Sunday, March 16, 2008

SPECIAL REPORT: The Growth of Convergence, part II

There has been a lot of discussion about convergence lately. Based on some recent interest in this information, here is part II of a primer on this trend and what it means to all of us; not just in telecommunications, but in all facets of the business world.

Convergence is not a new concept: telecommunications companies have been attempting similar tricks for years. By combining services that traditionally require different transport methods, fewer networks are needed. Fewer networks need less maintenance, less facilities, etc. The trick is to find the network that will effectively do the job.

In the late 90s, AT&T used it’s resources to purchase enough cable TV properties to become the largest cable provider in the US. AT&T had little interest in running a television operation; their goal was to get local and long distance services on these existing cable networks. Although this technology had been tried (at least 4 times) before, the new CEO C. Michael Armstrong believed it could be done now and was willing to bet his and the company’s future on it. Did it work? Today Armstrong is the semi-retired chairman of Johns Hopkins Medicine and AT&T was recently purchased by a company it spun-off, SBC (shortly after purchase, SBC changed it’s name to AT&T, a more recognizable moniker).

Another example is Sprint’s experiment with convergence, called ION – short for Integrated, On-demand Network. Sprint’s idea was to use its well-designed and maintained ATM over SONET network to deliver different services. The plan was to bring Sprint’s network directly to the premise (home or business) through a miniature ATM switch. The marketing was simple: just like electricity is turned up as needed, ATM could be turned-up similarly. If more telephone service, Internet or video conferencing was needed (television may have been on the radar as well), service could just be “cranked-up”.

Sprint blew over $80 Billion on this project before they pulled the plug. They concluded that ION was truly a project ahead of its time. They were probably right. While they were correct about the coming need for convergence, running telephone and IP over ATM(!?!) was not the way to go. All but the largest companies had no use for ATM by the early ‘00s.

NEXT WEEK: Why IP networks are the best choice

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