The Internet has been compared to everything from Gutenberg's printing press to a virtual shopping mall. Many in the industry remain skeptical, but one thing is clear: The Internet phenomenon is not going away. Powered by its "killer application," the World Wide Web, the Internet has become far too large for telephony service providers to ignore. According to a Dataquest survey, 12 million new Internet users will log on in 1996 alone. By the end of 1998, Internet users in North America will number more than 60 million, with more than 100 million Internet surfers on-line worldwide.

Hardware manufacturers, software companies and information services are all developing products and programs to catch the Internet wave. But in the telephony world, the dominant tone of any Internet discussion is likely to be uncertainty. Despite the general enthusiasm about Internet growth, most carriers have yet to identify where the real market opportunities lie. Their doubts about profiting from the on-line consumer world do have a solid foundation. Without the right strategies in place, the gold mine of providing Internet access is actually a potential minefield of problems for established carriers.

Colliding Network Models One of the biggest obstacles facing traditional carriers is understanding the inherent differences in personality between the Internet and the public switched network. For now and the foreseeable future, the public network remains the vehicle of choice for Internet access. However, crossing the boundary where the two networks meet means adapting to a new set of rules.

The Internet is a network of networks designed to share computer resources. Its nature is essentially connectionless, in contrast to the public network, which was specifically designed to facilitate direct, one-to-one connections. Pricing on the Internet has no distance sensitivity. Internet users have less sensitivity to delay than users in the telephony realm, where any delay longer than 250 milliseconds is considered unacceptable.

Another example of how both networks differ is shown in the scale of address space. The public switched network has about one address for every human being; the Internet's next generation address scheme (Internet protocol version 6) will have enough addresses available to assign one to every insect on Earth.

Perhaps the widest point of departure between the Internet and public switched network mindsets is security. Because it was originally built on a monopolistic model, the telephony industry has always relied on physical security to protect its network. The Internet, however, has been built piecemeal by a cast of literally thousands of players, and security must be imposed by logical rather than physical means.

In many ways, the ad hoc, free-wheeling nature of the Internet is a telephony manager's worst nightmare. Established carriers may wish to view the Internet warily, but they cannot afford to ignore it.

Success Strategy No. 1 Avoid "The Fax Trap." Local exchange carriers are already participating in the Internet access market today; unfortunately, in most cases, they are doing it at the lowest rung on the value ladder-as providers of dial tone. Providing dial tone and ISDN services for this year's 12 million new Internet users will stress the infrastructure of the public switched network, but it will be Internet service providers (ISPs) and not telephony carriers that will reap the financial benefits. The time has come for telephone companies to start tapping that revenue stream for themselves.

The first step in a successful Internet strategy is using technology to provide dial-up services efficiently, with minimum stress on the telephony network. Think of it as avoiding "the fax trap." In the 1980s, the proliferation of fax machines forced carriers to install new lines in the local loop and deploy additional circuit-switched capacity between central offices. Fax traffic was treated as if it were voice, even though it is uni-directional, bursty and compressible. At the time, there was no other way to respond to this market demand except to deploy circuit-switched capacity for what was essentially a data application.

Jump ahead 10 years, and we see history repeating itself, with an explosion of dial-up modem traffic replacing the fax transmissions of a decade ago. The good news is that the available central office technology has evolved to afford carriers the opportunity to avoid the costly fax trap. It is now possible to get the data traffic off the voice network until it reaches the local loop.

A new product category-the dial-up switch-creates an Internet point of presence (POP) within the CO. IP data traffic into the switch is routed onto a frame relay, asynchronous transfer mode or other high-speed backbone, keeping it off the circuit-switched voice network. Using dial-up switches to create its own CO POPs, an LEC not only gains entry into the Internet access business but also reduces the network stress created by delivering dial-up traffic to other providers' POPs.

Success Strategy No. 2 Leverage Inherent Competitive Advantages. Because the barriers to market entry are low, services that provide access to the World Wide Web, e-mail and file transfer are quickly becoming commodity offerings. In this competitive environment, carriers must leverage their strengths-network topology, customer base and brand quality-to uniquely position themselves in the dial-up Internet market. The most successful approaches will enable differentiated service offerings, provide added user value and deliver multiple services from the same infrastructure investments.

Surveys have shown that consumers are predisposed to choose Internet services offered by their local telephone company. They prefer one-stop shopping and generally have greater confidence in their local carrier. In this case, however, customer loyalty is a double-edged sword. Carriers must ensure that their Internet offerings will be reliable and easy to use and that they will not detract from the company's hard-won telephone service reputation.

The key to dial-up service reliability resides in the POP, where telephony providers must seek out carrier-grade solutions that support high traffic volumes and all popular client-server protocols. The most common POP scheme-consisting of a separate router, IP server, modem pool, terminal server and frame relay or ATM switch-is not up to carrier network standards. Even at its best, this POP design has a high cost of ownership. Typically, each piece of equipment is installed and maintained by a separate manufacturer, and compatibility with any sophisticated network management system would be highly unlikely.

Fortunately, a better alternative exists. Telco interest in providing reliable, high-volume Internet POPs has led to the development of the carrier-grade dial-up switch as a new product category. One example, the Northern Telecom Rapport dial-up switch, combines the functions of modem pools, terminal servers, ISDN-capable IP servers, routers and frame relay/ATM switches into a single unit that is ideally suited and specially designed for deployment in the public switched network (Figure 1).

The performance of the dial-up switch is determined primarily by its ability to move data through its serial ports and by the CPU's ability to efficiently perform the routing, filtering and IP packet-forwarding processes. Dial-up switch hardware must therefore be optimized for serial port throughput and general CPU power. By using distributed processors, co-processing add-ons and modular hardware within a building block architecture, dial-up switches can provide scalable solutions to address the unique performance requirements of both smaller sites with eight to 12 users to large-scale sites with nearly 700 simultaneous users.

The dial-up switch solution solves network integration and reliability problems, as well as operation, administration, maintenance and provisioning (OAM&P) problems that were inherent in the ad hoc, multivendor POP design. Integrated call-accounting systems such as the Rapport Accountant also enable the telco to capture detailed usage data. This information can be used to design sophisticated added- value services that will further differentiate the carrier's offering in a marketplace crowded with smaller ISPs. For example, carriers can exploit their network usage data to predict customer needs and upsell additional services such as ISDN. Marketing partnerships could be formed with end user equipment makers to move customers into higher-speed modems. Carriers can brand and market after-school specials, weekender rates and special events packages. End user help desks can be set up to troubleshoot protocol conflicts, fix dialing errors and resolve modem incompatibilities. These types of services are not a common part of ISP offerings today. They do represent a unique opportunity to wrap high-value-and high-revenue-services around a core distributed dial-up service.

Success Strategy No. 3 Provide Intranet As Well As Internet Access. One of every four personal computers shipped in 1995 was a laptop. Telecommuting initiatives are underway in most major corporations. The need for business travelers and telecommuters to dial into their corporate local area network-for e-mail and a host of other information services-is creating greater demand for remote access to enterprise networks.

With multiple POPs in place in its network, a carrier is perfectly positioned to reach this exploding market for remote access to enterprise networks. Through dial-up access, the public switched network can extend the enterprise network virtually anywhere. However, providing access to these intranets is a highly sophisticated high-value market with a higher technical benchmark than Internet access alone. To ensure success, carriers will choose dial-up switch solutions that allow them to address both markets with the same infrastructure.

Although the intranet market can be supported by a similar service architecture, client software and equipment, a carrier must address and resolve other issues as well to be successful. Network security is a primary concern. For Internet access, this can be addressed through the dial-up switch's flexible implementation of various user authentication schemes for access control, such as RADIUS or TACACS. A popular method for authentication is the RADIUS server, which can be extended to store a configurable set of attributes for each user, such as dialback, maximum connection time, IP address and server administration permissions. The database may also add security options such as a user lockout feature that disables a user name after a number of unsuccessful log-in attempts.

For remote intranet access, enterprise network managers prefer distributed computing architectures with higher levels of security controls (see sidebar). Software security systems such as Nortel's Entrust include encryption, which provides for the confidentiality of information, and digital signature, which provides strong authentication of the originator and the prompt detection of any data tampering. Implementation of a security system on this level is a requirement for serving the enterprise network remote access market (Figure 2).

Advanced solutions, such as dial-up switches, can use called-number, calling-line ID or user identity to provide secure tunnels within the Internet and terminate enterprise remote users on the enterprise gateway router, where intranet addressing and user authentication can take place. In fact, this service can be marketed by the LEC to ISPs for resale, helping them preserve capital and reduce cost.

By tapping this market, a carrier can develop a mix of Internet and intranet traffic, which maximizes the return on its wide area network investment. In general, traffic on frame relay networks is highest during weekdays from 8 a.m. through 6 p.m. Consumer Internet dial-up services have a complementary traffic profile, with peak traffic occurring after 9 p.m. and on weekends. Given the complementary traffic profiles of these enterprise and consumer services, it is not only technically feasible but highly desirable to use the same high-performance WAN infrastructure to support both applications.

The Internet Is Inevitable For the foreseeable future, the Internet will continue to be a fact of life for telephony providers around the globe. More than 100 million users cannot be ignored.

Obviously, there is more to becoming a successful ISP than IP routing. Choosing the right POP hardware, gathering usage data for targeted marketing and developing added-value services are three key strategies.

In addition, large carriers have a clear opportunity to address both the Internet and enterprise remote access markets with the same infrastructure.

Enterprise needs for remote access are clearly more sophisticated than strictly Internet access. With its carrier-grade reliability, scalability and security enhancements, the dial-up switch sets the technical benchmark for addressing both markets.

Peter Brockmann is Senior Manager of Internet Solutions Market Development for Northern Telecom, Research Triangle Park, N.C.