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The Internet/IP
network market is complex, with many forces affecting its course.
However, from the viewpoint of the relationship between
profitability and performance issues, three market developments
stand out as key drivers:
·
Multimedia traffic explosion:
In the communications arena, voice and fax over the
Internet are now demonstrating dramatic cost savings. Through the
performance-boosting efforts of companies such as Intel and
Microsoft, multimedia applications, including 3-D animation and
audio/video streaming, have become an integral part of PC
architecture, driving both public and private networks rapidly
toward a diverse and challenging traffic mix. Many are real-time
multimedia applications, which may also be interactive, demanding
better than the current “best-effort” IP network that treats all
traffic equally.
·
Migration of business traffic:
The migration of business traffic from private to public IP
networks may even be a more critical driver than multimedia traffic,
e.g., VPN. Enterprises are interested in taking advantage of the
public network - especially IP networks - to reduce expenses and
operational complexity, as well as to provide improved connectivity
to customers, business partners, and employees. Before this happens,
businesses will want to see that the IP network’s inherent
performance/reliability issues are addressed.
·
Concerns on profitability:
The rapid and unexpected growth of the Internet has created
intense competition among Internet service providers (ISPs), pushing
margins extremely low in the traditional IP services market. It is
very difficult, if not impossible, to create a successful business
model based on a low monthly flat-rate pricing structure. To improve
this picture, service providers are now striving to find new sources
of revenue to improve their margins.
Moving business
traffic - primarily data, but also IP-based voice traffic - onto
public IP networks is one of the major new sources of revenue
identified by service providers in recent years. A major
prerequisite for attracting business customers’ mission-critical
traffic is to offer alternative IP-based services with guaranteed
quality of service (QoS), and using QoS sensitive pricing structure,
rather than best effort IP service with flat-rate pricing structure.
By implementing
IP QoS solutions, ISPs can achieve:
·
Profitability
Improving top-line revenues by attracting high-margin
business customers and offering higher-priced levels of services,
while reducing bottom-line costs through using bandwidth more
efficiently;
·
Competitiveness
Enhancing service differentiation by offering multiple
classes of better-than-best-effort service and by offering
customized solutions based on individual requirements.
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