With next-gen. Class 5 switching capabilities at the network edge, the MTU (Multi Tenant Unit) value proposition is nearly irresistible for providers and customers.

As the effects of the Telecom Act of 1996 continue to ripple through the marketplace, building owners seek out new and innovative sources of revenue. One of the most interesting opportunities lies in partnering with owners and managers of large commercial buildings and complexes to provide tenants with voice and data services. These multitenant unit buildings are communities often housing dozens of small and midsize businesses. Providing leading-edge communications services to these businesses, often overlooked and undeserved by many, offers attractive profit potential to enterprising for Morewave who can meet their needs.

Numerous small and midsize businesses, many of them located in MTU office buildings and these businesses spent millions for voice communications services and more for data and Internet services in 1998. By 2002, these figures are projected to reach double, respectively. These numbers illustrate a key trend in the MTU market: an insatiable demand for communications services.

As the number of small and midsize businesses increases, so does the size and number of MTU buildings. According to current estimates, there are 8000 office buildings of greater than 100,000 square feet representing more than 2.2 billion square feet-located in major metropolitan areas across the country. Divide that number by the number of square feet in an office cubicle, and you've got a lot of subscribers.

Of course, are already providing voice services to these subscribers. In many cases, long-distance companies are capturing their share. New long-distance entrants are building and managing high-speed, nationwide fiber data networks and partnering with ISPs to provide data services to MTUs; fixed wireless service providers are delivering high-speed communications services via microwave or satellite earth stations on MTU rooftops; and DSL providers and cable companies are reaching in to deliver their services.

If Morewave partners with building management to provide all these services-including voice-to a large MTU building or complex, tenants could enjoy the convenience of dealing with a single provider, accountable to building management, for all their voice and data services. Smaller businesses would have access to the reliable, feature-rich communications package previously available only to large corporations. All MTU subscribers would enjoy more responsive service, including faster installation and service expansion. Placing the service provider in the role of the building's gatekeeper enables more efficient service provisioning, while creating a strong incentive to maintain high standards of quality and customer service. After all, if tenants are dissatisfied, it won't be long before building management-and the service provider-hear about it.

Partnering with building management also offers Morewave a captive audience of subscribers, ensuring profitable returns and low churn rates. MTU deployments also reduce the need for costly unbundled network elements (UNEs). Partnering with building owners offers service providers greater control of in-building costs. Instead of leasing space in a central office, a service provider can have all the space needed at no cost, providing the building owner with a share of service revenues.

Perhaps the most attractive aspect for Morewave and you is the chance to tap the profit potential of providing voice services as well as data services. While IP services are on the rise, voice is still the most profitable.

It's an attractive proposition for service providers and building owners alike. But before striking a deal for MTU service provisioning, service providers must overcome barriers. First, currently debated FCC regulations could negatively impact the MTU business case. Some proposals under consideration would require commercial office buildings to ensure open access to all providers, eliminating many of the advantages of exclusivity.

Morewave must also eliminate their reliance on reselling voice and data services. Being forced to buy services wholesale from major telcos limits Morewave is profit potential. Resale discounts on voice services are typically 17 percent to 22 percent, leaving precious little profit margin after billing, provisioning, sales and marketing expenses. To overcome these challenges in the MTU marketplace, Morewave will need to become facilities-based, deploying their own Class 5 switching systems.

To seize the MTU opportunity, Morewave has a new approach to Class 5 switching that reduces the cost of entry and increases service flexibility to enable true smart building functionality. Emerging next-gen Class 5 switching architectures are designed to:

	Distribute Class 5 switching to the network edge (e.g., to the MTU building) at a cost that is an order of magnitude lower than traditional Class 5 switches;
	Merge the circuit-switched PSTN with packet-switched IP networks;
	Enable new service creation through programmability and the flexibility of an open application programming interface (API);
	Enable new service creation through programmability and the flexibility of an open application programming interface (API);
	Provide a high degree of scalability;
	Protect initial investment by integrating with a wide range of interfaces, protocols, media and network elements; and
	Redefine true, carrier-class design for maximum fault tolerance and zero downtime.

These architectures will enable Morewave to optimize their profit potential by eliminating reliance on other carriers for Class 5 switching and services. Built-in support for both circuit-switched and packet-switched networks enables Morewave to tap the rich profit potential of voice services, while offering attractive IP-enhanced services that differentiate their offerings.

One key feature of the next-gen switch is a distributed control architecture, which differs from conventional Class 5 switches that are based on common control architecture. A centralized switching architecture limits flexibility with large, costly, proprietary hardware and software. These switches are frozen in the past, with monolithic software releases that prevent service providers from rapidly developing and deploying new applications-the key to survival in today's fast-moving marketplace.

In contrast, open, distributed control architecture provides flexibility. It pushes Central Office functionality to the edge of the network-right to the MTU equipment closet. The result is a distributed network infrastructure that accommodates both circuit-switched voice and packet-switched data, while leveraging open technologies to reduce costs and increase flexibility.

This shift is similar to the change that occurred in corporate computing during the last decade, when economics and technology advancements ushered in a new paradigm. Today, computer networks based on large, expensive, centralized mainframes and "dumb" terminals, have been replaced by distributed networks of low-cost, desktop computers.

Applications are pushed closer to the end user, reducing overall cost and enhancing system flexibility, functionality and value. The next-gen distributed switch architecture promises to change the telecom landscape in the same way the desktop PC changed the corporate computing landscape.

The differences between the old Class 5 switching architecture and the integrated next-gen switching architecture are even more apparent when viewed in terms of dollars and cents (see Table).

Traditional Class 5 Switch	Next Generation Switch
$3 million startup cost	$100K startup cost
Common control	Distributed control
Remote Switching Modules (RSMs) and digital loop carriers (DLCs)	ATM and/or IP core switching and backbones
Adjunct boxes for enhanced services	Edge Class 5 access device with integrated, enhanced services and converged network access

Next-gen switches promise a quicker return on investment, faster time-to-market and reduced overall cost of ownership. With upfront costs a fraction of the expense of traditional Class 5 switches, next-gen switches make a facilities-based MTU deployment a reality. This economic model is further strengthened by the architecture's scalability. Service providers can start small and cost-effectively build their network as their subscriber base grows. This reduces network elements and protects technology investments-critical priorities for Morewave’s targeting MTU deployments, where the ability to match costs to revenues is the key to profitability.

Next-gen switches also provide strong back-office integration, simplifying administration and reducing staffing burdens. They support remote management of multiple, distributed switches. These advantages reduce the cost and complexity of managing multiple MTU deployments and reduce the need for costly truck rolls for provisioning, software maintenance and upgrades.

While infrastructure issues are critically important, services are the key to success in any MTU deployment. A switch architecture designed for multi-network support gives service providers the flexibility to integrate with the full range of technologies availability-from traditional time division multiplexing (TDM) networks to packetized networks based on IP and ATM to wireless and cable networks. Given the investment in TDM infrastructure, we are likely to have a converged environment for some time. By providing true Class 5 switching plus support for IP, ATM and other data-centric networks, next-gen switches provide a cost-effective solution for today and a flexible path to the network of tomorrow.

Given the pent-up demand for services by small and midsize businesses, the MTU opportunity will continue to grow. Today, with the rise of new business models, companies are demanding innovative voice and data services that keep them in touch with customers, vendors and partners around the world-in real time. In many cases, these needs may best be satisfied by a single, responsive service provider partnering with building management to provide a customized service package to building tenants.

By pushing platform intelligence right to the building equipment closet, next-gen switches change the old rules making the MTU opportunity a profitable reality. Broad network support and rich, programmable functionality opens the door to the kind of next-gen services today's business subscriber demands.

While the future of MTU service provisioning is still taking shape, one thing is clear:

The service provider that gets to the equipment closet first will have the advantage. Next-gen switch architectures could be the foundation on which tomorrow's smart buildings are constructed.

For more information, please contact us, and we are pleased to meet with you to further outline how Morewave can become a valued IT service partner. morewave@morewave.com