Dear Colleague:

Three years ago, four high roller gamblers – IBM, HP, EMC, and CA – stepped from their black limousines outside a Las Vegas casino and were escorted to a velvet-draped poker room.

Their mission: to see which player would take away the richest prize in the service assurance software business.

Yes, we’ve glamorized the story a bit, but the money spent by the IT giants to acquire assurance software brands raised many eyebrows at the time. CA bought Concord Communications for $350 million. EMC took Smarts for $260 million. HP snagged Peregrine for $425 million. IBM upped the ante to $800 million to own Micromuse. And we’ve only mentioned the biggest of the acquisitions.

Now none of the assurance companies acquired was a pure telecom play. They all had significant enterprise assurance businesses. Still, the telecom market was half of Concord’s and half of Micromuse’s annual revenue.

Yet three years later, one wonders what all the excitement was about.

In telecom, fault and traditional performance management are no longer the hot categories they once were. In fact, it’s hard to find much new about these solutions on the telecom pages of the IT giants' websites. For the most part, those solutions are being promoted today as enterprise, not telecom solutions.

Now we think this turn of events says a lot about the character of today’s telecom assurance market:

The gulf between enterprise and telecom assurance solutions is widening.  The QoS demands of 3G+ and large-scale IP networks and services are truly advanced and require an extraordinary level of software innovation and telecom-specific expertise.

Not only are the technical requirements more rigorous, the telecom industry also needs to respond quicker to the latest communications developments.

For instance, eighteen months ago, the 3G data services market was a sleeper. Then along came the Apple iPod and KABOOM -- things started to get interesting real fast.

Now suddenly, there was a big need to monitor all sorts of software applications on a smart phone. The radio network needed to be optimized as well so that high speed music downloads didn't cripple voice service.

Network management, then, is telecom's ticket to tomorrow. Telecoms desperately need the latest network assurance and service assurance innovations if they hope to continue offering highly complex services and a high quality customer experience at the same time.

Trouble is, the telecom assurance software market is evolving so quickly that the critical assurance sectors – and the applications where software value amasses – are shifting dramatically.

But what assurance areas are the most critical today? And which vendors provide the best solutions to assure telecom's future?

Well, getting answers to such questions is the purpose of a new TRI research report, The Telecom Network/Service Assurance & Remote Test Software Market.

Overall, the 218-page report finds the assurance software market reached $2.4 billion in 2008 and predicts it will grow to $2.9 billion in 2013.

The Report analyzes this dynamic market and shows how you and your company can find profitable solutions, invest safely, and/or avoid excursions into market sectors that are either too competitive or too specialized to attract enough paying customers.

Opportunities exist across a diverse spectrum of assurance and test solutions. But where can your company make a difference?  Well, here are some highlights of our analysis to provide some perspective:

• The Rise of Application Performance Management - Two and a half years ago a French mobile operator advertised its very popular mobile data service as “1 Mbps bandwidth for 15 Euros a month”. Today that same operator offers mobile data service without telling you what the bandwidth is. The user gets a mixture of internet access, video on demand, voice mail, and an email application.
  
  In other words, bandwidth is no longer the issue – the carrier sells strictly on the types of services and applications that come in the mobile package.
  
  It's a dramatic break with the past and a key reason wireless application performance management (APM) has become critical for operators. The report explains the details behind APM, the differences between monitoring synthetic vs. real transactions, and which vendors lead the market.
   
• Deep Packet Inspection and Complex Services - What do you do when your network application operates across multiple network layers and has millions of possible points of failure?  Often the only way to diagnose problems in an environment like that is to replicate that application and painstakingly investigate the problem off-line.
  
  This is the purpose of deep packet inspection assurance (DPI) solutions that capture all packets passing a segment of the network and load them into massive data storage.  The report examines the benefits and kinds of applications that especially lend themselves to DPI analysis.
   
• Device Management is Skyrocketing in Importance because smartphones and mobile data services are expanding greatly.
  
  Device management solutions help operators sort out terminal software compatibility problems. They also track the performance of different types of handsets to determine which handsets drive traffic and which devices create more problems than they are worth.
  
  Here the study probes the intriguing market related questions that mobile assurance solutions can help answer.  In addition, the report looks at the brand new area of home device monitoring.  It explains what this market is all about, why the rise of femto cells may be crucial to it, and which vendors are delivering software solutions.
   
• Advanced Policy Compliant SLAs - The kind of service level agreements (SLAs) that make sense for enterprise customers today go way beyond the traditional assuring of network connectivity and IP network performance.
  
  Managing enterprise compliance with “policy assurance” is the new solution frontier. The idea is to wrap an enterprise’s full set of operational, security, regulatory, and industry policies in one over-arching management framework.
  
  Now BT is the first tier 1 carrier to offer this innovative policy assurance as a service to its enterprise customers. When BT sells telecom services to a healthcare organization, it not only guarantees network performance, but also "proves" that patient record confidentiality hasn’t been compromised across that network.

  The report explains what's behind this new policy assurance category, what technological hurdles needed to be overcome, and how IP network reconciliation and service orchestration are an integral part of the solution.
   

• Radio Network Optimization - 3G networks are monitored quite differently than 2G.  3G adds a new access component, the RNC or radio network controller, which controls: QoS, authentication, handling weak transmissions, scheduling, and the prioritization of various services. It’s a dramatic change for operators who used to handle those processes in the mobile core.
  
  As you move to 3.5G such as HSPA and 4G in LTE and WiMax, functionality moves even further out into the edge -- from the RNC to the individual base stations.

  The report profiles a new radio optimization solution that addresses the immense complexity of  these new 3.5G and 4G QoS. issues.   Mapping QoS hotspots within 100 to 200 meters, the solution offers significant OPEX improvements over traditional drive test optimization.
  
  The report highlights the key issues in advanced wireless network QoS, showing where test/QoS solutions are lacking and which vendors are stepping in to help.

The highlights above are just a sampling of the many diverse developments and telecom assurance innovations that are profiled in this market study.

Whether you're a carrier executive aiming to improve your network/service assurance infrastructure or a vendor delivering assurance and related solutions, the Report will help you discover:

• What are the most important market priorities?. . .
• Which success strategies of other operators can you adopt at your own  telecom organization?
• Which vendors have industry market share and are leading in specific niches?. . .
• Which OSS players have the right background and market experience to partner with?. . .
• What emerging trends can your company capitalize on?. . . 

Please scan the full table of contents below. You'll see why this report delivers the tactical and strategic information you need to fully understand where telecom assurance and test are headed.

To access this market intelligence today, contact me at TRI's offices at +1-570-620-2320.

Sincerely,

Dan Baker
Research Director, TRI

P.S.  This Report is one research module in TRI's on-going OSS/BSS KnowledgeBase covering the breadth of telecom software and OSS  innovations.

Table of Contents

The Telecom Network/Service Assurance
 & Remote Test Software Market

A. EXECUTIVE SUMMARY (2 pages)

B. MARKET VISION (2 pages)
1. Circuit Reliability in a Dynamic IP Telecom World

C. DEFINITION OF TERMS (1 page)

D. PERFORMANCE MANAGEMENT (4 pages)
1. The Virtues of Performance vs. Fault Management
2. Performance Management Overview
3. Marrying Probes with Performance Management
4. The Demand for Better & Faster Customer Reporting
5. PM's Key Capabilities
6. Performance Management Consolidation

E. APPLICATIONS PERFORMANCE MANAGEMENT (5 pages)
1. Why Application Monitoring is Essential in Wireless
2. Application Performance vs. IP Performance Assurance
3. Monitoring Synthetic vs. Real Transactions
4. Monitoring Multiple Java and .Net Transactions
5. Application Management - Mobile Data Applications
6. A Carrier Delivered Solutions for Enterprises
7. Assurance Where Wireless Service is Mission Critical

F. DEEP PACKET INSPECTION SURVEILLANCE (1 page)
1. Combining Deep Packet Inspection and Massive Data Storage

G. FAULT MANAGEMENT & ROOT CAUSE ANALYSIS (4 pages)
1. Fault Management Functions
2. Why EMSs Are Not Sufficient for Fault Analysis
3. The Consequences of Poor Root Cause Analysis
4. Interconnect Fault Management at AT&T Mobilty
5. Intelligent Filtering & Alarm Consolidation
6. Correlation by Network Management Consolidation
7. The Expert Systems Approach to Fault Correlation
8. The Diagnostic or Code Book Approach
9. Limitations of the Code Book

H. CUSTOMER EXPERIENCE & SQM (7 pages)
1. Customer Experience vs. SQM: Definitions
2. Integrating Across Multi-Vendor, Multi-Technology, Multi-Layer
3. The Challenge of Monitoring a Service's Quality
4. The Benefits of Customer Experience Management & SQM
5. SQM and Service Modeling Example: an MMS Service
6. Service Management -- Provisioning vs. Assurance Differences
7. Migration of OSS Systems via Federation
8. Creating Enterprise Bundles with the Service Model
9. Gaining Multiple Views of Quality

I. MOBILE DEVICE & HOME NETWORK MONITORING (3 pages)
1. Wireless Device Management
2. Home Monitoring - Advent of Residential Network Assurance
3. Relieving the Call Center from Excess Network Trouble Calls

J. SLA MONITORING (2 pages)
1. The Components of Service Level Agreements
2. Verifiers Aid the Detection of IP SLA Violations
3. Measuring Service Quality in Wireless

K. SIGNALING ANALYSIS SYSTEMS (4 pages)
1. Signaling Impact on Service Assurance
2. Signaling vs. Performance Management Assurance
3. Voice Quality Analysis
4. Real-Time Analytics & Dynamic Thresholding
5. Service Assurance for Mobile Operators

L. RADIO NETWORK OPTIMIZATION (3 pages)
1. Why VoIP over Mobile Strikes Fear in Operator Hearts
2. The Challenge of HSPA and LTE Deployments
3. Why the Change from 3G to 3.5G and 4G is a Big Quality Issue
4. Testing Advanced Wireless Networks
5. Where the OPEX Savings Come From

M. REMOTE TESTING & MONITORING (6 pages)
1. Pre-Service Test - Its Unique Value for Operators
2. The Operationalizing of Test
3. Doing More With Moderately Skilled Technicians
4. Key Markets for Remote Test Vendors
5. Multi-Vendor Test: The Virtues of Best Practices R&D
6. Active vs. Passive Testing
7. The Progression of Test: From Lab to Live Network
8. The Advantages Test Vendors have in OSS

N. IPTV SERVICE ASSURANCE (6 pages)
1. The IPTV Monitoring Business
2. The Dispatch Problems That Surround IPTV Services
3. Assuring IPTV Network Capacity
4. What It Takes to Excel in IPTV Assurance
5. Quality of Service and Trouble Management
6. Interconnect Assurance
7. Video Quality Monitoring
8. Technician Coordination with Network Assurance
9. Video Set Top Monitoring

O. CONTROL PLANE & LARGE SCALE IP SOLUTIONS (9 pages)
1. The Rise of the Deep Network Knowledge Guys in OSS
2. Carrier Ethernet - Assurance Spells the Difference
3. From OAM&P to OSS
4. The Challenge of Multi-Vendor Network Control
5. Network Reconciliation - Another Use of the Control Plane
6. Orchestrating Provisioning & Assurance on a Large Scale
7. Policy Assurance - Evolving Telecom Business with Enterprises
8. BT: Taking Compliance Responsibility for Customers

P. OSS CONSOLIDATION (2 pages)
1. The Consolidation of OSS Systems and Processes
2. The Genius of Micromuse: Manager of Managers
3. Consolidation of the Wireline Work Center

Q. MERGERS & ACQUISITIONS (2 pages)
1. Looking Back: The Mega-Mergers in the Assurance Business
2. How to Manage a Test Company

R. MARKET THREATS (2 pages)
1. The Challenging Life of Assurance Software & Test Vendors
2. An OSS Software Company that Spread Itself Too Thin

S. VENDOR OPPORTUNITIES (6 pages)
1. Where the Telecom Market & Assurance Solutions Will Grow
2. Assessment of Assurance Software Sectors
   a. OSS Automation to Drive OPEX Savings
   b. Customer Experience Management & SQM
   c. OSS Consolidation -- Assurance & Modeling Middleware
   d. Large Scale IP Network Assurance & Policy Compliance
   e. IPTV Remote Test
   f. Deep Packet Inspection Surveillance
   g. Home Network Monitoring
   h. IP Performance Management Software
   i. Fault Management
   j. Wireless Radio Network Testing
3. Working Successfully with SIs

T. CARRIER RECOMMENDATIONS (3 pages)

U. MARKET SEGMENTATION & FORECAST ANALYSIS (10 pages)
1. How TRI Develops its Market Segmentations
2. Market Growth Forecast
3. OEM vs. Service Provider
4. Distribution Channels
5. Geographic Region
6. Service Provider Type
7. Service Provider Size
8. Type of Network/Service Assurance or Remote Testing Solution
9. Networks/Devices Assured

V. VENDOR PROFILES (128 pages)
1. Alcatel-Lucent
2. Anritsu
3. CA Wily
4. Hewlett Packard (HP)
5. IBM
6. InfoVista
7. Intelliden
8. JDSU
9. NetScout
10. Nokia Siemens Networks
11 Objective Systems Integrators (OSI)
12. Soapstone Networks
13. Spirent Communications
14. Suntech
15. Tektronix
16. Telcordia

Vendor Profiles & SWOT Analysis

TRI's vendor profiles section delivers a detailed analytical snapshot of the leading billing companies.  Sixteen of the leading software vendors and network equipment providers are profiled in the report.

Each of the profiles are between 8 and 10 pages in length and are presented in the following sections:

1. Company Specifications and Web Links

This upfront backgrounder information in each profile is organized in the same format for easy cross-reference in other profiles.

Here you'll find basic company data organized for fast retrieval and web access such as:

• Corporate backgrounder
• Overall OSS/BSS business
• Significant investors and stock market reference for public firms
• Significant customers
• Major vendor partnerships
• Major worldwide locations
• Summaries of key products in the billing market

• Number of employees

2. Company Revenue & Market Breakdowns

In this section, we provide an estimate of each company's individual revenue breakdown in the assurance/test market.  The numbers are gathered from public documents, conversations with people at the companies themselves, and Dittberner's experience tracking the market since 1997.  Many companies provided guidance on their own numbers. 

Here are the segments we breakdown for each company:

• Overall Market Revenues 
  - Corporate, Telecom Industry & OSS/BSS Revenues
• Business type
  - OEM software, Telecoms software, Consulting/SI services
• Channels of Distribution
  - Direct, Indirect
• Service Provider Type
  - Circuit wireline, Broadband, Wireless, Cable/DBS, Virtual Network Operator/Non-Facilities Operator, Other
• Size of Carrier
  - Tier 1 (>$10 bill. revenue), Tier 2 ($250 mill. to $10 bill.), Tier 3 (<$250 million)
• Geographic Region
  - North America, EMEA, Asia Pacific, Latin America
• Software Delivery Method
  - Software License, Prof. Services, Service bureau/Hosted
• Network/Service Assurance & Remote Test Applications
  - Fault management & analysis
  - Performance management & analysis
  - Service quality, SLA & customer experience management
  - Network optimization
  - Policy compliance & IP reconcilation
  - Remote test
  - Trouble/incident management
  - Application performance management
• Type of Network/Device Assured/Remote Tested
  - Radio Access Networks|
  - ATM/Frame Networks
  - Broadband Networks
  - Transmission Networks
  - Fixed or Mobile Core TDM & Mobile HLR
  - IP & Corporate Networks
  - Service Delivery & IN Machinery
  - Mobile, CPE & Home Terminals
  - Other Networks/Devices

This calendar year 2008 data is made further accessible in a a database program (delivered as free software with the text report) that allows you to create instant tables and graphs,  compare various company market shares across these segments, and produce a variety of reports in Excel format.  Prior year data is also provided on the OSS/BSS market for historical analysis.

3. Dittberner Discussion of Company and SWOT Analysis

You'll no doubt find this section the most valuable because it's here where each company's assurance business is put into context.  In this section, TRI gets into a free wheeling discussion on company success stories, challenges, and significant product developments.

In this discussion, we meander quite a bit on the significance of company histories, new product/marketing initiatives, telecom customers, geographic markets, and competitive forces.

The section concludes with a company Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis -- a candid Dittberner opinion on where each vendor stands against its competitors and the suitability of its products and services for the network/service assurance market.

TRI's competitive analysis draws from significant research such as attending OSS conferences and speaking with OSS experts at telecoms.  We also held 30-minute or longer conversations with executives at all of the assurance companies we profiled for this report.

Getting so many assurance vendors to participate was an invaluable aid to the research effort because TRI got to hear how each company interpreted its role in the marketplace.  In turn, TRI could discuss competitive issues, evaluate trends, and gain insights on the company's strategy.  

When TRI finished its profiles, it also gave companies a chance to check the profile for accuracy and comment on TRI's analysis.

In all, we think our research methodology meets the twin goals of: maximizing competitive insights; and maintaining a relationship of trust with the sources of this valuable information.

Market Segments & Forecasts

TRI has also sized and forecasted the worldwide market for the network and service assurance software market in this report.  Our forecast model is based on several parameters: TRI's historical tracking of the OSS/BSS market; TRI's forecast of Next Generation Network (NGN) services growth; discussions with carrier experts; and interviews with software and consulting vendors.

The forecast use 2008 as the base year and provide forecast numbers to 2013.  The segments forecasted are the breakouts described in the Vendor revenue breakouts above.

* * * * *

Desktop Database and Search Software

Included in your report order is a  delivers a fully organized body of knowledge and analysis across two interfaces: 

1. Full Report in HTML Help format for searching the text and visuals of our analysis modules, case studies, and vendor profiles, and 
    
2. A desktop Software Application (written in Microsoft Visual Foxpro) with market segmentation and forecast data that you use to view customized data tables, graphs, vendor comparisons, and print documents.  Note: all data and forecast tables are also provided in  Microsoft Excel and comma delimited files can be created too.

Below are some sample screens (NOTE: the examples show non-revenue assurance and non-fraud companies)

Search analysis in On-Line Database. . . 

Compare vendor market strength. . .

View, modify, and print our estimates of company financials. . .

View market share graphs in international currencies. . . 

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