Bid Response Summary - SBC Communications

March 03, 2002
Bid Response Summary - SBC Communications
 
INTRODUCTION
 
Varetis is pleased to respond to SBC's Request for Information concerning Automated Directory Assistance systems. Directory Assistance technology, and the technical and human factors skills necessary for its automation, is at the heart of Varetis's exceptional competencies as a telecommunications vendor. In collaboration with our technology partners, we have crafted a suite of solutions for your review that do more than simply address the issues at hand - they help to position SBC to accommodate the challenges of this rapidly changing industry with a minimum of difficulty and expense as technologies evolve and populations change.
 
These two factors are crucial - partnerships and technological change. The former is an increasingly indispensable factor in managing the latter, which affects not only the pace of changes to the Directory Assistance industry itself, but also the expectations and behavior of the Directory Assistance consumer. Any technical solution must gracefully accommodate both, while simultaneously ensuring the best possible consumer experience.
 
PARTNERSHIPS
 
The recent departure of Nortel Networks from the Directory and Operator Services industry has left vendors and customers alike in a state of mild confusion, concern - even alarm. The modern Directory Assistance infrastructure represents a substantial long-term investment on the part of telcos across North America; Nortel Networks had for years dominated this market to the virtual exclusion of other vendors in areas such as central office switching, listings databases, and operator terminal infrastructure. Much of this infrastructure remains operational and viable, and will continue to play an important role in the Operator Services industry for the foreseeable future. And yet, as a fully engaged partner, Nortel Networks has departed. The clear message here is that vendor diversification remains an important strategic consideration for large capital investments, and that reliable, long-term partnerships remain essential for sustainable competitive advantage.
 
Varetis's response to this challenge is twofold; first, to form collaborative partnerships with best-of-breed technology providers in order to provide a comprehensive, world-class solution to SBC, and second, to develop close ties with Nortel Networks, in order to ensure that our solutions will work with SBC's existing infrastructure as seamlessly and elegantly as possible.
 
MODULAR SYSTEM DESIGN
 
Elegance. The search for this elusive concept is fundamental to the pursuit of technology, and perhaps even to the human condition itself. Elegance implies grace and simplicity - simplicity that is often at odds with a technological environment in which the only constant is change. The constancy of change invites - even requires - the capacity for flexibility, which in turn gives rise to complexity. Thus we observe the engineer's dilemma - the tension between the desire for elegance, and the imperative toward complexity.
 
Like most of the rest of the high technology sector, the Operator Services industry has addressed this tension through the modularization of its basic infrastructure, although it has been relatively slow to do so. Standards adoption, open interface specifications, and platform standardization, however, have permitted this modularization to materialize, resulting in better risk management, lower operational costs, and improved network resiliency. Operator Services in particular has benefited from the externalization of certain switching functions facilitated via the OAP protocol, which was developed and published by Nortel Networks in the mid 1990s. In general, the externalization of call control functions and the usage of well-defined, standardized interface protocols have given rise to the possibility of a heterogeneous vendor environment - a need first identified by Bellcore more than a decade ago in its Intelligent Network (IN) specification, and underscored most recently by the departure of Nortel Networks as an active partner in this industry.
 
OAP forms the technical basis of Varetis's ability to interface seamlessly with SBC's existing switching infrastructure, but the need for modularization does not end there. A fully modular network fulfills the imperative both for elegance and flexibility - elegance at the micro level; flexibility at the macro. This is consistent with modern software development techniques, with network resiliency and survivability practices, and even approaches the elegance and power of organic systems. The lesson here is that modularity must extend as far into the technology as possible. System components, like the shingles on a roof, must be small enough to manage easily, standard enough to replace quickly, and flexible enough to adapt to changing environmental circumstances.
 
None of this is new in theory, but much of it has been slow to evolve in practice. Varetis's dedication to modularity in design, however, extends throughout our systems, and will provide SBC with important sustainable competitive advantages as the Directory Assistance industry continues to evolve. This dedication is evident in our offerings in two important ways - the first is technical, and the second, economic.
 
TECHNOLOGY AND HUMAN FACTORS
 
In any RFI to the high-technology sector, there is an understandable and expected focus on the technical aspects of the challenge, and the current case is no exception. SBC will find heavy emphasis on a wide variety of technological marvels throughout the bids in which Varetis is participating. Telecommunications invites technical complexity, and the business of providing Directory and Operator Assistance is an especially difficult and pernicious example of this phenomenon, involving almost every discipline to be found in this industry in substance both large and small. Directory Assistance involves exceptionally large database storage, extremely fast search and retrieval demands, the implementation of complex operator forcing and queuing theories, seamless and rapid interaction between man and machine in both visual and auditory domains, complex switching and routing functions, and market and regulatory conditions that demand minimum costs and maximum productivity at all times.
 
There is, indeed, a temptation to focus on technology to such a disproportionate extent that the most important perspective - that of the consumer - is sometimes forgotten. But the Directory Assistance industry, like that of the entire telecommunications sector, is undergoing enormous upheaval. The days of minimizing cost at the expense of consumer satisfaction are over.
 
For the last 20 or so years, technological advances in Directory Assistance have been implemented primarily in service to cost savings. The minimization of operational costs remains a viable and important aspect of any Directory Assistance business, but a new focus is needed - a focus on the consumer. Consumer satisfaction metrics have always been important, of course, but a dissatisfied consumer today is as likely to select an alternate service provider as to take the trouble of calling the Public Utilities Commission to lodge a complaint. Technology must respond to this newly competitive Directory Assistance environment by ensuring that the user's "experience" of a Directory Assistance call is as positive and consistent as possible.
 
THE IMPORTANCE OF DIALOG DESIGN
 
Oddly, it turns out that automating some or all of a call to DA need not drive down consumer satisfaction metrics if the underlying technology is implemented with a vigilant eye toward satisfying the consumer. For years, the "holy grail" of automated dialogs has been to emulate a live operator as closely as possible, and this remains an important consideration in modern system design. Unlike live operators, however, and despite remarkable advances in recent years, modern technology is not yet able to handle entirely unconstrained, context-free dialogs and grammars in the Directory Assistance environment. But - let's be fair - neither can human beings. Context and expectation always underscore any verbal interaction, Directory Assistance or otherwise. Given this rather obvious limitation, then, a much more sensible approach to managing the consumer experience of Directory Assistance is to properly manage consumer expectations, and to carefully guide consumer response behavior. The key, in short, is effective dialog design.
 
The importance of good dialog design has been well known for years, but dialogs have always been constrained by the underlying capabilities of the voice response and speech recognition technologies supporting them. In recent years, however, these technologies have advanced to the point that the bottleneck in dialog design is no longer primarily in the technology itself; it is in the implementation of that technology. Market experience, human factors considerations, behavioral understanding of diverse ethnic and cultural populations - these are the factors that most heavily underscore the problem of designing effective dialogs that produce desired results and that satisfy - even delight - the customer. And good design does not necessarily emulate a live operator.
 
MANAGING CONSUMER EXPECTATIONS
 
The key, again, lies in understanding and managing the expectations of the consumer. As a coarse population, consumers in North America today are well versed in automated dialogs of all kinds, some good, some bad. They encounter voice mail systems, automated attendants, computer-generated telemarketing calls -- the list is endless, and so, for the most part, is the frustration. Much of that frustration stems not from the technology itself, but from improper, irresponsible, or incompetent implementations of the technology. Increasingly, one is even surprised to hear a live person answer the telephone, rather than a machine. The North American population, in short, has been conditioned to expect and, in varying degrees, accept automated dialogs. This is particularly true in the realm of Directory Assistance, which has used some form of automation for decades.
 
This conditioning turns out to be quite useful. Consumers act differently when they know they are speaking to a machine. Generally speaking, they behave in a more deterministic fashion, because they intuitively understand the conversational limitations of machines. Responses tend to be shorter and more precise; tolerance for mid-call delays is higher, and an implicit tolerance for occasional mistakes is common, although not unlimited.
 
IMPLICATIONS FOR DIRECTORY ASSISTANCE
 
The challenge in good dialog design, then, is to guide the consumer to be as concise and accurate as possible within this context. Even with the limited amount of information that must be collected for a Directory Assistance inquiry - City, State, Name , and Address - this challenge is daunting, not because of the behavior of individuals, but because of the scale of behavioral variation implicit in large populations. Today's technology has become so sophisticated that wide variations in response behavior can be handled, but those variations must nevertheless be anticipated, modeled, and accommodated. This requires more than just technical brilliance. It requires time, experience, and a deep understanding of the nature of human-machine interaction - precisely the domain in which Varetis and our partners excel. That understanding must inform all levels of a technical solution, from the tone of a recorded prompt to the speed and accuracy of a database search.
 
THE BUSINESS ADVANTAGE
 
This latter aspect - search speed and accuracy - is of particular interest at this juncture, as it is a special strength of Varetis. Varetis's [Product] search engine is a critical component of each of the configurations before SBC, and is the finest product of its kind available today. [Product] is a remarkable example of technology - here used in service to Directory Assistance automation - that heavily influences the quality of the consumer experience while remaining entirely invisible to the consumer . And that's the rub. The dialog - so critical to sustaining excellent consumer satisfaction metrics - is informed and supported by a wide variety of products and technologies that must each perform superbly in near real-time - switches, databases, communications links, speech recognizers, speech synthesizers, operator terminal positions, statistical collection - in order for the dialog itself to be perceived as satisfactory by the consumer. This requires a comprehensive system view that extends beyond the pieces of the puzzle to the puzzle itself. In the modern world of heterogeneous, multi-vendor networks, this system view can only be achieved through outstanding business partnerships and technical collaboration between and among cooperative vendors. This is precisely why Varetis has worked so hard to forge business alliances that are equal to our world-class technical capabilities, and why we believe the result will provide SBC with long-term sustainable competitive advantages in the Directory Assistance marketplace.
 
VOICEXML
 
It is said that good fences make good neighbors. In the present case, these fences are well-defined, open, standardized interface specifications. Of these, there are many that are noteworthy, but one in particular warrants extended consideration in this document, as it is germane both to the modular philosophy articulated above, and to SBC's sustainable competitive advantage in the technical domain, also alluded to earlier. That specification is VoiceXML, and it is perhaps the most important "fence" in these configurations that allow our Business Partners to happily coexist in a "neighborly" fashion.
 
VoiceXML is a specification that has only recently emerged, coincident with the explosive, simultaneous growth and convergence of the Internet and wireless industries. As the name suggests, VoiceXML is similar to the XML (extensible Markup Language) specification - also relatively young - extending XML-style capabilities into the domain of voice communications, and is further evidence of the ever-growing importance and popularity of the standards efforts now driving every aspect of the telecommunications industry. VoiceXML, like XML, is a semantic specification, meaning that it is designed to convey meaning as well as specific instructions. This is important, because it allows system designers to specify instructions at a high level of abstraction. In practice, this means that VoiceXML is used to convey what is to be done, rather than how to do it. For the designer, this leads to well-defined, modular system development. More importantly, for SBC, it means that the resulting solutions are, to a large extent, platform independent, and to a similar extent, interchangeable . Here is the technical flexibility needed for modern telecommunications infrastructure, extended as never before into the audio domain.
 
[Figure Omitted]
 
Figure 1 - Architectural View of Varetis Solutions Utilizing VoiceXML
 
VoiceXML is one of the chief technical reasons why Varetis's business partnerships are able to work collaboratively, cooperatively, and rapidly in the audio domain. It is also why we are able to partner with different audio platform vendors with equivalent facility, as is evident in the responses before SBC. As a feature-rich, powerful, and highly abstracted specification, VoiceXML permits Varetis and our partners to focus on our specialized capabilities with full confidence that the results of our efforts will function seamlessly together. As businessmen, we recognize the value that such flexibility affords. As engineers, we appreciate the elegance with which it does so.
 
In the diagram above, you'll also notice that the [Product] search engine occurs twice - first, as an integral part of the dialog management system, and second, as an integral part of the National Directory Assistance system, which is provided by LSSI. This turns out to be important for reasons of consistency in providing this service, because the same database and search engine (LSSI/[Product]) is used both for automated directory inquiries, and for traditional operator assisted inquiries. This kind of consistency is critical in providing high-quality service to consumers in both automated and non-automated domains, and is one of the factors that we regard as an important competitive advantage for SBC in providing an automated solution to its customers.
 
THE MARKET ADVANTAGE
 
There is little question that the Directory Assistance business is changing, and radically so. A thorough analysis of the industry is beyond the scope of this paper, but a few trends, which are doubtless well known to SBC, are worth articulating. Overall DA traffic continues to grow, but it is migrating heavily to wireless users. Wireline DA traffic remains flat overall, and is migrating away from core 411 traffic to NDA. RBOCs continue to face constant and stringent regulatory restrictions for traditional services, even in the face of declining business. The Internet has had a dramatic impact on listings retrieval in general, but Internet providers have not, thus far, respected the need for accuracy and currency in the listings aggregation process - at least, not nearly to the standards established by the Baby Bells. NPA splits continue to proliferate, causing confusion among consumers, and - presumably - increased call volume to Directory Assistance. There are other trends as well, but everything points in the same direction - opportunity for heavily capitalized, attendant backed Directory Assistance call centers. That opportunity is manifesting itself thus far primarily in outsourcing and wholesaling activities, and this trend will certainly continue.
 
Varetis's challenge as a telecommunications vendor is to formulate technology solutions that assist our customers in anticipating and reacting to these market dynamics. We do that, again, by respecting the tension between elegance and flexibility; by building solutions with an eye toward extensibility, adaptability, and growth, and by forming world class partnerships that overcome the inherent challenges of a heterogeneous vendor environment.
 
What does this mean for SBC? Most importantly, it means that SBC can have confidence that Varetis is prepared to support market-driven changes in the role of it's Operator Services infrastructure - should that become necessary or desirable - with minimum costs and maximum market velocity. A popular paradigm for describing one kind of expansion, for example, is the "portal" - Internet, Voice, Corporate, or otherwise. Directory services are an integral feature of portal technology; voice portals add speech and IVR capabilities to the mix. Yellow pages service is another obvious and increasingly interesting consideration. And there are others.
 
Another kind of expansion is one of scale, both in terms of breadth and depth. Varetis technology is in no way limited to the traditional data fields associated with Directory Assistance; the addition of new data critical for mobile applications, for example, such as location information, is easily accommodated. Expansion beyond store and forward technology to full Directory Assistance automation is similarly possible, as described in the RFI responses. And depth of scale is a special strength of Varetis technology, which supports upwards of 160 million subscriber entries with sub-second response time. Finally, the ability to scale in both dimensions - depth and breadth, can be accomplished in a gradual stepwise fashion if desired. In short, Varetis is building technology that does more than solve the challenges facing today's Directory Assistance market; we have an eye on the future as well; forward-thinking design pervades our solutions, as well as those of our partners.
 
SBC RFI RESPONSES
 
Varetis technology is an integral part of two of the RFI responses before SBC, and is part of a third option, not specifically bid, which is covered briefly below for informational purposes. Our intent in approaching SBC in this multifaceted fashion is not to introduce confusion, nor obfuscate the process of vendor evaluation and selection. It is instead to illustrate, with solid commitments, the special strengths of our solutions that have been articulated in this paper. Those strengths - modular design, world-class partnerships, and the integral use of VoiceXML-based technology, set Varetis and our partners above our competitors in every important respect.
 
Varetis is providing solutions to bids that have been primed by both Intervoice/Brite and by IBM/DirecTalk. Our technological and architectural participation in these bids is essentially identical. In both cases, Varetis is providing the [Product] platform for high-speed database searches of N-best lists created by the speech recognizers, as well as the [Product] platform for the dialog management of residential search requests. These bids are also supported by Nuance Communications, which provides speech recognition technology and associated speech development tools in support of Directory Assistance automation, Telelogue, an automated directory assistance vendor specializing in the robust and accurate recognition of business listings, and LSSI, which functions as a data aggregation source for National Directory Assistance. The IBM solution is also supported by ViaVoice, which provides speech recognition and speech development tools as well. These architectural components, as well as their interaction, are described in considerable detail in the respective RFI responses from InterVoice/Brite and IBM/DirecTalk.
 
One of the most noteworthy aspects of these responses is the presence of not one, but two independent dialog management systems in each proposal - one from Varetis (ADIS) and one from Telelogue, to manage residential and business search requests, respectively - dialogs in which each company separately specializes. This is an excellent example of how technologies such as VoiceXML can permit solutions that truly use best of breed technologies without substantially increasing complexity. VoiceXML also permits the operation of the audio and speech recognition platforms to be functionally isolated from the dialog managements systems, permitting the use of Nuance, or ViaVoice, or even both, as requirements and opportunities dictate. This is operational flexibility on an unprecedented scale in this industry, and SBC will be the direct beneficiary.
 
Varetis is also including a proposal for SBC's consideration that incorporates technology from Phonetic Systems, running in concert with an IBM/DirecTalk platform. This solution is architecturally dissimilar to the other offered solutions, in that it does not incorporate the use of VoiceXML in the fashion articulated in this white paper. Varetis regards Phonetic Systems' technology, however, as truly world-class, and as a worthy option to consider for the automation of Directory Assistance at SBC as described in the RFI. Varetis's commitment to VoiceXML is important, however, and should SBC wish to pursue a Phonetic Systems option, development in this area would be important to consider and plan for. However, Phonetic Systems' ability to automate directory inquiries for hundreds of thousands of listings at high rates of automation warrants serious consideration, and Varetis offers this solution in illustration of the viability and importance of strong corporate partnerships as outlined in this document.
 
CONCLUSIONS
 
Once again, Varetis is pleased to participate in the RFI responses that have been submitted for SBC's review on the matter of Directory Assistance automation. We regard our technical capabilities as world-leading in this industry; they are informed by a philosophy of modular design, strong corporate partnerships, and the use of key technologies, such as VoiceXML, which provide sustainable competitive advantages to our customers. They are the result of vision and prudence - the vision of an engineer, coupled with the savvy of a businessman - a delicate, yet powerful balance of elegance and flexibility. It is our earnest hope that SBC will choose to become a Varetis customer, and we look forward to forthcoming conversations about the possibility.
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