Telco 2.0 Comment: We're delighted to have the people from Red Hat's telco business at Telco 2.0. Ivelin Ivanov, their director of product development, agreed to do a guest post for us about telcos and their JBoss Java-based comms platform; it's like a really tiny SDP that fits into products like IP-PBXs. In fact, when Ivelin demonstrated it, it turned out it was running on his laptop. If that isn't cool, I don't know what is.

Who would think a few years ago that the telco industry would ever reach a pace of innovation comparable to the web world? Well, it happened. Most still wouldn't agree, but maybe pointing out a few facts will help.

Earlier this year the web thought leaders launched amazing new online tools for web mashups - Yahoo Pipes, Microsoft Popfly and Google Mashup Editor. They took over the web developers community by storm and changed the way applications are written and deployed. A new computing environment emerged.

A series of posts followed in the telco blogosphere, proposing interesting ideas for telco mashups. Some good examples came up during the O'Reilly Emerging Telephony Conference (ETel).

It was magical for me to find out that a tier one carrier was tuned in and listening to all the cool talk in town. Not only listening but also acting on it. Last week I was presented with early access account to an online service exposing telco services in a way easily consumable by mashups. Hopefully the service will reach general availability shortly and I will be able to post more about my experience with it while creating converged online services.

While there is a lot being said about creating mashups, it is less clear how one can create services that can be converged via mashups. Recently Telco 2.0 wrote about evolving telco platforms. The article argued that while Level 1 and 2 platforms are feasible and will evolve, Level 3 platforms have no future.

We would like to challenge the latter statement. L3 platforms are proven to work well in the enterprise middleware market and are starting to take off in the telco middleware space as well. At least open source L3 platforms are.

Yesterday, on the Telco 2.0 Product and Partnership Innovation track, I demonstrated a DVD Online Store service, which will show convergence of several middleware technologies - web, SOA, process management, and call control running on an integrated Level 3 service delivery platform.

At Red Hat we are working closely with several major telco equipment providers (NEPs) to embed the JBoss Communications Platform in some of their flagship products such as routers, switches, gateways and MCS (Multipoint Communications Systems). These are the kind of mission critical products that are traditionally black boxes with stringent quality of service characteristics. It used to be unthinkable to allow customization by third parties. However a number of market realities are forcing changes, impacting the way such products are created and distributed throughout the telco ecosystem.

What are examples of such market changes?

One is that telco vendors are starting to realize that they are no longer able to compete for business by offering seven-eight-digit products with 10-15 year life cycles. The IT vendors are after their market with all-software alternatives running on commodity hardware at a fraction of the total cost. In order for NEPs to compete, they need to be more flexible. They need to reduce cost, shorten release cycles and increase the number of innovative features in their products.

Another market trend is driven by the emerging problem of complexity and power consumption in the data center. Increasingly enterprises and service providers are striving to reduce the number of boxes in their data centers by using virtualization technologies and integrated blade servers. Rather than adding more routers, switches, gateways, web servers and application servers as their needs grow they are looking for ways to layer them as multiple software stacks on fewer hardware instances.

The forementioned examples are among the market forces pushing telco vendors to offer L3 platforms. Their products become more attractive to end customers, who can customize and write new add-ons themselves or purchase them from third parties as needed.

Second tier equipment vendors and a new generation of hosted service providers, can now innovate faster by focusing on new features. They will leverage the bullet proof carrier grade base platforms from the top tier brands. With older generation equipment, a significant time has been spent on integration between newer services and existing hardware. Integrated service delivery platforms offer clear application management characteristics and rich sets of resource adapters, thus significantly shortening the development cycle.

The market for IP based communications equipment is growing fast throughout a broad range of markets - including small, mid-size businesses, big enterprises and service providers. The prices vary significantly between these target markets. IP PBX systems cost in the range from a few hundred dollars to tens of thousands, while IMS Elements, MCS and Soft-Switch systems can reach six to seven figures.

Some equipment vendors are starting to realize that if they can come up with a flexible base platform that can scale both in processing power and richness of features depending on the end end user requirements, they would be able to achieve enormous cost efficiency. Most ruled out the direction of developing in-house completely such application platforms.

Several have realized after extensive due diligence that partnering with proprietary middleware vendors may be a challenge because of licensing structure. It proves hard to include a $200K per CPU Communications Server in a PBX that is aimed to sell around $10-15K.

One solution to the cost saving plan is found in leveraging open source software. Since open source business models are primarily based on services and not on license fees, it is possible to structure creative deals where an open source platform is included in PBX appliances, with more basic SLA for a lower fee and the platform is included in higher end servers for a more demanding and respectively higher priced SLA.

A lot of key decisions are being made in 2007. Strategic partnerships are being forged that will reshape the layers of the telco food chain. Integrated Service Delivery Platforms are a hot topic in these discussions and one that will be talked about more often in the future.