Addressing the Market Transformation and Needs

Over the past decade, IP communications have dramatically changed the market landscape for all businesses. The IP-enabled world is extending well beyond the current people-computer interactions to a broader context of object-to-object communications, where the connected "things" are devices, machines, information, services, and people. Always-on, always-connected resources, customers, suppliers, and partners create a new socioeconomic environment that demands new business models and business processes. These must be supported in turn by appropriately capable, integrated, and scalable information communications infrastructures.

Initially, businesses leveraged IP to optimize existent processes and functions. The focus was on very specific functions related to the primary scope of the business. This natural approach lead to the development of network "islands" customized to each market space, as shown in Figure 3-3.

Figure 3-3 The Internet Today

Although IP is far from being fully leveraged within each of these islands, and the independent growth of each island remains a significant business opportunity, the larger opportunities are in integrating these islands. This is where the IP evolution delivers the most significant economic benefits and IPv6 becomes an essential component. Market segmentation has worked well for IP up to this point. However, it is now time to move away from market segmentation before it becomes counterproductive. This section explores some of today's market demands and the opportunities available to both service providers and enterprises.

The Convergence of IP-Based Communications

IP's ability to rapidly integrate new services and to deliver them in a cost-effective yet reliable way pushes both service providers and enterprises toward consolidating all their communications needs over a single protocol. A converged IT infrastructure would be easier and less expensive to manage. The service consolidation, however, increases the demand for IP addresses. An enterprise user now has multiple addresses for their devices and services. Fixed VoIP phone, fixed access for the PC, and Wi-Fi access for the laptop all require a different IP address. The combination of the market demand for converged services and the interest in options such as the deployment of thin clients (which requires double the number of IP addresses per host) leads to the conclusion that IPv6 is a necessary enabler for the service consolidation process.

The Demand for Information

Content has become the "currency of the Internet." Demand for access to information is growing in sync with the striking increase in the volume of information available. In meeting this demand, products and services related to content delivery are increasing at a dramatic rate and the delivery mechanisms are leveraging the IP infrastructures:

• Entertainment: Access providers are fine-tuning their business models to deliver HDTV premium channels over IP multicast. Over-the-top content providers such as YouTube built their audiences through free but lower-quality content and are now quickly morphing into a platform for business and political communications. A related move is the industry adoption of IP Multimedia Subsystem (IMS) standards. IMS is an enabler for application and content delivery of "triple play" services combining voice, video, and data over IP.

• Educational: Distance education is becoming a significant component in the curriculum of major universities. It is also the business object of greenfield educational institutions. The option to tailor the learning schedule around the personal schedule makes distance education very palatable to those interested in continuing their education or those seeking job- or business-related training.

• Business: Whether it is stock prices, news reports, plant operations, or inventory data, information reaches businesses entirely or partially over an IP infrastructure, and thus its availability is essential to the proper operation of the business.

• Machine-to-machine (M2M): Information is also a critical ingredient in M2M communications as industrial networks move from current-loop and bus systems to IP. The generation and use of static and real-time information opens the door to a wide spectrum of opportunities ranging from vehicle and building automation to innovations on more effective management and security of plant and process systems. The number of sensors, actuators, effectors, and annunciators in today's industrial environment is already huge and will explode as information from emerging sensor networks and nano-machines takes off. A scalable infrastructure is required to support these devices and enable them to acquire and provide relevant information.

An interesting dimension of this market is that many of the Internet consumers contribute content as well. A 2004 Pew Internet & American Life

Project report22 indicates that 44 percent of Internet users contribute their thoughts and information, while a related 2005 report23 highlights that teens are even more involved in contributing to the Internet's information pool. Much of the content is exchanged through direct communication between users. Peer-to-peer communications, a growing contributor to the overall IP traffic, complicate the definition of business models that capitalize clearly on content distribution. Peer-to-peer communications also defy the traditional asymmetric traffic profile assumed for Internet users, requiring new considerations in designing the NGNs and in the development of the billing models. Although the customer base is very large, the challenge in this market space is to identify and develop the right business model and evolve the IP infrastructure to best support these services.

IPv6 is capable of bringing more content consumers into the market and providing them with more options to receive and transmit content. At the same time, an environment with all users having unique, globally reachable IPv6 addresses facilitates and stimulates peer-to-peer communications. This phenomenon can potentially drain revenue from today's services that count on IPv4's use of NAT and user communications that require a broker. Providers will have to generate value-added services that discourage a user's tendency to go for a similar service found free on the Internet. Higher quality would, for example, justify paying for the VoIP services offered by the access provider versus the free services available

22. Amanda Lenhart, John Horrigan, and Deborah Fallows, "Content Creation Online," http:// www.pewinternet.org/pdfs/PIP_Content_Creation_Report.pdf.

23. Amanda Lenhart and Mary Madden, "Teen Content Creators and Consumers," http:// www.pewinternet.org/pdfs/PIP_Teens_Content_Creation.pdf.

on the Internet. Initiative such as P4P Explicit Communications for Cooperative Control Between P2P and Network Providers is an other example of new service that could add value.

Social Networking

If its life is not measured in "Internet years," social networking can be considered a relatively new concept. At first sight it might be immediately filed in the entertainment/leisure category. However, it already proved itself to be much more than that.

Social networking experiments became unexpected tornado markets, bringing together incredible numbers of individuals. After being acquired by News Corp., MySpace was signing up 150,000 new users a day. Environments such as Second Life are exploring new sources of revenue from the captive audience they generate. This goes beyond simple entertainment. Cisco Systems, for example, purchased property and has a store in the Second Life virtual world. Going a step further on the path of trend validation, Cisco also purchased social networking technology from the privately owned Utah Street Networks, the operator of the social network site Tribe.net. Cisco plans to use the technology to build products for both consumers and enterprises.

Social networking will become a significant market driver in evolving the IP infrastructure. IPv6 can provide the resources necessary to efficiently support the social networking environments of the future and the markets they will develop.

Fixed-Mobile Convergence

The market demand for mobility has sharply increased since the early days of the first cell phones. Ericsson Research coined the phrase "Always Best Connected (ABC)" in 2001 for a model that allows seamless connectivity and handover across multiple access networks, including cellular, WLAN, and fixed

networks. The research explored emerging paradigms of integrated mobility including personal-area networks (PAN), Mobile Ad Hoc Networks (MANET),

24. http://adaptive.ucsd.edu/02_08_26_Eva_Topics_UCSD_2.pdf.

and Network Mobility (NEMO). The idea is to offer users the ability to connect anywhere, anytime, and with the device of their choice regardless of whether they are static or not. The transition between the access media types and between access points should be seamless for all services. Today's highly mobile, always connected individuals make these capabilities a market requirement.

Fixed-mobile convergence is a strategy aggressively pursued by both fixed-

access providers and by mobile providers. This is the new telecom battleground.25 Those who successfully implement fixed-mobile convergence will acquire a whole new market space to grow into. However, this convergence requires IP addressing resources beyond those provided by IPv4. IPv6 is the answer. It enables fixed-mobile convergence and is essential to the economic growth of access providers.

Servicing Networks for People

The increasing complexity and importance of today's networks generates great market demand for managed services. Enterprises of all sizes are interested in having someone—service providers or professional services organizations— manage their networks. Service providers are also tapping into the opportunities offered by home networks. New services such as security surveillance, health monitoring, and product tethering, together with existing services such as VoIP, video on demand, broadcast video, and Internet access, will lead to complex home networks that people depend on beyond entertainment. Subscribers are likely to rely more and more on someone else to manage this communications infrastructure.

The market size for these services is significant, yet it is not easy to make the service itself profitable. The large IPv6 address space offers globally unique addresses to all the devices managed, leading to simplified management models. To offer managed network services at home, the traditionally tight margins do not provide room for expensive provisioning tools and mechanisms. Some of the IPv6-specific provisioning mechanisms represent an opportunity to simplify the operational model and to keep a low post-sales cost for the service.

25. Wally Harris, "Convergence" (Ericsson AB, 2006), http://www.itu.int/ITU-D/imt-2000/ documents/Algiers2006/Presentations/Day%203/Algiers_Presentation_37_WHariz.pdf.

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