Transcript: MetaSwitch: The New CLEC

This transcript is from a PodTech.net podcast at:
http://www.podtech.net/home/technology/1621/metaswitch-the-new-clec

Guest: John Lazar - MetaSwitch
Guest: Bill McCarthy - Cisco
Guest: David Malfara - Remi Communications
Host: Rich Williams - Connect2 Communication
Host: Catherine Girardeau - PodTech

Catherine Girardeau - PodTech
The history of CLECs, Competitive Local Exchange Carriers is long. Subject to the whim of regulators and fickle markets; what it will take for CLECs to thrive in the coming decade? What business strategies are they adopting? The new technologies offer opportunities to compete or destroy their ability to differentiate, and what regulatory changes are coming that will change the ground rules yet again. PodTech.net brings you the breakfast panel sponsored by MetaSwitch; with John Lazar, MetaSwitch CEO, Bill McCarthy of Cisco and David Malfara with Remi Communications. The panel is moderated by Rich Williams, Principal with Connect2 Communication. This is PodTech.net.

Rich Williams - Connect2 Communication
So, welcome, thanks for coming. There's a lot happening to see that market distance (ph) consolidation, there's new services; there's no opportunities within technologies. So, one thing I'm curious what happens with to see that market growth as an equipment vendor, serving that market as provider, Post UNE-P, what's the business model for CLEC?

Speaker
In terms that CLEC opportunity to develop a business case, what you're seeing is an extension of requirements. We begin to talk about emerging technologies such as IMS (ph) and how IMS may play in the deliberately different services what they call Real-Time Protocol services such as voice and video or Storage Area Networking services or background applications that need to be accommodated. Today's business needs all of that, and so if you look at the OSI Reference Model really selects need to become manage service providers and provide services at every layer.

Speaker
I think you take for granted if you work in a larger company that you have access to Outlook and you can share that, and that's CLEC to be able to touch an application like Unified Communications where you're involved with the small medium-sized business owners; their voicemail or their ability to effect their e-mail. You touch their two primary communication mechanisms, right. There's an aspect of this CLEC's business everywhere, I think you're -- it's a move to being enable to support applications more quickly and more fluidly so that -- but their applications are very relevant to the users move way beyond just providing voice, and where that's accelerated.

Rich Williams - Connect2 Communication
So, with the model change, with the UNE-P going away, what opportunities do the services like WiMax or Wi-Fi mean to you in terms of available (Inaudible) services?

Speaker
UNE-P was -- there's statistics out that show the CLEC industry be in -- that for the first time the ILECs are taking market share from the CLECs, and I think it's a bit misleading because AT&T had a huge percentage of UNE-P customers. I would guess that it's a little bit -- it might be flat, I mean regulatory pendulum swung a bit. It swings at different times, maybe it's not as favorable for the CLEC industry right now. The UNE-P market I don't see being effected per se by Wi-Fi. I think of Wi-Fi is a different type of user, and like the UNE-P market created an opportunity for companies like MetaSwitch to come in and to move UNE-P CLECs two facilities to begin supporting the resident from a void perspective and then with really a platform to continue that application to, and that's the big (Inaudible).

Speaker
I think it's certainly true that WiMax is going to begin to element back then, we're all seeing CLECs in various places looking at ways in which that can become independent in the last month, and that's the crucial point. The crucial point is not having to do with a proper (Inaudible) from anybody else, but being able to -- if you get a better facilities base to go through that Ethernet. I'm still slightly cautious about it because I think that WiMax, the technology has improved dramatically. I think that the standards are settled down and I think that the reliability and the technology is catching up with what we will -- thought to do a couple years ago, but it still got two years ago and it will be interesting to see what happens there the next year or two.

Speaker
If you take a look at different Axel Technologies; I don't think and this will be a strange statement that there's ever been more opportunity for amended service provider that there is right now, WiMax is part of it, Okay. Ethernet first model CAPER is part of it.

Speaker
Fiber.

Speaker
Fiber is part of it. If we look at ways in which carriers, competitive carriers have to access the customer, there really has never been a time like right now. What we need to do as carriers is normalize layer one facilities into a congruent layer two offering. Technologies like VPLS and HVPLS allow you to do that and to maintain quality of service. So, I'm very excited about WiMax coming online, but it is one way of reaching the customer. Now, you've got the most ubiquitous broadband access facility on the globe and that's T1 or E1, if you're in those areas and we certainly need to maintain the access to Unbundled Network Elements for rising the support baring filing and things like that are problematic, because what it shows is a failure of regulators and frankly legislators to understand what the basic concept of competition requires in terms of the access to the end user.

They're not going to let you dig up their driveway for another facility. They allowed it for cable because you couldn't put video over twisted pair. But, those days are over. But, WiMax allows you to avoid a significant amount of that. Ethernet first model CAPER. The job for a carrier is to take all of those access methods and make sure that customers who are in various areas or customers with multiple locations can normalize the way in which they use the network to be able to achieve their goals.

Speaker
I think it does much (ph) about voice qualities incredibly in more (ph) concern and I know we're checking even slightly further. It's more -- you can even say, it's about service quality. We did a Webinar Christmas Package in Arlington where we had -- I think we're over about a hundred of our customers attended and we ask them, which feature or which thing on our road map they would most like to see over the next year or two. We get them a - reasonably a long (Inaudible) list. What came back really, really strongly was additional tools for Voice Quality Monitoring as the most important thing. I think is particularly with the IMS promise of being able to employ variety of different integrated applications, which are Multimedia. The real challenge for service providers and I think this is where CLECs can differentiate themselves, is being able to put -- ever since laid networks together where you can actually control that quality, and provide a better experience for users. So, I think that's a big opportunity for CLEC with a very focused good sense of integrated services, which can then be higher quality and can be provided by a large Kojima's (ph) like AT&T.

David Malfara - Remi Communications
I think that CLECs to the extent they had the support of residential services would be an incremental cause to their predominant core focus on enterprise, I think you'll see penetration that way, but in multiple dwelling units and the things of that sort, I don't believe you'll see CLECs servicing single family dwellings because the mindset frankly are residential customers. Customers to a larger extent are willing to put up with quality disparities because of the benefit of price at the lower end. Well, if you are at CLEC, you're building a quality network and what you're building, they don't necessarily want, they're looking at price. Today, I don't think we face many challenges other than deployment and execution. We use -- specifically Remi uses Riverstone Technology of 15000 series product, which Riverstone's just bought by Lucent. That is a pretty awesome unit of due respect, I'm sure Cisco has those significant offerings there as well. But we believe that VPLS has a technology and HVPLS really is going to be an emerging driver of Indian Quality Of Service.

Rich Williams - Connect2 Communication
How do your customer based at are actually, world or independent (Inaudible) CLEC opportunities or any other thing that you've seen UNE-P managers are not finding it -- most people are culturally adverse to that and simply you're saying, it's got in team one or above. are you seeing any change in that?

Speaker
In general, no we couldn't. I mean almost all of them are trying to it via different range, whether that's a -- whether it's such a good focus build ups in every region- where they controlled network themselves or as you said just putting two months back, there's a couple of customers doing UNEL with a drop of (Inaudible) and then they just back hold the network from the (Inaudible) carrier. That happens quite a lot. But, UNE-P no, I think that's gone.

Speaker
I've seen an emergence over the last two years of planned communities, where the developer themselves or the municipalities coming in and providing not only excess but provide all the services in -- that seems to be getting (Inaudible) or I think capture the user. I was watching my wife Saturday night, she's going -- she was doing her counseling -- her Masters in Counseling. She wants to be almost highly-educated housewife, she did -- so second Masters. But, she was completing her test on Saturday night and she put it off for a little while online, watching the same for those card notes. At the same time, had chat room open which was allowed by her professor with other students and then was looking at multiple e-mail and documents and that suggest that, here's my wife and probably by enlarge doesn't think of herself as a technologist. But in terms of what she wants to experience from the network there's a lot. Few years ago, if we had talked about that scenario, we've been overwhelmed by the -- what ability do we have to deliver all of that. Now, it's just an assumption. So, there's still pretty interesting market for the residential user.

Rich Williams - Connect2 Communication
So, it's just a final question for David, now as sort of extension of primary business, customer service into the residential space. Obviously, I think you're properly not talking about the net workers professionally uses, they're actually linked to the (Inaudible). Customers say, "Oh, by the way, I've got three guys in a remote sales office (Inaudible).

David Malfara - Remi Communications
With that we actually accommodate is part of our service. We don't consider that to be residential. There's Road Warriors and Telecommuters. I mean in Remi's side -- in Remi's case we're looking at emerging technology as it comes out. If you've seen these yet, the WIP330, okay, it's a great little device from CISCO and Linksys.

Catherine Girardeau - PodTech
But, is that to do more with WI-FI Phone?

David Malfara - Remi Communications
No, it's just Wi-Fi. 80211G, and it works like a champ. We haven't got Wireless in here, so I'm not registered to my MetaSwitch College in here, but I'm outside this room. Why this is important is because we have executives who wonder round their office using MetaSwitch capability with the registered SIP Device and the attendant feature. Some of capability that they have in their UC 9,000; IMS platform, we're able to provide extended services to customers and some of those do include Telecommuter and Road Warrior services for both voice and data. We'll take data and we'll bring that into the network using a layer three VPN, and then map that directly do a VPLS instance to give them access to the VLANs that they have for corporate wives.

Rich Williams - Connect2 Communication
So, I think there's a breakdown between concept of residential versus business because it is such played now and I think the thing that you do see is you see more and more people working (Inaudible) at least a couple of days a week. Overtime, that means the residential users begin to expect a different package of services for once and that wouldn't be expected maybe five years ago, which is the point you're making

Speaker
Oh, yeah, much quicker. The concept of many (Inaudible). Now, we think about if somebody rings the doorbell, you get a screen pop and you're upstairs in your office and you just tell the UPS guy to just drop the package. But what if you have a -- now you have that same screen pop on your mobile device, whatever it is Treo or otherwise, and It's your son who's home a little bit early from school and you want to take it. Get inside and get after your homework, and you might be on the other side of the country. I think there is an acceleration in interest for those types of experiences and applications, a rapid acceleration. YouTube taught us a lot if you ask me. That's a year ago, I'm not sure, how many of us were familiar, and yet there's a billion, six billion evaluation really for the real creative content. I don't know if the evaluations are fair with the -- if I work today I think...

Speaker
You could argue about the creative content for the bits of (Voice Overlap).

Speaker
It's great Idea.

Speaker
Yeah, I think is...

Speaker
Well, isn't that interesting to know this content, I mean that's a fascinating transition.

John Lazar - MetaSwitch
The key is having an infrastructure we're going to swung quickly and flexibly and cheesily and you could try (Inaudible) and if they don't work, you can pull back, you can try something else.

Speaker
Then monetizing and that's the...

John Lazar - MetaSwitch
Exactly. So, I think that's really the environments in which we go because we don't know (Inaudible) want to paid for.

David Malfara - Remi Communications
Gary (ph), if I could just follow up John's answer with a slant tour to Enterprise, you face the same thing there; as far as the applications are concerned. I've been in Intel camp for 30 years; we're still looking for the killer app, right. The problem is that killer app is different on depending upon who the user is, and at any certain time. So, what I'm looking for and what Remi is pushing all of its vendors for in the IMS space, is that reach a little bit further and come up with a GUI based Service Creation Environment that drives the IMS to be able to accommodate the applications on a drag-and-drop basis that the customer wants.

I really think that a customer-oriented service creation environment is the killer app, because at that point, you mobilize the customer to be able to create products and services that they need on a dynamic basis and you built a network that has the ability to respond to those differences in performance techniques. Now, we talk about quality of service, almost in terms of a prioritization scheme, what is more important than others, in terms of applications, it isn't that way at all as you well know. It is defining proper network performance parameters to support the information flow that we're discussing or that's at hand. So, if it's voice, it's low gitter, low latency, low loss. If it's a Storage Area Network Application, we're talking about absolutely assured forwarding, zero packet loss and we don't care so much about jitter and latency. But we need large frame support, things of that sort. So, it's building...

Speaker
We also need to be able to find out quickly when things go wrong. That's the really, really difficult part in this storage network.

Rich Williams - Connect2 Communication
Yeah.

Speaker
It's working on which note in the network, that is the one, it's actually causing the bottleneck. So, invisibility into that.

David Malfara - Remi Communications
Right, and the Operational Support Systems to be able to provision it, down a dynamic basis as well. Three years from now, I would like to be able to make available to my enterprise customers, a defined set, a library of little applets that they can use on a GUI Interface to build IMS applications and to have those little applets behind the scenes controlled through interfaces to my network elements, the network environment to be able to create that. It's so easy frankly, if we look at it really in a mode in which you're providing bundled service to enterprise customers. So, you're not really differentiating. Remi for instance provides a full QOF Centric Network Interconnection, when you buy what's called 'RemiDIA', Remi Dedicated Interconnection and Access service. So, that's a layer two QoS Aware Interconnection. Then we give the customer at each location ability to build 4094 VLANs within that location.

Frankly, the ability to do that and to segregate and differentiate is based on their marking of packets because within Remi's network there is no QoS issue, we've got enough bandwidth to do everything. But the fact of the matter is that the bottleneck is at the access and egress point. So, the customer needs to be in control of the prioritization of information flows there. They also need to be in control of the catalogue of the services that they need. So, I can take my MetaSwitch UC9000, and I can package a different bundles of service that allow them on a non-usage sensitive but the subscription basis to really take advantage of all the capabilities that they need. But only buy the packages that they need as well. So, really it's a charge code for a single unit as opposed to keeping track of packets, which is something none of us want to do.

Let me tell you a story, we have a bank, who spends over a $100,000 a month and an applet - and a Frame Relay Network carrier will go unnamed, okay. But, the fact of the matter is they wanted to roll out an application to be able to process consumer loans faster at their branches, okay. Couldn't do it, they spent over $200,000 to build this application, they couldn't roll it out, because there was no way they could prioritize that application over simple, but necessary Web Browsing and other things that they were using to Frame Relay Network for. They did a cost analysis of deploying Remi with QoS Aware VLAN capability in all of their branch offices, came away with the price of around $36,000 a month to do that.

Speaker
Versus 100,000.

David Malfara - Remi Communications
Versus over a 100,000. Now, the problem that they ran into right away was, in their initial analysis because Remi says, you need broadband capability at each location in order to accomplish this. As it was somewhere locations just aren't large enough to accommodate that. I said, "you know what, sit back and look at the possibility that, that might be the reason that they're small. They haven't got access to the tools and capabilities that the larger branches have. So, what you need to do is take your total, total current spent divided by the number of offices that you have, and that's your target on a per office basis for expenditures."

Once they moved to that mindset, they found out they were going to save enormous amounts of money anyway. I think in most cases, what this provides to them is a disciplined approach of ordering information flows in a way that you can accomplish more with the same facilities. If you think about it, a best offered Internet access facility costs about the same as a Remi Dedicated Interconnection Access facility. So, to be able to look at what your information flows are in your enterprise and to accommodate the dynamic changes in capacity, in performance that each of those applications represent is of significant value. So, on the residential side, I'm not so sure, really.

Speaker
Just to ask you like a slightly harder question but the question I have to ask, Application means different thing to different people. I think there's a good enough thinking in the industry endangered for all this in communication spaces, and the value of applications is really coming from stuff than running as an enterprise app, I can see your conservers have got mobile, and those are also close guarded. We don't necessarily always have two different access and plus I mean it's not just we don't know how important they are. Truly, I can understand how it's a revenue model for what you want to do. But this is other question of we don't want just the revenue we've currently got and we can increase a little bit from being more flexible, we can do it, this is quite honest, it's perfect vision. Somehow, we've got to figure out a way to hook into the enterprise software vendors of the world, the PeopleSofts and the Google (Voice Overlap) because to create an IMS application, the stuff that's interesting to me is I'm not going to drag-and-drop here and then use your GUI, it really create an application. There might be an application where they have appeared not.

Speaker
Gary, that's absolutely correct, and that's why Remi is working right now with Third-Party Software Development companies to do that, because we expect to have our network become the facilitator for these applications, but the fact of the matter is that, different even if you think your Software Development Group is Einsteinish in terms of what they can do. They're going to necessarily bias toward a certain industry or a certain sector or whatever it is, there are thousands of those out there. So, opening up a Service Creation Environment or an accommodation of third-party applications to hit different industry sectors and then to publish or raise the visibility of those applications as being Network-Centric in Remi's network, we think that's worthwhile.

Speaker
So, your model is actually not certain banging on the doors forcing the software developer to write code for you and saying I'm a (Inaudible) come write code (Inaudible) to what you do and saying here's (Inaudible).

Speaker
Exactly.

Speaker
We are carriers, you know we are carriers.

Speaker
So, in that sort the better way of saying since the different project that what I was asking before is that in that scenario then your extra revenue comes from customer paying more to buy more facilities or...?

Speaker
Oh, certainly, I mean some of the applications you have to realize that the third party developer comes up with are most efficiently deployed within our network, okay. So, write in our points of presence, write in our Edge Devices even toward the customer. So, we can provide a home for those applications; we don't necessarily have to write them. Those can be...

Speaker
It's part of your managed service portfolio then?

Speaker
Yes. So, and we go further with that as well because Remi -- as Remi Professional Services that will actually go in and assist an enterprise in looking at their business operations and defining areas within which we feel applications that are developed can apply.

Speaker
In the way I sort of think about is if you (Inaudible) a few minutes ago you can measure the scenario into three years where there isn't the environment where you have fragments about the (Inaudible) themselves, which provide like, finally following the service and then picked it all service where an integration with the (Inaudible) service whatever it is and what you're allowing your enterprise customers to do even very small businesses. They may have a portal or an application specific to their businesses.

Suddenly they think what I really need is I need this particular part of that application to to be finally followed enabled or I've got what people to run more than unexpected. What they can do is to literally just take that Applet and integrate it closer and they get all of -- they get all of the back-end provisioning, they get billing just happens etcetera, etcetera. I think that's what is okay about I mean that's the vision. Now, that's hard to do, but it's certainly possible because...

Speaker
I do see everything blending. I think in terms of almost an E-Commerce Portal enabling applications and now we're speaking in a language that really does kind of foot back to the Beta B, Beta C days of what's old again or how's that same was new as old again.

Speaker
Yeah, everything old is new again.

Speaker
Everything old is new again, so, there's...

Speaker
Their all elements have been in place.

Speaker
I think there's a number of things that have happened, one is, we do have to generate the generation of because you developed this to understand so an XML and understand it really well. If you look at the way in which people are approaching IMS applications they're also XML based. So, it's absolutely (Inaudible), you can just take that certain XML (Inaudible) and they can pull it in, they know how it works and it all must come together, so that's one. The other one is such as within this revising multimedia, it is absolutely true that SIP has some beautiful variances, so many different extra packages that make it difficult to work with, but it's also true that it is becoming increasingly ubiquitous in those environments.We've got customers who're just using MetaSwitch SIP devices routing applications, let's do them, we don't know that they're doing.

So, that basic multimedia approach called 'Glue' with the associated interfaces is becoming (Inaudible) than it was. We've got a way to go, but that's good. The other PC subscriber management so, if you look at -- again I don't - actually a critical part of this, is that if you're -- is that an application around just got to be able to get access, sense of information of some of other third-party, you've got to -- you have to have share some kind of information, and again we find this we'd be getting to see if not this is the Edge has developed, we certainly be getting to see the interfaces whether a clear scheme is accessing information's, exactly the building (Inaudible).

Speaker
I think that from Cisco's perspective, we think that the network becomes a facilitation of all of this and so, I would say our greater emphasis is certainly not around individualized application, just a facilitation of delivery note. Our view is also that there are applications that they can reside in the network, there are applications that reside in other places. But the question is, I think John spoke to -- well, how efficiently can you blend those and then can you capture it from the back office, standpoint really monetize it and build for those. Our view, our vision is we want to be in a place where we're facilitating them, facilitating exceptionally well.

So, a lot of our investment today and a lot of our messaging is around being able to facilitate the experience that not only individual users would want, but also what the experience that we think large enterprise, small medium-size business all would like to have too. Our investment, our vision around that is crystal clear. The path of getting that accomplished is there's a lot of hard work involved and there's a lot of partnership, I mean Cisco and MetaSwitch have build wonderful partnership. In my opinion, John I think the world ahead is probably has interdependencies.

Speaker
Okay. We want to thank everyone for coming. It's certainly a topic that I think it's in everyone's minds and think you're questions were spot on when (Inaudible) when it's connect to the market. But, I want to thank the panelists for taking their time to be here this morning and then feel free to mingle and ask questions (Inaudible).

Announcer
Rich Williams, Principal with Connect2 Communication at a breakfast panel sponsored by MetaSwitch at the World Center Marriott in Orlando, Florida. This is PodTech.net.