Soap Box: The Interoperability Imperative & the New Era of Trust

Posted: 8/2003

The Interoperability Imperative & the New Era of Trust

By Jeffrey E. Ganek

Two powerful trends are about to reshape the telecom, Internet and IT sectors in a big way. These trends also promise to affect e-commerce in ways that will touch the lives of consumers in just about every area, from simple online shopping to banking and health care -- you name it. The first trend is what I call the "Interoperability Imperative." The second, closely intertwined with the first, is what I refer to as the "New Era of Trust."

Interoperability enables the creation and deployment of innovative service packages, by combining wireline and wireless services and integrating voice and data, communications and computing, content and transactions. While interoperability delivers systems based on open standards, it also depends on building and managing large-scale directories, customer and billing clearinghouses and sophisticated network management and control technologies.

However, all of this intricate interfacing, integrating and interoperating demands not just technical interconnectivity. It demands and relies on the all-important "T" word mentioned above: trust. Interoperability requires trust.

The New Era of Trust started sometime in the early 1990s with the dawn of the Internet, which I regard as something of a fuzzy watershed between the pre-Trust era and where we are today. I'm not saying people didn't trust each other before the Internet. In the past, however, telecom-related products were largely independent of each other. Consumers trusted the provider of each product independently. We didn't need electronic verification systems to deliver high levels of virtual trust across different carriers, networks and platforms. Now we do.

In the years ahead, many telecom and Internet-related products and services will take the form of integrated packages. They will be interdependent. End users will have to trust the service packagers. The packagers will have to trust the network integrators who pull together various service elements.

Where does trust come from in this brave new era we're entering? How do we create trust? For starters, it's critical for companies to adopt the "Foundations of Trust." These are bedrock requirements like reliability and quality, confidentiality and privacy, and, of course, security. As the industry recovers, the emerging market will require all telecom companies to deliver those values.

We need to find a way to weave trust into the fabric of our service offerings as a core attribute, like weaving cotton thread into a blanket. Increasingly, we'll have to provide verifiable trust values in our products -- verifiable reliability and quality, and verifiable confidentiality, privacy and security.

When you see these values proliferate, it will be a sign the industry truly is on the road to recovery. However, there's something else that's key to recovery, something that is particularly important for my own company. I'm referring to neutrality. For interoperability to function and for trust to flourish, it's imperative that telecom companies and other service providers share critical information -- information about customers, information about products and information about routing and addressing.

Interoperability cannot happen without information sharing -- but sharing is difficult. Companies often must share information with competitors. They don't exactly trust each other, but they need to share critical, valuable information. They need to share it frequently, in large volumes and often in real time. They also need to share it with many other parties. This information sharing is at the center of the emerging matrix of networks and technologies that will make interoperability and convergence-based services possible.

Open standards systems address part of the challenge. Nevertheless, there's a new role that still must be filled. There is a need for trusted directories with which independent, competing parties can share critical information in a trusted way, and managed by a neutral party that does not compete with the users of the directories.

Examples exist in other industries. The bank associations Visa and MasterCard fill some of these functions in the credit card world. In the telecom business, local number portability (LNP) provides an interesting example. LNP enables consumers to change local service providers while keeping their telephone number. For number portability to work, a trusted, competitively neutral party is needed. Here's how it's done. Collectively, the telcos and the FCC established technical standards for the data sharing and they established a neutral operator of the central directory. In a secure way, all telcos have access to the data. Today, all calls in North America must hit a copy of the database in order to get delivered. Privacy and confidentiality are guaranteed.

The system is built around a model of trust. My company is that neutral operator. Our role is to make sharing possible. We provide the trusted repository for key customer information. As a result, all competing carriers have equal access to the information they need to route all calls. The simple act of letting a subscriber retain his or her telephone number when changing carriers requires complex changes in routing and OSS ... and whole new levels of industry cooperation.

Online credit card transactions offer another example of the need for interoperability and the overriding importance of trust. Credit card purchases via merchant Websites supported by ISPs enable consumers to buy airline tickets, book hotel rooms, rent cars, purchase books, home mortgages, car insurance and various forms of entertainment ... all over the Web.

It's getting easier everyday for consumers to do these transactions. In fact, the volume of online credit card transactions is growing 300 percent annually. Meanwhile, fraud is growing at an even faster clip -- 400 percent a year. Indeed, fraud is 10 times more frequent in online credit card transactions than for in-person transactions. Online fraud will cost banks and merchants at least $6 billion this year alone. What we have here is a potential crisis of trust that will continue to inhibit, if not completely halt, the expansion of e-commerce.

The interoperability required for online transactions requires high levels of trust and confidence among banks and merchants and consumers. Without trust, the interoperability system could break down completely. Systems that deliver trust are needed among hundreds of thousands of banks, millions of retailers and hundreds of millions of consumers.

A key starting point is for all those individual parties to better manage our digital credit card identities on the Web. They must be able to authenticate that we really are who we say we are online. We must be able to control transactions in a trusted way. Existing systems simply don't deliver adequate levels of trust. To address this problem, more than 200 companies have come together to form the Liberty Alliance. These companies represent banks, the large credit card issuers, airlines, entertainment providers, system providers and telecommunications companies. The aim is to define and develop industry standards for digital identity management. Eventually, we'll adopt industry standards that define how digital IDs are managed in a verifiably trusted model. When that happens, we'll be able to trust our digital IDs -- our credit cards, our health care cards, our brokerage account numbers and our phone numbers, not to mention our e-mail addresses.

We're not there yet, but the process has started. Other areas are crying out for trust-based solutions. Take convergence, the Holy Grail we've been talking about for years. With the tools of convergence, packagers will be able to fashion a new generation of robust service offerings. Customers will be better served. Usage volumes will increase. Emerging technologies based on open standards will facilitate convergence. However, there's another piece that will open the floodgates.

I'm talking about a still-nascent service called ENUM, short for Electronic Numbering. ENUM is the standard for a central directory that will match telephone numbers with IP addresses. It will be used for routing calls and messages the way the local number portability directory is used today in the telephone network. When implemented in a verifiably trusted way, ENUM will enable the routing of calls to IP networks -- and e-mails to phones.

I believe making progress on interoperability and trust are keys to recovery in the telecommunications and Internet sectors. Recovery will also involve not just consolidation, but restructuring within the operations of the bigger industry players as they strive to become the lowest cost providers of reliable, basic services. They will restructure to drive down costs. Substantial costs also will be cut by outsourcing, particularly in noncore, back-office functions.

The Interoperability Imperative and the New Era of Trust will change the way telecom and Internet companies do business, while also changing the way customers interact with suppliers. Successful companies in the new era will embrace verifiable trust values like reliability, quality, confidentiality, privacy, security and, where necessary, neutrality. Customers will demand it. A host of interoperable service offerings will require it. Ultimately, recovery depends on it.

Jeffrey E. Ganek is chairman and CEO of NeuStar Inc., a provider of trusted, neutral, third-party central database services to the telecommunications industry.