Executive Summary
Recent Telecommunication Trends and the Impact on Continuity

By Christopher Dorencz

This document reviews recent trends in the telecommunications marketplace and their impact on the business continity industry.  Significant developments over the past year have changed the telecommunications landscape for the continuity planner.  These changes include carrier consolidation, technology advancements, bandwidth commoditization, and the astronomic growth of the Internet.  The following takes a look at some of these changes and their potential impact on continuity planning.

Consolidation
The telecommunications industry has been marked by the actual or proposed consolidation of existing carriers (SBC & Ameritech, World-Com & Sprint, etc.) and the entrance of new, next-generation carriers (Level3, Williams, etc.).  Even among the newer carriers consolidation and buyouts are occurring at a blistering pace (Qwest, US West).  Deregulation and competitive pressure are driving these companies to achieve improved economies of scale.  What are the service implications of these consolidations?

The competitive pressures spurring these consolidations are also producing changes in the way carriers can bill for their services.  As the old regional bell operating companies offer long distance and other new services, an opportunity for billing innovation is created.  The enhanced billing systems needed to accommodate merged enterprises offer improved functionality. One significant advantage is the opportunity for cross-product discounting.  Through cross-product discounting the price point for one product is reduced if certain consumption volumes are achieved in another.  The continuity planner may be able leverage cross-product discounting to reduce the costs for recovery network capacity if a certain dollar volume is achieved in long-distance voice or some other service.  Though not all carriers offer cross-product discounting, Dataquest reports that nearly 80% of carrier billing systems support this functionality.

Technology Advancements
Coupled with this consolidation, technological advancements in the form of Dense Wave Division Multiplexing (DWDM) have increased the capacity available over existing fiber routes.  Dense Wave Division Multiplexing expands the number of signals that can be processed over a single fiber through the use of prism technology to refract a single light wave into multiple spectral wavelengths.  Doing so enables a fiber that previously could carry a single signal to now carry 32 or 64 signals over different wavelengths.  As the precision of prism technology improves, additional wavelengths will be derived over the same fiber further increasing capacity.  In addition, carriers are building new routes and expanding capacity along existing routes to extend market reach and increase capacity to existing markets. 

Both of these developments are driving down the cost of pure bandwidth with significant reductions occurring along select routes in the last year alone.  Indefeasible Rights of Use (IRUs) and other financial instruments are being offered by carriers and bandwidth wholesalers alike to lock in pricing and hedge themselves against long term price erosion.

In addition to the aforementioned opportunity for cross-product discounting, these developments will contribute to lower costs for production networks, and by extension, to lower costs for recovery networks.  Though lower operating costs are valuable in and of themselves, cost savings can be used to improve the availability and performance of both production and recovery networks.  Once cost prohibitive for anything but the most critical applications, multiple diverse circuit paths and load balancing become more feasible options.

Bandwidth Commoditization
As the supply of bandwidth increases, it is natural for its price to drop, but other developments have initiated a debate over the commodity status of bandwidth.  The market is generating innovative approaches to provisioning bandwidth with companies like Enron Broadband Services and Rate Exchange working to create bandwidth markets that increase liquidity, reduce cost, and sharply reduce provisioning time (60-90 days to 15 minutes).  These companies are leveraging pooling points in major metropolitan areas that will quickly allow high capacity (DS3 and above) services to be provisioned from participating carriers.  Rollout of these services is just occurring, and it remains an open question if the characteristics of circuit provisioning (circuit routing, framing, failover, etc.), can be sufficiently managed to create a true commodity.  However, along key routes this can create an opportunity to purchase bandwidth on demand to support or augment the bandwidth needs of recovery networks.

The Role of the Internet
In the latest version of the Vulnerability Index, an industry survey conducted jointly by BellSouth, Comdisco, and Oracle, 35% of respondents currently used the Internet for mission critical applications.  However nearly two thirds (66%) of respondents planned to use the Internet to support E-commerce business activities over the coming year.  How does this increase in the role of the Internet affect the job of the continuity planner and existing recovery strategies?  When Internet connectivity first became part of the computing environment, the typical application – to support access to FYI type web sites – was usually deemed not critical, and left outside the scope of existing continuity programs.  However, as Internet applications have evolved to include E-Commerce, Computer Telephony integration, and other critical, real-time business functions, the need to incorporate Internet access into your continuity capability is urgent. 

What factors need to be considered when adding Internet access into a continuity capability?  The first, and perhaps most obvious, consideration is bandwidth.  What type of bandwidth is used in the production environment?  Is the capacity fixed (e.g., T1) or is the capacity fluid to accommodate bursty traffic.  These production access characteristics need to be incorporated into the continuity capability.  Be sure that your provider has the infrastructure to handle your requirements.

In addition to bandwidth, consideration must be given to Domain Name Services (DNS).  DNS is the function that resolves the Universal Resource Locator (URL) or text version of an Internet address to its IP address.  The way DNS is handled in production will impact how this capability is restored at time of disaster.  If your Internet access provider provides DNS, you will need to work with your access provider and continuity provider to coordinate this function in recovery.  If your continuity provider does not manage its own domain, a layer of complexity may be added and you may need to work with their Internet access provider.  If you manage your own domain then you will be able to work directly with your continuity provider (or their access provider) to address the changes that need to occur to make systems accessible through your continuity provider’s Internet access.

About the Author
Christopher Dorencz is the Director of Network Product Management for Comdisco's Continuity Services Division.  He was previously the Program Director in the Professional Services Organization where he managed detailed network projects and complex enterprise initiatives.  He has directed continuity projects in a variety of industries including, insurance, financial services, medical services, chemical manufacturing, and electronics manufacturing.  These projects have included both technical systems recovery, general business continuity/resumption, and high availability.  For more information contact Chris via e-mail at cxdorencz@comdisco.com.  

1 U.S. Communications Industry Moves into the Age of Competition at Full Speed: An End-User Analysis of the US Marketplace; Dataquest, December 1999.
2 Digital Signal 3 provides 45.4333 Mbps.