Welcome Cisco Service Provider Vision Mazen Jabri Territory Manager, Gulf Service Provider Line of Business

WelcomeWelcome

Cisco Service Provider VisionCisco Service Provider Vision

Mazen JabriMazen JabriTerritory Manager, GulfTerritory Manager, Gulf

Service Provider Line of BusinessService Provider Line of Business

Roadmaps for Success:Roadmaps for Success:

New WorldNew WorldBusiness ModelsBusiness Models

for Service Providersfor Service ProvidersMuscat -Muscat - May 29th, 2001May 29th, 2001

3© 2000, Cisco Systems, Inc.

Drivers of Telecom MarketDrivers of Telecom Market

Telecom Market

DisruptiveTechnologyDisruptive

Technology

IPIP

DeregulationDeregulation CapitalCapital


Intelligence to the InternetIntelligence to the Internet

Internet CircaInternet Circa

• 19941994

• 19971997

• 20002000

Access MethodAccess Method

• Dial-upDial-up

• T1T1

• DSL/CableDSL/Cable

ApplicationApplication

• Mass e-mailMass e-mail

• MyYahooMyYahoo

• Video on Video on demanddemand

Fiber


Convergence Convergence to HTTPto HTTP

Complexity and Complexity and ScaleScale PersonalizationPersonalization

Intelligence to the InternetIntelligence to the Internet


Wireless InternetWireless Internet

• Internet—anytime, anywhere

• Internet to the masses

500 million subscribers ww today

2 billion expected in 2003

• Emerging markets

Europe, India, China

PC substitute

• Conquering the digital divide

Less financially affluent

Less technically affluent


ContentContent

IPIP

BB Access BB Access

The “3” Layer ModelThe “3” Layer Model


Content Delivery NetworksContent Delivery Networks

Optimize Internet Experience by Connecting Users and Customized Content

Optimize Internet Experience by Connecting Users and Customized Content

DeliveryDelivery

• Network/server knowledge

• Forwarding of content to caches

• Redirecting users to content

SwitchingSwitching CachingCaching

• Forwarding based on http information

• Hardware assisted switching

• “Integrated” caching and delivery

• Local content insertion

• High performance serving


• Decoupling services from switching

• Custom siliconService

Switching

• Service creation

• Provisioning

• Management and monitoring

• Billing and accounting

HardwareHardware SoftwareSoftware

ControlControl

IP Service EnablingIP Service Enabling

Enable Networks to Offer Managed Value-Added IP Services at Wire-speed

Enable Networks to Offer Managed Value-Added IP Services at Wire-speed


Optical NetworkingOptical Networking

Revolutionize the Transmission Infrastructure for Internet ScaleRevolutionize the Transmission Infrastructure for Internet Scale

BandwidthBandwidth

• Wavelength proliferation

• From 2.5G to10G to 40G

• Dramatic improvements

IP OptimizedIP Optimized MultiservicesMultiservices

• Controlling optics with IP

• Eliminating multiplexing layers

• Storage

• Metro/Ethernet

• Long and ultra long haul

• Legacy traffic


Deliver the Internet Anytime, AnywhereDeliver the Internet Anytime, Anywhere

CapacityCapacity IP ServicesIP Services New ApplicationsNew Applications

• From overlay to pure packet based networks

• Converged data/voice

• Customized internet

• M-commerce

• Location-based services

• Remote access

3G and IP Wireless3G and IP Wireless

0

500,000

1,000,000

1,500,000

2,000,000

2000 2001 2002 2003

Data Rate of

Wireless

Years


SP Industry Disruption:SP Industry Disruption:Waves of OpportunityWaves of Opportunity

IndustryDisruptionIndustry

Disruption

B2BeMarketplaces

Portals/Online Services

HostedApplications

eCommerce

Video-on-Demand

UnifiedMessaging

WebConferencing

IP Telephony

eCRM

OnlineCommunities

Click-to-Talk

WirelessWeb Access


Customer NeedsCustomer Needsin the Internet Economyin the Internet Economy

• Communications

• Content

Information

Entertainment

• Commerce

• Community

• Efficiency/ Productivity

• Universal Access

• Mobility, Flexibility

• Personalization

• Self-Provisioning


Service ProviderBusinesses

LargeEnterprises

Small-MediumBusinesses

ConsumersOther Service

Providers

Banking

Manu-facturing

Securities

Insurance

Retail

ConsumerPackaged

Goods

Health Care

Oil & Gas

Government

Education

Transport-ation

Entertain-ment

LocalInformation

Teenagers HomeAutomation

ISPs

NSPs

Enterprisesas SPs

Utilities

Which Businesses, Customers, Which Businesses, Customers, Industries do you Serve? Industries do you Serve?


Falling Prices: U.S. Interstate Falling Prices: U.S. Interstate Long Distance (Voice)Long Distance (Voice)

Source: FCC; Dataquest; IDC Packetized Voice Services (January 1998)

U.S. Interstate Long Distance Price per Minute

Continued deregulation

Increased competition: CLEC and RBOC penetration of LD

Lower access costs

Lower network operating costs

80-02CAGR

-6.4

80-02CAGR

-6.4

95-02CAGR

-12.3

95-02CAGR

-12.3


Making Money Up the Stack:Making Money Up the Stack:End User Activity Drives RevenueEnd User Activity Drives Revenue

(conceptual)

ServiceProvider

End User/Customer

So

luti

on

s V

alu

e A

dd

Closeness to Customer Delivery

Transport

Access

Hosting

ContentContentDistributionDistribution

Use ofUse ofContent &Content &

AppsApps

Network

ServicesNetw

ork

Services

Value-Add

Solutions

Value-Add

Solutions

Traffic, R

evenues

Traffic, R

evenues


New World SP Solutions:New World SP Solutions:Engines for GrowthEngines for Growth

37.7

8231

233233

Data Communications Services0

50

100

150

200

250

300

350

1999 2000 2001 2002 2003 2004

Worldwide Service Revenues$ Billions

Content and Applications

Solutions

Content and Applications

Solutions

4747

32.4

1999-2004 CAGR (%)

315

21.9

Sources: IDC; Dataquest; Forrester; Morgan Stanley Dean Witter; Internet Research Group; Veronis, Suhler & Associates; Cisco analysisNote: Wireline voice transport grows at 7.6% from 564 B (1999) to 815 B (2004) and wireless voice transport grows at 13.8% from 225 B (1999) to 430 B (2004)

78


Example Roadmap ofExample Roadmap ofNew World SP SolutionsNew World SP Solutions

(Wireline)(Wireline)Basic VoiceBasic Voice

LocalLocalLong DistanceLong Distance

AdvancedAdvancedVoiceVoice

Call Waiting,Call Waiting,Caller ID, * 69,Caller ID, * 69,ConferencingConferencing

Basic DataBasic DataTransport,Transport,

Access,Access,Web HostingWeb Hosting

AdvancedAdvancedDataData

IP VPNs, Extranets,IP VPNs, Extranets,Managed Security,Managed Security,Wireless AccessWireless Access

BasicBasicSolutionsSolutions

Data Storage, eFax,Data Storage, eFax,eMail, Messaging,eMail, Messaging,

IP TelephonyIP Telephony

AdvancedAdvancedSolutionsSolutionsHosted Apps,Hosted Apps,

Unified Comms,Unified Comms,Portal ServicesPortal Services

Time

Content andApplicationSolutions

So

luti

on

s V

alu

e-A

dd

DataCommunica-tions Svces

VoiceCommunica-tions Svces

WirelessWirelessVoiceVoiceLocal,Local,

Long Distance,Long Distance,Call Waiting, etc.Call Waiting, etc.


Converging and De-layeringConverging and De-layeringService Provider Value ChainsService Provider Value Chains

Value Chains

1. Broadcast ContentVideo

2. Web Applications

3. Web Content

Data

5. Wireless VoiceVoice

4. IP Telephony

6. Wireline Voice

NewNew NewNew NewNew Old NewNew

NewNew NewNew Old NewNew NewNew

NewNew NewNew Old NewNew NewNew

NewNew NewNew NewNew NewNew NewNew

--- Old --- --- NewNew

Old --- --- --- ---

WirelinePhone

WirelessPhone

PC/Desktop TV

Pager/PDA

Access Device (Traditional vs. New Usage)


T2/3 ISP(local access)

Web Content Delivery Value Chain:Web Content Delivery Value Chain:Who Pays Whom? Who Pays Whom?

CDSP

= revenue flow

CDSP: Content Delivery SP(Akamai, Digital Island/Sandpiper)

WirelessISP

• Akamai• Adero• Mirror Image Internet• Digital Island/ Sandpiper• Real Networks• Yahoo!

BroadcastServices• Edgix (satellite)• IBeam Broadcasting

(satellite)• AudioSoft• Digital River• Infinet• Intertainer• MP3.com• ProWebCast

• Disney• Time Warner• Universal Studios• Warner Brothers• Paramount• New Line Cinema• Viacom• CNN• NBC• Newscorp• ZDnet• CBS Market Watch• CNet• ESPN• iVillage

(or)

ContentContentProviderProvider



NSP/T1 ISP

ILEC/CLEC

EndEndUserUser


MeteredBilling

MeteredBilling

Transactions vs. TransmissionTransactions vs. TransmissionMoving to New Revenue ModelsMoving to New Revenue Models

• Usage-based Billing (SMS)

• Functional Services

• Software App Services

• Content Delivery Services

• Advertising

• Revenue-Sharing


Usage-based BillingUsage-based Billing

• On the model of existingOn demand services

• Charge for each usage of short messaging services, message translation services, web- or email-to-fax services, find-me services, etc.

• On the model of existingOn demand services

• Charge for each usage of short messaging services, message translation services, web- or email-to-fax services, find-me services, etc.


Functional ServicesFunctional Services

• Service Subscription Fees

– Charge for availability of network-delivered services (monthly charge)

– Consumer example: home security service that calls police, neighbors, find-me services for each parent

– Business example: company calendaring service, charge by corporate user by month

• Service Subscription Fees

– Charge for availability of network-delivered services (monthly charge)

– Consumer example: home security service that calls police, neighbors, find-me services for each parent

– Business example: company calendaring service, charge by corporate user by month


Software Application ServicesSoftware Application Services

• Usage-based Billing to Businesses

– Provide hosted business applications (eSFA, eHR, eCRM) to enterprise/SMB; Charge business for each application usage (by the drink)

• Usage-based Billing to ASPs/ISVs

– Provide AIP (Application Infrastructure Provider) hosting/ data center services for ASP/ISV; Charge ASP/ISV for each application usage

• Usage-based Billing to Businesses

– Provide hosted business applications (eSFA, eHR, eCRM) to enterprise/SMB; Charge business for each application usage (by the drink)

• Usage-based Billing to ASPs/ISVs

– Provide AIP (Application Infrastructure Provider) hosting/ data center services for ASP/ISV; Charge ASP/ISV for each application usage


Content Delivery ServicesContent Delivery Services

• Usage-based Billing for Content Delivery

– For delivery of rich media content, charge by item of delivered content

– Consumer example: Charge by the item for music- or video-on-demand

– Business example: Charge by the seat for web-based distance learning/ company training sessions

• Usage-based Billing for Content Delivery

– For delivery of rich media content, charge by item of delivered content

– Consumer example: Charge by the item for music- or video-on-demand

– Business example: Charge by the seat for web-based distance learning/ company training sessions


AdvertisingAdvertising

• Advertising Revenues from Businesses and Other Organizations

– Subsidize web and voice portal/ search and content delivery services

– Subsidize business and residential user Internet access, IP telephony, eventually IP video

– Results in free to the user Internet access, free IP telephony, free IP video

• Advertising Revenues from Businesses and Other Organizations

– Subsidize web and voice portal/ search and content delivery services

– Subsidize business and residential user Internet access, IP telephony, eventually IP video

– Results in free to the user Internet access, free IP telephony, free IP video


Revenue-Sharing:Revenue-Sharing:ASP ExampleASP Example

• Revenue-Sharing With Software Vendors/ ASPs

– SP provides AIP services for hostinge-business applications for free/ at below market rates

– ISV/ASP does all customer support and service functions as well as software development and application integration

– SP shares in ISV/ASP revenues -- charge per usage, per seat, per project

• Revenue-Sharing With Software Vendors/ ASPs

– SP provides AIP services for hostinge-business applications for free/ at below market rates

– ISV/ASP does all customer support and service functions as well as software development and application integration

– SP shares in ISV/ASP revenues -- charge per usage, per seat, per project


Revenue-Sharing:Revenue-Sharing:Content Delivery ExampleContent Delivery Example

• Revenue-Sharing With Content and Media Creation Companies

– Provide free/ low cost content production, hosting, distribution, transport services in exchange for cut of content creation fees

– Example: free production, hosting, and transport of digital films for playing directly in digital projection theaters in exchange for a cut of theater ticket sales and/or artist royalties

• Revenue-Sharing With Content and Media Creation Companies

– Provide free/ low cost content production, hosting, distribution, transport services in exchange for cut of content creation fees

– Example: free production, hosting, and transport of digital films for playing directly in digital projection theaters in exchange for a cut of theater ticket sales and/or artist royalties


Revenue Sharing:Revenue Sharing:e-Commerce Examplee-Commerce Example

• Share of e-Commerce Transactions for an Enterprise/SMB or a B2B Marketplace Operator

– Develop web site/ integrate packaged application (or done by partner), provide hosting, access, transport for free/ less than market rates

– In exchange for cut of revenues from products/services sold via web site or in the B2B eMarketplace

• Share of e-Commerce Transactions for an Enterprise/SMB or a B2B Marketplace Operator

– Develop web site/ integrate packaged application (or done by partner), provide hosting, access, transport for free/ less than market rates

– In exchange for cut of revenues from products/services sold via web site or in the B2B eMarketplace


New Services and Solutions:New Services and Solutions:Content and ApplicationsContent and Applications

Business SolutionsBusiness Solutions Consumer SolutionsConsumer Solutions

HostedHostedApplicationApplicationSolutionsSolutionsContent &Content &MediaMediaSolutionsSolutionsCommunica-Communica-tionstionsSolutionsSolutionsPortal/Portal/MediationMediationSolutionsSolutions

• E-business applications(internal-facing andexternal-facing)

• Content delivery: distance learning, advertising, co. websites

• Managed email• Short Messaging• Web conferencing• Unified communications

• Web portal• Voice portal• Online business

communities

• Personalproductivity applications

• Online gaming

• Content delivery:music-/video-on-demand

• Managed email• Instant Messaging• Web conferencing• Unified communications

• Web portal• Voice portal• Online personal

interest communities

• Data storage & mgmt.• Business process

outsourcing

• Home automationsolutions (security,energy, appliances)


• How should we organize for eBusiness?

• How can we change the “Old World” culture?

• What should we do with our legacy systems?

• Which eBusiness solutions should we do first? How can we identify them?

• What can we do to become a “cool” place to work in? How can we attract and retain talent?

• How can we increase the value of our company through eBusiness?

31

Challenges in eBusiness TransformationChallenges in eBusiness Transformation


Prioritizing Solutions Opportunities:Prioritizing Solutions Opportunities:Some ExamplesSome Examples

High

Low

Low HighAbility to Execute

(based on competitive assets)

EconomicOpportunity

(revenuegrowth,

margins)

AIP/ASPAIP/ASPSolutionsSolutions

UnifiedUnifiedMessagingMessaging

Data StorageData Storageand Mgmt.and Mgmt.

IP VideoIP Videoon Demandon Demand

eFax Mgmt.eFax Mgmt.ServicesServices

IP VoiceIP VoiceServicesServices

Chat/ CollaborationChat/ CollaborationSolutionsSolutions

eMail Mgmt.eMail Mgmt.ServicesServices

eCommerce/eCommerce/eMarketplaceseMarketplaces

OutsourcedOutsourcedContactContactCentersCenters

Home SecurityHome SecuritySystems SolutionsSystems Solutions

OnlineOnlineCommunitiesCommunities

PortalsPortals


Cisco as Strategic PartnerCisco as Strategic Partner

Internet Economy Business ModelsInternet Economy Business Models

Ecosystem PartnershipsEcosystem Partnerships

World-class TechnologyWorld-class Technology


Cisco’s Role: Helping SP Build Cisco’s Role: Helping SP Build Profitable Revenue StreamsProfitable Revenue Streams

Cisco asStrategic Partner:

Help SP ChooseOpportunities and

Build the Infrastructure

to Create ProfitableRevenue Streams

At the Crossroads:

Which Opportunities?How to Build?

Challengesand

Opportunitiesin the

New InternetEconomy


SP Business Models:SP Business Models:Roles and ResponsibilitiesRoles and Responsibilities

1-2 DayWorkshops

4-12 WeekEngagements

Evangelizeand

Educate

StrategyConsulting &

BusinessPlanning

DetailedFinancialModeling

Deploymentand

Go-to-Market

• SP Sales• SP Field Ops• BDMs• IBSG-SP• SPLOB

(MSCs)

• IBSG-SP• Various

BusinessModelingefforts(cable,hosting,STEM)

• JumpStart, CPN• Partner

programs(OSS, CHAI, etc.)

• Ent. Sales/ PAM• WW Channels• CA-SP, PSO

• IBSG-SP

EBCs


Service Providers can benefit from Service Providers can benefit from three key opportunities in eBusiness.three key opportunities in eBusiness.

… to increase productivity and agility, reduce operating costs, and improve customer loyalty

… to increase productivity and agility, reduce operating costs, and improve customer loyalty

Running myRunning myNetwork: Network:

““Zero Touch”Zero Touch”

Running myRunning myNetwork: Network:

““Zero Touch”Zero Touch”

eOSS

eBSS

22

SP as a company whose mode of operating is deeply altered by Internet technology...

SP as a company whose mode of operating is deeply altered by Internet technology...

ProvidingProvidingeBusinesseBusinessServicesServices

to myto myCustomersCustomers

ProvidingProvidingeBusinesseBusinessServicesServices

to myto myCustomersCustomers

33

SP as a provider of eBusiness services to its customers ...

SP as a provider of eBusiness services to its customers ...

… to reduce network operating expenses, time-to-market, etc.

… to reduce network operating expenses, time-to-market, etc.

Running myRunning my‘‘e-SP’e-SP’

Running myRunning my‘‘e-SP’e-SP’

eCare

WO

eCom

SCM

11SP as an e-Enterprise ...

SP as an e-Enterprise ...

e-SPe-SP

… to generate new flow of high-margin revenue

… to generate new flow of high-margin revenue


eBusiness SolutionseBusiness Solutions ExamplesExamples

Service Provider as an Enterprise: Service Provider as an Enterprise: “Transforming into an e-SP”“Transforming into an e-SP”

Workforce Optimization

Supply Chain Management

e-Care

Web-based employee automation: directory, expenses, purchases, training registration, e-learning, executive intelligence systems (EIS)

Web-based customer care, service order status, service level agreement information, custom bill presentment, equipment and service inventory, trouble ticketing, automated advisory services, etc.

Customer premises equipment supplier integration, field force, maintenance and subcontractors, etc.

e-Commerce Web-enabled catalogue, pricing simulation tools, lead times, service configuration, on-line ordering, bill payment, CRM, click-to-talk

11


eBusiness SolutionseBusiness Solutions ExamplesExamples

Service Provider as Network Operator: Service Provider as Network Operator: “Zero Touch Dream”“Zero Touch Dream”

Automated Service Provisioning

Flow-through provisioning system:• Address validation check• Feature availability check • Customer service record• Service planning• Service configuration• Service provisioning • Billing • ...

Automated Network Management

Custom management of the network:• Network configuration• Element management and testing• Service fault and performance analysis• Security management• Service provisioning lead times• Trouble ticket• ...

22


E-Business SolutionsE-Business Solutions ExamplesExamples

Application Service Provider (Basic and Complex Hosting) for SME

Basic: Web Sites, IT Services (backup / storage), email, simple Desktop Apps (e.g. Calendars). Complex: e-Business Applications (e-Commerce, e-Care, Workforce Optimization, Supply Chain Management)

Service Provider as Provider of Services: Service Provider as Provider of Services: “e-Business for my Customers”“e-Business for my Customers”

Service Provider as Provider of Services: Service Provider as Provider of Services: “e-Business for my Customers”“e-Business for my Customers”33

E-Business Value Added Services for Large Enterprises

Consulting and systems integration of e-Business for large enterprises, development of partner ecosystem

Vertical Industry Specialization

Vertical market focused portals(COIN) and applications

Media Play E-Learning, e-Training, e-University, e-TV

© 2000, Cisco Systems, Inc.

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Welcome Cisco Service Provider Vision Mazen Jabri Territory Manager, Gulf Service Provider Line of Business