The Works - E-Bonding and the ASP

Posted 08/2000

E-Bonding and the ASP
SOFTWARE SUPPLIERS SEE DOLLAR SIGNS WITH EACH TRANSACTION
By Paula Bernier

The service bureau model for the telecom back office is making a comeback. But this time it's under the moniker "application service provider."

Several suppliers of software for e-bonding--that is, electronic ordering and provisioning of services and unbundled elements between carriers (see "E-BONDING DEFINED") and various other "behind the scenes" telco functions--are now offering their software on a hosted, outsourced basis. In this scenario, the telco pays the software supplier by the transaction as opposed to the more traditional model of paying to license software and then running and managing that software on its own servers.

"The ASP model is an important trend in that a number of suppliers are looking to go outsourced with their [e-bonding] gateways," says Phil Cavallo, senior vice president of worldwide sales and marketing at software company DSET Corp. (www.dset.com), which sells an electronic bonding gateway.

NightFire Software Inc. (www.nightfire.com) made a big splash when it moved into the ASP space with its e-bonding and provisioning solutions, which focus on DSL and broadband, says Mike Allen, senior analyst with Aberdeen Group Inc. (www.aberdeen.com).

SupplierExpress is NightFire's software that automates orders of local loops for all U.S. ILECs. But the company extended that product with eSupplierExpress (see "Making the E-Bonding-ASP Connection"), a hosted service based on the software, explains Venkates "Swami" Swaminathan, founder and executive vice president at NightFire.

Diagram: Making the E-Bonding-ASP Connection

Outsourcing e-bonding to an ASP can enable a carrier to get to market with new services more quickly with a lower initial investment. On a longer-term basis, it can relieve a carrier of additional costs such as employing specialized technicians to update and maintain e-bonding infrastructure.

Albion Connect Inc. (www.albionconnect.com) also recently released an ASP gateway. It's targeted at Tier 2 and 3 service providers that may not want to make the high upfront investment on e-bonding, says Dale Sizemore, vice president of marketing at the software provider. Carrier customers pay less than $15 per transaction, based on volume, he says.

"We saw there was a real need for the office automation for the Tier 3 providers," he says. These smaller carriers couldn't afford this automation, but needed it to compete, he adds, referring to the automation that e-bonding offers over the manual ordering process between carriers that has traditionally taken place via hard-copy faxed, mailed or phoned-in forms.

But not all software providers jumping on the ASP bandwagon are expanding into this business by themselves. Rather, some software companies are partnering with ASPs.

DSET, for example, is working with "six or seven" companies that will outsource its e-bonding gateway function, says Cavallo. He guesstimates that the licensing fees the company collects from ASPs will make up about 20 percent of DSET's business in 2001.

"CLEC revenues will go from $7 billion last year to $40 billion in 2003," Cavallo predicts. "That's a lot of access lines to provision. Then the cash register rings every time a transaction goes through a service bureau."

Indeed. And Quintessent Communications Inc. (www.quintessent.net) hopes to take advantage of that trend on at least two fronts.

The company launched its ASP business in April and as of early June had four customers, including Spokane, Wash.-based Avista Communications (www.avistacom.net), says Dale Quick, senior vice president and COO at Quintessent. Quintessent is still figuring out pricing, he says, but like most ASPs, it charges by the transaction. On the access service request (ASR) front, a transaction is defined as a firm order confirmation, he says. On preorders, the carrier is charged per customer service record retrieval.

In addition to its own ASP business, Quintessent in June cut a deal with Illuminet Holdings Inc. (www.illuminet.com), through which the SS7 network operator will outsource its Tele.Commerce software and do outsourced OSS mediation.

"The ASP model is garbage in, garbage out," says Quick. "If you feed the system a bad order, [it will be] rejected by the carrier. With Illuminet, they're handling all the fallout management. It's kind of an additional level of outsourcing."

By "fallout," Quick is referring to orders for which the CLEC incorrectly fills out a form, for example. Rather than simply putting through or kicking back faulty orders, Illuminet would take steps to correct them.

Of course, the move to outsource a back-office function such as e-bonding harks back to the days when most CLECs that needed to put all their efforts toward laying fiber and locking in new customers simply outsourced functions, such as billing, customer care, network management and the like, to outside companies. Then CLECs moved beyond simple, basic transport to offer switched services and other, more complex fare. And, as competition heated up, these carriers began to see the back office as critical to control the customer and ensure a high level of service. Carriers' desire to control that part of the back office hasn't changed, says Quick. He believes that handling customer care and order management functions for on-net provisioning, for example, will continue to have a lot of value for carriers. But e-bonding "is so homogeneous that it makes sense to outsource it," he says.

To date, carriers that needed to e-bond with another service provider did it by negotiating an individual peering arrangement. But with all the partnering and purchasing carriers are doing with one another to expand their footprints and service bundles, we've seen the rise of clearinghouses and trading networks that link multiple carriers.

In fact, Extant Inc. (www.extant.net) recently purchased Mantiss Information Corp.--which makes the popular CLECware customer care gateways that enable ordering and provisioning between carriers--for just this reason, says Rachit Dhingra, Extant senior vice president.

Extant is building a global broadband network and Internet-based clearinghouse. It aims to enable service providers of all stripes to interconnect with and electronically order services and elements from other carriers, regardless of the OSS interfaces both sides are using.

For resellers, Extant offers a turnkey OSS, with an emphasis on UNE-P. That's just the software, not clearinghouse function, explains Dhingra. For facilities-based carriers, it offers the Mantiss software on an ASP basis. In addition, it uses the clearinghouse to provide carriers with e-bonding and settlement services (for termination deals among carriers), billing, Tier 1 peering to the Internet and/or the ability to use Extant's nationwide ATM network for whatever reason. As of mid-June, Extant says it had signed up eight or nine clearinghouse customers and was in beta tests. ITC^DeltaCom Inc. (www.itcdeltacom.com) was among those customers. The aim is to connect with BellSouth Corp. (www.bellsouth.com) and SBC Communications Inc. (www.sbc.com), expand in BellSouth and SBC territories, and use Extant's PoPs to pick up inbound and outbound Internet and frame relay traffic exchanged with other carriers, says Dhingra.

Meanwhile, NightFire recently announced BandwidthExpress.com, a hosted service targeted at web channels, including web portals, PC manufacturers and content providers like MP3 companies. It enables these web channels to offer DSL on their websites by handling DSL loop prequalification and order automation, and providing gateways to DSL providers. At the launch of BandwidthExpress.com on June 12, the service provided links to DSL providers Ameritech, Bell Atlantic and Pacific Bell.

Also, Vitria Technology Inc. (www.vitria.com) offers what it calls the Vitria Business Network (VBN). It's not a physical network, explains marketing vice president Alex Osadzinski, but rather a subscription-based service that enables various carriers to do e-business. All network members have the same businessware installed, and they get a list of other carriers with which they can bond over any type of network.

"It's a way to introduce them and give them access to everyone else in network," Osadzinski says. "If Jato [Communications Corp., www.jatocom.com], NorthPoint [NetConnections Inc., www.northpoint.net] and Rhythms [www.rhythms.net] have e-bonds to ISPs, if a new player like Universal Access [www.universalaccess.net] with bandwidth management services, hits the market, it might want to bond with all three of those carriers. By joining VBN you have immediate access to bond with all of them."

Utility.com Inc. (www.utility.com), which has connections to electricity and gas for competitive bidding, is one of Vitria's customers. Through VBN, says Osadzinski, Utility.com can now approach ISP customers and ask them if it also can offer its Internet access as part of the bundle.

That way, ISPs get another channel for their services and Utility.com is able to expand its palette of services.

E-BONDING DEFINED

Electronic bonding for telecom is not so different from what many industries now are doing with supply chain management via the business-to-business (B2B) applications we hear so much about.

Like automated supply chains being constructed for the automobile, electronics and other industries, e-bonding is simply about automating business processes among businesses via interconnected networks. E-bonding is the process by which one service provider orders a service such as DSL or an unbundled element such as an unbundled loop from another carrier.

Traditionally, competitive carriers have placed such orders with incumbent carriers including the Baby Bells using paper forms sent via fax. But that was inefficient--resulting in illegible forms, duplication of work (the ordering carrier filled in the form and then at the receiving carrier had to type that information into the system), a high rate of error and a slow rate of order fulfillment. Although it hasn't solved all the problems, placing and receiving such orders electronically is a much more efficient way to go, and theoretically, that means the process--from order placement to fulfillment--should work a lot quicker, resulting in faster time to market for the carrier initiating the order.

The notion of e-bonding--popularized with the passage of the Telecom Act of 1996--was seen as enabling CLECs to more quickly and easily order elements and services from the Bells. But incumbent and competitive carriers also are beginning to use e-bonding to receive and fulfill orders from other carriers such as CLECs and ISPs.

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