September 2001
 

BY DAN CALLAHAN

Mike Wolf, manager of In-Stat's LAN and enterprise communications service, states that "a new market has emerged, targeting the delivery of next-generation services to the multi-tenant unit (MTU) environment. MTU-specific service providers are delivering broadband access to businesses, residences, and hotels by essentially moving the Internet point of presence (POP) to the building itself, allowing broadband services to be deployed much more quickly."

In-Stat also finds that the MTU broadband access market will see several new trends over the next few years, including increasing numbers of property owners who will see broadband access as a key differentiator, and who will look to outsource the management of their broadband networks to MTU service providers. The MTU equipment market will represent an increasing revenue opportunity for companies participating in the broadband client, access aggregator, and home networking markets. The deployment of high-speed Internet connections to the MTU marketplace will enable the delivery of new value-added services, including VPN services, e-commerce, telephony, video, and network management services.

The editors of Communications Solutions invited several vendors in the MTU market to contribute to this feature on broadband, voice/data MTU systems. We've noticed about 20 vendors offering these systems (although during research for this piece, we found that companies such as 3Com and AccessLan have since de-emphasized their presence in this space), and we thought it would be a benefit to our readers to acquaint them with the variety of offerings available, as well as a few key points of differentiation. Also, we thought an article could alert readers to the consequences of the recent retrenchment in the market, as well as continued technological development, particularly development emphasizing converged communications as opposed to mere data connectivity.

THE CULTIVATORS
Following is a "directory plus" section, where we have listed broadband MTU platform vendors that responded to our invitation, along with information contributed by these vendors:

Avail Networks
734-332-5585
Avail's Frontera 2000 intelligent packet access platforms are designed for broadband convergence applications, including MTU-based IP and ATM data, voice, and video. Frontera platforms incorporate the service intelligence and hardware-based QoS controls required to guarantee traffic integrity in a converged multi-service environment -- even with access network over-subscription. Frontera 2000 solutions provide multi-service, subscriber-side interfaces that give Avail's platforms broad application flexibility in MTUs. These interfaces include DSL, POTS, PBX, V.35, and Ethernet ports for connectivity to SMB, branch office, and enterprise end users. This translates into broader reach across a variety of commercial MTU tenants, incorporating legacy traffic interworking where needed, while eliminating or simplifying the CPE requirements at the end user premises. Avail's solutions also incorporate a range of uplink options -- from N x T1/E1 through OC-3/STM-1 -- allowing flexibility across different packet access network architectures such as traditional wireline, fiber, fixed wireless, and free space optics.

Kenetec
203-723-4242 x310
The company's EdgeXpress product family, designed to enable integrated communications providers to enter the MTU telecommunications market and quickly deliver value-added broadband services, consists of the EdgeXpress 1000 Service Access Unit, the EdgeXpress 5000 Service Exchange Platform, and the EdgeManager Service Provisioning System, which includes the EdgeXpert Service Planning Suite. EdgeXpress is a broadband infrastructure solution based on its Services-oriented Building Area Network (SBAN) architecture. An SBAN supports converged legacy and future voice and data environments, and delivers incremental revenue to service providers from value added-services while lowering the overall cost of operations. Earlier this year, EurekaGGN, a provider of integrated communications services, selected Kenetec's EdgeXpress product family to deliver communications services to small and mid-sized enterprises located in multi-tenant unit facilities throughout the United States.

Lucent Technologies
888-4-LUCENT
ProfitSuites, a comprehensive product, services, and support program for concentrated user communities, enables high-density property owners, carriers, and integrators to deploy advanced, integrated voice, data, and video communications solutions utilizing a full suite of DSL technologies. Lucent ProfitSuites is designed to give multi-unit properties the ability to offer high-speed access services to tenants and guests. Based on Lucent's DSL product platforms, including the Stinger family of DSL access concentrators, ProfitSuites combines DSL equipment with the project management, installation and integration services, marketing assistance, and end user help desk support that multi-unit properties need to speed, simplify, and streamline the launch of broadband Internet service. The ProfitSuites program provides services including in-building community portals and enhanced IP services where end users can choose pay-as-you-go applications like bandwidth on demand or video conferencing. The ProfitSuites solution integrates into the existing building infrastructure, facilitating the immediate delivery of DSL services to the building's end users.

RAD Data
800-444-7234
RAD Data's products include the IPmux-1, IPmux-4, and IPmux-16 TDMoIP gateways. TDMoIP combines features from Time Division Multiplexing and IP to deliver synchronous T1/E1 and T3/E3 circuits transparently over IP networks. An alternative to VoIP, TDMoIP uses less bandwidth. The IPmux-1 compact CPE device includes a T1/E1 TDM port and a 10/100BaseT uplink; IPmux-4 includes four T1/E1 ports and a 10/100BaseT uplink, and serves as a central site device for smaller networks or as a branch office unit in larger organizations; IPmux-16 is a scalable solution supporting up to two T3/E3 ports or up to 16 T1/E1 ports in a 1.5U high enclosure.

STSN
801-201-9695
STSN is a provider of high-speed Internet access for hotels across the globe. STSN specializes in providing high-speed Internet connections in both the guestroom and conference room by installing a "smart box" in each room. The system works with any Internet-compatible laptop or computer and does not require the guest to reconfigure their settings. By partnering with a high-speed Internet vendor like STSN, hotel guests can open e-mail instantly, download large files in seconds, and access their corporate network though Virtual Private Networks (VPN) at office-like speeds. The system works over the hotel's existing infrastructure and phone lines, so hotels do not need to rewire in order to provide high-speed Internet access. STSN is installed in over 450 hotels across the globe and provides a toll-free help line to answer questions and provide assistance 24 hours a day, 7 days a week.

Tut Systems
925-460-3900
An ideal MTU technology supports at least 10 Mbps line rates for multiple service delivery, extends for distances of 500 - 2,000 feet, and allows service providers to reduce network deployment time by using the building's existing copper infrastructure. Tut Systems' IntelliPOP, designed for in-building deployment, uses VDSL signaling technology to satisfy these requirements, and to ensure maximum bandwidth and minimum cross talk. IntelliPOP is a service gateway that combines the functionality of an edge router, high-speed switch, and access multiplexor, delivering 15 Mbps of symmetric bandwidth on a single copper pair, and up to 26 Mbps asymmetric for residential MTUs on a single copper pair. Tut's patented Signature Switch is the core enabling technology, allowing the creation of IP-based services customized to each desktop -- generating new revenue streams and allowing service providers to differentiate their offerings. End-to-end QoS guarantees the delivery of delay-sensitive services to meet SLAs across networks.

DISCUSSION
Vendors were also asked to comment on the various topics concerning this market.

Com Sol: Please describe the architectural/transport options and tradeoffs, especially with respect to DSL, Ethernet, HPNA, and wireless options. Relevant considerations include bandwidth, distance limitations, QoS, security, and the necessity for new equipment (or support for legacy equipment). Also, the question of whether using existing wiring or installing new risers, for example, would be optimal.

Avail Networks: We believe that DSL is an excellent in-building solution, especially for those buildings that are too small to justify the additional wiring expense for Ethernet or fiber in the vertical riser structures within the building. These smaller MTUs (e.g., buildings smaller than 100,000 sq. ft.) make up the vast majority of MTUs and are usually the least well served from a telecom perspective.

DSL also provides plenty of bandwidth for most SMBs (many of whom will just be graduating from dial-up ISP accounts), provides a secure, non-shared point-to-point connection, and supports various cell and packet-based QoS methods for multi-service applications such as packetized voice and video.

RAD Data: Transporting TDMoIP allows MTUs to benefit from cost-effective access through metro Ethernet service while remaining able to provide leased line voice services. TDMoIP allows the transfer of voice over an IP infrastructure.

Com Sol: What are the consequences of tighter financing, increased emphasis on revenue generation, and the challenges faced by CLECs? What role might RBOCs assume going forward? What sorts of consolidation and acquisition might we yet see? What are the prospects for the startups that remain?

Avail Networks: The increased emphasis on top-line and bottom-line financial health will ultimately be good for in-building service providers, but it's a mind-shift from the mentality of the past year or so -- at least for the competitive providers who operated with a land-grab philosophy. Increasing subscriber penetration rate per building and average revenue/profit per subscriber will be a major focus going forward. For equipment vendors this means increased customer focus on the real multi-service capabilities of their solutions, which will be needed to enable the increased service revenues. It will become critical now to really be able to back up the "multi-service" claims found on so many product data sheets today.

RBOCs and other incumbents getting into the MTU-based service model will have to adopt a "penetrate the building" sales approach, versus just doing "home runs" to each tenant. Their success in this area could make the MTU model really interesting going forward.

Also, today's more demanding financial environment may also require property owners to start sharing some of the up-front costs with the providers. Timing for this may be good given the CLEC financial model constraints and the increasing awareness among property owners that a telecom-ready building is worth some incremental investment on their part.

RAD Data: Today, approximately 50 percent of available bandwidth is used to transmit voice, with the other 50 percent used to transmit data. However, this balance is disrupted when it comes to revenue generation, as close to 80 percent of revenues come from voice services. Thus, it is critical for MTU CLECs to provide voice services in order to increase their revenues. Data services alone are simply not enough to be profitable. TDMoIP allows CLECs to offer lucrative voice services, and control capital expenses by using a more cost-effective data infrastructure.

Com Sol: Discuss the importance of "future proofing," in terms of the ability to address converged multimedia services, as opposed to the continued maintenance of separate voice and data infrastructures. How to generate new revenues as data services become commoditized, and as voice revenues fall? How to roll out profitable converged voice/data value-added services?

Avail Networks: All of these are important points, and will become real competitive differentiators over time for forward-thinking providers. Some BLECs tried the "TDM voice resale" approach over separate access facilities with limited success due to the low margins, while other competitors have deployed packet voice services on top of data services with initial success. If the raw bandwidth and QoS are both there, eventually new services will find their way into the same pipe.

RAD Data: TDMoIP technology allows CLECs to integrate voice using diverse infrastructures as transports. For example, an MTU using wireless access today could transition easily to fiber access, should that become more cost-effective tomorrow -- with no equipment upgrades necessary. Because TDMoIP allows the use of any access infrastructure, capital expenses can be kept low as delivery technology improves.

Com Sol: What about provisioning and management issues -- potential for remote management, limiting truck rolls, over-provisioning? Also, tradeoffs between CO- and premises-based systems, in light of considerations such as power control.

Avail Networks: Remote management and integration with third-party provisioning and monitoring tools are must-haves going forward. Over-provisioning of the WAN circuit will not always be possible (in fact, usually the WAN link will be at least somewhat over-subscribed and under-provisioned), which gets back to the need for strong QoS controls "in the basement." Having the ability to battery-back the basement POP environment is good, as is E911 support for packet voice services in the event of power failure.

RAD Data: Because operational costs have proven to be significantly (as much as six times) higher than equipment costs, the reduction of operating costs for service providers has become critical. In light of this trend, service providers need enhanced management capabilities such as fault isolation and plug-and-play that allow complete control of customer circuits and eliminate the need for expensive truck rolls. RAD implements such capabilities in their ACE product line of ATM access devices.

Com Sol: Could you characterize the near-term and longer-term opportunities? For now, the slogan might be, "It's the SMB, stupid!," based on the results of various market surveys. Going forward, what other opportunities might open up? Home networking solutions for upscale MDUs? Solutions geared for hospitality and hospitals and transportation hubs?

Avail Networks: All of the above, but the SMBs and enterprise branch offices in commercial MTUs may be the best hunting grounds for higher-margin converged services initially. Data-only services should get traction in MDU and hospitality applications, but the margins could get ugly pretty fast.

RAD Data: Near-term opportunities are characterized by the leveraging of existing infrastructure. As such, the ability to provide as many services as possible from a single source is critical in maximizing "per customer" revenue. In addition, the minimization of operational costs through the use of management capabilities is key to profitability in the MTU space.

For the long-term, a viable CLEC MTU business model requires the offering of enhanced services to existing customers. Until recently, service providers focused primarily on deploying infrastructure and increasing market share -- with little thought given to ROI. Now, cost savings measures and revenue enhancements are more frequently recognized by CLECs as critical steps.

Finally, STSN and Tut Systems had some topics of their own:

STSN: in addition to providing high-speed Internet access, broadband providers need to be compatible with VPNs so their users can successfully and securely access their corporate networks. Without VPN compatibility, users cannot access network resources and are forced to use the public Internet to retrieve sometimes sensitive e-mail and corporate issues.

Tut Systems: For companies to survive the next few years, it won't be enough for a service provider to make a "best effort" when delivering advanced broadband services such as data, Internet access, and high quality voice and video. Service providers need a platform that guarantees performance sufficient for QoS and service level agreements. They need a single service gateway that integrates multiple network components and allows for remote management and self-provisioning. And they need to be able to customize and dynamically alter the provisioning of tiered services within each building, for each tenant company, and even for each desktop. Self-provisioning and policy management will be key. We believe the ideal platform to support such services within multi-tenant buildings is a potent combination of ATM, IP, and xDSL technologies.

The four major points that contribute to a successful business model of any service provider in the MTU space are:

1. A platform (the entire system infrastructure) that supports multiple services. One service pays back your CAP-X, additional services make your offering profitable.
    
2. A flexible and universal access to the property that fits a service provider's business model. It can be copper (T1, xDSL or T3), fiber, coax, or wireless.
    
3. Distribution on the property -- using existing infrastructure allows low capital expenses, low installation expenses, and higher ROI.
    
4. Service provider-controlled, subscriber-managed services. Service providers spend more than 50 percent on network management and provisioning. Any savings will contribute to their bottom line.

MTU property owners face an enormous and expensive hurdle when evaluating the investment required to upgrade existing infrastructure. Consequently, service providers must help MTUs evaluate actual bandwidth needs against the realistic costs of acquiring high-speed Internet access and building the network infrastructure. As demand for high-speed Internet access grows, many MTU IT managers have been entertaining a "more is better" approach. Yet, with few exceptions, a 1 Mbps bandwidth solution provides apartments, university buildings, and hotels with a complete, affordable Internet connection -- without over-investing in technologies tenants will never need. Almost without exception, accessing e-mail and downloading content is the main attraction to the Internet. Consequently, 384 Kbps is entirely sufficient to meet the communications and entertainment demands placed on a network backbone. And if 384 Kbps meets the baseline need, then 1 Mbps comfortably and affordably exceeds both current and near-future needs and applications. Of course there are some limitations to this solution. First, even with 1 Mbps speed in the last mile, there's no guarantee the backbone is sufficient to deliver such high speeds to the property or across the Internet itself. In addition, high-end, DVD-quality movie-on-demand applications require higher speeds of at least 6 Mbps to ensure quality of service. However, rapidly advancing compression technology will likely reduce these bandwidth requirements and may question whether anything faster than 1 Mbps will ever be needed for high-speed Internet functions.

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