The Cisco TelePresence Opportunity for Service … Cisco TelePresence Opportunity for Service Providers Cisco® TelePresence is a new conferencing technology that creates a unique,

White Paper

All contents are Copyright © 1992–2006 Cisco Systems, Inc. All rights reserved. This document is Cisco Public Information. Page 1 of 11

The Cisco TelePresence Opportunity for Service Providers

Cisco® TelePresence is a new conferencing technology that creates a unique, “in-person”

experience over the network by combining innovative video, audio, and interactive

elements. According to market research conducted by Cisco Systems, telepresence

network services will represent an estimated US$4 billion in revenues for service

providers by 2010. The optimum Cisco TelePresence experience is delivered over an IP

Next-Generation Network (IP NGN), which has the intelligence to assign priority to

telepresence traffic and dynamically allocate bandwidth as needed. Service providers

that offer a network connection for Cisco TelePresence not only can capture a significant

revenue opportunity today, they also lay the foundation to offer additional tiered and

bundled services that provide market differentiation, strengthen customer loyalty, and

generate incremental revenue.

Executive Summary

Cisco TelePresence, a breakthrough communications technology, simulates face-to-face

interaction by providing a life-size video image of each remote participant, with fluid motion and

ultra-high resolution that can reveal subtle facial expressions. Participants can look at the eyes of

remote participants – rather than at a camera – as if they were in the same room. The life-like

experience is enhanced by CD-quality audio. Each person’s voice originates from his or her image

and is completely synchronized with the video.

The business case for Cisco TelePresence includes increasing employee productivity and job

satisfaction by reducing travel; decreasing travel costs; and increasing the speed of decision-

making for a competitive advantage. Sample uses for Cisco TelePresence include business

meetings, a local presence for remote executive assistants and lobby attendants, remote

interviewing and Human Resources benefits support, trading windows for investment banks,

access to specialists from remote bank branches, arraignment and deposition, remote expert

consultation for offshore drilling platforms, and face-to-face customer service and support.

Cisco TelePresence is defined by its extraordinary video and audio quality, and achieving that

quality requires three solution components:1

● The Cisco TelePresence Meeting System, which includes customer premises equipment (CPE)

such as video endpoints, cameras, codecs, and video screens. The system also integrates with

calendaring tools and Cisco Unified CallManager to enable simple call scheduling and one-

button call launch.

1 Gartner, “Comparing Videoconferencing Telepresence Systems,” September 2006

“The obvious gains of reductions in travel time and travel costs [from telepresence]

may, in fact, be far outweighed by potential gains in increased productivity, efficiency,

time to market and other factors.” – Gartner1

White Paper


● A Cisco Certified TelePresence connection, based on the service provider’s IP NGN, which has

the intelligence to recognize telepresence traffic, assign it priority, and dynamically allocate more

bandwidth as needed to deliver the optimal Cisco TelePresence experience. Two enterprises

with identical Cisco TelePresence equipment and room setup will experience radically different

results based on whether their network connection has the required intelligence and availability.

Cisco certifies the service provider’s network connection as a Cisco Certified TelePresence

connection – providing a competitive advantage – if the service provider adheres to a validated

network design and follows specified operational procedures.

● Professional telepresence room design, including equipment installation and attention to

environmental features such as lighting, speaker placement, and conference seating. Cisco has

identified global Advanced Technology Partners with the expertise to provide these services.

Service providers that offer a Cisco Certified TelePresence connection stand to capture a

significant revenue opportunity. Wainhouse Research reports that company purchases of high-

definition endpoints increased 18.1 percent in quarter two of 2006,2 Gartner states that 200

telepresence units are sold yearly and estimates that the potential number of telepresence

deployments is in the thousands,3 and Human Productivity Lab predicts that nearly all Global 5000

companies will adopt telepresence by 2016.4

This white paper, intended for service provider executives and IT personnel, describes the Cisco

TelePresence services opportunity for service providers. The first section describes the Cisco

TelePresence experience. The next sections describe the service opportunity and solution

elements. The paper concludes with the motivations for enterprise customers to adopt Cisco

TelePresence.

What Is Cisco TelePresence?

Cisco TelePresence creates a unique, “in-person” experience over the network by combining

innovative video, audio, and interactive elements. It enables people in multiple global locations to

interact as if they were face-to-face. All participants appear to be sitting in the same room, no

matter where they are physically located (Figure 1).

Figure 1. Cisco TelePresence Meeting Solution

2 Wainhouse Research Bulletin, August 31, 2006 3 Gartner, “Videoconferencing Telepresence Systems – Ready for Prime Time?”, 2006 4 Human Productivity Labs, “TelePresence, Effective Visual Collaboration and the Future of Global Business at the Speed of Light,” August 2006

White Paper


Cisco TelePresence is as different from video communications as the telephone was to the

telegraph. A defining attribute is its life-like visual and audio quality. Participants see life-size

images of remote participants, with fluid motion and accurate flesh tones. The combination of fluid

motion and ultra-high definition – double the definition of today’s high-definition televisions and

available only from Cisco TelePresence – enables participants to notice subtle facial expressions

as if the other person were seated across the table rather than thousands of miles away. The in-

person experience is heightened by the impression of true eye contact. Cameras are located out of

sight, at eye level, so that participants appear to look at each others’ eyes while speaking or

listening, engendering a greater feeling of trust. Inconspicuous camera placement helps strengthen

the impression that the other people are physically present. In addition, Cisco TelePresence

provides CD-quality, spatial audio. Each person’s voice sounds as though it is originating from his

or her image, further enhancing the in-person experience. Voice is synchronized with the video.

In a study conducted by Sage Research, end users indicated they expect substantial benefits from

Cisco TelePresence such as:

● 75% improved relationships and increased decision-making

● 65% improved productivity in functional groups

● 67% extended competitive advantage

● 57% faster issue resolution

● 77% reduced IT support5

Life-like video and voice have contributed to enthusiastic uptake of telepresence technology by

business users. Companies that have adopted telepresence report usage between 60 and 275

hours per month compared to an average of 15 hours per month for traditional video

communications systems.6 In addition, the in-person quality of the Cisco TelePresence experience

makes it feasible to communicate over the network for more important or sensitive interactions than

in the past, including high-level business negotiations and collaboration by film companies

producing high-budget films, to reduce traveling costs.

5 Sage Research, "Expected Benefits of TelePresence", 2006 6 Human Productivity Labs

The Cisco TelePresence experience

Comments from enterprise executives who experienced Cisco TelePresence in Cisco focus groups:

● “I need to see expressions. Cisco TelePresence would make my meetings more productive – a must if we cut back on travel.”

● “With Cisco TelePresence you’re able to focus on the conversation, not the technology.”

● “I knew it was good when I tried to shake the hand of the person across the room who was in another room.”

● “I like the idea of a one-button launch.”

● “The resolution and sound are years ahead of what has been available.”

● "A Cisco certified TelePresence network connection would give me greater confidence as to the reliability and quality of the service."

White Paper


While the immediate service provider revenue opportunity for a Cisco TelePresence connection is

for business meetings, Cisco TelePresence has broader potential to transform the way people

work, live, play, and learn:

● Work – Interactions with centrally-located specialists from branch locations, remote executive

assistants

● Live – Healthcare, telemedicine, telejustice, visits with family for soldiers on extended tours of

duty

● Play – Sports viewing, virtual wine-tasting events

● Learn – Observation of surgery by medical students

The Cisco TelePresence Service Opportunity

Cisco TelePresence is among the first applications to capitalize on the service provider’s

investment in an IP NGN to generate incremental revenue. Only with an intelligent network can

service providers deliver the extraordinary video and audio that characterize Cisco TelePresence,

because only an intelligent network can assign priority to telepresence traffic and dynamically

allocate bandwidth.

In addition to generating immediate revenues, a Cisco TelePresence connection positions the

service provider to rapidly introduce additional tiered and bundled service offerings based on the IP

NGN (Figure 2).

Figure 2. TelePresence Value Added Services

White Paper


Service offerings that can complement the Cisco TelePresence connection include:

● Network services

◦ Cisco TelePresence business-to-business connection – The service provider offers a Cisco

TelePresence network service to schedule and connect Cisco TelePresence meetings with

partners or customers that have their own Cisco TelePresence meeting rooms. As part of the

offering, the service provider provides directory services to securely facilitate session setup for

approved meetings, as well as security between networks to limit traffic to the Cisco

TelePresence traffic, only.

◦ Metro Ethernet Service – Enterprises use this service for high-bandwidth access to the Cisco

Certified TelePresence connection.

◦ Application-Aware VPN – The standard Cisco Telepresence connection has the intelligence to

assign priority to telepresence traffic and dynamically allocate bandwidth to this traffic. An

application-aware VPN uses a policy server to also consider the user or user group originating

the traffic when assigning priority.

● Value-added Cisco TelePresence services

◦ Video Concierge – The service provider delivers additional services, such as moderating

meetings, connecting participants who are using a standard phone or video communications

system, and providing additional meeting resources. The enabler for these services is

integration of the Cisco TelePresence System with other applications on the IP NGN, such as

Cisco Unified CallManager and Cisco IP Contact Center (IPCC).

◦ Multipoint Cisco TelePresence Connections – The service provider provides secure, multipoint

calls between three or more locations.

◦ Managed Cisco TelePresence – The service provider manages the customer’s Cisco

TelePresence System and provides 24 x 7 management, monitoring, maintenance, and

reporting services.

◦ Hosted Cisco TelePresence Service – The service provider hosts and manages the entire

suite of Cisco TelePresence services at a public location, where they are accessible to small

businesses and individuals.

● Ancillary services

◦ Managed Unified Communications – The service provider manages the customer’s Cisco

Unified CallManager platform, required for the Cisco TelePresence connection and already

used by some customers as their business communications system.

◦ Managed Security Services – The service provider manages the customer’s security

technologies and applications, such as firewall, intrusion detection, intrusion protection, and

anti-virus.

Service providers that offer a Cisco Certified TelePresence connection also position themselves to

capture revenue from specialized Cisco TelePresence markets such as telemedicine, telejustice,

telepsychiatry, pharmaceutical research, film production, and neurological operating rooms.

“This ability to effectively conduct global inter-company business will be, without a

doubt, the ‘killer app’ of the 21st century, and an application with potential for the

same exponential growth that characterized telephony, the Internet and other

communication networks.” – Human Productivity Lab

White Paper


Service Differentiation

Service providers that offer a Cisco Certified TelePresence connection can attract more global

customers as well as strengthen relationships with existing customers. Customers perceive these

service providers as delivering greater value than providers without the designation. They

differentiate themselves today by offering a superior Cisco TelePresence experience, and in the

future by offering additional intelligent services, such as Video Concierge, that help increase

enterprise customers’ productivity and provide added value.

Reduced Risk

A Cisco Certified TelePresence connection is built on the service provider’s existing IP NGN, which

accelerates time to market and avoids the need for capital expenditures. In addition, the Cisco

Powered Network Program team provides support for marketing and service development, helping

to accelerate service adoption.

Elements of a Cisco TelePresence Solution

Cisco Certified TelePresence Connection

Two companies with identical Cisco TelePresence Systems and room setups can have noticeably

different experiences based on their network connections. The optimal telepresence experience –

the Cisco TelePresence experience – requires an intelligent network connection that conforms to

strict standards for QoS and availability and is managed according to best practices. Therefore,

Cisco recommends to all customers that purchase a Cisco TelePresence System that they work

with a service provider offering a Cisco Certified TelePresence connection. To acquire the

certification, service providers must meet rigorous standards for their Multiprotocol Label Switching

(MPLS) VPN architecture, service-level agreements (SLAs), management systems, and policies

and procedures. After receiving the certification, service providers undergo an annual third-party

review to ensure that standards are maintained.

A third-party certification process for the Cisco Certified TelePresence connection provides

enterprise customers with the assurance that the network service delivers the voice and video

quality required for Cisco TelePresence and meets or exceeds enterprise requirements for

operational excellence.

Cisco TelePresence Meeting Solution

The first of several planned telepresence solutions from Cisco, the Cisco TelePresence Meeting

Solution is deployed at the customer premises by a Cisco Advanced Technology Partner that is

certified by Cisco after receiving extensive training. The Cisco TelePresence Meeting Solution

includes:

● Cisco TelePresence System – The Cisco TelePresence 3000 System is a three-panel plasma

screen system, complete with speakers, microphones, lighting array, and a table that seats six

on each side for group meetings. The Cisco TelePresence 1000 System is a single-panel plasma

screen system designed to be installed as a free-standing unit in executive offices and general-

purpose conference rooms, accommodating up to four people: two on each side.

● Cisco TelePresence Manager – The management software provides event management, help

desk support, and reporting of device status. Cisco TelePresence Manager interfaces with

enterprise groupware, such as Microsoft Outlook or Microsoft Exchange, to enable employees to

schedule Cisco TelePresence sessions from their calendars. It also integrates with Cisco Unified

CallManager, which pushes information about the scheduled call to the Cisco Unified IP Phone

White Paper


in the Cisco TelePresence meeting room. Employees can launch the call by pressing a single

button on the IP phone, or initiate an unscheduled call simply by dialing the number of the other

telepresence room.

Cisco Ecosystem of Service Providers

The hallmark quality of the Cisco TelePresence experience depends not only on the quality of the

service provider’s network connection, but also on the room design and proper installation of the

Cisco TelePresence endpoints. Therefore, Cisco has identified global Advanced Technology

Partners that can work with service providers to provide planning, preparation, design,

implementation, and operation for the telepresence room and equipment. Only Cisco Advanced

Technology Partners are authorized to resell and install the Cisco TelePresence Meeting Solution.

Working at the customer sites, the partners plan the room design, install professional lighting and

acoustics systems, and deploy and maintain the Cisco TelePresence Meeting System. The Cisco

Customer Advocacy group provides support to Cisco Advanced Technology Partners to help

ensure proper design and installation of customers’ Cisco TelePresence rooms and equipment.

Business Drivers for Enterprise Customers

The best candidates today for Cisco TelePresence – and an optimized network connection – are

large, multinational companies in the Global 2000. More specifically, according to a survey by Sage

Research,7 companies with the most interest in telepresence are in the financial services industry,

have 100 or more sites, are actively pursuing employee collaboration initiatives, or are planning an

investment in video communications in the next 24 months. Industries other than financial services

with a clear business case for Cisco TelePresence include manufacturing, healthcare, retail and

consumer packaged goods, and the public sector (Table 2).

Future markets for service providers that offer Cisco TelePresence include smaller enterprises,

organizations with shared facilities such as retail locations and convention centers, and

entertainment and leisure companies that offer remote dining or remote viewing of sports events.

Table 1. Prospective Customers for a Service Provider’s Cisco TelePresence Service

Industry Process Efficiencies Enabled by Cisco TelePresence Benefits

Financial services Staff a centralized contact center with experts in all products and services, providing immediate, personalized 24 x 7 support for customers who live anywhere in the world.

● Reduced cost to acquire and serve customers and enter new geographic markets

● Increased operational efficiencies

● Increased assets under management as a result of providing more products and services per household

● Higher net present value of each customer relationship

● Improved salesforce productivity

7 Sage Research, “Cisco TelePresence: A Quantitative Study of Potential Concept Benefits,” September 2006

“The use of videoconferencing and visual collaboration can yield significant

improvements in corporate efficiency – especially in the project management area

where these tools can help speed the development and product launch process. By

cutting time-to-market, engineering and marketing teams can introduce more products

to the market in a given period of time.” – Wainhouse Research

White Paper


Industry Process Efficiencies Enabled by Cisco TelePresence Benefits

Manufacturing Connect managers and experts at headquarters with operational staff in other locations and countries for real-time, collaborative R&D, manufacturing, and engineering

For high-value customers, set up a telepresence meeting room on the premises to provide Cisco TelePresence-based support.

● Improved decisionmaking because senior executives in different locations can meet more frequently, with less time and expense

● Faster development cycles

● Lower costs

Healthcare Enable patients and physicians to meet in realtime with physicians in other locations.

Use Cisco TelePresence in conjunction with imaging systems so that physicians in different locations can collaborate on diagnosis and treatment recommendations.

● Lower healthcare costs

● Promotion of wellness with telehealth, an ecosystem of healthcare providers

● Enhanced quality of care by enabling remote follow-up – for example, between a patient visiting a primary care physician’s office and a specialist in another region of the country

● Reduced “time to care” by enabling a physician to consult with a specialist in another location regarding rare medical conditions

● Faster diagnosis, treatment, and discharge

● Improved customer reach

Retail and consumer-packaged goods

Enable executives to meet more frequently, fostering product and service innovation.

Set up kiosks to provide information about automobile loans, mortgages, home improvement services, and more, to avoid the expense of onsite staffing.

● Enhanced customer satisfaction

● Faster time-to-market for new products and services

● Increased margins by reducing operational expenses

Public sector Meet remotely to enhance situation support, improve command and control of resources, and facilitate rapid decisionmaking in response and recovery situations.

Establish a virtual capital to conduct ministry, embassy, and policy meetings.

Link courts, prisons, and police to reduce costly prisoner transport and court time and to minimize security risks.

Hear grievances in state and local government.

● Better communication in national and worldwide emergencies

● Faster decision making in critical negotiations

● Increased safety and security ● Better community relations

Following are the major motivations for enterprise customers to adopt Cisco TelePresence.

Increasing Employee Productivity and Collaboration

Using Cisco TelePresence for internal meetings reduces the unproductive time that employees

spend traveling and recovering from fatigue. Improved access to globally distributed colleagues,

subject matter experts, and executives speeds up decisionmaking and enhances collaboration. For

example, a product-development engineer could demonstrate a prototype of a new form factor or

user interface for instant approval, accelerating product introduction. A global PR team handling a

time-sensitive crisis could meet to discuss strategy, ensuring more consistent response to the

press.

Enabling Business Process Transformation

By enabling employees to meet more frequently with their colleagues, customers, and partners,

Cisco TelePresence gives companies a competitive advantage. Salespeople can supplement in-

person meetings with Cisco TelePresence meetings to introduce customers to subject matter

experts sooner in the sales cycle, close sales more quickly, and strengthen the customer

relationship. Distributed marketing teams can develop campaigns more quickly. Product

development teams can accelerate development cycles. Human Resources personnel can conduct

White Paper


remote job interviews, reducing air travel expense during preliminary interviews, or enabling more

managers to interview candidates. Professional services organizations can meet more frequently

with their clients.

Reducing Travel Costs

Cisco TelePresence reduces the need for travel to internal and inter-company meetings,

decreasing costs for air, hotel, food, and transportation. Alternatively, companies can keep the

same travel budget but allocate more of it to high-value customer meetings instead of internal

meetings. In an ROI calculation by Wainhouse Research, if a company’s employees make three

domestic business trips monthly, each meeting has an average of four participants, and employees

are paid $80,000 annually, the company can save approximately $110,000 the first year if 10

employees conduct 40 percent of their meetings with telepresence.8 Reducing travel also has a

positive impact on the environment by reducing fuel consumption and emissions.

Increasing Employee Satisfaction and Retention

Reducing the amount of required travel improves employees’ quality of life at the same time it

increases productivity. Greater job satisfaction results in fewer turnovers among valued employees.

Supporting Business Continuity

Governments and companies with distributed operations can use Cisco TelePresence for crisis

management and emergency executive meetings. The ability to meet in realtime without travel

delays enables faster response and improved decisionmaking.

Increasing IT Efficiency

A Cisco Certified TelePresence connection delivers predictable and reliable service levels,

reducing the time that IT groups spend on troubleshooting and resolving network issues. IT also

saves time as a result of the integration of the Cisco TelePresence connection with the Cisco

Unified CallManager server because employees do not need assistance from IT to schedule a

conference. Instead, they schedule the Cisco TelePresence meeting just as they would a voice

conference, using Microsoft Outlook.

From cost savings to competitive advantage, the business benefits of Cisco TelePresence are

compelling. Companies can realize those benefits only if they have a reliable network connection

that delivers a consistently excellent Cisco TelePresence experience. This provides a powerful

incentive for companies to work with a service provider that offers a Cisco Certified TelePresence

connection.

Why Cisco

Service providers that want to capitalize on the telepresence market opportunity gain the following

advantages from offering a Cisco Certified TelePresence connection:

● Network technology that supports Cisco TelePresence requirements

◦ More than 24 patents in process pertaining to Cisco TelePresence, representing a commitment

from Cisco to enable the best possible user experience

◦ Application-aware VPN that inspects packets and dynamically allocates bandwidth and priority

according to policies associated with application type and specific user

8 Wainhouse Research, “The Business Case for Videoconferencing,” August 2005

White Paper


◦ Integrated VPN Routing and Forwarding that enables each enterprise to have its own separate

and secure VPN connection, making it simpler and more straightforward to establish inter-

company Cisco TelePresence sessions

◦ Encryption support for product planning, government meetings, board meetings, or other Cisco

TelePresence sessions in which sensitive information is discussed

◦ Integration with Cisco Unified CallManager and Microsoft Outlook for simple scheduling and

one-button call launch

● Brand recognition – Brand recognition boosts service acceptance, and business customers know

and trust the Cisco Powered brand. In fact, Cisco has the world’s best brand recognition for

service certification, according to Merrill Research. Service providers that promote their Cisco

Certified TelePresence connection reassure their customers that their service is delivered over

an end-to-end Cisco infrastructure – an attribute that business customers associate with

compatibility, reliability, and quality.

● Marketing resources – Cisco provides valuable marketing resources to service providers that

participate in the Cisco Powered Network program. Service providers can leverage these

marketing materials to accelerate time to market and to capitalize on the strength of the Cisco

brand and Cisco’s relationships with enterprise customers.

● Complete lifecycle services at the customer premises – Cisco has identified experienced

Advanced Technology Partners in each geography, sparing service providers the time, effort,

and risk of selecting partners to provide lifecycle services, which include planning, design,

implementation, and maintenance services, at the customer premises. These partners are

certified by Cisco to sell, assess, design, and install the Cisco TelePresence solution and design

the telepresence meeting room.

Conclusion

Service providers that offer a Cisco Certified TelePresence connection can accelerate and increase

the ROI from their IP NGN by capturing part of the estimated $4 billion in revenues for telepresence

network services between 2007 and 2010. The revenue potential expands when service providers

offer tiered and bundled services such as Managed Cisco TelePresence, Video Concierge,

Managed Cisco Unified CallManager, and Application-Aware VPN, and enter emerging niche

markets for telepresence such as telemedicine, telejustice, telepsychiatry, pharmaceutical

research, film production, and neurological operating rooms.

The Cisco Powered Network Program team provides resources to help accelerate introduction of

the Cisco TelePresence network service and to minimize risk. For example, third-party certification

gives potential customers objective validation that the service provider’s Cisco Certified

TelePresence connection provides the quality and reliability needed for an excellent Cisco

TelePresence experience. Access to the Cisco ecosystem of Advanced Technology Partners

eliminates the time and risk of finding partners to deploy and maintain customer premises

equipment. Finally, support for marketing and service development for vertical industries helps to

accelerate service adoption.

To read more about Cisco TelePresence technology and marketing resources, visit

http://www.cisco.com/go/sp/telepresence.

http://www.cisco.com/go/sp/telepresence

White Paper


Printed in USA C11-375487-00 10/06

Documents

The Cisco TelePresence Opportunity for Service … Cisco TelePresence Opportunity for Service Providers Cisco® TelePresence is a new conferencing technology that creates a unique,