In the arena of security there have been literally dozens of start-ups who have attempted Vertical Integration to solve security issues and a fair number of them have built successful products.  The only difference between security companies and infrastructure companies (like the ones listed above) is the constant threat of hackers who are usually a half-step ahead of the security vendors.

However, I believe this gap is closing.  There are a few new companies in the security arena who are pushing technology evolution with Vertical Integration.  One company of note is Palo Alto Networks who have developed a way to inspect and control applications from within the network at wire speed by using a mix of programmable and off-the-shelf hardware.

Do you have any experience with this or any comments?  Please sound off below!

Surprise, Denial, Anger, Bargaining are all stages we go through when experiencing tragic loss.  I go through all these feelings once a month, when I see my mobile phone bill.

I have a flat-rate contract which includes more minutes then I will ever use and an unlimited data plan.  The tariff isn’t cheap but it’s within my budget and the service is very good.  So, as long as I stay within the borders of Germany this flat-rate applies.  No problem.

My job requires me to travel extensively which means roaming charges and that turns an acceptable mobile phone bill into a nightmare.  Roaming charges make up around 80-90% of the amount of my monthly bill and frequent conversations with other frequent business travelers confirm that it’s a widespread issue.

This issue isn’t new, the EU Parliament has been passing legislation to relieve customers from excessive roaming charges.  In order to strengthen the idea of a single EU market Since, the European Commission has imposed a roaming cap in 2007 that is currently being argued in the European Courts.  The EU’s goal is to have a “Euro Tariff” for all services at a flat rate anywhere within the EU.

To show some sort of goodwill, Carriers have been implementing their own roaming protections, price-cuts or caps.  The mobile bill I get each month tells me that this is the same-old, tried-and-tested gouging with a “feel-good” name something like “Smart Traveller”.  Here is a side-by-side comparison for calls within the EU:

Legacy Standard Tariff

• Call connection charge – €0.25
• Average Per minute roaming charge – €0.59
• Average 3 minute call costs – €2.02

Smart Taveller Tariff

• Call connection charge – €0.75
• Per minute roaming charge – €0.39
• Average 3 minute call costs – €1.92

As anyone can plainly see after spending a lot of money in legislation, lawyers, meetings, etc.  We now have a whopping 5% drop in our average call costs.  Furthermore, any calls under 3 minutes cost more than the old tariff and any calls over 60 minutes have a completely different per-minute cost structure.

In other parts of the world roaming charges have become less of an issue.  In Asia Pacific Region (APAC) the competition for customers is so fierce that prices have fallen dramatically and in North America most carriers have a flat rate plan for all of North America, from Canada, to Mexico to the Caribbean.

So where is the international flat-rate for Europe?  It’s geographically smaller than North America and more densely populated so instituting a flat-rate is a no brainer.  After years of searching I have found that It doesn’t exist because of a little known thing called “Inter-Carrier Call Termination Fees”

When a call is made while roaming at least 2 different carriers are involved.  The handoff point between these two carriers is where per-subscriber usage is tabulated and the roaming charges are applied and these appear on financial statements as “The Inter Carrier Call Termination Fees”.  These fees are responsible for up to 15% of a Mobile Carriers revenue.

This is high-margin business for mobile carriers for a few reasons:

1. 1.  Inter Carrier Call Termination Fees are in addition to Roaming fees, although better hidden on the bill
2. 2.  Roaming and other fees are imposed even if the subscriber is on the same network as the home country network.  i.e. Vodafone Germany and Vodafone UK are considered foreign network to each other.
3. 3.  When a call is routed between two countries on the same carrier(i.e. Vodafone/O2 or T-Mobile) their own infrastructure is used;  Meaning that there is no cost to the carrier if the call stays on the same network.

International Flat-rate in the EU is long, long overdue and the first company to offer it would see a massive subscriber growth of high-value customers.  Personally I would be willing to pay €500 per month if I knew that no matter where I was in the EU a flat-rate would apply.

Let us know if you’ve had issues with “Bill shock” by commenting below!

We’ve seen an increase in smartphones and other mobile devices in the last couple of years that has dramatically increased the amount of bandwidth each individual consumes.  This surge in mobile bandwidth is not only here to stay, it will grow at least at the rate of Moore’s Law for the forseeable future.  The challenge that carriers face is that mobile subscribers are already paying what they are prepared to pay and the broadband surge necessitates a network infrastructure refresh every 18-24 months.

Carriers have turned to Ethernet as the medium to lessen the impact of this continual demand for mobile broadband.  In the US and in a good part of Asia-Pacific legacy TDM networks have been getting “Etherized” since 2007.  However the implementations in Europe have been very limited which has led to the European Marketplace relinquishing their leadership position in Mobile Broadband Access.

How did this happen?

The main reason is a little known but very important issue of network timing.  In order for mobile towers to hand-off a mobile call or data session from one tower to the next while you are driving they need to be “in-sync”.  This synchronization is enabled by having reliable timing at each mobile tower.  This timing has traditionally come from the TDM circuits (E1/T1, STM-1/OC-3, etc.) and the mobile tower would get their timing and thus their synchronization by assuming the timing from the TDM circuit.

Ethernet, on the other hand, has no inherent timing mechanism; In fact, Ethernet was specifically designed to be asynchronous because of it’s “any-to-any” communications capabilities.  To compound the challenge, the tolerances for error and timing slippage are moving downwards.  LTE standards are demanding timing accuracy that is, in some cases, a tenfold increase over where it was expected to be in TDM based networks.

There has been a number of efforts to add synchronization to Ethernet with the main aim of providing timing to the mobile towers.  Here is a list and a simple explanation of the methods and technologies that are being considered by mobile providers in Europe.

1588v2 or PTP is a technology that aims to inject timing/synchronization information into each packet that can be retrieved at each element in the network that is configured to use it.  The main strength of 1588v2 is that it can be transmitted as a normal Ethernet packet across any switch/router that handles Ethernet natively.  The main weakness is that 1588v2 isn’t accurate enough considering the decreased margin of error demanded by these LTE high-speed mobile networks.  Furthermore, accuracy decreases with each “hop” in the network.

Another method of having timing natively on Ethernet is to use Synchronous Ethernet (Sync-E).  Sync-E is a method of transmitting the timing information directly on the physical wire (or fiber as it were) as another signal.  Nothing in the Ethernet frame or packet is modified.  The strength of this approach is extremely accurate timing, even more accurate than the most stringent LTE standards.  The main weakness is that new hardware is necessary to support this technology.  Most networks today are built on switches and routers that cannot support Sync-E without a hardware upgrade.

Network Timing Protocol (NTP) is one of the oldest protocols in use and was invented to synchronize the clocks of computer systems.  NTP’s strength is that it’s an inherent IP layer protocol that is widely implemented on LANs and WANs across the globe.  The overriding weakness of NTP is it’s accuracy.  NTP has an acceptable tolerance of +/- 20 milliseconds which is significantly more than the LTE standards allow for.

Global Positioning Satellites (GPS) are being used in parts of the world currently as a clock source for the Mobile towers.  This is how the United States, Canada and parts of Asia-Pacific have recently been able to build very fast mobile broadband networks.  With a GPS antenna on each tower, the mobile network can synchronize without ever having to carry timing information on the backhaul Ethernet links.  The strength of this approach is the ability to use existing Ethernet infrastructure without having to worry about retrofitting it to support timing.  The weakness is cost; GPS antennae aren’t cheap and if we multiply this by the amount of mobile towers in a network (sometimes on upwards of 30,000) the business case quickly turns sour.  In addition to the cost issue there is no disaster recovery capability with GPS, however, if satellites start falling out of the sky then network synchronization will be the least of our worries.

So what is the answer?  Most pundits have suggested that the mobile networks will solve the synchronization issue using one of two options;

1.  Networks that have GPS already (such as CDMA based networks) will continue to use it despite it’s disaster recovery limitations and will enjoy a head start on their non-GPS enabled competitors.

2.  Sync-E and 1588v2 will be used simultaneously in non-GPS networks.  1588 will be implemented in the core and distribution layers where there is already a tremendous amount of investment in Ethernet that isn’t Sync-E capable.  And Sync-E at the access-to-tower portion of the network.

Considering that GPS is considered anathema in Europe (no one want’s to have their networks rely on US based satellites) I believe we will see almost exclusively option #2 in Europe.

Are you in this business?  Have you been working on this issue?  Let us know your experiences by commenting below!

No doubt you have heard/read the recent headlines concerning the threats from governments in the Middle East to block Blackberry service.  These threats stem from the use of encryption to ensure secure transfer of data between the handheld device and the networks it connects to.  Certain governments of the Arabian Peninsula, including the Emirates, are claiming that RIM’s implementation of encryption on the device poses a security risk.  Here are some of the headlines so you can get a good idea about what the mainstream media are saying about this:

• On The Wall Street Journal
• US Authorities able to tap Blackberry Messaging
• Gulf News Piece on the Story
• Express.co.UK from a political angle

I hope you have taken a good look at all of those articles because they all report the same story from a different perspective.  That story is, in a nutshell:

Blackberry Services are encrypted and the traffic is routed, for the most part, directly to RIM servers in Canada.  This technology could be exploited by terrorists that cannot be monitored by local authorities.  The governments of the Arabian Peninsula want the ability to monitor the traffic between the blackberry handhelds and the RIM servers and expect RIM to provide them with decryption keys similar to the keys already provided to other governments including the US and UK.

That story also completely misses the point……Let’s take a look at the real issues….

First of all, the governements of the US/UK (and others who have the ability to monitor the Blackberry traffic) have very strict rules under which they are allowed to monitor.  In keeping with normal due-process, any law enforcement organization who wants to monitor a suspects traffic is only able to do so after obtaining a Court Order.  This is an important distinction as the regulatory commissions of the Emirates, Saudi Arabia, etc. are asking for the ability to decrypt traffic and monitor at will with no provisions for due-process.

I can understand RIM’s reluctance to give in to these demands.

Aside from that the real issue here isn’t security, it’s money (as usual).

The Telecommunications companies in that part of the world have been wrestling with the spectre of VoIP for quite awhile.  To be more specific, the threat to their bottom line posed by Skype style VoIP.  According to people I know in the Emirates some of these Carriers are claiming that 10-15% of their revenue is being “stolen” because of Skype telephony.

Contrary to what us technologists think, per-minute telephony charges are still a lucrative business for Carriers.

The Carriers’ response has been to block certain types of traffic and certain domains that enable the service to work.  By identifying the traffic at the point of entry into the network, certain network-elements can then block or drop the traffic before it can be transmitted.  This of course is completely dependent on the offending traffic being identified.  What if the offending traffic were encrypted…..

Which brings us to the real issue.  Carriers want to protect their voice minute revenue streams in the face of their customers’ tendency of making dirt-cheap and sometimes free phone calls.

To be fair, I’m sure the security argument is somewhat valid but in the end it’s all about money.

Ireland telecommunications is in the spotlight due to the launch of the Exemplar Network.  The launch is currently limited to a testbed in the Dublin area but is planned for a phased nationwide roll-out by 2013.

The Irish government has invested €5 million in the development of the network and expects to invest another €5 million before the network is done.  This is on top of the large but undisclosed sum given to InTune Networks, a network vendor whose technology is showcased in the Exemplar Network.

InTune is developing ultra-fast broadband communications technologies that are to be showcased in the Exemplar Network.  The technology is rumored to be a new type of WDM laser coupled with Ethernet switching and OTN to offer transport and switching in the same unit.  The product, the iVX8000, is positioned to solve the Metro-Network bandwidth bottlenecks and offer a dynamic provisioning mechanism to respond to ever-changing metropolitan demands.

It seems as though we’ve heard this story before.  The telecom vendor sector is littered with carcasses of companies who have tried to approach the WDM/Ethernet layers with a new technology.  The most recent one being Matisse Networks of California whose implementation of Optical Burst Switching promised but never really delivered.

Let’s hope the luck of the Irish is on InTune’s Side.

I recently went to the LTE World Summit in Amsterdam.  The show was quite a bit smaller than I would have expected for an industry under pressure to transform itself.  There were a number of very good speakers and panels that more than made up for the apparent lack of industry participation.  Overall the show was sufficient but it left me with the impression that the LTE/Mobile industry in Europe needs leadership, badly.

Currently mobile networks in Europe are at an impasse on which technologies to implement to cope with the current and (non)expected broadband data usage on their networks.  Their US and Asian counterparts have already started to implement infrastructure that can cover not only todays 100Mbit/second demands at the base station but can cover a 10x increase in case of another data explosion.

The LTE show should have been a place where the Vendors could show leadership in the infrastructure game by demonstrating the solutions that can solve the impending (existing!) bandwidth issues.  Instead all of the major vendors showed the same presentations and same concepts as last year.  One Vendor I didn’t see anything from was NSN (Nokia Siemens Networks), though as they were hidden in a separate set of “invitation-only” showrooms.  Maybe they have a real solution but want to keep it secret…

A number of Carriers also presented their LTE plans and this too was disappointing.  One major global carrier stated “We are LTE ready!” and proceeded to explain their claim.  They setup a small network, configured the proper technologies for various classes of voice/video/data services and simultaneously served 5 (that’s right “five”) customers.  According to this global carrier that services millions of customers globally at any given second, they can claim “LTE readiness” by successfully completing a trial of “5″ customers.

The only carriers I saw that could provide concrete evidence of being on the LTE path were US based.  I believe this is because of (or a lagging indicator of) the “iPhone effect” where Apple forced mobile carriers, kicking and screaming, into the 21st century.

Perhaps I’m being a little too hard on the Vendors and Carriers.  I would also place quite a bit of the challenges we face at the feet of the standards bodies that drive the LTE concept.  Standards are being developed and the LTE people are continually modifying how they make use of the standards in order to accommodate their charter.  You could almost say they’re “evolving” which, of course, is the “E” in LTE.

While there I took part in a panel that tried to provoke a discussion about the current state of mobile backhaul.  The title of the panel was “Mobile backhaul, is it fixed?”, literally meaning “do we have a standard solution for mobile backhaul?”. The direct answer is of course, no.  Mobile backhaul is a mess, especially in Europe where synchronization is a major issue with technological and political hurdles.  That topic, however, is meat for another blog post.

At the European Telecommunications Blog we focus on explaining the technologies, cultures and business traits that affect doing business in the Telecommunications sector in Europe.  We have several people in the trenches in the largest markets who daily engage Carriers, Systems Integrators and Vendors to understand the pulse of the European Telecomms sector.

Every so often we put together a white paper that summarizes our findings and I am pleased to announce that we have just completed one.  Our latest white paper discusses “Bridging the Knowledge Gap” of doing business in Europe and is part 2 of our series on how to expand into the European Marketplace.  Here is a link to register and receive download instructions for the white paper.

The main point of this latest paper is to explore factors that all companies must adhere to if they wish to thrive in Europe.  The markets on this side of the Atlantic Ocean do business a bit differently.  North American and Asian companies who wish to enter these markets need to understand that their approach they’ve used so far might not be the best way to find success.  Here is a snippet of the white paper as a teaser:

In order to come to market successfully in Europe the manufacturer or service provider must be mindful of the way business is conducted in Europe. To do this, the first topic we will cover is a commonly overlooked business characteristic. Understanding how relationships play a major role in day to day business dealings through Europe.

The second topic is assessing a product or service through the eyes of your intended customer prior to launch. This is a totally acceptable and recommended business practice. Not only does it provide critical acceptance criteria, it will also supply valuable competitive information not typically available prior to head to head competition.

The third topic has been difficult to adapt to.  Most companies who expand to Europe prefer to go it alone without partnerships and in some cases this direct approach is successful, however the majority of companies need relationships with VARs and large vendors to establish their value and brand. European telecommunications carriers and large network providers procured much of their equipment through these channels opposed to their counterparts in North America.

I hope that this nugget of information helps you and if you feel like it then please pass it along.  As always we welcome any and all feedback, please comment below!

I’m an Internet Junkie….there I finally admitted it.

What I really mean is that I’m constantly connected.  Through my laptop at home, my mobile phone or even my new iPad, I’m constantly connected. The amount I’m connected is probably an order of magnitude higher than the average person as I work in the Internet industry.  Each one of the devices I connect with basically does the same thing; Emails, web browsing, Intranet access and even VoIP calls.  The only difference is the context in which I use them.

At home I have a full communications package with phone, fax and Internet connectivity from Deutsche Telekom.  They are a very good provider, very few (if any) outages and the speed is always first rate.  I have T-Mobile for my mobile phone and the service there is also top notch.  The mobile data speeds are better than I expect, most of the time, and the network coverage is excellent.  Recently I procured an iPad and the experience there mirrors the experience of my mobile phone.

With all that said, you would think that I have nothing to complain about.  On the contrary, I have an issue with the contract.  More specifically, I have an issue with paying more than once for the same service!

All of these various devices are a demarcation point for access to the Internet.  In the case of Deutsche Telekom, all IP traffic goes over the same network, regardless of where it’s originated.  This means all DSL, Ethernet, Business Services and Mobile IP traffic is serviced by the same routers, switches and access gear.  Once a packet…always a packet….

This is the same with just about every market and carrier across the planet.  The recent drive to consolidate various services onto an IP infrastructure has yielded all IP networks in nearly every Carrier on the globe.  These all IP networks  carry all types of service, Voice, Data, Internet, Intranet.  Furthermore most of these carriers have plans to streamline their business process to integrate all of their various business units into a single entity (if they haven’t done it already)

With this in mind I’d like to know why a company like Deutsche Telekom cannot offer me a flat rate IP service that covers all of my IP devices?  I’d like to see DT charge me a single rate for IP service regardless of the amount of devices I use to access the network……let’s just add this to the long list of wishes

Today, Apple releases the iPad in the international market.  While we have gotten used to mobile apps, emails, calendars, and the occasional web surfing on mobile devices over the 3G network, the iPad promises to place a much larger demand for content.  Average users, not just “power” users will be everywhere able to surf the web, download content, etc. with more ease than even sitting at home on their computers.  Even with devices such as the iPhone, with it’s limited browsing capabilities due to it’s small screen size, we saw a much larger demand on the 3G networks that is driving the carriers to upgrade their backhaul networks to cope.  Will the iPad have a large impact if it is as successful in the international market as it’s release in the US?  Are the carriers ready to handle this today?

The nine markets released today are:

• Australia
• Canada
• France
• Germany
• Italy
• Japan
• Spain
• Switzerland
• UK

Do you have an iPad or plan to get one?  Tell us what your experience is and your likely uses for it!  Comment below.

If you’ve been in the telecommunications market longer than a decade you have witnessed the rise of the Chinese dragon.  Chinese firms have aggressively engaged every marketplace on the planet with a rulebook that is totally alien to incumbent vendors.  Aggressive pricing, support giveaways and a seemingly limitless supply of human capital are tactics used in every engagement. North America is now the last frontier.

The secret to Chinese success is a very simple idea;  A complex system is made up of cleverly connecting simple components together.  We can use our human capital to connect these discrete components together and build software around them  much less expensively than our western counterparts.  We will pass these cost savings along to our customers and undercut the competition.

This model has been wildly successful at gaining marketshare in Europe.

Customers are in the drivers seat as they can use the threat of Huawei or ZTE to dictate pricing to almost any other vendor.  I have been many sales meetings where a customer put an offer from a chinese vendor on the table and said:

“You’ve got some really interesting technology here.  Here’s the pricing from a chinese vendor, if you match it we an discuss this project further.”

So, price is more important than technology differentiators.  That’s a powerful statement and contrary to how the western vendors have positioned themselves.

This is a headache for the western(American/European) based telecommunications vendors.  Most of them have reacted by slashing prices, discounting aggressively or offering free services to match the financial terms that the Chinese vendors have set.

The 400Kg gorillas of the telecoms vendor world (Cisco, Alcatel, Ericsson) have many ways to counter this threat; Relationships, long contract cycles, deep pockets and of course brand name recognition, but these models aren’t sustainable in the long run.

So how can we change the game to our advantage?

As usual, we need to turn our attention to the next-generation technology companies for an answer. Some of these small technology firms have found a way to leverage their expertise to change the rules of the game by vertically integrating technologies into silicon.  This strategy is core to obviate the labor cost burden most western vendors have today while simultaneously adding more technology differentiators for Carriers to exploit.

So, price is more important than technology differentiators. That’s a powerful statement….

As stated above, complex systems are cleverly connected discrete components.  If these components can be integrated into silicon we gain a cost reduction by obviating the need for a bunch of people to “glue components together”.  Although the initial R&D cost is high, the follow-on manufacturing cost is significantly reduced.  This can result in a scenario where a company can compete with the chinese on price while maintaining a Wall St. margin expectation.

When components and software are tightly integrated together on silicon, a performance advantage emerges.  Consumers, businesses and Carriers have been clamoring for more bandwidth, cleverer packet handling, more services and lower cost.  Integrated Silicon, whether it’s in the form of ASICs (Application Specific Integrated Circuits) or FPGAs(Field Programmable Gate Arrays) is the foundation of ensuring network elements have the ability to provide all existing and future services at wirespeed,

There has also been concern regarding the software development practices of Chinese Vendors.  Issues ranging from disregard of software patents to blatant piracy have been reported.  This is only a threat of the software has code that is portable, i.e. can be run on any other machine.  When the hardware is vertically integrated and the software written specifically for this hardware then the threat of software appropriation is significantly reduced.

A number of companies have been very successful at this, even some of the 400Kg gorillas.  Here are a few examples of companies who have integrated silicon at the core of their product strategy:

• Juniper Networks – Internet Processor Family of ASICs
• Timetra, later Alcatel – MPLS and Ethernet chips
• Infinera - The Photonic Integrated Circuit
• Accedian Networks – integration of testing, measurement and service creation
• CyanOptics – Vertical Integration of Lambda, Ethernet and Transport technologies.

Vertical Integration of technologies is the only way forward for Western Technology companies.  If you run a high-tech company in the western hemisphere, leveraging advanced technology expertise to reduce costs, increase performance and protect Intellectual Property is the way to secure your future.

As always, I’d love to hear your comments, please let me know what your experiences are.