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OSS & Billing for VOIPTeleManagementWorld

October 14, 2004, Long Beach, CA

Arthur J. Musgrove

Vice President, OSS & Billing

Cymbal Corporation

Kevin Dieter

Director, Software Engineering

Covad Communications

• Introduction

• Voice-over-IP Overview

• Market

• Technical

• Covad Communications VoIP Direction

• Target Market for VoIP

• Implementation Approach

• Leveraging Existing OSS and BSS

Agenda

OSS & Billing for VOIP

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• 2% of US firms use some form of IP Telephony, and this number is expected to grow to 19% by 2007.

• 73% of wireline service providers and 31% of wireless operators have either implemented or are testing packet technology in their networks.

• 50% of households are interested in Internet Voice as a way of lowering voice phone bills.

• The US is 11th in the world in broadband deployment.

Source: March 10, 2004, Michael K Powell, FCC Chairman

VOIP Interest

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• Voice-over-IP is an application, like any other Internet application, for communicating between peers. Skype is an example of this type of application.

• Voice-over-IP improves enterprise communications by making interactions more collaborative. In this view - helped by VoIP-PBX providers - voice is just one component of the overall solution.

• To existing voice carriers, Voice-over-IP is a better protocol for the public telephone network to carry subscribers phone calls.

The Three Views of VoIP

What is VoIP?

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• The US consumer voice industry has a 35% churn rate.

• Bundling products has been demonstrated to significantly reduce churn - some claim by as much as 60%.

• Bundled wireless and VOIP services could expose wireless Revenue-per-Minute to erosion from comparison to shared-use with VOIP services (see next slide).

• Wireline carriers can use an MVNO model to deliberately drive MOU to their own network - given proper education and hardware.

• Wireless carriers can offer non-private VOIP to cost effectively bundle a wireline offer.

• Wireless carriers could establish virtual private VOIP/Broadbandofferings to offer a complete bundle - Broadband Virtual Network Operators (BVNO) if you will.

• Higher value may come from combining networks.

Bundled Services

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VoIP – Opportunity and Challenges

VoIP provides an exciting opportunity for new carriers to compete with the fixed-line voice providers, but comes with unique business and technological challenges.

• Integration of voice and data

• Service Bundling (voice, data, video) by the same provider on an IP network is a powerful market differentiator, for cable and DSL operators.

• Reduced cost – packet telephony is significantly cheaper than the traditional voice networks. Inter-carrier costs (avoiding them) and reduced taxes contribute to the VoIP competitive cost.

• Value-Added services – e.g. IP phones provide sophisticated, specialized end-user applications. The phone number is not location dependant anymore; the phone can be connected anywhere in the world in an IP network.

• Packet Telephony Call Centers – simplified infrastructure for remote locations reduces the operational costs and enables easier scalability.

VoIP Value Proposition

Regulatory

• FCC and PUC regulatory stance is uncertain and changing, and has Tax, Bundling and offer considerations.

Business and Technology• CALEA is a challenge• Ensuring the Quality of Service more challenging on an

IP network • VoIP standards are in development• OSS VoIP components not fully mature yet (e.g.

mediation, RKS).• VoIP support by OSS ISVs is limited (e.g. Billing and

Provisioning), and there are limited end-to-end solutions available.

• Distribution of functionality in an IP network compared to a TDM network.

• Introducing voice services as a logical extension of existing systems OSS/BSS infrastructure.

VoIP Challenges

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“VOIP is clearly not your father’s telephone service. It represents a uniquely new form of communication that promises to offer dramatic advances in the consumer experience. Consumers can anticipate greater value, greater personalization, and a wealth of features that are only possible through the convergence of voice and data on a broadband network that pushes more intelligence to the edge of the network and into the hands of end-users.”

Michael K. Powell, FCC Chairman, May 2004Comments on WC Docket No 02-361

VOIP Regulatory Treatment

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• The tax and regulatory treatment for VOIP is unclear.

• Few carriers have taken the position that VOIP is entirely non-taxable and unregulated.

• Senate Commerce committee passed the Regulatory Freedom Act of 2004, giving regulatory responsibility for VOIP to the states. This Act probably will not come before the full Senate this session.

• On August 4, 2004, the FCC issued a declaratory ruling (FCC 04-187) saying that VOIP carriers where generally subject to CALEA provisions.

Legal Treatment

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Transforming Communications through Broadband Innovation

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• Covad VoIP

• Local & Long Distance

• Voice Access Services

• Data Access Services

• Data Solutions

Voice Services & Solutions

Data Services & Solutions

Covad Strategic Assets

• Nationwide Network

• Integrated Systems and

Customer User Interfaces

• Customer Support

• Field Tech Support

•Wholesale partners•Retail customers•Hybrid partners - BVNO

•Consumer•Small & Med Businesses•Enterprise•Carriers

Channels Markets

The Covad Strategy

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Small/Medium Business is Covad’s Focus

Market Size• 8M SOHO Businesses• 2.5M Small and Medium Businesses• Branch office employment has the strongest growth, increasing to 30% in

‘03

Market Attributes• Mobility and remote access are central issues for decision-makers • Too many hats to wear, too many products, too much information, too

little time

Trends• Voice over IP (VoIP)• Higher upload speeds/bandwidth• Security Solutions• Improved customer and technical support

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Covad’s Business a Natural Fit for VoIP

• Broadband is the critical ingredient for VoIP• It’s a natural extension of Covad's existing infrastructure• Deliver end-users value while increasing revenue and profitability for partners• Fully hosted solution minimizes capex for customer and eliminates danger of

obsolescence

• Provide Covad’s partners with solutions• Voice-optimized loop ensuring QOS for partners with own VoIP infrastructure• Provide an alternative to ILEC voice services

• Increase and diversity revenue portfolio• Broader product portfolio• Higher ARPU (Average Revenue Per Unit)

• Increase customer retention through integrated voice and data bundles

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Covad Systems Strategy

• Align application portfolio to eTOM Model• Purchase and integrate packages where possible & practical• Utilize open & industry standards for integration (eTOM, OSS/J, …)• Focus development resources on delivering differentiating business value

• Deliver incremental functionality and business value• Apply iterative project management & development methodologies• Focus on value-driving functionality first• Deploy systems on a frequent release cycle

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Admin / HumanAdmin / HumanResourcesResources

EnterpriseEnterprisePerformancePerformanceManagementManagement

Financial &Financial &AccountingAccounting

ManagementManagement

Market AnalysisMarket AnalysisStrategic PlanningStrategic Planning

Technology PlanningTechnology Planning

Communication Bus / Work Flow Management

2005 Application Portfolio mapped to eTOM Model

MarketingCustomer

ManagementOrder

ManagementBilling &

CollectionsCampaign Management

Promotion Management

Dealer Management

Market Analysis

Telemarketing

Price Plan

Revenue Management

Invoicing

Accounts Receivable

Collection

Settlement

Usage Data Mediation

Point of Sale

Customer Definition

Order Negotiation

Account Management

Order Management

Order Processing

Customer Contact Management

Customer Definition

Trouble Ticket

Account Management

Call Center Mgmt / Navigator

Billing Inquiry

ServiceMgmt

Network Mgmt

Service Level Management

Network Mediation

Address Register

Activation

Network Inventory

Warehouse

Number Management

Workforce ManagementNetwork Planning

Network DesignNetwork

AdministrationTest Management

Assurance Control / Fault

-Performance-Traffic

-Preventive Maintenance

Element Mgmt byDomain

Configuration Mgmt Alarm Mgmt Performance Mgmt Security Mgmt AIN

PDH SDH ATM Mobile SCP Other Tech

Oracle FinancialsOracle Financials

CRMCRMCFI, CFI, xLinkxLink,,

Connect,Connect,EagleEagle InfranetInfranet

Enterprise Services Bus Enterprise Services Bus –– BEA WLIBEA WLI

Various CustomVarious CustomApplicationsApplications

Network InventoryNetwork InventoryManagement SystemManagement System

ServiceServicePowerPower

Pricing EnginePricing Engine

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Covad

Technical Integration Architecture

• The Enterprise Services Bus (ESB) enables easier, more standardized integration between applications and with our partners

• The ESB provides better management of business rules.• New GUIs that can span the enterprise• It reduces the impact of change in our systems

ESB

Billing Network Customer Service Fulfillment

Partner A

Partner B

Custom GUI

X-Domain Rules

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Implementing VoIP at Covad

• Deploy VoIP Switches and PSTN gateways • Challenge: Requires good understanding of the VoIP Call Control

protocols, such as H.323 (voice encoding), MGCP (Media Gateway Control Protocol) and SIP (Session Initiation Protocol).

• Covad Solution: Acquired this knowledge and a deployed network with the GoBeam acquisition in June 2004; expanding VoIP network nationwide by end of year

• VoIP Provisioning and Activation• Challenge: Some, but not all, support provided by the VoIP virtual

switches. • Covad Solution: Need to configure the Provisioning applications to

support Voice services.

• Billing and Mediation• Challenge: Support for usage data, consolidated (voice, data, VoIP)

summarized and detailed billing. VoIP taxing needs to be integrated with the Rating/Aggregation engine.

• Covad Solution: Implementing this functionality using current billing and taxation engines, augmented by mediation component

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Implementing VoIP at Covad

• CRM and Sales Order Management VoIP support• Challenge: The customer facing applications have to be enhanced to

support VoIP orders, bill presentment and trouble management.• Covad Solution: Implementing product catalog and order management

package, integrated with order entry, billing, and service activation components

• OSS –Wide Business Integration• Challenge: VoIP end-to-end business processes and enhanced integration

between CRM, Billing, Mediation and Provisioning.• Covad Solution: Leverage Service Oriented Architecture and Enterprise

Service Bus for more easily implemented and managed integration

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Implementation Strategies

• Define the correct target architecture, then move incrementally to get there.• Build products, services, and systems the right way – aligned with our systems

strategy• Respond to market timing demands• Extend some existing components and add new ones where needed

• Selecting implementation partners for a new service launch is an important decision• For existing services, cost is a key factor, but for new services, knowledge of

process and experience is more important.• Partner should not just understand IT and systems, but also business context,

competitive positioning, and be able to provide experience and guidance on business process and context issues.

• Covad retained Cymbal for high-level work - consultation, vendor selection, IT strategy -well before the completion of the GoBeam acquisition

• Cymbal advises Covad on OSS and Order Management vendor selection, development processes, and business process.

• Cymbal is implementing the Billing and Revenue Management systems to support Covad’s automation, scaling, and enhancement for VOIP services.

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• Voice over Wi-Fi devices combine a cordless handset with VOIP technology. This handset can, in turn, support mobile phone technologies such as GSM and CDMA.

• 802.11b and 802.11g uses only 3 non-overlapping channels, limiting their capacity to 6 - 8 calls at a single access point. Shipping handsets have trouble working with pay-as-you-go access points (HotSpots)

• 802.11a uses 21 non-overlapping channels. Vendors estimate this allows 25 simultaneous call on a single access point.

• VOIP over 802.16 could replace the Local Loop for voice and broadband access. It can also be the solution for the developingworld.

VOIP Over Wi-Fi

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VOIP Network

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VOIP Provisioning

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Click to edit Master title style

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commitment to relationships

Proprietary and Confidential ©Copyright 2003 Cymbal

Cymbal is a global services company providing solutions and sustainable business results for the communications value chain through the integration of expert industry knowledge in OSS/BSS, process and technology frameworks, and a global work force.

Our focus is to build sustainable relationships through delivery of IT services at a significant ROI for communications service providers.

Our Core Business: Communications & Media

• White Papers on “Wireless VOIP” and “VOIP Jumpstart”

• Drop off a business card with A.J. after this presentation

• Send e-mail to helena.starc@cymbal.com with “Whitepaper” in the subject line.

Information

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1

Arthur J. Musgrove

Vice President, OSS & Billing

Cymbal Corporation

• Cymbal: www.cymbal.com

• More Information: helena.starc@cymbal.com

• A.J. E-Mail: aj.musgrove@cymbal.com

• Kevin E-Mail: kdieter@covad.com

Thank You

Kevin Dieter

Director, Software Engineering

Covad Communications

Backups

Click to edit Master title style

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commitment to relationships

Proprietary and Confidential ©Copyright 2003 Cymbal

At a Glance

Who We Are

Founded in 1998, US Headquarters

Offices in North America, Europe, Asia

100% Referenceable

Fortune 1000, industry-leading clients

80%+ revenue from telecom & media industry

70%+ revenue from existing clients

6 years of profitable operations

Average CAGR 40%, $40M run rate

No debt, management-owned

Long-term relationships with key accounts

Global Delivery

Onsite, Offsite, Offshore and hybrid options for expedited delivery

Highly Technical Team, focus on Telecom Industry

600+ seasoned professionals from leading Global 1000 & telecom firms

Competitive offshore development centers

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Covad’s History of Broadband Innovation

Dec 1997Launched the first

Commercially available SDSL service

1996Founded as a result of the Telecom Act

Sept 1999Covad’s network

reaches 40%of US homes &

businesses

Jan 2000Covad first to

install shared line & launch self

install kit

Nov 2001Covad

launchesT1 service

(TeleXtend)

June 2003 Covad wins

CNET’s Editor’s Choice award for

self-install kit

Mar 2003Covad launches

new Hosting Services

June 2004 Covad launches

VoIP

Feb 2004First enterprise SDSL service

2nd Half 2005Line-PoweredVoice Access

4Q 2004Voice-Optimized

Access

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Communications Innovation

Covad Offers The Most Comprehensive Portfolio Of Services In The Industry By Leveraging Our Best-In-Class Capabilities

Consumer Business Enterprise

ADSL

SDSL

T1

•TeleSurfer•TeleSoho

• vPBX• PBXi

•TeleSoho

•TeleSpeed•Enterprise TeleSpeed•Frame

•Enterprise TeleSpeed•Frame

•TeleXtend•Frame

•TeleXtend•Frame

•ADSL•Second Line ADSL

Voice Optimized

Loop

•Second Line ADSL•Enterprise TeleSpeed

•ESDSL•T1

ISP Services

Customer / Technical Support

IP Transit

VoIP

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Covad VoIP Provides Complete Business Communications Solution

ServiceDescription:

Key Features:

• Multiple Integrated Product Bundles• Fully managed service option • Choice of Calling Packages• Quality of Service (QoS) and reliability backed by

comprehensive SLAs

• Simple pricing • Single number for 24x7 voice & data support• Managed high-speed connection to customer site• Comprehensive Feature Set

- 911, Local Number Portability, Directory Assistance, and others

- Metered or Unlimited Long Distance• Enhanced Features

- Unified Messaging, FindMe/FollowMe, Dashboard (Intuitive Account Management)

Channels: • Sold through Covad Direct, Agents/Dealers, and Wholesale Partners/Resellers

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Covad VoIP Product Suite

vPBX™Managed voice and Internet services eliminating the need for your PBX

vPBX LiteAvailable late Q4 ’04; 8 stations or less

PBXi™Managed voice and Internet servicesthat work with your existing PBX

SOHO VoIPQ2 ’05; 25 stations or less

Covad BroadbandNationwide broadband services for vPBX™ and PBXi™

Hundreds of thousands of business users already rely on our access services every day

PSTN

Service Office™

Customer

• Covad retained Cymbal for high-level work - consultation, vendor selection, IT strategy - well before the completion of the Gobeamacquisition

• Cymbal advises Covad on OSS and Order Management vendor selection, development processes, and business process.

• Cymbal is implementing the Billing and Revenue Management systems to support Covad’s automation, scaling, and enhancement for VOIP services.

Covad-Cymbal

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• Covad believes in building products, services, and systems the right way, but the market dictates pragmatism in getting to market.

• Covad’s strategy is to define the correct target architecture, then move incrementally to get there.

• In many cases, the DSL OSS does not support the VOIP requirements, and it is better to introduce new components than enhancement existing ones.

• In addition to retail VOIP, Covad will also offer wholesale VOIP to retail partners, and Voice Optimized Access to VOIP providers.

Covad Direction

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Transition Roadmap to VoIP

Deploying VoIP services is a major undertaking for a carrier, impacting all the OSS/BSS layers.

• VoIP Switches and PSTN gateways need to be deployed, requiring good understanding of the VoIP Call Control protocols, such as H.323 (voice encoding), MGCP (Media Gateway Control Protocol) and SIP (Session Initiation Protocol).

• VoIP Provisioning and Activation – some support provided by the VoIP virtual switches. Need to configure the Provisioning applications to support Voice services.

• Billing and Mediation impact – support for usage data, consolidated (voice, data, VoIP) summarized and detailed billing. VoIP taxing needs to be integrated with the Rating/Aggregation engine.

• CRM and Sales Order Management VoIP support – The customer facing applications have to be enhanced to support VoIP orders, bill presentment and trouble management.

• OSS –Wide Business Integration- VoIP end-to-end business processes and enhanced integration between CRM, Billing, Mediation and Provisioning.

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Implementation Consideration

Selecting implementation partners for a new service launch is one of the most important decisions.

• For existing services, cost is a key factor, but for new services, knowledge of process and experience is more important.

• Implementation partner is often required when building new systems or doing significant enhancements to support a service launch.

• Partner should not just understand IT and systems, but also business context, competitive positioning, and be able to provide experience and guidance on business process and context issues.

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• Covad is the largest independent DSL provider in the US, servingmore than 500,000 subscribers.

• To enter the VOIP market, Covad acquired Gobeam in June, 2004.

• The acquired systems and processes needed to be enhanced for different products and scaled to support Covad’s growth plans and potential.

What it takes to launch a business is not often what it takes tosustain and grow a business.

• Covad’s value is in bundled services and in delivering VOIP in combination with its high-quality DSL products.

Covad Situation

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• Many companies launching VOIP have an existing OSS that has become inflexible or expensive, so a second OSS is introduced tosupport VOIP.

• Often the goal is to use the new OSS systems to replace some of the existing OSS systems.

• Unless the new OSS is designed and built in a way fundamentally different than the original OSS, the new OSS will, in time, be as inflexible and expensive as the existing OSS.

If you do what you’ve always done, you’ll get what you’ve alwaysgot.

OSS Migration

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• VOIP mediation can be more complex than traditional circuit-switched mediation.

• Some VOIP vendors use an event-based call recording format. This requires the mediation platform to correlate multiple events to get billable call records.

• The VOIP usage formats are not standardized. IPDR has been proposed, but is far from wide-spread adoption.

• At least two CMS vendors support - either directly or through a third-party - the well-known AMA/BAF standards, but the support is not necessarily totally in line with GR-1100 and GR-1343.

• Most VOIP switch vendors seem to use some sort of delimited format, either call record or event based. There is also some proprietary XML call record formats.

• Mediation must turn all of this into billable call records.

VOIP Mediation

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Mediation

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• Billing is a primary - or the primary - touch point for customers. Without billing, its just a hobby.

• History shows that billing mistakes are the mistakes most likely to end up in the media and result in customer defections.

• Many offerings are realized in billing. Other systems don’t necessarily know about bundles, discounts, and promotions.

• The legal, regulatory, and tax uncertainty effect billing more than any other component. This implies that billing must be managed with a constant-change methodology, to reduce the overall cost of change over time.

• Existing companies launching new VOIP services to complement existing services may choose a multi-stage billing approach. This approach is expedient, but does have its complexities, particularly with payments, adjustments, and rolled-up financial reporting.

VOIP Billing

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“[The] nastier that the war between the cable and telephony [VoIP] platforms becomes, the higher the probability that the RBOC-wireless properties will be drawn even closer to the bundle. This implies that standalone wireless revenue yields will come under pressure as a result of aggressive RBOC discounting strategies. As wireless yields fall, this will put download pressure on wireless ARPU in order to prevent what could become a remigration of volumes back to the wireline platform.”

Deutche Bank Equity Research – Voice over IPFebruary 25, 2004

Wireless VoIP Analyst Feedback

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