February 2001

BY JANINE ROTH

Enhanced services have long played an important role in the business models of successful service providers. Such services add value to a telecommunications provider's core product offerings and provide them with a significant competitive edge. In the new communications marketplace, however, enhanced services provide carriers with more than a competitive advantage. Enhanced services are becoming crucial to ensuring the continued growth and profitability of telecommunications service providers.

This new reality is driven by several trends. Due to consumers' increased use of reduced-rate long distance options and fierce price competition among service providers and local exchange carriers, traditional voice and long distance services are shrinking in value, significantly reducing revenues for carriers. At the same time, wireless and wireline broadband technologies are expanding the range of available service offerings, features, and functionality, increasing the need for applications that provide greater control over new content streams. In addition, Internet content providers and media companies are beginning to offer services, such as unified voice and e-mail, which were once available only through telecom providers. In order to maintain profitability, telecom providers must deliver comparable -- or better -- solutions at competitive prices.

A Checkered Past Meets New Opportunity
While shifting market dynamics are driving this new industry focus on enhanced services, carriers and other industry players need to come to grips with a stark reality: the typical subscriber has yet to fully embrace enhanced services that are marketed as "unified communications." Yes, basic value-added services such as voice mail and caller ID caught on with the public long ago. But more advanced applications, such as follow-me and one-number services, have never penetrated much further than early adopters like traveling salespeople and executive road warriors.

As the volume of message activities increases, along with increased wireless accessibility, the need for more efficient and selective control over communications functions must be provided on a dynamic and flexible basis. To remain competitive, a carrier must offer an extensive range of services to meet the demand of customers. Unified communications isn't a one-size-fits-all market. Messaging solutions include voice mail, e-mail, fax mail and video mail, as well as applications that unify multiple messaging tools and provide support for a variety of communications devices, including desk phone, cellular phone, pager, PC (desktop, laptop and hand held), as well as WAP-enabled wireless devices. Carriers need to fill specific voids within their market, and a rigid service offering automatically limits market potential. For carriers, providing a diverse array of enhanced services will not only provide additional revenue streams, but will also reduce customer churn by creating another important link to customers and adding value to the relationship.

All these factors are shaping a unique communications market environment, one that will require a new kind of enhanced services platform. To reiterate: service providers are eager to establish new revenue streams as their traditional voice businesses shrink and they come into direct competition with Internet companies. Subscribers are reluctant to embrace enhanced services, but powerful applications will be necessary to control and personalize the wide array of communications streams -- voice, text, video, and multimedia -- made possible by broadband networks. In this new market environment, old-line enhanced services will become obsolete. In the coming months and years, service providers and subscribers will turn to the next generation of enhanced services, what we can call "adaptive" communications.

Adaptive Communications: Enhanced Services For A Broadband World
Adaptive communications means more than helping customers manage and enhance their communications lifestyles. It provides a flexible, scalable, high-speed, reliable infrastructure. This architecture not only supports the services and technology that are available today, it will grow and evolve to accommodate and enable synergistic broadband services in the future. Information will adapt to the available device, service providers will adapt to constantly changing market requirements, and subscribers will benefit from the communications services that adapt to their lifestyles.

Progressing beyond the functionality and underlying technologies of enhanced services, adaptive communications enables individual subscribers to fully exploit broadband access, while at the same time creating valuable new revenue streams for service providers. Adaptive communications enables providers to offer customers a combination of convergent voice, video, and data services on a single bill. Adaptive communications is not simple. It requires a complex set of multimedia and cross-media features and functions that support all aspects of an individual's needs for controlling both real-time and messaging communications.

Broadband networks -- both wireless and wireline -- promise to enable a wide array of once unimaginable services, such as wireless video conferencing, location-specific information streams, multimedia messaging, and mobile e-commerce. However, in order for subscribers to take full advantage of broadband communications, carriers must deploy an architecture that enables the convergence of all network services. The challenge for service providers is to evolve seamlessly from current architecture to a third-generation, high-speed data network that supports multimedia applications. The winners in the new marketplace will be those service providers that deliver convenience, personalization, and ease-of-use. Technology providers that develop features and functions that can be easily customized and packaged for a variety of market segments will realize maximum return on investment.

The new adaptive communications applications -- and the platforms on which these new services are based -- will depend on a few basic principles:

• Operational Simplicity: A consistent user interface across applications devices is essential for system administration and subscribers. Communications functions must be easy to use and support wired or wireless devices that provide complex functionality, yet are as simple to use as a traditional telephone.
  
  
• Integration: The ability to use multiple media sources, disparate voice mail systems, and different message types simultaneously, from any device. The complexities of unified communications in an open network environment will increase the need for interoperability among different technology products and services. This requires a flexible, open, scalable and interoperable set of functional software and hardware components that can quickly adapt to the evolving needs of users in all market segments and on a global basis.
  
  
• Web-Ready: Customer service staff or individual customers must be able to control provisioning, service configuration, and administration for all types of content and message services through a single, simple-to-use Web interface.
  
  
• Conversion: True cross-media functionality requires automatic, transparent conversion of all message formats, including converting speech to text and text to speech.
  
  
• Evolution and Scalability: Adaptive communications must exist within an open architecture that is capable of rapidly responding to industry growth and change. Products and services must be open, flexible, and scalable to support not only familiar communications capabilities, but also new multimedia and cross-media communications that users and enterprises will demand. In today's fiercely competitive marketplace, scalability is a key factor for continuing success. It gives carriers all the capacity and capabilities to meet current requirements, while providing the flexibility necessary to easily expand to accommodate the continually changing needs of customers.

Applications and services that help subscribers harness the power of wireless broadband and allow them to adapt the new networks to fit their personal communications lifestyles (i.e. personal scheduling and organizing services, call management and multimedia messaging) will be key elements for meeting market demand and building customer loyalty. By deploying these adaptive communications services, carriers will be well positioned to differentiate broadband offerings from existing systems, reduce churn and acquisition costs, and maximize their investment in next-generation broadband.

By truly empowering subscribers to receive only the information they want and need -- whether voice, video, or data -- anytime, anywhere, using any communications device, savvy service providers will be set to compete -- and succeed -- in the dynamic communications marketplace.

Janine Roth is Vice President, Marketing and Business Development for ADC Enhanced Services. ADC is The Broadband Company. ADC's fiber optics, network equipment, software and integration services make broadband communications a reality worldwide by enabling communications service providers to deliver high-speed Internet, data, video and voice services to consumers and businesses. ADC has annual sales of over $3.2 billion and employs more than 22,400 people worldwide.