Verizon's Fiber Optic Service is one of the most anticipated and closely watched technology rollouts in telecom's modern era. However, what deserves an even closer look is the underlying software infrastructure for enabling the services that will make FiOS more than just another very fast network.

There is no Doubt about it. Information technology is driving the transformation of Verizon's wireline business. While IT has helped the company eliminate 2500 of its 3000 software systems over the last few years, the real focus has moved to service enablement, a capability Verizon needs to perfect to fill its big fat FiOS pipes.

Shadman Zafar, chief information officer for Verizon Telecom, reads a lot of books as part of his quest to perfect this new facet of the business. He worries about the warnings he has read in business best sellers such as Clayton Christensen's The Innovator's Dilemma, which describes the threat to even the most successful, well-established companies by small innovators. And he sees potential in the maturation of the business analytics described in Ian Ayers' Super Crunchers: Why Thinking-by-Numbers Is the New Way to Be Smart. Although Zafar calls this one a rehash of Freakonomics, Steven Levitt, the author of that book, calls Super Crunchers groundbreaking and in a review said, “Today, the name of the game is data.”

Zafar swears he'll write his own book when this transformation is done. If he does, he too will sound the gong for data, particularly data analytics. It is one of the most significant changes instigated by IT and embraced by Verizon.

“The back office is taking on a different role now,” Zafar said. “Rather than automation being the prime goal, data crunching is becoming a lot more important in business decision-making.”

To illustrate this point, he describes a hypothetical market where he has a 90% chance of losing a large block of customers, but because his data crunchers can tell him in real time how those customers use services and what their experience has been, he can reach out to them — proactively.

“That's the kind of intelligence that is operationally driving the day-to-day management of the customer. And it has become the forefront of how IT is changing the business,” Zafar said.

While waxing philosophic about IT, how it drove the adoption of a service oriented architecture (SOA) back in 2001 and how that decision is now bearing fruit through FiOS, Zafar says, “The system has become the service.” By performing his own variation on the SOA theme, he is helping Verizon transform its business through the incorporation of software system functionality into the services themselves.

Not only is the company turning operations support systems and business support systems (OSS/BSS) on their heads, it is changing its culture from a networking company into a services and application company. And the engine of change is IT, Zafar said.

If Zafar and his team are successful in making FiOS the nimble, interactive, customer-driven, real-time service it promises to be, the IT-driven network will stand as the model for the company. It will stand as a solution, Zafar said, to the innovator's dilemma. “You use one successful strategic program to change the rest of the culture by letting it bleed into the rest of the company,” he said.

So what is this program? Well, it's not Web 2.0. And it is not merely a set of new application programming interfaces (APIs) for the typical stand-alone activation, billing, inventory and provisioning systems. But it does start with SOA.

Karl Whitelock, senior consulting analyst for Stratecast, said SOA is “nothing more than the ability to combine the components of a function with the components of another function and produce something new that couldn't be done before.”

Although this description may sound a lot like the mashup concept of Web 2.0, the components used here are instead pieces of traditional, albeit next-generation traditional, OSS/BSS functions.

“When Verizon talks about SOA, it is about the way they have arranged the underlying systems to work together to accomplish certain business needs, and that can be a differentiator from one company to the next,” Whitelock said.

The biggest change Verizon has made to its software arrangement has been the incorporation of OSS/BSS directly into its products. Using FiOS TV as an example, Zafar said the product is embedded with capabilities for interacting with the company's ordering, activation, billing and management systems that allow customers to self-activate services. In this case, that capability is embedded in the remote control, which interacts with the FiOS TV Interactive Media Guide (IMG) — developed in house.

However, it takes much more than putting applets in an end-user device like a remote control to enable self-activation and ordering of services such as temporary bandwidth boosts for downloading high-definition videos. To this end, Verizon has redesigned its back office to act as a single activation layer. The activation layer is a message-based system that will provide real-time interfaces into all the network switches and servers to allow subscriber management of services across data, video and voice platforms.

“The real-time nature of the system is the fundamental difference here,” Zafar said. “All of our FiOS network works through this layer.”

The activation layer also was built in-house by Verizon's IT team using a good dose of off-the-shelf software, including database and applications servers. The same SOA strategy that enables the activation layer also is transforming the way Verizon will monitor and manage its FiOS-based products and services. “There will be a lot of consumer electronics sitting inside the home, and we need much more intelligence to manage it,” Zafar said.

Enabling the IMG does a lot for the consumer, but the architecture also does much for Verizon. One of the drivers for the architecture design was to change the management and monitoring model, Zafar said. Verizon can interact with the set-top box to monitor performance of the video stream, the exchange of messages and vendor performance.

“It's not just that we can tell a vendor their product is defective, but we can go to a set-top box or router vendor and tell them that compared to other providers they are having a lot of errors, so fix it,” Zafar said. “On one hand it provides more proactive vendor management, but it also gives us almost real-time insight into what's going on inside the home.”

While these individual features and capabilities may not seem transformational on a corporate level, they require changes at the system, service and cultural levels.

Although Whitelock feels that IPTV (or IP-based video services such as FiOS TV) as currently promoted would likely go the way of the dodo, he said Verizon's SOA approach — as described by Zafar — is the right one. “Making OSS part of the service is exactly what needs to be done,” he said.

Whitelock used Disney Mobile as an example of how this can be achieved. Yes, Disney is pulling the plug on its service, but Whitelock — referencing comments by Disney executives — says it was all just one big experiment that proved a telecom service can be created that includes OSS. “It was all integrated, and you could not tell what part of the service came from the network or from a database in IT or from the OSS,” he said. “And that's what the future of communications services will be about.”

To enable all this functionality, Verizon built more than 40 new national systems from the ground up specifically for FiOS. This included systems the company had not had before such as a device management system, which includes customers' configurations and a history of events in a particular device. Other new systems include partner management, security services, ad insertion and revenue sharing.

The partner management system leads to another set of systems called the Application Development Network. Through these systems, Zafar said he is “democratizing application development.” By that he means allowing, for example, some guy in his garage in Cambodia to offer a service on Verizon's network without having to know how to connect to underlying systems such as billing.

“I feel it unlocks a lot of the entrepreneurial potential that today doesn't see the light of day,” Zafar said. “It used to be that whatever the switch manufacturers gave you counted as innovation. But today it will be the fastest guy in the market utilizing the APIs we have built that will be enabling the services for the future.”

Shira Levine, senior analyst of next-generation OSS and billing for IDC, said service providers admittedly have not been very good in the application space. “Their best bet is to create an environment where third-party developers can come in and offer next-generation services,” she said.

In the meantime, we await the first Cambodian-built telecom app.

While Verizon's application development network and its activation layer are undoubtedly proprietary solutions, Zafar said the interfaces used are both following and leading industry standards. Describing how the practice of defining standards has changed even within organizations such as the TeleManagement Forum, Zafar said the market is now driving standards.

“It used to be you'd define the standards and then try to implement them in the real world. Now you get things out to market, learn from them and then submit proposals for standards. The feet on the street are ahead,” he said.

The feet on the street, those implementing and supporting FiOS, are also a big part of the transformational march to IT. “Going to a completely different model has been a challenge,” Zafar said. “We are changing the culture of the company. That generates an uncomfortable feeling about job security.”

So far, Zafar said he is pleased with the cultural transformation within the IT department. More culture shock is sure to come if and when the success of FiOS bleeds across the company. Zafar said that since FiOS has become a reasonable well-oiled machine, other business units already see it as a success. “The old regime wants to imitate the shining star, and there is no other way to do it than the model we put in place for FiOS,” he said.

There is a lot more riding on this than the success of a new software architecture or the triumph of IT over traditional telecom operations. The whole idea of this transformation and the SOA behind it is to make sure that the Verizon network does not end up as a pure pipe story.

But as much as IT and software are driving the transformation, success also depends on the network itself. Two weeks ago, Verizon launched a symmetric 20 Mb/s service over its FiOS network, which sets a new record for upstream bandwidth speeds and perhaps satisfies the desires of the next Quentin Tarantino to broadcast his indie films from his own bedroom.

Transforming the software infrastructure of a Tier 1 telecom network into an SOA is a significant and trendsetting feat. Yet in a list published recently in eWeek of the Top 100 most influential people in IT, there was not a service provider CIO among them. They were beaten out by the likes of Nancy Pelosi and the guys from MySpace. Perhaps if Zafar and company are successful, telecom will bust through the IT ranks next year.