Most operators around the globe are engaged in next-generation network transformation projects or IP transformation projects, moving from multiple single-service TDM networks to a single multiservice packet network. Currently, large providers typically have a voice network, broadband network and some data networks, such as a frame relay, IP/MPLS or Ethernet.

Service providers are investing billions of dollars worldwide to simplify their networks because, in the long run, they will reap the rewards of reduced capex and opex.

Going to a single packet network also offers the opportunity to have a single network platform for new services, resulting in an even more important benefit in today's cutthroat environment: new revenue streams.

Customers benefit, too. New applications, or new twists on existing apps, keep current customers and attract new ones, especially as our fast-moving world goes more mobile — and as fixed and mobile applications merge. In some recent work based on our Service Provider Capex, Opex, ARPU and Subscribers service, Infonetics determined that in 2007, service providers spent about $25 billion worldwide on applications, including service delivery platforms, software development kits, developer funding, direct development of new applications and other related activities.

Belgacom, which launched its new IP/MPLS packet network and introduced “Belgacom Explore: The Application Aware Platform” in 2007, is heavily promoting to customers the advantages of their new single multiservice network. Through Application Aware, Belgacom attracts customers from old services on multiple networks to new services on a single IP network.

For example, although the efficiencies of a single Ethernet connection are attractive in themselves, Belgacom customers, via new “application performance maximization” tools, can now monitor, set priorities for and allocate bandwidth to various applications and individual end users.

Not surprisingly, Belgacom found its customers were happier with this new service than they were with the existing willy-nilly fistfights among applications for resources. User satisfaction jumped markedly for both key applications users (53% to 100%) and users overall (57% to 78%). Meanwhile, Belgacom is on the way to achieving the cost reduction benefits of operating a single packet transport network, even though it must still operate the old networks for the next few years.

Major incumbent BT introduced its revolutionary 21st Century Network IP transformation project in the U.K. four years ago, and it now is in the midst of early rollouts. Several hundred thousand customers now are using 21CN voice over IP rather than the public switched network, with no noticeable quality differences. For businesses, BT plans to stop selling E-1 TDM services in 2012 and to shut them off completely in 2014. Until then, though, and taking a different approach than Belgacom, BT is allowing the move from E-1 TDM services to Ethernet services to be “customer led.”

And, while BT's 21CN is designed to enable “new service delivery over a global, real-time, open platform,” BT has yet to offer any new services over the new platform, instead opting to first get the network fully up and running and later to open up the network to leverage resources outside of BT for the development of innovative new apps and services. When valuable applications are introduced to BT's customers (or even by them), they are more likely to want to stay with BT.

Regardless of the particular solution or approach, as service providers move toward a single multiservice network, the simplifications are passed on to their customers; for example, delivering voice, IP virtual private networks, an Ethernet LAN extension and Internet access all over a single Ethernet connection is a lot easier for both the user and the provider. While this makes everyone's life easier, a common applications platform available on that same single network may turn out to be an even bigger benefit and win-win for both providers and their customers.

Michael Howard is principal analyst and co-founder of Infonetics Research.