The nature of change in the networking business is itself in flux, said Dr. John McQuillan, speaking at the opening of this year’s Next Generation Networks conference in Boston. In the past, change was more predictable because network equipment almost became better, faster and cheaper each year. Going forward, this premise may no longer hold true. McQuillan observed that the process of change is now different in four important ways. First, the industry is maturing — packet switching is 34 years old, email is 32 years old, SONET is 18 years old, and the PC and its major applications are 20 to 25 years old. As a result, market growth for certain networking segments has slowed and in some cases even declined. Second, commoditization and deflation are taking a toll on revenues. For instance, enterprise Ethernet shipments for Q2 fell by 3% from a year earlier and revenue was down by 15%. There are still growth opportunities in networking, but McQuillan noted that many are succeeding by substitution and cannibalization of existing markets. Third, McQuillan argues that IP and Ethernet are fundamentally disruptive and have the habit of making other technologies obsolete –the list includes TDM, FDDI, SONET, Fibre Channel, Class 5 switches, cellular, etc. Fourth, McQuillan believes that the Internet business model itself remains unproven. Meanwhile, traditional providers of telephony face a huge crisis as packet services undercut their margins. Extrapolating from these four trends, McQuillan predicts the industry will need to shift its emphasis from building networks to figuring out how to use them.
Dr. McQuillan is retiring following the conclusion of the NGN conference.
“Bottoms Up” user demand will lead to a metamorphosis in voice communications, said NGN co-chairman Dave Passmore. Instant Messaging, combined with SIP-based collaboration tools, is fundamentally changing the nature of the business and cutting out the telecom middleman. The changes will be profound, said Passmore, as voice becomes just another data network application. The Instant Messaging buddy list becomes the directory. SIP proxy servers could be located anywhere. Ultimately, anybody could become a phone company. So what’s the role of telcos going forward? Are they relegated to just being “bit haulers”? Passmore said there are still huge opportunities for telcos to add value to the network, in particular by creating a mediation layer. These opportunities could include: SIP proxy servers, media gateways, directory services, firewalls, IDS/IPS, caching and content distribution, multicast services, location-based services, etc. Whether for wireless coverage or VoIP coverage behind firewalls, islands of connectivity will persist for some time. Some carriers are trying to hinder third-party services by blocking ports on their networks. Though there is potential for “Internet fragmentation,” Passmore said the real question will remain whether advanced connectivity services will be provided by telcos themselves or by 3rd parties leveraging the network. He also observed that the disruptive effects of IP are just beginning to intensify. This year may be remembered as “the calm before the storm.”https://convergedigest.com
