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Advanced technologies are often unattainable for SMBs, either because of the equipment costs or the company's lack of staff and infrastructure to support them. The Cisco® Broadband Local Integrated Services Solution T1 (BLISS T1) addresses this very issue by offering service providers an easily deployed package for addressing the communications needs of the important yet underserved SMB customer.
THE CISCO BLISS T1 ADVANTAGE
Cisco BLISS T1 is the only end-to-end, packet-based solution (other companies offer parts of the total solution) in the market for delivering affordable, integrated voice and data services to SMBs. It is aimed at businesses that use 5 to 25 phone lines and generally employ from 10 to 100 people-a potentially huge market segment because currently about 1.2 million businesses have five or more phone lines. Cisco BLISS T1 allows service providers to offer customers voice and high-speed Internet services through a single T1 line, with the bandwidth dynamically allocated so that data traffic does not affect the quality of the voice calls. With Cisco BLISS T1, service providers can do the following:
• Increase customer loyalty and reduce churn by bundling voice and data services.
• Build out the network as they grow customers. Because Cisco BLISS T1 is based on a modular architecture, service providers can add capacity when they add customers instead of being forced to undertake huge upfront capital costs.
• Add next-generation services such as unified messaging, VPNs, and storage to increase both revenues and customer loyalty.
• Give customers the convenience of a single bill and a single point of contact for customer support.
• Provide wholesale services to other competitive carriers.
Delivering voice and data services to customers over the existing time-division multiplexing (TDM) infrastructure requires considerable capital investment and is operationally complex because separate platforms are required for supporting voice and data services. Cisco BLISS T1, by contrast, represents simplicity because its uses the same protocol-IP-to deliver these services over a T1 connection to the customer. Service providers save on capital costs because Cisco BLISS T1 is comprised of very few network elements: integrated access devices (IADs) for the customer premises, a router for T1 aggregation, a softswitch for call control, a border router for data and Internet connectivity, and a voice gateway for public switched telephone network (PSTN) connectivity (Figure 1).
Figure 1
Cisco BLISS T1 Network Elements
Cisco BLISS T1 gives SMBs popular custom-calling features such as call waiting, caller ID, and call forwarding as well as support for emergency and operator services. Through solution-tested Cisco partner platforms, additional capabilities, such as interactive voice response and unified messaging as well as call interception by law enforcement agencies, can be added. And Cisco BLISS T1 works with customers' traditional PBX and Key systems.
CHOICE: RETAIL, WHOLESALE, OR BOTH
The modular framework of Cisco BLISS T1 makes the solution ideal for providing integrated services directly to SMBs and for wholesaling to other service providers, which might be interexchange carriers (IXCs), cable operators, ISPs, or other competitive local exchange carriers (CLECs). Because of the solution's modularity, service providers and their retail partners can deploy services in a particular market, a region, or nationwide in a measured way as they acquire customers without committing up front to a large capital investment.
To illustrate the advantages of Cisco BLISS T1's distributed architecture, a service provider offering voice and data services to SMBs would typically install an IAD, such as the Cisco IAD2430 Integrated Access Device, at a customer premises with a T1connection (typically using an unbundled local loop from the incumbent carrier) to a Cisco 10000 Series edge router in a colocation site. Depending upon the size and demands for aggregation, the Cisco 10000 Series might need to connect to additional aggregation devices or to a switching device. The Cisco BTS 10200 Softswitch, at the core of the solution, and the Cisco MGX® 8000 Series Carrier Voice Gateway, which functions as the trunking gateway to the PSTN, would reside in the service provider's data center or in a central office.
It is easy to see how this modularity makes Cisco BLISS a flexible framework for partnering with other service providers. A service provider wholesaling services based on Cisco BLISS T1 typically would manage all of the back-end infrastructure, including the IP backbone network, softswitch, and the operations and business support systems, while the partner retailing the services might assume responsibility for the customer premises equipment (CPE) and, depending on the arrangement with the wholesaler, possibly the aggregation platforms and the trunk gateways. In fact, the amount of responsibility the retailer wants to assume and the level of support the wholesaler wants to provide the retailer is negotiable.
FAST RETURN ON INVESTMENT
Cisco BLISS T1 allows for a mutually beneficial strategy for both wholesaler and retailer, although how soon the wholesaler and retailer can anticipate a return on investment (ROI) for Cisco BLISS T1 depends on the partnering agreement. Cisco estimates that, for either wholesaler or retailer, ROI ranges from 18 to 36 months (Figure 2). By working with partners the wholesaler can quickly get national reach without assuming all capital costs, and the retailer has the benefit of reducing the time to market for services while also reducing its operational expenditures.
Figure 2
Cisco BLISS T1 Return on Investment
Numbers based on actual service provider experience and combined with estimates made by Cisco Systems® underscore the clear business case for Cisco BLISS T1. They show that, over a 5-year period, a service provider can realistically expect to sign up as many as 6000 customers, representing 95,000 subscribers and 52,000 business lines. Looking at these numbers from a different perspective, a "greenfield" service provider can anticipate a first-quarter capital expenditure of US$1.7 million, while total capital outlay during this period will be between US$200 to US$400 for each new phone line. In about 30 months, the service provider can expect to have completely paid for Cisco BLISS T1, and that after this the payback period for each new customer will likely be between 7 to 12 months. Again, based on the acquisition of 6000 customers over five years, here are some other numbers to consider regarding Cisco BLISS T1:
• US$17.1 million in total capital expenditures
• Earnings before interest, taxes, depreciation, and amortization (EBITDA) positive in seven months
• EBITDA margin of up to 54 percent by fifth year
• 101 percent internal rate of return
• US$172 million net present value
• US$1 in sales generated for every 11 cents in capital investment
MEETING CUSTOMER DEMAND
Cisco BLISS T1 does not constrain service providers into offering a universal package. They can tier their service packages based on the number of phone lines, long distance minutes, and data bandwidth (Figure 3). Not surprisingly, because of the large number of small businesses, service providers may find their bronze package to be a bestseller, providing a 10-to-1 advantage in the number of customers over the other packages. To help service providers understand the business case for Cisco BLISS T1, Cisco has developed a tool for computing the ROI. This tool gives service providers detailed information about all the business aspects-revenue, capital and operating expenditures, etc.-of targeting SMBs with integrated services.
Figure 3
Cisco BLISS T1 Service Packages
Despite the revenue potential SMBs hold for service providers, this important segment continues to be bypassed when it comes to the business value offered by advanced technologies. In Cisco BLISS T1, service providers have a solution for creating profitable revenue streams by offering SMBs the benefits of next-generation voice and fast Internet services, thereby developing long-term relationships with customers. They can offer these services confident in the knowledge that Cisco BLISS T1 is a fully tested and supported Cisco solution that is successfully deployed by service providers and is managing millions of calls every day.
