Managed network services represent a significant business opportunity for carriers, but today's environment creates several challenges to capturing that opportunity. One factor is a convergence of network service providers. Local carriers are providing long-distance services; long-distance carriers are providing local services; new providers are providing both local and long-distance services; and all carriers want to be Internet access providers. Fierce competition has emerged in this environment. To protect its incumbent position, a carrier must build a higher level of brand equity into its service offerings (see Figure 4).

Figure 4. Managed Multiservice Solutions

At the same time, a carrier is under pressure to maintain favorable margins. Containing costs of bandwidth, equipment, rack space, and staffing can be challenging. It is particularly difficult to control bandwidth costs when striving to meet QoS commitments, yet QoS guarantees are one of the keys to honoring SLAs. The problem is particularly acute when handling multiple traffic types. Different applications generate traffic with distinct characteristics and service requirements.

QoS integrity is only one challenge in honoring SLAs. Another crucial aspect is avoiding network downtime. Service redundancy and equipment redundancy can be costly to deliver. Carriers must also respond quickly to customer requests for adds, moves, and changes. Any change can be time-consuming in a complex, multiapplication, multiservice, multinational network. Short response times, however, are a requirement for customer retention in today's changing environment. In addition to retaining its customer base, a carrier must capture market-share from incumbents in other market segments. To increase its market-share, a carrier must be able to broaden its geographic reach and penetrate a wider variety of vertical segments. This requires a shorter time-to-market than ever before. It also demands a greater need for competitive differentiation.

One way to achieve differentiation is to include applications development in the service portfolio. However, support for upper-layer applications requires an underlying transport infrastructure that is extremely flexible and cost-effective. ATM technology can provide such an infrastructure. Unfortunately, most ATM equipment that is currently available offers limited support for legacy traffic, minimal traffic management capabilities, and a lack of standards compliance.