Demand, ever-improving technology, and deregulation are significantly disrupting the telecommunications marketplace, presenting service providers with tremendous opportunities as well as precipitating huge changes in network alliances.

The existing infrastructure has not kept pace with the exponential network growth. New business applications such as e-commerce, high-quality videoconferencing, telemedicine, large-file transfers, data mirroring, carrier hotels, and data-storage warehousing all are driving the need for ultrahigh bandwidth services. New species of service providers, such as Internet service exchanges (ISXs), application service providers (ASPs), and storage service providers (SSPs) are emerging, experiencing rapid growth in their businesses and scrambling for market-share.

The rapid increase in bandwidth demand has also forced carriers to choose quickly among competing technologies: digital subscriber line (DSL), asynchronous transfer mode (ATM), and Internet protocol (IP) over synchronous optical network (SONET). All of these have been offering to provide customers with new high-bandwidth access services.

Unfortunately, in the rush, mismatched protocols have developed between enterprise and carrier environments. The complexity and redundancy of the equipment required and a lack of legacy integration further complicate the issue, resulting in carrier frustration and uncertainty in a scramble to support access demands by employing a complex mix of technologies. Both end users and new carriers perceive that there are no practical fiber-based access alternatives. Instead, they struggle within the finite limits of copper facilities to take LAN interconnection to ultrahigh speed levels.

Today’s furious network growth is continuing to force carriers to reassess business plans, profitability, and the deployment strategies upon which they will shape future offerings to end users. The Telecommunications Act of 1996, which effectively opened these markets to all, spawned new enterprise-access competition, and increased pressure on all carriers to differentiate themselves in the marketplace. Competitive dimensions such as cost, quality of service (QoS), reconfigurability, and future capacity have all become defining aspects in the battle for customers.

Because deregulation has opened the door for new carriers to provide local service, the traditional economic models are also affected. Voice service revenue growth is relatively flat, and the margins are plummeting. While continuing to provide voice services is important for current cash flow, carriers must gravitate to higher-margin data services, multiservice architectures, and value-added applications in order to attract and retain customers and improve profitability. On the other hand, users need—and are, in fact, counting on—order-of-magnitude improvements in high-speed access capacity. They need new network extension technologies that are protocol, topology, and geography independent.