1 Convergence Overview Presented by Verizon
2 Agenda Verizon Overview Convergence Market SizingEnterprise Convergence Strategy Data Implications Voice Implications Impact of Wireless Data
3 Our solutions and expertise deliver, so you can:Verizon Overview Fortune ranking: Fortune 20 Globally/ 14 Domestically #1 communications company domestically A Dow 30 company 47.4M Wireless voice and data customers (2Q05) 1.2M+ SuperPages advertisers Wireline Markets: 94 out of top 100 Wireless Markets: 97 out of top 100 Relationships with 2/3 of the Fortune 1000 >$75B in infrastructure investment since ’00 >$26B in debt reduction since ’01 Did You Know? 1.5B+ calls handled nationwide each day Operate one of the largest call center operations in North America managing over 275M calls annually Maintain one of the largest internal IP networks – larger than any hosting firm 11.2 Million miles of fiber 2,337,000 long distance lines Added 1,240,000 DSL lines in 2004, adding 100,000+ every month Added 278,000+ broadband connections in 2Q05 for 4.1+M Added 600+ new Enterprise Advance contracts in 2Q05 18M+ line equivalents managed or maintained IT budget of approximately $1.5B Our solutions and expertise deliver, so you can: Reduce costs and boost the bottom line Maximize operating efficiencies Concentrate on growth and expansion to gain competitive advantage
4 Today’s “Top of Mind” Enterprise ConcernsLOWERING COSTS ADDRESSING UNCERTAINTIES INCREASING PRODUCTIVITY Focus on TCO Doing the same functions for less Focus on headcount Focus on core vs. context Being prepared for the unpredictable Disaster at HQ Displaced users Security concerns New laws, regulatory changes “Change ready” infrastructure (new apps, new interfaces) Decreasing wasted time Increasing responsiveness Doing more for the same or incremental cost Focus on core vs. context Partner/supplier interface PROFITABLE PROTECTED PRODUCTIVE
5 Convergence Defined EnterpriseConvergence occurs in three primary areas: Applications – Voice Access – SONET, Ethernet Core Network – VOIP, IP-VPN TCO benefits only occur when migration: Involves all three areas Evolves over time Driven by business strategy Verizon differentiation based upon: Hybrid strategy – premise & network Level of service integration Breadth of portfolio Enterprise Video WAN Extranet Voice VPN Internet PSTN Enterprise Converged Network PSTN Internet Account for convergence dependencies Enterprise requirements/demand Existing infrastructure Cost recovery model Redeploy IT/Telecom support resources Reduce access network complexity Complexity managed within the network Facilitate business applications deployment Align IT infrastructure with business process Rapid implementation of new IP based applications Drive competitive advantage and revenue growth Applications
6 Convergence What We’ve Learned From The MarketTop Concerns Extend applications to remote employees Streamline administration and network management complexities Reduce costs, leverage investments Increase customer satisfaction Enhance productivity Competitive position – access real-time, information Regulatory mandates Consolidating networked applications and e-commerce Top Applications Driving Convergence: Conferencing (61%) IP phone-based productivity applications (58%) Remote access to applications (52%) User mobility (52%) Source: Meta Group 2004
7 Convergence Market SizingCAGR ’05 – ‘09 Hosted Voice – 106.1% VoIP VPN – 56.3% IP PBX – 19.4% IP VPN (N) – 34.2% IP VPN (C) – 10.6% 2005 Total Market = $4.3B Composite CAGR = 24.5% $759.1M $2078.8M $1040.2M $2787.3M $3200.2M 2009 Total Market = $9.9B
8 Convergence Marketing SizingTraditional Managed WAN services being replaced by Managed VPN Managed IP Voice lifting Managed LAN utilization IP-PBX maintenance eclipsing traditional PBX maintenance Verizon is not investing in growth drivers of CPE Services $M
9 Enterprise Convergence StrategyVision Enablers Benefits Applications HOSTED NETWORK APPLICATIONS enable enterprises to outsource non-core activities to focus on activities that enable their business strategy. Verizon’s strategy is to offer a full compliment of hosted voice and network security hosted application services accessed from Verizon’s secure private MPLS IP-VPN network. Converge Voice & Data over common LAN Infrastructure (IP/PBX, SIP, Unified Messaging, Wireless) Reduced Equipment & Platform Costs Access METRO ETHERNET services provide cost effective, highly scalable solutions to Enterprise’s growing bandwidth and convergence requirements. Verizon offers a full range of Metro and WAN Ethernet services integrated with it’s MPLS based IP-VPN offering to enable Enterprise site to site connectivity requirements, business continuity and convergence strategies. Reduced Access Costs Simplified Operations Converge Disparate Technologies over a over single access facility Core Network OPTICAL INFRASTRUCTURE is the foundation on which high bandwidth, high-availability networks are built. Verizon’s fiber infrastructure with 11.2 million route miles and SONET rings translates into unmatched service availability and reliability backed by strong SLA’s. MPLS IP-VPN enables fully meshed connectivity between sites, choice of multiple access technologies and Class of Service capabilities to support converged applications. Utilize common Core Architecture to provide flexibility across geographies Highly Efficient Eliminates Multiple Networks
10 Traditional LAN/WAN EvolutionLegacy Unconverged Edge & WAN PSTN Legacy Voice Avaya PBX ISDN-PRI’s DS1 PBX Tie Lines Polycom Videoconferencing ISDN-BRI’s Public Internet Web/Ecommerce & Internet Access DS3 Internet Access Cisco 2691 Cisco PIX 525 Fast Packet Network Local Area Network DS3 Frame Relay Cisco 3660 Storage Area Network SONET/TDM DS3 Private Line McData Eclipse 3300
11 CoS Enabled Metro Ethernet / IPConvergence – Role of Ethernet Cisco IP Voice 7971-G 7971-G 7971-G 7971-G Cisco IPTV Videoconferencing PL to IP-VPN Internet IPTV 3540 Web/Ecommerce & Internet Access CoS Enabled Metro Ethernet / IP Local Area Network VoIP Gigabit Ethernet ISR 3845 Call Manager Express Firewall/IPSEC Cisco EtherSwitch Storage Area Network MDS-9216 FCIP Verizon is primary provider for all network infrastructure and related applications
12 Convergence – Role of EthernetService Type Service Class E-Line Ethernet Private Line Service Point to Point Ring-based Ethernet Virtual Private Line Service Verizon Ethernet Virtual Private Line Service E-LAN Ethernet LAN Service Switched Ethernet Ethernet Packet Ring Multiple flavors of Ethernet described by the Metro Ethernet Forum No single Ethernet product can support all enterprise network requirements
13 Convergence – Role of IP-VPNMesh networks SIMPLIFY the dynamic WAN environment One Virtual Circuit per location allows complete Any-to-Any communication between customer locations Routing Protocols allow the network to automatically adapt to network changes, simplifying the change management process No change necessary to existing sites when bringing a new site online Connection-Oriented VPN Topology Connectionless VPN Topology VPN C VPN A VPN B VPN C VPN A VPN B MPLS IP-VPN Mesh Network Simplification
14 Convergence – Role of IP-VPNNative IP-VPNs Multi Protocol Label Switching (MPLS) – IETF RFC 2547 Provides unique networking options “Any-to-Any” connectivity (FR, ATM, Ethernet, Optical, Private Line, etc.) IP enabled Frame Relay and ATM IP Multicast Internet Protocol Security (IPSec) Defines a security standard IP networking Authentication Encryption Tunneling Transparent Layer 2 MPLS VPNs Enable Layer 2 protocols to be tunneled (encapsulated) across Layer 3 (IP) networks Point–to–Point (i.e., Martini Draft) Preserves Virtual LANs (VLAN) across the IP network IP–VPN enables customers to construct secure, access independent Intra/Inter/ExtraNet infrastructures, backed by SLAs. Customers will have access to the Internet, as well as, vertical services (i.e., firewall, VoIP).
15 Customer Example – MPLS IPVPN/Switched Ethernet National Banking CustomerCombination of Ethernet & IP-VPN drives flexibility and value Existing and New Switched E Sites Metro NY Albany, NY 100 Mb New York, NY 100 Mb 1.5Mb Private Line Sites Arkansas TLS Illinois Primary iVc EMS New York, NY 10 Mb New York, NY 100 Mb Backup California SER MPLS IP-VPN Backup iVc . Chicago, IL VLAN-xyz New York, NY 10Mb SER New York, NY 10 Mb Florida #1 SER Philadelphia PA Local/National Convergence Florida #2 Los Angeles, CA IP-VPN i-VC’s Bank’s Service Point Bay Area, CA Florida #3 California #2 Layer 2 PVC, Ethernet frames
16 Convergence Redefines Voice ServicesTraditional Voice Perspective Defined by state and federal jurisdiction Defined by technology and network infrastructure Limited by regulatory and network infrastructure Traditional Marketing Strategy Driven by technology platform and jurisdiction Traditional Sales Strategy Point Solutions
17 Convergence Redefines Voice ServicesDefined by state and federal jurisdiction Defined by technology and network infrastructure Limited by regulatory and network infrastructure Traditional Voice Perspective Traditional Marketing Strategy Driven by technology platform and jurisdiction Traditional Sales Strategy Point Solutions New Voice Perspective Defined as an application Independent of jurisdiction Independent of transport medium or network infrastructure New Marketing Strategy Driven by customer requirements defined features and functionality New Sales Strategy End-to-end Solutions Features and benefits
18 Convergence – Voice ApplicationsUser Interface Centrex Private Line T1/T3 PSTN PBX/IP PBX ATM IP-VPN with QoS VoIP VPN iobi Switched Ethernet Service Hosted IP Telephony Call Management IP-VPN with QoS (MPLS-based) GUI/Soft Client Unified Messaging Productivity Conferencing/ Multi-media Features/ Applications Service Platform Resources Access Infrastructure Voice Applications are separated from underlying transport creating an opportunity to enhance flexibility, value and speed to market
19 Flexibility to Address Customer’s Business NeedsConvergence – Voice Applications Solutions Packaging Flexibility to Address Customer’s Business Needs Solution Components Enterprise Customer Needs Cost Reduction, Predictability Single Service Provider Economies of scale – network integration Toll by-pass savings Business continuity Keeping current with latest technology Lower cost with future expansion Productivity improvements Extension of voice services Collaboration/Conferencing Interfaces Applications Platforms Networks Access Points Customer Specific Solutions
20 Convergence – Voice ArchitectureBenefits: Deliver significant cost savings through network consolidation, reduced administrative expense, and reduced termination costs. Improve efficiency through improved self-control of MACDs & the ability to support hybrid environments that leverage existing investments until business demands require a change. Improve productivity by delivering unified communications and collaboration tools via an integrated, user friendly desktop application. Minimize the impact on users, support hybrid environments, maintain carrier level quality & availability while retaining feature sets. Feature Servers Feature Servers Feature Servers Feature Servers Softswitch PSTN Gateway Internet Secure IP/MPLS Network G/W IAD IP PBX IP Enabled PBX Hosted IP Telephony 1-800 Mobile Access 3rd Party PBX VoDSL
21 Convergence – Mobility RequirementsA single platform to access regardless of location Mobility solutions: Teleworkers need access to , voice mail and corporate data Remote traveling employees need high customer/corporate interaction Occasional corporate travelers need extended communications, data access, message management Secure access to organization resources: Wireless LAN and Remote Access Mobility (RAM) Remote Access Mobility Unified Messaging iobi Enterprise Centrex and PBXs Connectivity – Ethernet, DSL Managed VPN
22 Speed will Drive Adoption Speed & Reach are Key EnablersConvergence – Role of Wireless Data Speed will Drive Adoption Speed & Reach are Key Enablers 1MB File Download Comparison Technology Speed* (Kbps) Download Time** GPRS 20-30 5 min 36 sec Relative Appeal 1xRTT 40-60 2 min 48 sec EDGE 40-120 1 min 45 sec EVDO 21 seconds Source: Arbor Inc’s survey for VZ Communications *Average realistic throughputs. **Assume mid-point of average throughput.
23 Wireless Data is increasing in feasibility & valueWireline/Wireless Converged Applications Remote Access Mobility Frame relay connectivity from Wireless SP data center to customer location Wireline SP provides network, CPE and management services Business Continuity Primary/secondary wireline Backup EVDO for Wireless Voice/Data Backup Alternative to ISDN/DSL Wireline SP provides network integration services Wireless Office IP PBX Integration Seamless Mobility/IP Roaming (CDMA/WiFi Integration) Adding VoIP as a Feature Data Roaming Available Today (Enterprise Offer) Single Software Client Wireless Data is increasing in feasibility & value
24 Backup Communications PathBusiness Continuity and Remote Access Mobility Fast Packet/MPLS AAA PDSN 1X, EV-DO Wireless WAN Network Frame Relay Branch Office RNC Data Center MobileBridge RNC Corporate Ethernet EV-DO Connection IP (10/100 Base - T) Network Backup Communications Path 60 – 80K Uplink Up to 2M Downlink Local IP Network Access Router Frame or ATM Virtual Channel Router (Primary Communications Path)
25 Convergence is an Evolution not a RevolutionConvergence Summary Convergence is a reality today Real technology – tangible benefits Requires holistic approach Applications Access Core Network Creates efficiency for Data networks Creates flexibility & value for Voice Applications Wireless Data beginning make an impact Convergence is an Evolution not a Revolution
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