Psychological and sociological musings might be the last thing you’d expect to hear from an executive of the leading manufacturer of equipment for communications networks. But last January, Marty Parker, a marketing director at Lucent Technologies Inc., took the podium at a ComNet trade show to talk about the ways people work together. His underlying message: new patterns of collaboration require new methods of communication. Or, more precisely, telecommunication.
Is it coincidence that fundamental changes in both business practices and telecommunications are occurring simultaneously? Perhaps business initiatives like downsizing, decentralization, and reengineering are stimulating the rise of complementary telecom technologies. Then again, maybe new technologies are encouraging corporate change, by fostering more efficient interactions internally and externally.
Don’t pause too long to ponder which side represents the chicken and which the egg. Daydreamers could get left behind as competitors harness telecom to revitalize, globalize, streamline, and innovate. Many industry observers say it’s time to start thinking about telecommunications as a strategic asset.
“There’s so much opportunity to change the way businesses operate right now,” declares Don Van Doren, president of Vanguard Communications Corp., a Morris Plains, New Jersey, independent communications-system consultancy. “Be prepared to think about communications as an area with real opportunity for strategic investment.”
Some of the most promising opportunities in telecom include the following technologies:
Of course, such technologies fulfill their promise only when they connect with legitimate business needs, and many emerging technologies in telecom are still looking to make that connection.
No matter how urgently needed, new capabilities in telecom wouldn’t be around without today’s microprocessors. (A cellular phone, for example, is little more than a handheld computer plus a radio.) Higher- capacity transport media, like fiber optic cable, contribute a lot, too. Nevertheless, it makes powerful computer chips to manage those media.
For example, the transport technology asynchronous transfer mode (ATM) keeps high- capacity communications pipelines fully utilized by simultaneously loading them with agglomerations of voice, video, and data signals. The trick is to accommodate high- bandwidth bursts from, say, video signals, and fill in the gaps with other traffic. That takes computer power–first to fragment each communication session into cells with addresses that enable receiving equipment (more computers) to reassemble them; then to rank the urgency of each cell, so conversations are allowed to pass through immediately at the expense of data files.
Electronic packaging also underpins the technology known as digital subscriber loop (DSL), which significantly expands the carrying capacity of the low-tech copper wires that bring phone service to homes and small offices. And it accounts for the digital wireless services currently emerging. Computerized data compression and other encoding techniques can now secure transmissions in segments of the radio spectrum that were once unusable because of high interference levels.
Microprocessors not only enable communications advances, they encourage them. The spread of computer networks, and the propensity of network users to share work, create tremendous demand for data transport over longer and longer distances.
“Computer users want to be able to communicate with everybody just as they do on the phone. People want to gain access to corporate information,” observes Steve Hindman, vice president of data marketing for AT&T’s Business Markets Division, in Bridgewater, New Jersey. That explains the explosion in the business-data traffic carried by the phone companies. Pacific Bell, the San Francisco based regional Bell operating company, reports annual growth of 25 to 30 percent in its data volume.
The hunger for data is spurring on deployment of new telecommunications tools to support more-flexible, team-driven approaches to doing business.
Whenever downsizing disperses staff, or product-development cycles shrink, or new levels of supplier or customer involvement demand more company-to-company cooperation–in these and other situations, productive information-sharing means a lot more than simple voice conversations. Typically, that’s when talk turns to multimedia, which includes both videoconferencing and data conferencing (in which participants share computer files as they converse).
For the most part, multimedia capabilities require high-bandwidth communication connections. Bandwidth describes how much a data-transport medium can carry. (It’s useful to compare bandwidth and data to the flow of water through pipes: wide- or high-bandwidth pipelines carry more data.) Some materials, like copper wire, inherently possess narrow- bandwidth capability–signals trickle through it.
Other materials, like light-carrying fiber, can transmit a lot of data. That’s important when there’s simply an abundance of signals or when the nature of the signals demands high- speed transport. For instance, ever-changing video images need a lot of bandwidth for the receiving end to get all the data it needs to continually refresh the picture.
BANDWIDTH CHAMPION: ATM
ATM is the bandwidth champion among transport technologies. That explains why telecommunications carriers are harnessing it to cope with their traffic explosions, installing ATM trunk lines to meet their customers’ capacity demands. Even if they don’t know it, many companies are probably already using ATM through their carriers.
More-apparent benefits will come through direct ATM connection between a business facility and networks. That would require an ATM pipeline to a carrier, plus ATM-handling equipment on a company’s private branch exchange (PBX) and other information-handling devices. The setup would eliminate separate connections for voice service and data service, because the ATM network would handle all communication modes with the outside, as well as among separate corporate facilities.
And it would do so flexibly. ATM would handle every phone call at 9:10 on a Monday morning, when, say, 90 percent of corporate communication is start-of-the-week phone work. Later, it could manage late-night data dumps between corporate information centers. Proponents argue that despite its considerable start-up cost, the configuration would save money by providing fuller network utilization. By contrast, companies currently using T1 connections to pipe data between facilities must contract for set amounts of capacity, even though that capacity is unused much of the time.
ATM networks would also support multimedia communications. “They give users much more flexible use of their communications facilities,” summarizes George Foley, director of broadband networking for Murray Hill, New Jerseybased Lucent Technologies.
While carriers use ATM increasingly to bolster their own networks, the availability of ATM connections to businesses is spotty. Tom Nolle, president of CIMI Corp., a telecom consultancy in Voorhees, New Jersey, explains that a company probably couldn’t cover its wide area communications needs with an ATM network, because the service is still largely confined to major metropolitan markets. What’s more, communications systems in which ATM might shine–like multimedia team computing with video augmentation– aren’t yet widely used.
At present, Nolle says, ATM fits best as an on- premises communications backbone, connecting a company’s internal networks. It’s flexible enough to accommodate whatever improvements and innovations in equipment come along. “ATM is the most versatile switching technology available,” Nolle says. “The risk [of your infrastructure becoming obsolete] is much lower with ATM than it is with other [networking] technologies,” such as Ethernet and Token Ring.
There are other ways to make high-bandwidth connections to the outside. One is integrated services, in which leased lines to the outside are partitioned–one portion dedicated to voice traffic, another dedicated to data signals transported over a carrier’s frame relay network.
Frame relay is the fastest-growing mode of data communication, with annual usage growth estimated up to 300 percent. According to Lucent’s Foley, that’s because carriers price it lower than the traditional alternative– dedicated, leased lines connecting a company’s facilities. In a frame relay network, carriers use shared lines to pass the data transmissions of many subscribers, spreading the network cost among them. To keep them separate, each data-transmission session is bundled as a discrete “frame,” with addressing that allows the network to route it to the intended receiver.
Other methods permit multimedia communications using a company’s current communications infrastructure. The MultiMedia Communications eXchange server (MMCX) is one of three Lucent products that knit computer networks into multimedia conferencing systems–tying desktop computers into video- and data-conferencing networks. At New York investment bank Bear Stearns & Co., the MMCX accommodates meetings of about two dozen engineers and network specialists from different sites in metro New York, often when their collective skills are needed on short notice to untie a knot that has developed in the company’s extensive communications grid. A Bear Stearns staffer says the videoconferences–which can also include exchanges of data like software code and network maps–create a unique spirit of cooperation, enabling the electronically convened group to find better solutions, faster.
Other technologies are extending telecom capabilities to personnel working off-site. A significant one is data transmission via wireless, cellular circuits, such as a cellular digital packet data network (CDPDN), which squeezes data transmissions into the gaps among voice signals on a conventional cellular phone system.
“We see a tremendous mobile-data explosion coming,” proclaims Leslie Riseberg, vice president, technology planning at GTE Corp., the Stamford, Connecticut-based communications equipment and services provider. Demand for mobile data will come from salespeople accessing corporate information networks to check pricing or product availability, for instance. Service personnel will call technical manuals to the screens of their take- along communicators. Insurance appraisers will send instantaneous estimates back to their offices.
Mobile-data services add “a tremendous amount of flexibility to the way of doing business,” says Hemant Vaidya, executive director of data and video marketing at Pacific Bell. That company launched its wireless personal communication service (PCS) at the Republican Party’s national convention in San Diego last September. A PCS is an all-digital cellular phone system using heretofore unavailable airwave spectrum recently auctioned by the Federal Communications Commission. PacBell’s PCS will also offer a wireless data service, allowing palmtop or laptop computers with cellular modems to tie into the Internet or into private corporate intranets. The service will be in place later this year; by then, Vaidya expects PCS deployment to have spread nationwide.
That coincides with the rollout of fixed wireless (also called wireless local loop) services, which likewise package data smartly to float digital signals over slices of the airwave spectrum. One of the most closely watched, the AT&T system, which goes into test service this year, initially targets the consumer market, aiming to give AT&T a way to provide local phone service while bypassing the Baby Bells.
The AT&T system handles data in addition to voice calls; thus, it can connect personal computers to the communications grid. Data marketing vice president Hindman says AT&T’s fixed wireless allows signal speeds up to four times faster than those leaving houses today. “It makes video much more of a possibility, so telecommuting becomes a better option,” he says.
More-powerful fixed wireless systems targeted to businesses can even match the bandwidth of the wired frame relay ports used for branch locations, Hindman says. By bringing high- speed connections to remote offices, private contractors, and even homes, wireless expands work groups and extends access to corporate data repositories, accommodating flexible work practices and the more dispersed employment pool that companies tap after downsizing.
The same holds for the various flavors of digital service loop technology, such as asymmetric digital subscriber line (ADSL) under investigation by Pacific Bell. Similar to wireless, it sticks a digital translator in a home or small office to encode signals from phones and other communications devices. But it then reaches the outside network through standard copper wires, rather than over airwaves. “We’re talking about speeds that are 100 times faster than what you get from a 14.4- bit modem,” Vaidya asserts. That’s the same speed as a T1 line; however, ADSL promises to be much cheaper because it doesn’t involve expensive new wiring.
As businesses decentralize or as they partner strategically to form far-flung enterprises, their knowledge base can extend far beyond homes and other remote offices. Increasingly, global companies are intermeshing operations across oceans. When Americanizing its Opel Omega sedan to create the Cadillac Catera, for example, General Motors pooled engineers from Warren, Michigan, and Russelsheim, Germany, where the car is made.
When project teams span such distances, long- distance tolls can be a major distraction–no matter how much pundits downplay this very traditional preoccupation of telecommunications managers. But here, too, technology provides solutions, like using data networks to avoid long-distance charges entirely.
Internet telephony still suffers from an association with hackers and hobbyists. But products like Lucent’s Internet Telephony Server SP and VocalTec Inc.’s Telephony Gateway now command serious attention.
Lucent’s server, introduced on March 31, promises to enable low-cost, high-quality phone and fax services over the Internet. It will be tested through carriers like MCI, ICG, and France Telecom.
VocalTec’s gateway is a server that connects a facility’s PCs or standard telephones to another location equipped with a like server. The connection is made over the Internet or over a company’s existing wide area network, provided the network supports the common set of communications standards called Internet Protocol. Calls between gateways seem like internal calls, routed from the gateway through a company’s PBX to the appropriate phone. Users pay only the flat rate for their data line to the external network, which is already in place at most companies.
Sound quality remains the loudest complaint. With a corporate gateway, signal delay via the Internet can lag by as much as one-half second, according to VocalTec, which is based in Northvale, New Jersey. By comparison, delay with a conventional phone connection remains below a quarter second, which is imperceptible.
VocalTec is working to improve call quality. But even if it can’t, the multimedia promise of Internet telephony could make a little sound distortion tolerable. VocalTec’s Internet Conference Professional software, at $100 per copy, can unite 250 computer users, located anywhere, in a multimedia session in which every participant can manipulate certain computer files, like PowerPoint presentations and Excel spreadsheets.
Better messaging systems can also bridge distances, especially among workers in different time zones. Whether voice mail, E- mail, or fax, messages keep projects moving even when participants can’t maintain constant contact. “There are lots of ways to make business move faster without tying people up in conversations,” says Lucent’s Parker.
To consolidate messaging while drastically reducing its cost, Lucent created the Intuity Interchange Server as an extension to its Intuity Integrated Messaging System. Like Internet telephony, the server forwards messages over data networks, bypassing long- distance carriers and their attendant charges. The Intuity system consolidates messaging, delivering E-mail, voice mail, and faxes to a worker’s PC, and allows retrieval in several convenient ways, including a call from an outside phone. Parker calls it store-and- forward messaging, because communications wait on a server until forwarded in compact packets to their recipient.
Tektronix Inc., a high-tech company in Wilsonville, Oregon, expects $400,000 in savings over five years from an Intuity messaging system that will unite more than 5,000 workers. Cliff Roper, Tektronix voice and video manager, expects the system to save money in equipment costs, long-distance charges, and reduced systems management and administration. Meanwhile, Coopers & Lybrand LLP has even greater expectations from Intuity, looking to recoup $1 million annually, most in long-distance savings, says Parker.
But particular products don’t tell the big story. The greatest significance of emerging capabilities in telecom is what they represent: the merging of phone calls, data exchanges, and graphics and video in communications techniques that effectively deliver information to people–and bring together the people themselves, too.
LET YOUR CARRIER CARRY THE INVESTMENT
The problem with gaining a competitive advantage through telecommunications is that the capabilities available to one company are also available to its rivals. The trick is to beat them out the door. “Competitive advantage is not going to come about from what you do as much as from when you do it,” says Tom Nolle, president of telecom consultancy CIMI Corp.
The fastest way to deploy a new capability? Nolle recommends contracting for the necessary equipment and services from a telecommunications carrier.
“A CFO could leap into multimedia capability using a managed frame relay service, without any capital investment to build the service himself,” he says. For example, for desk-to- desk videoconferencing, a telecommunications carrier can supply both the frame relay service to connect facilities and the necessary equipment to distribute the videoconference signals over the company’s existing local area networks. “He could have the idea on Monday and in a week or so have it running. With private networking, it might take a year.”
A big chunk of that year could go to just finding and hiring capable personnel, Nolle notes. There simply aren’t enough to go around. Worse, because the technology involved is so esoteric, Corporate America lacks suitable criteria for evaluating communications-networking hires, he claims. “The truth is, you’re fishing, and you don’t know what you’re going to catch,” Nolle says.
More and more executives seem to realize that. Carriers report strong growth in managed services, in which they design, install, and maintain internal communications systems. “A lot of companies are deciding that networking is not their core competency,” says Hemant Vaidya, executive director of data and video marketing at Pacific Bell. For-hire services come at a premium; Nolle says that a carrier’s managed-service fees range 25 to 100 percent above the cost of simple signal transport.
Also available are services built into a carrier’s communications network, available to subscribers on a fee-per-use basis. The services, called advanced intelligent network (AIN), include capabilities like voice authorization, which gives companies a means to secure travel charge cards issued to employees. Intelligent call routing can send calls from a single, worldwide 800 number to a company facility nearest the caller. AIN services can go for as little as pennies per transaction, according to David Malfara, president and chief executive officer of Pace Communications, in Greensburg, Pennsylvania, which develops and operates AIN applications for carriers.
But a company can expect to spend millions to build similar capabilities on its own, says Malfara. And then, he notes, “you’re stuck with what you pay for.” Insulation against obsolescence can be gold in a technology advancing as quickly as telecommunications. Nolle’s bottom-line advice: “Find a good, reliable carrier that has a proven track record in the service you want to buy. Get the contract blessed by a good lawyer. And sue them if they don’t deliver.”
MAKING TELECOM STRATEGY
Telecommunications tactics involves bleeding the last fraction of a penny out of long- distance rates. Telecommunications strategy, by contrast, means finding innovative ways to improve operations or to make more money.
That characterization comes from David Goodtree, director of telecom strategies at Forrester Research Inc., an information- technology consultancy in Cambridge, Massachusetts. In a recent report, “Beyond Tactical Telecom,” Goodtree observes, “Beyond the tactical task of inking cut-rate deals, savvy executives see telecom as a way to change what they sell, how they operate, and how they interact with customers.”
But telecom strategy need not necessarily involve lofty investments in cutting-edge technology. “Just look at what exists, and ask if you can apply it to your business,” advises Goodtree. The Boston-based Legal Seafoods restaurant chain, for instance, uses ordinary pagers for better customer service. At mall locations, instead of losing patrons unwilling to wait for a table, the restaurateur lends them pagers so they can wander through shops until signaled.
“Obviously, a new technology gives you more opportunities,” Goodtree notes. Speech recognition, for one, “is moving into the realm of affordability and accuracy.” It could handle many transactions accomplished in vocabularies of, say, 2,000 words, like airline or hotel reservations, or financial dealings. In addition to lowering transaction costs, a speech system would probably be much easier on users than interactive voice response, which requires callers to press numbers in response to menu choices. “Speech is the most natural interface you have,” Goodtree says. “You were born with it.”
Today, bringing better communications to workers’ desktops, to boost their productivity and creativity, demands a job-by-job needs evaluation. The old telecom model–universal access–no longer applies. Thanks to increasing bandwidth availability and to emerging technologies for allocating bandwidth according to need, communications options are too numerous to be doled out to everybody.
“Don’t apply the same rules to every desktop,” advises Marty Parker, marketing director for collaborative communications at Lucent Technologies Inc. “You’ll either invest too late, or you’ll overinvest if you think you need to give the same capabilities to everybody.”
Parker advises evaluating telecom needs by job class. “Look at where each job type is today and where it needs to be in the future” in terms of communications abilities, he says. For example, a call center serving customers may make good use of instantaneous, flexible access to a corporate database that can deliver product information or updates on orders. Engineering departments may get more mileage out of video and graphic links among individuals, to foster concurrent product design.
“Different communications needs will apply,” sums up Parker. “Divide the investment.”