Despite Verizon’s Previous RFP on IMS, No Set Plans for Deployment in Place

Implications: 1.Verizon appeared to be hedging its bet with an IMS RFP that was addressed by suppliers last year. 2.Indications point to Siemens winning in the bidding process. 3.However, approving a solution is one thing – pulling the trigger is a whole different question.

Analysis:  

Telecom experts that have been around the block a few times were reluctant about the IMS concept almost from the beginning – especially for the United States. The drawbacks of the standard have been documented in previous articles. Just the unfortunate grouping of the letters alone looked too much like ISDN to people with a long history in the industry.

Verizon’s IMS RFP was an amalgamation of a proposal that Verizon Business (essentially MCI people) had put together and an RFP that the Verizon local personnel had developed. It came out as a two-volume set with Phase 1 addressing their LD type of environment and then Phase 2 targeting the wireline access-type space.

Still, this particular RFP was more of a fishing expedition than anything else. Despite the

appearance of an astronomically large chunk of business at stake, the RBOC really wanted to just test the water and get a better idea of the overall economics. Although RFPs in general can be quite detailed, manufacturers concluded that this IMS proposal was especially far-reaching and unreasonable. In particular, there were really high costs asked of the suppliers in terms of extensive lab demos and other requirements. It appeared difficult for the vendors to take Verizon seriously given the amount of capital required against only a “maybe” of getting some business. On the other hand, suppliers cannot refuse to engage in any Verizon RFP process – because they are anxious to get soft switch business from the carrier in general – and no response would have signaled a lack of total commitment to the market.

If indeed Siemens was selected as the vendor, it appears to be a further indication of the true seriousness of purpose by Verizon at this time. Siemens’ overall dedication to the space has been questionable and its performance has seemed to be rather lackluster. It also has a reputation for outrageously high pricing – that have led to detrimental outcomes in the marketplace. While Siemens will continue to get picked in the European market, even Deutsche Telecom has been giving the vendor a hard time over the pricing of equipment. Also, the shelf life of this particular vendor selection at this time is dubious. If Siemens was chosen, dropping the supplier later will be easier and will avoid harming the manufacturers that Verizon has a greater interest in moving forward with on soft switches.

All in all, Verizon is still struggling in determining how its VoIP network will be built out and both the timing and the capital expenditures are up in the air. Verizon does not even know how many switches are going to be deployed even in 2008, let alone moving in an IMS direction. It is expected that next year there will be an RFP out of Verizon for an access soft switch – for anticipated deployment in 2009 and later. There are reports of teams currently investigating certain segments for the RFP – but again, there are no firm commitments. The earliest Verizon will make a final decision on this type of product is probably fall of 2008 – time is needed to write the RFP (not to mention a lot of things go in and out of the RFP during the actual process), lots of testing needs to be conducted, and there will be all of the gamesmanship that will be played back and forth as far as finalizing contract pricing.

Over the years, there have been countless RFPs from RBOCs that never went anywhere. A vendor would be selected, a contract worked out, and not a thing was sold. The two key words in every proposal is “up to” in terms of quantity – so it can very easily be zero.

Despite the high cost of putting out an IMS RFP, Verizon will gain benefits regardless of whether it buys anything. The service provider will really get to find out what equipment is available and also what the competition is using. In addition, the people looking at the specs for a potential second vendor will have much greater knowledge.