems, and middleware provisioning and security issues, all of which are costly and time consuming functions.

Addressing and managing services within a cloud environment reduces infrastructure expenses without adversely affecting business requirements. With the deployment of virtualization solutions, utilization of servers can increase from 20% to 70% with a resulting decrease in required infrastructure. This hardware reduction translates to a dramatic decrease in some associated operation expenditures: rack space, real estate, power, and cooling.

Another important but often overlooked advantage of cloud computing is the ability to ensure continuity and data center longevity. The average life expectancy of a large data center is 12 years. With the cost of developing a data center at approximately $500M, cloud computing becomes both a business and operational value.

Not only does cloud computing improve system utilization, management, and provisioning as well as set the framework for data center longevity, it also increases service velocity; increases speed in service delivery within networks; reduces the overall costs associated with data centers; allocates resources more efficiently; establishes new revenue options; secures networks; and enhances customers’ experiences.