Industry Frameworks for ISP Restructuring and Competitiveness

Introduction

This article is aimed at Internet Service Providers (ISPs) and network operators of all sizes. Still, for more obvious reasons, in terms of targeting audiences, the following two ISP profiles are most appealing in Brazil:

• Tiny and medium-sized regional ISPs.
• Larger regional ISPs.

This is because, we know, not all regional ISPs are small or medium-sized! By the way, to all intents and purposes, a regional ISP is the same as what we call a "local ISP."

This article's conclusions and general unwind were obtained based on my many years of experience in taking to the providers typified above all the baggage I have acquired in large telecommunications operators; carriers.

Article Synthesis

As the full version - initially written in Brazilian Portuguese - of this article is about 22 pages long, thus requiring some time to absorb it and, conceivably, doing so in steps, to make the best use of the ideas given here, I summarize it on this post in the form of "bullets.". It focuses on the adoption of the Frameworx (TM Forum), considering the reality of regional ISPs in terms of size, customer base, and finances. From the Frameworx, the most significant component, in the perspective and intent of this article, is the eTOM Business Process Framework (BPF).

First, some realities are discussed about the characteristics and business models of the regional ISP. Its qualities, improvements, capabilities, restrictions, limitations, and businesses risks. For a better understanding, Frameworx as a whole is presented in an introductory way, including the BPF, SID, TAM, TNA, CCC, and LAM frameworks within, so that you can have a vision about how valuable and helpful Frameworx can be for these organizations. Then, the article tries to promote an understanding of the need for business and operational reorganization employing processes and doing this in alignment with the domains and categories proposed by the eTOM BPF.

In the end, the reader should have a clear perception that, to their relief, it will not be necessary to "reinvent the wheel", as the greatest experts in the industry have already promoted a practically perfect understanding of everything that is required for the telecommunications network operator / ISP to consider for business success and customer satisfaction.

What separates an established large telecom company (I call it a "big player" here) from a regional ISP company?

For the most part, organizational, structural (locations, employees, etc.), and finance. It is undeniable that the technological gaps between prominent players and regional ISP have shrunk drastically over time. Things like overall networking capacities such as port densities and subscribers have been the primary and remaining technical differences between these two profiles. Smaller network operators have become somewhat equivalent to prominent players, that is, considering here only those IP-based products and services (e.g., Internet, L2/L3VPNs, and the sort). But this could soon be extended to other products and solutions, too, ultimately.

In other words, the "boldest" MPLS networks are not exclusive to big players, not anymore, as many regional ISPs already have it in place! Advanced platforms for BNG (aka "BRAS") and carrier-grade NAT have no longer been a complete networking services solution exclusively available to big players. Best Current Operational Practices (BCOPs), including IRR/RPSL, RPKI, MANRS, IPv6 adoption, etc., have been followed by both the local ISP and top carriers, becoming an increasingly common state-of-the-art operational and engineering philosophy. Of course, in terms of "size," "locations," "capacity," "redundancy," "density," etc., a big player has excessive numbers compared to the regional ISP. But the most significant difference is still organizational, structural, revenue, and budget which justifies the elaboration of this article.

I intend to promote a series of future articles on this topic on the BPF Wiki, and post them here, on my LinkedIn page, which I consider vital for the segment of regional ISPs, as this is precisely what separates a large telecommunications operator from the companies that represent the regional ISP segments: corporate organization, processes, and systems that map to these processes for the proper organizational, technological and operational automation of the business. Future articles on the Brasil Peering Forum wiki will deal with: TMN FCAPS, TOGAF, Zachman, COBIT, ITIL, ITU-T standards of service provider disciplines, Carrier Ethernet Standards from the Metro Ethernet Forum, and others.

Why does the regional ISP need to consider restructuring its internal and operational processes?

I am talking specifically about small and medium-sized Internet access providers (ISP) and some larger regional ISPs: there are no arguments against facts. But what attributes do you wonder?

It is commonly understood that regional telecommunications service providers work out most regions of the country (Brazil). In terms of territory and overall presence in major cities and, mainly, in rural or remote areas, regional ISPs, combined, represent the majority. And, in terms of market share, these regional ISPs add up to 23.79%, which is already the largest share, compared to the second place (Vivo), and based on figures from August 2019. However, an indisputable fact here is that many of these ISPs currently do not have decent technical and business structures in a position to:

1. Compete on equal terms with the big carriers in some or several of the functional areas of the business and in different cases and situations.
2. Diversify the portfolio to expand revenue sources and improve this competitive scenario.
3. Maximize technical and operational resources, focusing on orchestration, automation, and cost reduction, especially those of a functional nature.
4. Make available the revenues and budgets required to oxygenate the business and make the necessary investments to retain customers and expand into new markets.

I am not claiming that the regional ISPs typified above are not good companies committed to providing a quality service and customer experience or are not motivated and engaged in doing good for society through their products and services. No, it's not like that, quite the opposite! Continue reading the article to better understand my point of view.

I mean that many of these regional ISPs mentioned above do not have an organizational and technological structure that is optimized for the telecommunications business, even though "selling Internet access" (and derivative/complementary services) is precisely the focus of this type of ISP. "Habemus paradoxon" (we have got a paradox)! Before you feel offended and prematurely finish reading this article, I suggest that you continue reading until the end. You will not regret it!

Where the regional provider (ISP) has deservedly had its achievements

I am absolutely convinced that these same smaller providers of the "paradox" discussed earlier have many qualities. So, I will try to quote them here!

• In many regions in Brazil, the regional provider renders a service indisputably better than the big players in terms of circuit capacity (especially in the last mile), availability, and, frequently, performance (ex: lower end-to-end latency, jitter, and packet drops).
• Regional providers, being smaller, are notoriously more agile and effective in matters involving service activation service and technical support. At least in Brazil, this is so true!
• Regional providers are typically more "humanized," and sensitive to "custom" character demands from their subscribers.
• Regional providers are derived mainly, that is, "born," from family businesses. And, therefore, they are (still) immune or exempt from all the bureaucracy and slowness present in large corporations.
• Customers often identify themselves more with local service providers as they typically share the same regional and cultural values.

Although these qualities mentioned are indisputable, by the way, I congratulate many of these ISPs, on this matter of quality of service and customer support; it does not mean that you, the CEO of one of those local ISPs, should not be concerned about your business:

Regional ISP businesses risks

• At first, years ago, the regional ISP emerged precisely because of the inability of the established carriers ("big players") to reach remote regions in Brazil. Many areas of the country had an excessive dependence on dial-up Internet services for years! Do you remember it?
• Secondly, it took a long time for the big players to offer decent broadband Internet services widely in Brazil. This happened for several reasons - it's a complex issue - but one of the strongest arguments was the low expectation regarding the average revenue per subscriber indicators (Average Revenue Per User or "ARPU") and the consequent return on investments ( ROI) of these scenarios. In other words, implementation costs in the concession and expansion areas were almost prohibitive in some cases, as the account did not close in the short and medium-term scenarios (the focus of these big players at the time).
• In many cases, big players invested almost exclusively in technologies that made the most of the (at that time) existing legacy analog and digital infrastructure, whenever possible, to transport IP services, which generated many annoyances in terms of quality, performance, service stability, and availability. Who has never suffered at the hand of the "ultra-fast" Internet promised by these big companies in the beginning? Disgusting!
• Thirdly, and later on, small initiatives by regional providers began to accommodate the demand from these regions and communities for connectivity over wireless transmission. And here, in general, the small and medium-sized regional Internet access provider profile was born.

Regional providers were proliferating rapidly!

• At that time, during that period, regional providers depended on negotiating IP transit services provided by large operators. This still exists, but this dependency is getting tinier.
• The lower costs over time of more reliable and higher-capacity technologies allowed gradual migration and vast expansion to Fiber-To-The-Home (FTTH) technologies. Regional ISPs invested heavily in deploying FTTH infrastructures!
• Meanwhile, peering settlements (both private and public) started to be widespread and encouraged, with small and medium ISPs connected to various points to exchange networking traffic. And this is huge!
• This developed significant increases in subscriber bases of regional ISPs, which, added to the qualities mentioned earlier, has promoted an outstanding market share.

Until then, the big players saw in these regions the most corporate businesses and transit services for regional providers and that was pretty much "it". Only... NO MORE!

In short, basically, the big players watched the whole rise of regional ISPs and didn't seem to mind at all. We all know now, and this is no secret, that these big companies are bothered by regional ISPs (small, medium, and, some of them, already large). These companies realized how much revenue they were missing and that they had a vast market to conquer! The reality is that "long-time" operators have apparently woken up to this reality. And they're eager to conquer or reconquer territories where they've been negligent for years. And they have some things that many regional providers don't, at least not to the same extent:

• Organizational structure. Well-defined business models powered by consistent processes and established frameworks by entire departments focused on business results; human capital maximization, etc.
• These large corporations recognize where historically they have always "tread the ball" and are mobilizing to be much more effective in the areas where regional ISPs currently operate and expand.
• Millionaire revenues! Large capital reserves can be used for investments in concession and expansion areas.
• Extensive resources at their disposal: third-party ecosystem (suppliers, partners), plenty of help, astronomical budgets, and numerous people/talents.

Ask yourself the following question:

How long could you (a local ISP) sustain in a competitive battle against large network operators that are organized and motivated to conquer your territory?

I emphasized "organized and motivated" so that you understand that, until then, the big players were not really much or not at all engaged in competing against regional providers. But, now, there is this intense interest, and that they can now take a significant part of the subscriber base from regional ISPs.

This article focuses on the dissertation of established frameworks related to essential processes that must be observed by the ISP so that it is "even" concerning market competitiveness. I hope this article manages to provide the necessary dose of "steroids" (analogies here, see?) for the regional ISP to fix the internal areas of the business so that this can make the company very solid to compete against this magnitude of initiatives that are being - and this tends to increase - promoted by large companies in the sector.

Shall we?

Link to the original article on the Brasil Peering Forum (BPF) Wiki:

Frameworks de Indústria para a Reestrutura??o e Profissionaliza??o do ISP

https://wiki.brasilpeeringforum.org/w/Frameworks_de_industria_para_a_reestuturacao_e_profissionalizacao_do_isp

I hope you have found this article useful!

Regards,

Leonardo Furtado