Telecommunications: The Race To Upgrade

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September 22, 1997

TELECOMMUNICATIONS:
Telecom: The Race To Upgrade

Shifts within the telecom industry call for rapid IT upgrades
By Charles Waltner
IW 500 slug elecommunications companies are in the midst of an unprecedented IT spending spree. If only they could buy more time.
Thanks to the 1996 Telecommunications Reform Act, the industry is in a fundamental-and rapid-shift to a more competitive market. But many of the largest carriers, especially the regional Bells and major independents, are weighed down by outdated systems and elephantine computer networks developed when the companies operated as monopolies.
Others in the industry, such as the major long-distance carriers, are under pressure to improve their IT infrastructures before moving into new businesses, like local phone and Internet access services.
Besides needing to upgrade their networks to prepare for more competition from small but fast-growing upstarts and long-distance carriers, regional Bells are being forced by the Telecom Reform Act to reengineer their network facilities to support wholesale business operations-in order to give new competitors access to previously captive customers.
With competition heating up and regulatory deadlines looming-some as soon as late this year-telcos can't update their internal computer networks fast enough.
Many would like to revamp their networks by 2000, but that might be too ambitious. The networks providing the backbone for phone services with millions of customers are enormous. For example, the networks operated by GTE Corp., the highest-ranked telco in this year's IW 500, contain a n estimated 1 billion lines of code, says Shaygan Kheradpir, assistant VP of architecture and planning at GTE, in Stamford, Conn.
The huge cost of upgrading, operating, and maintaining systems and networks is evident from the industry's high level of IT spending. According to an IW survey of the 500, telecom carriers on average have IT budgets for 1997 that are about three times larger than those of other companies.
GTE, one of the fastest-growing telcos, gives a prime example of the sweeping network reengineering taking place in the telecom market. The company has launched a top-to-bottom, three-year network overhaul, called GTE Integrated Systems Plan (GISP), that it hopes to complete by 2000.
GISP has three major components, Kheradpir says. First is a new network framework based on an industry standard called Telecom Management Network (TMN), which handles voice, video, and data. This will serve as the architecture for all operation support systems throughout GTE.
TMN includes four horiz ontal layers. The lowest, element management, handles systems management such as control of network switches. The second, network management, uses information from the network to perform tasks such as facility management. The third layer, service management, handles applications such as customer care and billing. The top layer, business management, handles internal systems such as finance.
As part of the second component of GISP, GTE is moving "massively" into Internet technologies such as intranets to distribute corporate information to its various operations-including ordering, customer service, billing, and service fulfillment. Kheradpir says GTE chose Internet technology because it promises to be faster and cheaper to deploy than other solutions, such as client-server networks.
In addition, he explains, Web-based technology will let the company seamlessly extend its systems into extranets for partners, suppliers, and customers, which can tap into self-service accounts. GTE will use Java tools and access legacy systems using the object-oriented middleware environment Corba.
The third element of GISP is the development of a "core engine" for developing applications such as service fulfillment, order entry, customer care, and billing. Kheradpir says GTE will be able to develop systems for each operation quickly because application components-such as credit checks, order submissions, or billing orders-vary by only about 15% among implementations in different business units and departments.
While not every telco is revamping its IT systems and networks on as large a scale as GTE, many are speeding up reengineering efforts while containing long-term costs.
To do this, some are turning to outsourcing for support services and partnering with hardware and software vendors. Cliff Dodd, CIO of Ameritech in Chicago, says the Bell company is outsourcing many of its IT operations, such as data warehousing, so he and his staff can concentrate on building more sophisticated software for customer service and marketing.
Ameritech also has hired IBM to consolidate its 26 data centers into three over a three-year period. The move will not only save Ameritech money, Dodd says, but will also help centralize access to customer and service information.
Dodd won't say how much the company is saving by outsourcing, but says an analysis by Ameritech showed that using service providers for some IT operations would let the telco "reach all of its long-term cost-reduction goals."
John Gerdelman, president of networkMCI Services in Washington, says MCI has always used outsourcing as much as possible to develop networking solutions more quickly. Rather than build applications in-house, it buys best-of-breed software and hardware and partners with experts for particular solutions. For example, MCI is using a billing system from Andersen Consulting to support its entry into the local phone market. The company is also partnering with Genesys Telecommunications Laboratory Inc., a San Francisco computer telephony int egration company, to create middleware to provide more telephony capabilities to its customer-service data networks. This technology helps link customer phone numbers to databases.
MCI is taking a "layered" approach to developing its network infrastructure, with the goal of bringing new paging or cellular phone services to market quickly. "We get something up and running and see how it works," Gerdelman says. "Then very quickly we see how it scales. None of this comes out perfect, but if you want to be competitive in the global market, you need to get products out as fast as possible." That's especially true when it comes to the Internet. Many carriers are expanding Web and intranet services to become more competitive. Companies such as MCI, Sprint, and US West are looking into using the Internet either to open up legacy data to employees or provide more detailed billing information to customers.
Most companies have a way to go in offering self-service on the Web, however. Sprint, for example, offe rs customer-billing information over the Internet to only 5% of its customers. Some CIOs of telecom companies cite security concerns as the main reason they're holding back on large-scale introductions of such services.
Other telcos are creating systems to harness their data for marketing. "Before now, we were regulated monopolies. We didn't need fancy marketing," says Ameritech's Dodd, noting that his goal is to develop the sophistication many financial institutions have in slicing and dicing customer demographics and other data. "On that account, we have a lot of ground to make up."
Dodd says Ameritech is setting up small-scale data warehouses in each of its business units. These warehouses collect selected data elements, which are then fed to a central warehouse-containing up to 1.5 terabytes of data-for companywide distribution.
Ameritech still must develop query models for extracting the information. Dodd prefers to go "plain vanilla" with his architecture for extracting the volumes of custo mer information archived in the company's mainframes, relying on proven technology such as Oracle databases and C++ while eschewing new technology such as object-oriented programming. But he is also turning to Corba to create three-tier client-server systems for tap- ping into mainframe data.
MCI is building data warehouses to help distribute customer information to its departments. Gerdelman says his goal is to eliminate the "city-states" that exist in the computer systems of various business units. MCI, which at one point had 125 separate networks, has reduced the number to about 80.
Expect the pace of change in telecommunications to continue for years-and with it, efforts by telcos to build and maintain flexible, unified networks in which different business units-cellular, paging, or long-distance-can easily exchange information for marketing, billing, and customer service.
Telco CIOs expect their IT investments to save their companies money almost immediately, and in the long run save million s of dollars a year. The huge task of keeping large-scale IT operations up to date is "a big challenge," says GTE's Kheradpir, "but we don't have a choice-and neither does anyone else."

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