Predictions for 2011: Environmental Drivers of Communications Trends

By Rob Rich, Managing Director, TM Forum Insights Research

A fundamental in understanding growth for communications services is the state of the global economy, as overall telecom financial performance is related to economic growth. According to the Organisation for Economic Cooperation and Development (OECD) the global economy will expand 4.2 percent in 2011. The good news is that the recovery started in 2010 continues, though at a slower rate. However, concerns about the sustainability of sovereign debt levels and growing trade imbalances around the world pose risks to this recovery.

China and India are expected to lead the larger economies in growth, with China growing in the 9 percent range, and India around 8 percent. Developed economies are not expected to fare nearly as well, with the U.S. expected to achieve a rate of 2.2 percent, Japan a rate of 2 percent and the European Union slightly less than 2 percent. Other important trends include:

Strong growth in Africa: This decade is expected to see massive development in Africa, evolving from Western aid to Eastern trade-based economic models.

Energy remains a key source of growth. It continues to play a key role, with the continuing upward trend in oil and natural gas prices. Countries with large reserves will continue rapid growth.

The impact of policy-based stimulus programs slows to a crawl: Many of the stimulus programs initiated in response to the global recession have run their course and are unlikely to be repeated, if only because most governments no longer have the funds to provide additional support.

Inflation remains low to moderate. While demand for commodities (especially food and energy) increases, prices hold relatively steady. Fast growth countries like China take steps to curb national inflation. Against these global trends, here are our top 10 predictions for 2011 – we live in interesting times.

Prediction 1: The margin crunch intensifies

Fixed line revenues, including for data, are under pressure and the rapid growth of mobile broadband hasn't brought additional revenues, but requires massive investment in network capacity.

Arguably communications service providers' (CSPs) greatest opportunity is in acting as enabler for other parties in the value chain. In the short term, there is no quick fix.

Prediction 2: Cloud services approach the mainstream

There's lots of activity in this area with different companies investing in data centers, computing infrastructure, software platforms and much more. Not all of them will succeed and we expect to see rationalization during 2011.

We predict the sweet spots will be small and medium-sized businesses, emerging markets and Software as a Service. In addition, lots of enterprises will be forced towards the adoption of cloud by financial considerations.

Prediction 3: Data management and analytics become critical competencies

Communications is one of the world's most data intensive businesses, yet the timely and effective use of this data is lagging way behind that of many other industries. This needs to be addressed.

Data management and analytics can improve the customer experience, thereby increasing revenue, enhancing the brand, reducing churn and extending the CSPs' role across the value chain, particularly when the information is available in real time or near real time. CSPs need to start by figuring out where the biggest payback will be, and go from there.

Prediction 4: Machine-to-machine accelerates

After a slowdown in 2010, we predict rapid growth this year, particularly in automotive, asset management, energy management, home and business security and telehealth.

Prediction 5: Smart utilities grow

The combination of demand, rising energy costs and stimulus funds are pushing this sector along, with most of this year's growth coming from smart meters and experimentation with dynamic pricing. Demand response technologies and distribution automation will play increasingly big roles.

There is resistance among customers to smart metering – including a class action suit in California – education will be all-important. Smart grids also have a role to play in securing electricity supplies in the face of cyber attacks.

Prediction 6: Mobile advertising moves to the mainstream

Propelled by the rise of smartphones, apps and mobile broadband and mobile advertising's effectiveness, this will be the year it goes mainstream. Great attention needs to be paid to privacy and consumers' concerns to avoid irritating them and provoking regulators into action. Nevertheless, this is a huge opportunity for operators.

Prediction 7: The bandwidth crunch continues

Network operators are struggling to keep up with demand for capacity, to the extent that customer dissatisfaction with their services is having a negative effect on some brands. Given the rise in video traffic and the continuing proliferation of smartphones, the situation is likely to worsen in 2011. The uneven economic recovery is making it difficult for service providers to raise revenues and the specter of net neutrality is an additional brake on investment. Even so, massive investments in infrastructure are underway around the world, but they will not do much to ease the bandwidth crunch in 2011.

Prediction 8: Mobile payments make progress

Although many think of mobile payments in terms of developing economies where few people have bank accounts or credit cards, they are swiftly moving up the agenda in developed economies. Lots of different parties are keen to make an impact, from technology firms to network operators, credit card companies, device makers and start-ups. In November 2010, Verizon Wireless, AT&T and T-Mobile USA set up a mobile commerce venture to address this market and keep the card companies out. Many, many other initiatives are underway, with Google, Apple and others hovering.

Prediction 9: Social media prove an opportunity and a threat

In 2010, web users spent more of their time on social media – blogs, wikis, social networking, social gaming and so on – than anything else, and it is accounting for a larger share of their online activity as time passes. While this is a great way for service providers to capture lots of data about how their brand is perceived and what users are thinking, if ignored or mismanaged social media are potentially very damaging.

Yet few CSPs are using analytics to monitor and exploit social media, as they do for other channels. Most are missing huge opportunities; a few will emerge as leaders at the end of 2011.

Prediction 10: Security issues become more serious

The growth in the number and type of devices is presenting plenty of opportunity for cyber criminals of all types. As the number rises dramatically due to more affordable devices coming onto the market, the problem will only get worse. Arguably, this will be surpassed by the expected explosion in machine-to-machine communications, which will also be targeted.

Cloud Security: It's No Myth

By Blake Lindsay, CISSP, Bell Canada

There has been a lot of talk about cloud services, but inevitably one major point of concern that's raised during almost any discussion about the cloud is security, which is natural given the fact that the cloud often relies on the public Internet, and resources are hosted off-site. Whether you are discussing Infrastructure as a Service (IaaS), Platform as a Service (PaaS) or Software as a Service (SaaS), they all have security risks, but there are things that can be done by network administrators and architects to reduce the risks in the cloud.

Carriers will most likely deploy IaaS type services, which give the customer some freedom to configure the systems for their use. IaaS would most likely be deployed as a shared infrastructure to achieve costs savings and get the most out of the hardware. This is where the security issues start. Proper planning and proven security practices are still critical to helping secure cloud infrastructure.

The services that are being provided are much like the ASP type services that were deployed in the past. One of the key differentiators is that customers can configure and set up the hardware to their specifications. There are things that carriers can and should do to ensure the security of the cloud, such as performing penetration tests before the service is implemented, using two-factor authentication for login and administration and proactively monitoring systems for misuse will ensure that the level of risk is reduced.

Proactively ensuring that maintenance patches are applied in a timely manner as well as strong access control are also important for cloud security as is only using secure protocols (HTTPS, TLS, SSH) and VPN tunnels for the customer administration of IaaS.

The customer may ask how they can ensure that their data is secure even with all of these measures in place. While the carrier provides the infrastructure for these services, the customer will have some responsibility for the security of the platform, including implementing a token-based system or encrypting sensitive data on the system. Cloud infrastructure is not yet at the point where putting mission-critical applications that have personally identifiable information (PII), Sarbanes-Oxley or key components of the business makes sense yet. Of course, this kind of data is always under the scrutiny of auditors and third-party external audits, so carriers will need to work with customers to provide this information.

Audits and security tests will have to be a regular occurrence and will have to be done in such a way that they meet the standards of the carrier, yet still have the ability to share that information with the customer. The customer may have to share that information with a third or fourth party. The carriers and customers, in effect, become partners for the IaaS service that is being provided, with both parties having a responsibility to ensure the security of the overall platform.

Policies and procedures are a key component to the security of the cloud. Carriers must ensure that processes for data breaches are in place; backup and restore policies should be well thought out as there could be issues where you may need to restore a previous configuration. There should be policies for data destruction, particularly when it comes to the backup media. The application configuration information should be secured for both the carrier and the customer, and data loss prevention should be on everybody's mind. All of this ties together to raise questions in the customers' mind. The security risks do not change; they only shift somewhat in responsibility.

The cloud and security are not mutually exclusive. Rather, through a combination of proven security practices, planning and a new paradigm of cooperation between the carriers and customers, security and integrity of the cloud can become a reality.

Ten reasons why SA companies should look towards hosted VoIP

Gail Holt Zycko | 15 February, 2011

According to trends analysts IDC, IT strategies in Africa for the year 2011 will be characterised by technologies including the cloud and virtualisation
This trend is being driven in large by increasing availability and affordability of bandwidth, making hosted services more of a reality than ever before.

This combined with an almost insatiable appetite for ever cheaper and better quality communications is driving an increasing interest in hosted Voice over IP (VoIP) in the business world. VoIP has long been a technology of interest due to its ability to bring down the cost of telephony and provide greater flexibility, but with the additional availability of bandwidth in the African region, the prospect of running VoIP as a hosted service is now possible and no longer a pipe dream.

A hosted VoIP solution means that organisations in Africa can harness the advantaged of VoIP as well as all of the well known benefits of outsourcing a solution, from access to scarce skills, better uptime and easier management to the ability to incorporate a range of advanced features and functionality that may not have been affordable with a traditional system in place.

Benefit #1 - Lower Total Cost of Ownership

A hosted VoIP solution enables savings right from the onset as it is no longer necessary to purchase expensive 'boxes' or systems. All an organisation needs are VoIP-ready handsets and the hosting service provider will take care of the rest. The service provider will also manage both the phone and data lines, enabling further cost savings. Organisations can obtain access to the most advanced technologies without having to invest large sums of money in hardware, making this an affordable option even for smaller businesses, and allowing them to access communications technology that was previously only available to larger companies.

Benefit #2 - Simpler IT support

Traditional phone systems are fairly complex and require a high level of skill to maintain. However a hosted VoIP solution removes this barrier to entry, as it uses a simple web interface and therefore requires very little IT support or training to administer. Users can be quickly added or deleted and additional features enabled by administrators from their computers through the intuitive interface, thus making additional support or staff members unnecessary. This in turn leads to further cost savings through simplified maintenance of the system as the resources can be allocated to other areas of the business.

Benefit #3 - Reduced Capital Investment

With hosted VoIP it is no longer necessary to spend large amounts of capital on expensive systems. Other than the actual handsets there is no investment required and no large capital expenses to depreciate over time. Hosted VoIP is an operating expense rather than a capital expense, so all businesses need to pay is an affordable monthly service fee to have access to a range of capabilities that can improve productivity and connect the business to advanced telephony.

Benefit #4 - Improved Business Continuity

Communication is at the heart of any modern enterprise and the last thing any business needs is for phone services to go down. Hosted VoIP solves this problem by incorporating failover systems that kick in should things go wrong. Because the physical box does not reside on the business premises but in a redundant and secure data centre off site, even if the building is affected by floods, earthquakes and other natural disasters the phones remain unaffected. A web-based portal enables users to quickly forward calls to cell phones or unaffected locations so that business can carry on without affecting customers.

Benefit #5 - Easy scalability

Hosted VoIP is a highly flexible solution as the number of employees on the system is not constrained, so expanding or reducing the number of users is a simple and cost-effective process. If resources become tight or the number of employees needs to be reduced this can easily be accommodated, and in times of growth it is quick and easy to scale up without incurring massive costs or disruption to the business. This gives organisations the ability to immediately make changes and scale up or down with fluctuating business needs.

Benefit #6 - Added functionality

A hosted VoIP solution gives businesses access to a wide range of functionality that can be activated on demand to suit the needs of any organisation. From HD voice to automatic voicemail forwarding and remote call following to phone systems integrated with Outlook or CRM systems, the potential for expansion is practically limitless. Hosted VoIP gives any size business the ability to access features and functionality that were previously only available to large enterprise because of cost constraints.

Benefit #7 - Automatic Upgrades

Outsourcing VoIP to a hosted provider means that businesses no longer need to upgrade hardware to take advantage of new features and technologies. All upgrades will be done by the host and will be delivered through software changes that happen automatically in the background. So businesses will always have access to the latest technology without the need for expensive upgrades every time something is updated.

Benefit #8 - Productivity Anywhere

Traditional telephony systems are highly desk bound, which in today's world is no longer the ideal scenario. A hosted VoIP solution gives businesses the ability to gain access to constant connectivity and productivity anywhere, anytime, whether employees are at their desks, in the boardroom or on the road. Workers can access the communication features of the VoIP system no matter where they are, improving productivity dramatically.

Benefit #9 - Access to Powerful Video Conferencing

Travel can be an added expense that during tough times many businesses cannot afford. Video conferencing enables the productivity of face-to-face interactions without the cost of travel. Hosted VoIP enables organisations to quickly and easily access video calling capabilities (part of Unified Communications), making calls far more personal and productive than traditional phone calls.

Benefit #10 - Focus on core business capabilities

By removing the worry and maintenance of phone systems, organisations can better focus on their core business capabilities. The management of these increasingly complex business communications systems is outsourced and handled offsite, so the telephony system continues to work while employees can get on with their jobs safe in the knowledge that the telephony system will just work, whenever they need it to, and they can access features like voice and video without having to know why and how they work.

To conclude

Hosted VoIP has numerous benefits that can help telecommunications in Africa to be brought onto a level with the rest of the world. Now that bandwidth is not the obstacle it once was, and IT spend is expected to increase in Africa over the next year, hosted solutions such as VoIP have become a reality and can drive greater productivity and efficiency in business operations.

Predictions for South Africa – Business Bites Think Tank

January 27, 2011 by David Graham

I attended the Business Bites Think Tank this morning and listened to what Mike Stopworth of Cerebra, Arthur Goldstuck of World Wide Worx, Dion Chang of Flux Trends, Stafford Masie, Toby Shapshak of Stuff Magazine and Aki Anastasiou of Talk Radio 702 are predicting in terms of future technology trends in South Afica. This is what I gleaned from the conference:

• Do not underestimate the reach and velocity of users on social networks to spread information quickly. Bear in mind that this also includes misinformation, however the ratio sways towards “good” information on a 80/20 basis
• The technology evolution that is taking place is being met with some resistance. It is human nature to resist change. A book titled The Victorian Internet draws similarities with the invention of the telegraph. The point that was being made is that change is inevitable, so embrace it.
• Companies are not doing enough in terms of using analytical tools such as Google Analytics, tracking and online reputation tools. There are thousands of connected, engaged consumers out there. It pays to know what they are saying about your brand
• Company websites are not up-to-standard and are not optimised. Work needs to be done to enhance the user experience
• This is the year of content, a lot of which is being produced by individuals. Services that were only available from international sources is going to be made available locally (iTunes was one of the services that was mentioned)
• The market to watch is “rest of Africa” as broadband is being introduced. Price reduction in smart phones and connectivity will play a huge factor
• There is going to be an explosion of mobile phones and tablets and availability of mobile applications
• There was an interesting discussion around the pros and cons of social networks and their effect on children and the general public. There was consencus that the general public needs to be educated on the do’s and don’ts of the Internet and social networks and that parents need to be good role models for their children

One key message is that consumer is king. Companies do not own their brand, the consumer does! Consumers will dictate what they want in terms of technology and applications. There was a veiled threat that companies who continue to ignore the changes that are currently happening and those predicted will be severely handicapped.

PBX in the Cloud or in the Closet?

Bryan Johns January 26th, 2011

In advance of a planned panel discussion on this topic at IT Expo in Miami next month, I decided to take a moment to formalize my thoughts on the merits of both the hosted and premises PBX deployment models. At risk of coming off as indecisive, I am going to go ahead and say that there are arguments both for and against hosted and premises solutions that depend heavily upon customer size, needs, network infrastructure, planned use and growth forecasts. Generally, the way in which these variables come together supplies the best determination as to which deployment model makes the most sense and why.

Let’s take a minute to look at that assumption in more detail.

First I want to say that over the course of my career I have designed, implemented and supported VoIP network solutions in both hosted and premises architectures. I hold no specific bias one way or the other but I believe that one strategy has advantage over the other based upon attributes of the company proposing to utilize the solution and their specific needs. In my experience, the following factors weigh most heavily in determining whether a company should consider a hosted or a premises solution:

Company size (count of end users to be supported)

Very small companies (fewer than 20 users) almost invariably find a better value in a hosted architecture than a premises deployment. This due to the fact that the recurring monthly expense of a hosted solution in these quantities is typically digestible and (assuming the availability of quality bandwidth) they can typically be purchased without an extended contract term which leaves the door open to change providers if needed. In a range from 20 to 50 users, the economies of a hosted solution are dictated by a combination of bandwidth cost / availability and anticipated monthly maintenance expense for telephony platform. Above 50 users, the economies of hosted solution typically collapse and higher recurring monthly expense overshoots the potential savings in operation, maintenance and upgrades.

Number of physical facilities (count of company locations to be supported)

The count of branch facilities to be supported also plays heavily in determining the value of hosted solutions versus premises solutions. For companies with a single facility that has 50 to 100+ users, a premises deployment will be both architecturally and financially more attractive. For companies with up to 3 branch facilities, a premises installation in each facility linked together via SIP or IAX2 trunks provides both financial efficiency and site isolation from bandwidth or machine failures. Above 3 branch facilities, the potential redundant expenses in each location begin to make the argument for a centralized, hosted design for purposes of ease of management / maintenance, price efficiency and disaster recovery.

Amount of daily or monthly PBX maintenance anticipated

Many companies shopping VoIP infrastructure are anticipating some ability to handle daily maintenance activities inside of their own doors. The “point and click” simplicity of solutions such as Digium’s SwitchVox appliance puts much of the day-to-day configuration and management within the technical capabilities of the average IT guy and reduces the necessity of outside maintenance assistance. Still, those companies that anticipate a high amount of monthly management requirements can benefit from the inclusive support provided by many hosted operations. Essentially, where a customer can receive significant value from inclusive support in a hosted configuration, this deployment design has distinct advantages.

Condition of WAN and associated carrier contracts

One of the more compelling ROI opportunities available in a conversion to a VoIP infrastructure is powered by cost savings through disconnection of conventional TDM service connections and replacing them with public or private data connections.

However, if a company is under contract for telecommunication services, the cost to break these contracts can have a significant impact on available monthly savings. Customers in fresh telecommunications contracts are stronger candidates for premises deployments while those who are not encumbered by contracts are typically better candidates for a potential conversion to a hosted or co-located solution where their other attributes make them a strong candidate for this design.

Up time requirements

There has been a heavy focus on business continuity and disaster recovery for all aspects of IT infrastructure in recent years. While conventional PBX solutions have not historically provided any measurable level of redundancy, the migration of these technologies into IP network environments has raised the bar for availability in business telecommunications solutions. If business continuity is a high priority, the advantage can go to a hosted design. This is not to say that a premises deployment cannot be engineered for high availability, but the costs to supply this ability can slant the value proposition toward a hosted or co-located solution design.

The third option: Hybrid or “Co-located”

There is a third, hybrid deployment design that is best described as “co-located” that supplies the efficiency and assurances of a hosted design with a financial structure more akin to a premises deployment. This structure includes customer-owned equipment running in a data center with private network connectivity to both the customer facility and VoIP carrier networks. A co-located design raises the bar for quality and performance on the company WAN but can be far more economical than the higher recurring expense associated with hosted solutions above the previously-mentioned economic tipping-point of 50 seats or so. A co-located design is preferred in most instances where a hosted solution is preferred but where the user count is above 30 seats and where the customer is comfortable handling the majority of their maintenance needs in-house.

So in summary, for a company with fewer than 20 seats and with fewer than 3 facilities the advantage most frequently goes to hosted. Between 20 and 50 seats there are a other variables that need to be considered before one can say whether a premises, hosted or co-located design is best. Above 50 seats the advantage usually goes to a premises deployment unless the customer has more than 3 locations which slants the preference to co-located.

Please remember that the information in this article is opinion gathered from 10 years of implementing VoIP solutions and is not backed up by scientific data. Still, I hope that it provides you insight as you consider VoIP technologies for your business. Happy implementing!