IS-3: Crossing Borders: Successful Strategies For International Expansion

Proprietary and Confidential 1

http://www.transnexus.com

IS-3: Crossing Borders: Successful Strategies For International Expansion

Frank Estes

[email protected]

770-671-1888, ext. 224



Company Overview

Founded in February 1997. Developed OSP with with major telephony vendors in 1998. Product offering in commercial service since March 2000. Industry leader in OSP solutions. Open solutions developer. OSP is in use by AT&T, WorldCom, NTT, Primus, Fastconnect, and others.



The Constraining PSTN

Today, service providers maintain two distinct and separate networks; one for delivering data traffic and another for voice traffic. Each network requires its own equipment, circuitsand customer care systems. However, the declining economy and lack of capital investments budgets are causing carriers to look at core transport models and a single point of access fordata, voice and other new communication mediums.

Carriers are seeking to:

- operate one network;

- consolidate voice and data traffic;

- deliver new services to their customers quickly and efficiently, and;

- move the higher margin voice traffic onto the existing, lower cost IP networks



Today

Access network

Data Services

Multi Service

Voice Services

DataSwitch

IP Backbone PSTN

Class 5 Switch

Class 4 Switch

Gateways

Service Provider’s Today



“Show Me the Money”

0

200

400

600

800

1,000

1,200

1,400

1997 1999 2001 2003

Billions US$ Year 2003 : Data service revenue will retain only 1/7 as Voice

Source : Internet Telephony Gateways[Action Information Services]

VoiceData

Year

Revenues ComparisonRevenues Comparison



Market Challenges

Service Providers (SP’s) need to maximize geographical service coverage to enable any subscriber to reach anywhere.

SP’s need a solution which is future proof (H.323, SIP, …). Privatization and deregulation are increasing competition and competitors. IP Packet Networks cost significantly less to build, maintain and operate. Yet,

service providers need a solution which allows future development, but does not cannibalize existing PSTN investments.

Integration of existing OSS and BSS systems into time tested and proven legacy systems.

The VoIP market in 2001 was worth 9,634 million minutes of traffic, an 81.5% increase from the previous year (source: TeleGeography, Inc., 2002).



Current Market

Greater than 90% of VoIP traffic uses H323 (Source NTT Comm.)

The economic advantages of packet telephony are driving both the access and core networks away from Circuit switching towards packet. Carriers are moving voice services to packet networks to reduce upfront and operational costs. A recent study found that packet voice equipment was 70% less expensive than traditional voice equipment, and data access lines were 60 to 80% less expensive than voice lines. In addition, maintenance of packet networks was 50% lower, while provisioning was in excess of 70% less (Source AT&T).

Developing solutions based on open industry standards will unite an otherwise fragmented market and allow the industry to focus on serving customer needs through better quality features and value-added services (Business Week).



Current Market

SignalSignal

ClearinghouseClearinghouse

VoiceVoice

Internet

AccessAccessLayerLayer

TransportTransportLayerLayer

ControlControlLayerLayer

ITSP-ZITSP-A

Voice remains the killer application, as old habits are hard to change

(Usage vs. flat rate).



Current Market

The Telecom market is recovering from “BoIP” as the speculative amateurs are driven from the market and Telecom professional no longer fear the venture and capital funded amateurs. The Telecom companies are investing in proven technology that compliments, not revolutionizes their current infrastructure and back office systems.

BoIP:Bubble over IPBoIPBoIP::

Bubble over IPBubble over IPBoIP:

Bubble over IPBoIPBoIP::

Bubble over IPBubble over IP



A Market Solution!

"Our VOIP strategy using OSP has enabled us to expand our global network coverage while minimizing the investments required in international fiber optic cable facilities, circuit switches, and other costly network equipment associated with the expansion of a traditional circuit switched network."

John Melick, President, Primus Telecommunications, November 6, 2001.

What do Service Providers need in order to meet today’s market requirements ?

An open, secure, scalable IP inter-connection solution which can be easily integrated with the existing PSTN network, network expansion plans, and proven external provisioning and billing

systems.



A Market Solution!

On October 10, 2002, NTT Worldwide Telecommunications Corporation (NTT-WT), a wholly owned subsidiary of NTT Communications Corporation (NTT Com) will launch a multi-protocol/multi-vendor compatible VoIP service for interconnection among carriers/Internet Telephony Service Providers (ITSPs) that use different types of protocols and VoIP equipment.

The global VoIP market has been growing rapidly and it is expected that IP telephony will become the next generation network (NGN). However, difficulties in interconnection among different VoIP protocols and vendor equipment have been a major obstacle in the service development of VoIP. NTT Communications Clearinghouse (NTT-CH), provided by NTT-WT, will offer a new VoIP clearinghouse service eliminating this barrier …..

TOKYO, JAPAN –– On October 10, 2002, NTT Communications Press Release



The New Public Network

ON -NET

High Speed, Optical Core

POP

POP

POP

POP

POP

POP

POP

POP

POP = POP or CO

CUSTOMERS

Cable

PSTN

DSL

ATM

Open StandardExchange Mechanism

OFF NET

VOICE

VOICEPartner

OFF NETDATA PUBLIC

INTERNET



Vendor EH.323 GK

Service Order MonitoringSystem

Service Order MonitoringSystem

Existing Clearinghouse

server

CDR

New clients

international leased circuits (IPLC) or Managed IP-BB*

NTT Communications Clearinghouse Platform

H.323 GW

Vendor AH.323 GK

…

Existing clients

New

CDR

H.323GW

H.323GW SIP

ClientSIP

Client

Vendor FSIP Server

Billingsystem

Protocol conversion equipment

New Clearinghouse servers

Attachment

H.323 GK: H.323 compatible gateway keeper * Internet can be used if thequality is confirmed.SIP Server: Session Initiation Protocol server GW: VoIP?voice over IP) gatewayCDR: Call detail record

Vendor AH.323 GK

H.323 GWH.323 GWH.323 GWH.323 GWH.323 GW

Vendor CH.323GW

Vendor BH.323 GK

Vendor DH.323GW

An Example of International Expansion



Case Study, VoIP Expansion Value Proposition

Circuit Switched Network

- Capital Investment (HIGH)

- Interconnection Cost (bandwidth) (High)

- Separate Voice and Data Networks

Open Standard VoIP Network

- Capital Investment (Low)

- Interconnection Costs (bandwidth) (Low)

- Digital Security

- One Network

- Multi-protocol and open



By the Numbers

Traditional Next GenerationPSTN Carrier Packet Transition

Carrier details $ per Month $ per Month

Four POP's Interconnectivity w/ E-1 connectivity Four POP's Interconnectivity w/ IP connectivity(London, New York, Los Angeles and Tokyo) $290,000 $22,800 (London, New York, Los Angeles and Tokyo)

(6 Mps, per UUNET)

Connectivity Costs: Connectivity Costs:2 Million Calls $0.14500 $0.01140 2 Million Calls5 Million Calls $0.05800 $0.00456 5 Million Calls10 Million Calls $0.02900 $0.00228 10 Million Calls

Additional POPOne E1 $48,000 $5,700 One 6 Mps, UUNet

Connectivity Costs Additional POP: Connectivity Costs Additional POP:2 Million Calls $0.02400 $0.00285 2 Million Calls5 Million Calls $0.00960 $0.00114 5 Million Calls10 Million Calls $0.00480 $0.00057 10 Million Calls



By the Numbers (continued)

Connectivity Costs

$0.00000$0.02000$0.04000$0.06000$0.08000$0.10000$0.12000$0.14000$0.16000

2 Million Calls 5 Million Calls 10 MillionCalls

E1 Voice Circuits($48K ea.)

IP Packet Circuit (6Mps $5.7K)



Case Study: Live Network Implementation

(1)

(2) Authentication

(6) CDR

Retail AAA

(5)

(6) CDR

AAA

(4) H.323 Call Connection

OSP Server

GCH Settlement Back-end Systems

(6) CDR

(6) CDR

Gateway/Gatekeeper(Member B –Call Termination)

(6) CDR

(3)Call Routing/ Authorization request & response

Gateway/Gatekeeper(Member A –Call Origination)

Global Clearinghouse



TransNexus Information

Thank you, Merci Beaucoup, Danke, Danku, Gracias

Frank Estes

Vice President

TransNexus, Inc.

678-358-5251 (cellular and office)

[email protected]

IS-3: Crossing Borders: Successful Strategies For International Expansion

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