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Telkom`s ambitious goal of having an entirely IP-based telecoms network by 2009 is easier said than done. Telkom`s ambitious goal of having an entirely IP-based telecoms network by 2009 is easier said than done. Apart from many more billions of rands that are needed to get the job done, the move may also result in thousands of job cuts.

CEO , speaking at the presentation of the Telkom`s results for the year to March, said the group is seeking to overhaul its network and investing heavily over the next four years to make it entirely Internet Protocol (IP)-based by 2009.

This move by Telkom, according to Nxasana, is to counter the "cannibalisation of voice revenues" caused by the growth of high-speed Internet connections through asymmetrical digital subscriber lines (ADSL).

Data - together with replacing existing networks with those that can carry both voice and data - is where Telkom`s future strategic direction lies, said Nxasana.

"Telkom`s future is in transforming its traditional business, by moving onto an Internet protocol-based network, aggressively rolling out ADSL and offering converged IP services," Nxasana motivated.

But the R5-billion capex, some of which Nxasana said was set aside for the IP migration project in the 2005/06 period, is a far cry from what the likes of British Telecom (BT) has allocated for transforming its infrastructure to an all IP platform by 2009.

Aside from the rollout of ADSL and broadband services, the increased planned capex for the current year would be used to upgrade the group`s fixed-line network, which would include evolving the transport network to high-speed and improved reliability and upgrading the older legacy switches to interface with the next-generation softswitch systems and new services capability, Nxasana said.

A year ago, on 9 June, BT has set itself the same goal as Telkom. But unlike SA`s telco, BT plans to spend around two thirds of its capital expenditure of R21.2 billion (£2.6 billion) to R24.5 billion (£3 billion) per annum in the next three to four years, on its next generation network and associated technologies. At the time BT also said this move will save it R8.2 billion (£1 billion) a year by the end of the decade, as it expects the move to also result in thousands more jobs being made redundant.

More importantly, Telkom`s planned evolution to an IP-based network lags its UK counterpart by several years - not only in concept, but also in technology scope, infrastructure breadth, and overall business maturity.

Chief technical officer Reuben September, however, is confident that Telkom will make its 2009 target. He maintains the installation of the fundamental systems, which will facilitate the evolution of its fixed-line network into new generation softswitch systems, will be completed by end 2005.

The 21st century network

But that is just the fundamentals. A backbone transformation of this magnitude needs careful planning and extensive customer pilots. Which is exactly what BT has done.

BT has set out a series of calculated steps by which it can create this next generation network within five years, beginning in 2004 with the first customers migrating from the public switched telephone network (PSTN) to voice over IP and trials of fibre in the local network (fibre-to-the-home).

The steps cover the growth of broadband availability, the transfer of traffic in stages to the multi-service IP-based network and the development of products based on the common capabilities.

In fact, already from 2006 onwards, BT intends to transfer the majority of voice services from its PSTN backbone to a new multi-service IP-based network, which it calls the 21st Century Network Project (21CN).

The plan calls for BT to gradually abandon its existing Asynchronous Transfer Mode (ATM) network and PSTN. In addition to making broadband available from exchanges serving 99.6% of people by July 2005, BT also aims to have broadband readily available to most of its customers in the UK in four years time.

Come 2009 BT wants its customers to be able to switch their telephone lines to broadband use themselves, without requiring physical work at the exchange and using whatever device they want to access the broadband network.

Migration pilots

{PICTURE]So far BT is well on track to meet its goal. In October last year it started with a voice over Internet Protocol, or VoIP, trial involving 1,500 customers in Cambridge and the Woolwich area of South London. This first stage in the migration pilot will involve the bypass of the core PSTN network link between two major network nodes at Cambridge and Woolwich in London. An extension is planned later to another exchange in London.

From October 2004, BT has been diverting voice calls between these network nodes to the 21CN-specific IP network. Calls are carried using IP packet technology rather than the circuit-switched technology used on PSTN.

The next stage of this pilot will involve the installation of multi service access nodes (MSANs) at 18 exchanges in south-east London, Kent and East Anglia - which are connected to the network nodes in Cambridge and Woolwich. This new equipment will carry voice and data services onto the core IP-based network.

Mass migration of customers from PSTN to IP is scheduled to begin end-2006, with the majority due to be completed in 2008.

BT expects the upgrade to cost up to £3bn a year for five years, within its previously forecast capital expenditure plans. The 21CN component itself, according to BT, will account for two thirds of spending in 2005, with the proportion increasing over time.

IP foundations

The foundation of BT`s 21st century network is Colossus, a backbone built by BT during the late 1990s to carry IP traffic. Colossus is essentially a massive network of fibres and powerful `gigabit routers`, which can operate at over a billion bits per second - enough to handle tens of thousands of voice and data calls simultaneously.

BT uses its nationwide Asynchronous Transfer Mode (ATM) network, called the Multi-Service intranet Platform (MSiP), to prioritise and feed IP packets from Internet customers directly into and out of the Colossus backbone as an ATM stream. Together the MSiP and Colossus are enabling more voice calls to be made over the Internet and IP networks.


But, with so much convergence between voice and data - and with the potential of IP to act as a common protocol for all types of communication - it made sense to bring the existing separate networks together into a 21st century IP-based network by 2009.

The six-year plan will see BT transform its backbone into a single, multi-service network that uses IP and Multi-Protocol Label Switching (MPLS) to carry voice, video and data.

MPLS which, as well as prioritising between video, voice and data, also enables companies to vary the amount of bandwidth they use in a very flexible way. When large volumes of data are being carried on an IP network, there can be a shortage of valuable IP addresses - the numbers on the packet headers. But MPLS gets around this by assigning temporary addresses to get packets around. The addresses can then be re-used.

This does not mean calls are travelling over the Internet itself - but that they are being sent over a high quality, secure network using IP - the Internet protocol - and, critically, MPLS to maximise efficiency.

Also, in order to be ready to handle voice, data and video in huge volumes, BT is installing new pieces of equipment called multi-service access nodes (MSANs) at its local exchange buildings.

MSANs are being designed to handle up to 40 gigabits (40Gbit/s) per second of voice and data, enough to carry 8,000 video and/or music tracks simultaneously, spreading the content around up to 1000 private and business users.

From the MSANs, calls are routed to one of around 100 major network nodes - which are updated versions of the core switch - and then transferred onto to this multi-service network.

Next on the schedule is for MSANs to be installed at 18 local exchanges in South East London, Kent and East Anglia - those connected to the major network nodes in Cambridge and Woolwich where it started with the voice over IP trials in October.

21st century communications

BT`s 21st century network, with services to match, is the stuff SA business can only dream about at present. The new services are demonstrating a series of characteristics, which will become increasingly significant in 21st century communications.

First they show `convergence` - or links between different technologies. Second they demonstrate `presence` - the ability to access communications whenever and wherever you want them. As these services develop, it will mean that instead of messages being stuck on PCs, answer-machines or mobiles, people will be able to access voice messages or emails from any device wherever they are.

Third, they use broadband as the norm - quality will no longer be measured by bandwidth because people will routinely have the bandwidth they need. Connections will offer `flexible bandwidth`, so that customers can boost their speed for a time, for example increasing it from 512Kbit/s to 2Mbit/s to download a DVD quality video.

This will open up access to a world of news, information and entertainment. And instead of having to remember to set the video or go to the shop, if people decide they want to see a particular movie they will be able to order it then and there.

Now consider Telkom. ADSL, Telkom`s first foray into "broadband" services, was not well received by the market insofar as pricing, availability and bandwidth limitations (cap) were concerned. This prompted an enquiry by the regulator in April, which in turn spurred Telom, ahead of the ICASA findings being announced, to state that it will drop its ADLS prices with effect from August 1.

Telkom, however, appears satisfied with the uptake of its ADSL offering.

According to Nxasana, the 16% growth in fixed-line data revenue during the year under review was largely due to the success of ADSL and broadband services. Nxasana also said that Telkom would continue to lower the prices into the future, as the ADSL customer base grew.

Lessons for Telkom

So what lessons can Telkom learn from BT? For starters, BT has stated that broadband will be the norm in services of the future, rather than narrowband. Secondly, BT is moving from an era when it concentrated on creating network-based products, which were then put on the market, and into an era in which the company first looks at customers` needs - then tailors services and solutions to meet them.

Therein lies Telkom`s biggestchallenge!

But more importantly, BT`s emphasis is on current cash flow and profitability, focusing on the core business of voice services at the same time as driving for growth in selected areas where there is proven customer demand and the company can deliver innovative services. Key examples are broadband, ICT solutions and global services.

Maybe Telkom should set aside its plans to expand into Africa for now and instead make the multi-service IP-based network transformation its top business priority for now.

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