Transforming from TDM to IP services: If it ain’t broke, don’t fix it?

Do you have legacy TDM (time division multiplexing) services in your product catalog that have generated very little revenue for years? Is it becoming increasingly difficult and expensive to maintain old TDM systems? Are you falling behind competitors due to an inability to upgrade and add new features to your TDM services?

If so, you’re probably considering transforming from legacy TDM services to Internet Protocol (IP) based services. This is a common strategic objective for many carriers and communications service providers (CSPs) in 2017. This transformation is necessary for the following reasons:

• Cost of maintenance: The cost of parts as well as people that understand legacy equipment is making it expensive to maintain.
• Lack of backup equipment: Old equipment is more expensive to source and hard to find.
• People and knowledge: The people that understand and maintain these systems are retiring.
• Features are outdated: You can’t upgrade or easily add some of the new features that CSPs must offer to compete against the new generation of over the top (OTT) competitors.

Although the transformation from TDM to IP service is seen by many as inevitable, CSPs have been slow to undertake it. There has also been some confusion between transformation and discontinuing legacy services that have not been ordered or generated revenue for some time. Some CSPs have begun to retire legacy services that are rarely or no longer used, but this is only the beginning. Discontinuing an unused TDM service with no customers is not the same as a transformation that migrates customers from TDM services to IP equivalents and then discontinues the legacy TDM service.

Why is moving from TDM to IP services so hard?

Moving away from TDM services is hard for a number of reasons:

Profitability

The fact is that many legacy TDM services are generating significant revenue at high profit margins. Even when the revenue from TDM services is in decline, if the decline is not accelerating, the case can be made to leave it alone for now. After seeing the business case for a TDM to IP transformation, many CSPs continue to struggle with the idea of cannibalizing a service that is both reliable and highly profitable, even when its revenue and use base is only in slight decline.

Timing

For many CSPs the business case for TDM to IP transformation lacks a clear trigger that necessitates transforming immediately. Despite published timelines for transformation, many CSPs have remarked that the risk on legacy services was low and the services were very profitable, so why spend money transforming them right now? Why not wait until services become unprofitable or unreliable before transforming them?

Given the current environment of cost cutting and fiscal restraint, any investment dollars in the current budget would be better spent on other priorities.Even when looking at a service that is seeing declines in revenue or users, the same argument still applies. If the rate of decline is “manageable” and it is not declining any faster than it was last year, why move now?

Migration strategy

Transforming from TDM to IP-based services requires a migration strategy that maintains customer satisfaction and service levels throughout the move so that churn does not increase during the change-over. Technicians have questioned if it is possible to replace an old gambling machine, fax machine, telex or custom security monitor with an equivalent IP-based machine or device that does the same job, is just as reliable and yet is cheaper to buy and maintain.

Some CSPs also admitted that despite their best efforts, not everything that a device or service depended upon was documented. Technicians commented that in some cases, “We may just have to disconnect the service and see who complains”.

Security

Legacy TDM lines are difficult to hack. In many cases, they are closed circuits which would require physical access and sophisticated line or signal monitoring equipment to eavesdrop, monitor or intercept. They are not susceptible to denial of service attacks or being “spoofed” and are not well understood by modern would-be hackers. Some technicians also pointed out that they had not done a hardware “patch” or upgrade for many years which greatly reduced the opportunities to introduce new security risks and vulnerabilities as part of the change. Fewer changes meant fewer issues and downtime that resulted from the changes themselves.

Cultural issues

A move from TDM to IP-based services will require significant change and education of CSPs’ staff. Some ‘old school’ employees don’t want to change and this attitude can be difficult to overcome in a larger telecommunications provider.

“Fast follower” business strategy

Telecommunications operators tend to be conservative by nature which manifests itself in several ways including the widespread use of the “fast follower” business strategy. The fast follower strategy means that few CSPs are prepared to take the risks associated with being the leader in implementing an idea or technology.

Many CSPs would rather focus on being quick to replicate an idea once it has proven itself. Some CSPs have remarked that “none of our competitors are doing large scale TDM to IP transformations so why do we want to be the first to do this without a truly compelling reason”.

Regulatory

Some operators have questioned if there may be regulatory requirements around continuous service and availability that may restrict the ability to move from TDM to an IP replacement. Some subscribers have suggested a different view based around the same theme, in that some operators might see the TDM to IP transformation as an opportunity to remove some of the regulations currently protecting subscribers.

Legacy features

Legacy TDM services in some cases provide features such as power and timing from the line. Over the years, some legacy services have evolved to rely upon these features of the way TDM was implemented. In some early deployments operators needed regulatory changes to remove service obligations or customers needed to sign off that power would no longer be supplied from a line in the case of an emergency. In some implementations, the requirement for battery backup was changed from the CSP to become the customer’s responsibility.

Mis-steps with initial trials

In initial trials of TDM to IP migration, several operators met with issues that have resulted in some understandable reservations by both CSP and subscribers towards the transformation.

During some early transformation trials there were occasions where subscribers were migrated from TDM services to IP, not all the features of the legacy TDM service were replaced. This resulted in complaints from subscribers.

In addition, many of the new IP services had reliability and performance issues which became a problem since the new services were replacements for services that had been working reliably for many years. Some customers in the trial areas became skeptical that CSPs were using the transformation as an excuse to force-move them to inferior, less reliable, more expensive services that made more money for operators.

In the new world of social media, bad news travels fast, meaning that once the rumor was published, it was hard to turn the perception around.

If it ain't broke...?

For CSPs some of the TDM to IP trials reinforced their fears around the need for a migration strategy that maintained customer satisfaction and service levels. Some operators reported larger than expected numbers of customers not taking up the replacement IP service even when the legacy TDM service was discontinued.

Operators generally did not give data on whether customers simply decided they no longer needed the legacy service and turned it off, migrated to a different service other than the suggested replacement or used the opportunity to churn away.

In any case the net effect was that operators gained a reluctance to touch customers that had a legacy TDM service, were paying their bills and not complaining. One technician simply repeated the old saying “if it ain’t broke, don’t fix it”.

Despite the factors slowing TDM to IP transformation, implementing effective transformation programs will become a necessity for CSPs. The need to move from TDM to IP has a certain inevitability about it which cannot be ignored indefinitely.

If you’re ready to take the leap, my next post will provide some tips on getting started with an effective strategy for the transformation.