1. Cisco Service Provider Vision
Welcome
Cisco Service Provider Vision
Mazen Jabri
Territory Manager, Gulf
Service Provider Line of Business

2. New World Business Models for Service Providers
Roadmaps for Success:
New World Business Models for Service Providers
Muscat - May 29th, 2001

3. Drivers of Telecom Market
Disruptive Technology
Deregulation
Telecom
Market
Capital
In Cisco’s environment, there are four key drivers of strategy:
Resources: the single most important tool that we marshal
Technology: the end product of the resource allocation
Customers: define the problems that we need to solve
Competitors: attempt to solve the customer problems more effectively than us
Combination of these factors and how they are managed generate a strategy IP

4. Intelligence to the Internet
Internet Circa
1994
1997
2000
Access Method
Dial-up T1
DSL/Cable
Application
Mass
MyYahoo
Video on demand
Fiber

5. Intelligence to the Internet
Convergence to HTTP
Complexity and Scale
Personalization

6. Wireless Internet Internet—anytime, anywhere Internet to the masses
500 million subscribers ww today
2 billion expected in 2003
Emerging markets
Europe, India, China
PC substitute
Conquering the digital divide
Less financially affluent
Less technically affluent
Cell phone brought mobility to our voice communications. This created explosive growth in the mobile phone business. The next frontier for mobile devices is the wireless internet.
Wireless devices will be on the frontier of breaking down the digital divide:
Digital Divide from two perspectives:
less financially affluent – cheap devices
less technically affluent – simple devices
Emerging markets: India/China!

7. The “3” Layer Model
Content IP
BB Access

8. Content Delivery Networks
Optimize Internet Experience by Connecting Users and Customized Content
Delivery
Switching
Caching
Network/server knowledge
Forwarding of content to caches
Redirecting users to content
Forwarding based on http information
Hardware assisted switching
“Integrated” caching and delivery
Local content insertion
High performance serving

9. Enable Networks to Offer Managed Value-Added IP Services at Wire-speed
IP Service Enabling
Enable Networks to Offer Managed Value-Added IP Services at Wire-speed
Hardware
Software
Decoupling services from switching
Custom silicon
Service
Switching
Service creation
Provisioning
Management and monitoring
Billing and accounting
Control

10. Revolutionize the Transmission Infrastructure for Internet Scale
Optical Networking
Revolutionize the Transmission Infrastructure for Internet Scale
Bandwidth
IP Optimized
Multiservices
Wavelength proliferation
From 2.5G to 10G to 40G
Dramatic improvements
Controlling optics with IP
Eliminating multiplexing layers
Storage
Metro/Ethernet
Long and ultra long haul
Legacy traffic

11. Deliver the Internet Anytime, Anywhere
3G and IP Wireless
Deliver the Internet Anytime, Anywhere
Capacity
IP Services
New Applications
Data Rate of Wireless
From overlay to pure packet based networks
Converged data/voice
Customized internet
M-commerce
Location-based services
Remote access
Years

12. SP Industry Disruption: Waves of Opportunity
B2B eMarketplaces
Click-to-Talk
eCRM
Portals/ Online Services
Hosted Applications
Industry Disruption
IP Telephony
Web Conferencing
eCommerce
Unified Messaging
Online Communities
Wireless Web Access
Video-on-Demand

13. Customer Needs in the Internet Economy
Communications
Content
Information
Entertainment
Commerce
Community
Efficiency/ Productivity
Universal Access
Mobility, Flexibility
Personalization
Self-Provisioning

14. Which Businesses, Customers, Industries do you Serve?
Consumer Packaged Goods
Manu- facturing
Health Care
Government
Retail
Education
Insurance
Large Enterprises
Small-Medium Businesses
Oil & Gas
Securities
Utilities
Service Provider Businesses
Transport- ation
Banking
Entertain- ment
Other Service Providers
ISPs
Consumers
Local Information
NSPs
Enterprises as SPs
Teenagers
Home Automation

15. Falling Prices: U.S. Interstate Long Distance (Voice)
U.S. Interstate Long Distance Price per Minute
80-02 CAGR
-6.4
Continued deregulation
Increased competition: CLEC and RBOC penetration of LD
Lower access costs
Lower network operating costs
95-02 CAGR
-12.3
Source: FCC; Dataquest; IDC Packetized Voice Services (January 1998)

16. Making Money Up the Stack: End User Activity Drives Revenue
End User/ Customer
Value-Add Solutions
(conceptual)
Use of Content & Apps
Traffic, Revenues
Content Distribution
Hosting
Solutions Value Add
Network Services
Access
Transport
Service Provider
Closeness to Customer Delivery

17. New World SP Solutions: Engines for Growth
Worldwide Service Revenues $ Billions
CAGR (%)
315
32.4
233
37.7
Content and Applications Solutions 78 47 82
21.9
Data Communications Services 31
Sources: IDC; Dataquest; Forrester; Morgan Stanley Dean Witter; Internet Research Group; Veronis, Suhler & Associates; Cisco analysis Note: Wireline voice transport grows at 7.6% from 564 B (1999) to 815 B (2004) and wireless voice transport grows at 13.8% from 225 B (1999) to 430 B (2004)

18. Example Roadmap of New World SP Solutions
Basic Solutions Data Storage, eFax, , Messaging, IP Telephony
Advanced Solutions Hosted Apps, Unified Comms, Portal Services
Content and Application Solutions
Basic Data Transport, Access, Web Hosting
Advanced Data IP VPNs, Extranets, Managed Security, Wireless Access
Data Communica- tions Svces
Solutions Value-Add
(Wireline) Basic Voice Local Long Distance
Advanced Voice Call Waiting, Caller ID, * 69, Conferencing
Wireless Voice Local, Long Distance, Call Waiting, etc.
Voice Communica- tions Svces
Time

19. Converging and De-layering Service Provider Value Chains
1. Broadcast Content
Video
2. Web Applications
3. Web Content
Data
5. Wireless Voice
Voice
4. IP Telephony
6. Wireline Voice
New
Old
---
Wireline Phone
Wireless Phone
PC/ Desktop TV
Pager/ PDA
Access Device (Traditional vs. New Usage)

20. Web Content Delivery Value Chain: Who Pays Whom?
Disney
Time Warner
Universal Studios
Warner Brothers
Paramount
New Line Cinema
Viacom
CNN
NBC
Newscorp
ZDnet
CBS Market Watch
CNet
ESPN
iVillage
= revenue flow
Content Provider
Akamai
Adero
Mirror Image Internet
Digital Island/ Sandpiper
Real Networks
Yahoo! BroadcastServices
Edgix (satellite)
IBeam Broadcasting (satellite)
AudioSoft
Digital River
Infinet
Intertainer
MP3.com
ProWebCast
Content Provider
Content Provider
CDSP
NSP/ T1 ISP
T2/3 ISP (local access)
Wireless ISP
(or)
ILEC/ CLEC
End User
CDSP: Content Delivery SP (Akamai, Digital Island/Sandpiper)

21. Transactions vs. Transmission Moving to New Revenue Models
Usage-based Billing (SMS)
Functional Services
Software App Services
Content Delivery Services
Advertising
Revenue-Sharing
Metered Billing

22. Usage-based Billing On the model of existing On demand services
Charge for each usage of short messaging services, message translation services, web- or -to-fax services, find-me services, etc.

23. Functional Services Service Subscription Fees
Charge for availability of network-delivered services (monthly charge)
Consumer example: home security service that calls police, neighbors, find-me services for each parent
Business example: company calendaring service, charge by corporate user by month

24. Software Application Services
Usage-based Billing to Businesses
Provide hosted business applications (eSFA, eHR, eCRM) to enterprise/SMB; Charge business for each application usage (by the drink)
Usage-based Billing to ASPs/ISVs
Provide AIP (Application Infrastructure Provider) hosting/ data center services for ASP/ISV; Charge ASP/ISV for each application usage

25. Content Delivery Services
Usage-based Billing for Content Delivery
For delivery of rich media content, charge by item of delivered content
Consumer example: Charge by the item for music- or video-on-demand
Business example: Charge by the seat for web-based distance learning/ company training sessions

26. Advertising
Advertising Revenues from Businesses and Other Organizations
Subsidize web and voice portal/ search and content delivery services
Subsidize business and residential user Internet access, IP telephony, eventually IP video
Results in free to the user Internet access, free IP telephony, free IP video

27. Revenue-Sharing: ASP Example
Revenue-Sharing With Software Vendors/ ASPs
SP provides AIP services for hosting e-business applications for free/ at below market rates
ISV/ASP does all customer support and service functions as well as software development and application integration
SP shares in ISV/ASP revenues -- charge per usage, per seat, per project

28. Revenue-Sharing: Content Delivery Example
Revenue-Sharing With Content and Media Creation Companies
Provide free/ low cost content production, hosting, distribution, transport services in exchange for cut of content creation fees
Example: free production, hosting, and transport of digital films for playing directly in digital projection theaters in exchange for a cut of theater ticket sales and/or artist royalties

29. Revenue Sharing: e-Commerce Example
Share of e-Commerce Transactions for an Enterprise/SMB or a B2B Marketplace Operator
Develop web site/ integrate packaged application (or done by partner), provide hosting, access, transport for free/ less than market rates
In exchange for cut of revenues from products/services sold via web site or in the B2B eMarketplace

30. New Services and Solutions: Content and Applications
Business Solutions
Consumer Solutions
Hosted Application Solutions
E-business applications (internal-facing and external-facing)
Personal productivity applications
Online gaming
Content & Media Solutions
Content delivery: distance learning, advertising, co. websites
Content delivery: music-/video-on-demand
Communica- tions Solutions
Managed
Short Messaging
Web conferencing
Unified communications
Managed
Instant Messaging
Web conferencing
Unified communications
This chart suggests some of the primary solutions that businesses and consumers are turning to service providers and their partners to deliver.
Hosted Applications Solutions for businesses are primarily hosted e-business applications either internal-facing (eHR, efinance, online directories, back office functions) or external-facing (e-commerce, eCRM); for consumers, hosted personal productivity applications (calendaring, online banking, etc.) and entertainment related apps (online gaming).
Content & Media Solutions for businesses are distance learning/training solutions, rich media web sites and web advertising; for consumers, primarily entertainment solutions for music or video-on-demand.
Communications Solutions refer to the value-added communications applications: managed services, instant/ short messaging services, unified communications, web conferencing services, chat, collaboration, etc.
Portal/ Mediation Solutions include web portals (Yahoo!), voice portals, wireless portals, etc., and the business (B2B marketplaces) and consumer related (AOL’s Motley Fool) communities that grow up around them.
Finally, there are some solutions which are exclusively for businesses, like outsourced data storage and management or outsourced contact centers and other business processes.
Primarily for consumers are solutions for home automation (e.g., controlling energy, security, or appliance systems via the web).
Although this list is not definitive, it helps to provide a useful framework.
Portal/ Mediation Solutions
Web portal
Voice portal
Online business communities
Web portal
Voice portal
Online personal interest communities
Data storage & mgmt.
Business process outsourcing
Home automation solutions (security, energy, appliances)

31. Challenges in eBusiness Transformation
How should we organize for eBusiness?
How can we change the “Old World” culture?
What should we do with our legacy systems?
Which eBusiness solutions should we do first? How can we identify them?
What can we do to become a “cool” place to work in? How can we attract and retain talent?
How can we increase the value of our company through eBusiness?
The Internet is more than just a new way to sell your products and services, it's a way to efficiently run a business, resulting in significant cost savings.
I’ll show you some specific examples at Cisco later in my presentation 31

32. Prioritizing Solutions Opportunities: Some Examples
AIP/ASP Solutions
Unified Messaging
Data Storage and Mgmt.
IP Video on Demand
eFax Mgmt. Services
IP Voice Services
Chat/ Collaboration Solutions
Mgmt. Services
eCommerce/ eMarketplaces
Outsourced Contact Centers
Home Security Systems Solutions
Online Communities
Portals
High
Economic Opportunity (revenue growth, margins)
Low
Low
High
Ability to Execute (based on competitive assets)

33. Cisco as Strategic Partner
Internet Economy Business Models
Ecosystem Partnerships
World-class Technology

34. Cisco’s Role: Helping SP Build Profitable Revenue Streams
Cisco as Strategic Partner:
Help SP Choose Opportunities and Build the Infrastructure to Create Profitable Revenue Streams
At the Crossroads: Which Opportunities? How to Build?
Challenges and Opportunities in the New Internet Economy

35. SP Business Models: Roles and Responsibilities
1-2 Day Workshops
4-12 Week Engagements
EBCs
Strategy Consulting & Business Planning
Evangelize and Educate
Detailed Financial Modeling
Deployment and Go-to-Market
SP Sales
SP Field Ops
BDMs
IBSG-SP
SPLOB (MSCs)
Various Business Modeling efforts (cable, hosting, STEM)
JumpStart, CPN
Partner programs (OSS, CHAI, etc.)
Ent. Sales/ PAM
WW Channels
CA-SP, PSO

36. Service Providers can benefit from three key opportunities in eBusiness.
Running my
‘e-SP’
eCare WO
eCom
SCM 1
SP as an
e-Enterprise ...
… to increase productivity and agility, reduce operating costs, and improve customer loyalty
Running my
Network:
“Zero Touch”
eOSS
eBSS 2
SP as a company whose mode of operating is deeply altered by Internet technology...
… to reduce network operating expenses, time-to-market, etc.
Providing
eBusiness
Services
to my
Customers 3
SP as a provider of eBusiness services to its customers ...
e-SP
Service providers (Telecommunication companies, cable, mobile and ISPs) have historically been slow in taking advantage of the Internet to streamline their business processes. However, they are now rushing to develop eBusiness strategies pushed by their clients, their shareholders, and even regulatory agencies and end-clients.
Service providers play a key role in the development of the Internet in the countries where they operate, since they provide the broadband network infrastructure required to make eBusiness a reality in the enterprise and consumer market. As such they can be a catalyst or a barrier to Internet diffusion in a market.
Service providers have the opportunity to be a major participant in the transformation of enterprises into eBusiness. This can be a way to expand their business into new revenue generating activities that can compensate the erosion in their traditional voice services market. Luckily enough, the enterprise market perceives service providers as a natural suppliers and implementers of eBusiness solutions.
Service Providers have three main opportunities in the eBusiness Revolution:
First: Service Provider as an enterprise. The goal is to use eBusiness to increase productivity (do more with less) and agility, reduce operating expenses, and improve customer satisfaction and loyalty.
Second: Service Provider as a company whose core mode of operating is deeply altered (disrupted) by internet technologies. The goal is to migrate to the new mode-of-operation, reduce the network operating and management expenses, and reduced the time-to-market and time-to-volume.
Finally: Service Providers as a provider (reseller) of eBusiness products/services to their customer base. The goal is to generate new flow of high-margin revenue and reposition themselves in the new Internet Economy.
In this transformation Service Providers face clear challenges such as past investments in legacy technologies, the prevalence of an “old world” culture, and the lack of experience in partnering to develop the ecosystems required to become an e-SP.
… to generate new flow of high-margin revenue

37. Service Provider as an Enterprise: “Transforming into an e-SP”1
eBusiness Solutions
Examples
Workforce Optimization
Web-based employee automation: directory, expenses, purchases, training registration, e-learning, executive intelligence systems (EIS)
e-Commerce
Web-enabled catalogue, pricing simulation tools, lead times, service configuration, on-line ordering, bill payment, CRM, click-to-talk
Web-based customer care, service order status, service level agreement information, custom bill presentment, equipment and service inventory, trouble ticketing, automated advisory services, etc.
e-Care
Before service providers rush into the Holy Grail of eBusiness, they must establish themselves as credible and trusted players, “walk the talk”, by adopting eBusiness solutions themselves.
The benefits of doing so are obvious: achieve competitive advantage through increased agility and productivity, reduced operating expenses, and increased customer satisfaction. Service providers must take advantage or webification opportunities in each link along their value chain. For instance:
Customer care opportunities: service order status, service level agreement (SLA) information, trouble ticketing status, customised bill presentment and information, equipment and service inventory, automated advisory services, historical analysis, account information, etc.
E-commerce opportunities: product/service catalogue, pricing simulation tools, online ordering, secure transaction engine, online payment, lead times, service/network configuration, etc.
Supply chain and service provisioning: inventory account, service order status, automated service configuration and provisioning, trouble ticket status, automated custom billing, service provisioning lead times, network/service performance reporting and management, alarms management, ticket entry, SLA management, etc.
Employee services: expense report, benefit enrolment, purchases, training registering, communities of interest (new hires, business units, departments, etc.), web directory and organisational chart, holiday/leave capture, e-training, career development, etc.
Our experience indicates that increments of up to 25% in productivity are within reach when implementing Internet business solutions. Reductions in the product/service development process and in the time-to-market may alone justify the investments.
Supply Chain Management
Customer premises equipment supplier integration, field force, maintenance and subcontractors, etc.

38. Service Provider as Network Operator: “Zero Touch Dream”2
eBusiness Solutions
Examples
Automated Service Provisioning
Flow-through provisioning system:
Address validation check
Feature availability check
Customer service record
Service planning
Service configuration
Service provisioning
Billing
...
Automated Network Management
Custom management of the network:
Network configuration
Element management and testing
Service fault and performance analysis
Security management
Service provisioning lead times
Trouble ticket
...
Before service providers rush into the Holy Grail of eBusiness, they must establish themselves as credible and trusted players, “walk the talk”, by adopting eBusiness solutions themselves.
The benefits of doing so are obvious: achieve competitive advantage through increased agility and productivity, reduced operating expenses, and increased customer satisfaction. Service providers must take advantage or webification opportunities in each link along their value chain. For instance:
Customer care opportunities: service order status, service level agreement (SLA) information, trouble ticketing status, customised bill presentment and information, equipment and service inventory, automated advisory services, historical analysis, account information, etc.
E-commerce opportunities: product/service catalogue, pricing simulation tools, online ordering, secure transaction engine, online payment, lead times, service/network configuration, etc.
Supply chain and service provisioning: inventory account, service order status, automated service configuration and provisioning, trouble ticket status, automated custom billing, service provisioning lead times, network/service performance reporting and management, alarms management, ticket entry, SLA management, etc.
Employee services: expense report, benefit enrolment, purchases, training registering, communities of interest (new hires, business units, departments, etc.), web directory and organisational chart, holiday/leave capture, e-training, career development, etc.
Our experience indicates that increments of up to 25% in productivity are within reach when implementing Internet business solutions. Reductions in the product/service development process and in the time-to-market may alone justify the investments.

39. Service Provider as Provider of Services: “e-Business for my Customers”3
E-Business Solutions
Examples
E-Business Value Added Services for Large Enterprises
Consulting and systems integration of e-Business for large enterprises, development of partner ecosystem
Basic: Web Sites, IT Services (backup / storage), , simple Desktop Apps (e.g. Calendars). Complex: e-Business Applications (e-Commerce, e-Care, Workforce Optimization, Supply Chain Management)
Application Service Provider (Basic and Complex Hosting) for SME
Vertical Industry Specialization
Vertical market focused portals(COIN) and applications
Media Play
E-Learning, e-Training, e-University,
e-TV

40. © 2000, Cisco Systems, Inc.