Weak Global Econcomy & Slow Business in China Has Negative Impact on Alcatel-Lucent and ZTE
Alcatel-Lucent underlined the bleak outlook for itself and much of the telecoms equipment sector by disclosing second-quarter operating losses of €40m and abandoning yearly profit targets. The company cited a “slower than expected business mix improvement”. Alcatel-Lucent also said that while it expects the second half of the year to be better than the first, it will not now meet its previously-announced adjusted operating margin guidance for 2012. It noted a “difficult macro-economic environment”.
According to Odon de Laporte, an analyst at Credit Agricole Cheuvreux cited by Bloomberg, the company has also been impacted by slow business in China. During the first quarter, the company noted “extremely weak” sales of GSM equipment in China, due to the timings of the sales cycle.
Financial Times offerered an even bleaker assessment for Alcatel-Lucent prospects this year:
http://www.ft.com/intl/cms/s/3/40dd8db6-d008-11e1-bcaa-00144feabdc0.html#axzz212LYe1kO
Update on Alcatel-Lucent– 26 July 2012:
Alcatel-Lucent reported a net loss for its second quarter and announced that it is planning to reduce its headcount by 5,000 in an effort to further cut costs. The results make it the latest infrastructure vendor to suffer at the hands of the economic downturn, along with Ericsson and Huawei.
The company reported a net loss of EUR254 million for the second quarter on the back of revenue of EUR3.55 billion. The loss was particularly severe when the previous quarter’s EUR398 million net profit is taken into account.
Revenue was down 7.1 percent from EUR3.82 billion reported in Q2 2011 but up 10.6 percent from the previous quarter’s EUR3.21 billion.
Revenue for the wireless network business was EUR877 million, up 11.3 percent from the previous quarter’s EUR788 million but down 18.7 percent compared to EUR1.08 billion for the same quarter in 2011. The decline in wireless revenue over the past year was attributed to “moderate or delayed spending of service providers” on 2G and 3G technologies. However, the company’s LTE business more than tripled its revenue during the course of the year.
North America and Europe provided the bulk of the company’s total revenue during the period but have declined 8.3 percent and 15.6 percent respectively compared to a year ago. The only region to have increased revenue in the past 12 months is the rest of the world with Central and Latin America recording a seventh consecutive quarter of double digit growth. All geographies were up compared to the previous quarter.
Alcatel-Lucent CEO Ben Verwaayen said the second quarter performance confirms the company’s strong position in “many attractive market segments” such as IP, next-generation opticss and broadband access, but also the effects of the global economic situation. Verwaayen’s ommision of ‘mobile’ from the company’s list of strong markets reflects how Alcatel-Lucent is facing serious competition in the wireless sector.
Verwaayen added: “It is clear from the deteriorating macro environment and the competitive pricing environment in certain regions challenging profitability that we must embark on a more aggressive transformation.” To that end, the infrastructure vendor has launched “The Performance Program” to achieve a further EUR750 million cost reduction to bring total savings to EUR1.25 billion by the end of 2013. The plan includes the reduction of 5,000 roles in the organisation and the exit or restructuring of unprofitable managed services contracts and markets. “These times demand firm actions,” Verwaayen said.
The company has previously reduced costs through rationalising its product portfolio, co-sourcing, reducing cost structure and managing working capital more effectively. The company is targeting a strong positive net cash position by the end of 2012. http://www.mobilebusinessbriefing.com/articles/alcalu-swings-to-q2-loss-announces-5-000-job-cuts/24737?elq=b0087be5d8994e1ea01991708af665c9
LightReading: “These times demand firm actions,” stated CEO Ben Verwaayen in today’s earnings press release.
In addition to cutting jobs, AlcaLu intends to exit or renegotiate unprofitable managed services deals and quit unprofitable geographic markets. No mention was made of winding down or selling off product lines.
As part of the program AlcaLu is also looking to capitalize on its intellectual property and is setting up its patent portfolio as an independent profit center.
The cost-cutting plan wasn’t enough to appease investors, as AlcaLu’s share price on the Paris exchange fell by 5.4 percent in early trading Thursday morning to €0.83, giving the company a market value of just €1.9 billion ($2.3 billion).
http://www.lightreading.com/document.asp?doc_id=223302&f_src=lrweeklynewsletter
And now let’s look at ZTE, whose Shenzhen-listed shares closed down sharply after its recent earnings report. The Shenzhen-based firm said late Friday that its net profit would total 154 million to 308 million yuan ($24.4 million to $48.9 milliion) in the first half of 2012, dropping 60 to 80 percent year-on-year from 769 million yuan in 2011.
ZTE attributed the profit decline to considerable investment returns in the first half of 2011, foreign exchange losses and order postponement by domestic telecom operators.
“Our performance in major businesses is better in 2012 than the previous year,” Dai Shu, spokesperson of ZTE China, told the Global Times Tuesday. “If we deduct the 900 million yuan earnings by selling Nationz Technologies Inc’s shares in 2011 and 150 to 200 million yuan foreign exchange losses resulting from the eurozone crisis.”
ZTE would grow faster than the average growth of the industry in 2012, Dai projected, noting that the company would release its semiannual report in August. However, the firm has to face worsening market environment and industrial bottlenecks, analysts said. Dragged by the global economic downturn, telecom operators around the world postponed their projects and investments, and the trend is unlikely to reverse in the short term, said analyst Chen Yunhong from Sinolink Securities.
Technology research firm Gartner predicted that the global telecom sector would see 2 percent expansion in 2012.
Media reports said many ZTE staff have been recalled from overseas postings since early this year and further job cuts would be announced within the year.
http://www.globaltimes.cn/content/721664.shtml
Gartner: Robust growth for telecom equipment spending, tepid growth for telco services, PC sales flat
Telecom equipment spending could rise 10.8 percent to $377 billion this year, according Gartner Inc. The prestigious market researct firm forecasts that growth will continue throughout 2013 when spending will increase by 8.3 percent to $408 billion.
“While the challenges facing global economic growth persist—the eurozone crisis, weaker U.S. recovery, a slowdown in China—the outlook has at least stabilized. There has been little change in either business confidence or consumer sentiment in the past quarter, so the short-term outlook is for continued caution in IT spending,” said Richard Gordon, research vice president at Gartner.
However, telecom services spending will not fare nearly as well, according to Gartner. 2012 telco service growth will only be 1.4% this year to $1,686B. And 2013 growth will still be paltry at 2.3% to $1,725B. The global telecom services market continues to be the largest IT spending market. Telecom services growth is expected to come not only from net connections, especially in emerging markets, but also in mature markets from the uptake of multiple connected devices, such as media tablets, gaming and other consumer electronics devices.
Telcos could also reap some benefits as more businesses and govenment agencies start to adopt cloud computing services. Gartner predicts that enterprise spending on public cloud services will grow from $91 billion worldwide in 2011 to $109 billion in 2012 to reach $207 billion in 2016. That’s somewhat surprising since other market research firms predict more robust growth for private cloud services, due to concerns about performance, security and failure recovery.
For more info please see the press release:
Atleast telecom spending on equipment and services is doing better than PC spending. Worldwide PC sales remained virtually flat in the second quarter, according to a new Gartner report.
Gartner principal analyst Mikako Kitagawa said in a statement that the PC market in Q2 “suffered through its seventh consecutive quarter of flat to single-digit growth.” Kitagawa attributed the key reasons for this sales performance to economic uncertainty in some regions and a dropping interest on the part of consumers for PCs.
SMBs Look to Hosting Companies for Cloud Computing Services
AMI Partners Report:
According to AMI Partners (http://www.ami-partners.com/), hosting companies — pure-plays, telcos and MSOs — will provide nearly half of the cloud services purchased by U.S. small and midsize business. The firm predicts SMBs will have invested a total of $34 billion in the cloud by the end of the year. According to the report, hosting providers such as telecom firms, MSOs and pure-plays are uniquely suited to handle the high level of customer service demanded by SMBs because of their long history of providing Web access solutions to the sector.
“A key reason that hosters are becoming a leading cloud channel for SMBs is because they have proven they can effectively handle critical infrastructure, while providing the necessary level of support,” said Monik Sheth, research analyst at AMI-Partners. “Poor service can be an immediate deal breaker for any company, and SMBs are no different.”
AMI Partners is including telecommunications providers (telcos and cable companies) in the “hosters” category is because many of the solutions offerings are beginning to overlap, especially around IaaS and related cloud offerings, Sheth told Channel Partners. “Telecom firms are making strategic plays in the hosting space, as you can see for example by M&A activity among major telecoms in the U.S. (e.g..Verizon acquiring Terremark and Time Warner Cable acquiring NaviSite),” he said.
SMB cloud services spend includes investments in IaaS, SaaS, web hosting, UC and remotely managed IT services. Two areas where AMI Partners found SMBs see clear benefits, and are aggressively moving to the cloud, are hosted infrastructure, such as servers and storage, and remote management of IT systems and related applications. That’s because SMBs have very limited, if any, internal staff dedicated to managing technology, so deploying these solutions in the cloud, with the support of a trusted provider, is quickly becoming the norm, the research firm explained.
References:
http://www.ami-partners.com/index.php?target=news&mode=details&news_id=287#287
TELECOM-PRO Comment:
We see Savvis-Century Link and Terremark-Verizon as the telco leaders in providing cloud services to SMBs. Of course, that’s why Century Link and Verizon acquired those two formerly independent companies! It remains to be seen what competive telcos will do in the cloud space. Those include: TW Telecom, Level 3 Communications, AboveNet, XO Communications, Windstream, and Globe Telecom (amongst others).
Meanwhile, MSOs (multiple system operators) are becoming a bigger threat to telcos in the business end services and wholesale market, as more SMBs and wireless operators (e.g VZW) look for alternative providers to meet their needs. We see Comcast Business as particularly strong in Carrier Ethernet and VoIP to SMB, but they haven’t announced anything definitive for cloud computing.
Perhaps, it takes web hosting and IT service management expertise that’s beyond the reach of most telco’s and MSOs.
What’s your opinion?
Telecom Revolution in India and the Government’s Role in Making it Happen (or not)
Note: Please see comments at the end of this article for updates and opinions.
New Broadband Telecom Projects in India
The legendary Sam Pitroda presented the closing keynote speech at TiECon 2012- The Indus Entreprenneurs annual conference. Sam is a pioneer in design and development of digital switching technologies (in the 1970s) and the man behind India’s telecom revolution (in the 1980s and ’90s). Mr. Pitroda is currently Adviser to the Prime Minister of India on Public Information Infrastructure and Innovations. A technologist, inventor and entreprenneur, Sam initiated India’s telecom revolution in the 1980s and sparked India’s outsourcing boom in the late 90s. In 2007, IEEE ComSoc awarded Mr. Pitroda the award for Public Service in the Field of Telecommunications. (http://www.comsoc.org/about/memberprograms/comsoc-awards/telecom/bios)
A comprehensive article on Mr. Pitroda’s speech appears in the July 2012 issue of IEEE Global Communications Newsletter, which is published in IEEE Communications magazine.
http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=6231274
Sam believes that Public Information Infrastructure is critical for driving innovation and entrepreneurship, as well as for improved delivery of public services and accountability.
The first step in modernizing India’s IT infrastructure is the National Knowledge Network (NKN). This high speed fiber optic network will interconnect all educational and research institutions in India (including 22,000 colleges) as well as global research networks in the U.S., EU, Singapore and Japan. Its goal is to enable real time collaboration and research. The target users for the NKN are institutions engaged in the generation and dissemination of knowledge in various areas, such as research laboratories, universities and other institutions of higher learning, including professional institutions.
NKN has already connected 774 institutions (as of 26 May 2012) and aims to connect over 1500 Institutions/ Organizations /Laboratories throughout the country. The network design is based on a proactive approach that takes into account future requirements and new possibilities- in terms of both usage and perceived benefits. The NKN is characterized by a 40G bit/sec fiber optic backbone, multiple 2.5/10G fiber add/drops, and a total of 1500 nodes. It’s projected cost is $3B.
Another government funded fiber optic network is being built to connect 250K Panchayats (local government bodies) in India. Broadband connectivity to these rural Panchayats will improve delivery of public services and empower village residents (which make up 70% of India’s population). It will transform eGovernance, education, health, hospitals, and agriculture. The India government launched this rural broadband program in late October 2011 under the Universal Service Obligation Fund (USOF) to increase broadband penetration in rural and remote areas.
At these Panchayats there will be a cell tower and other related infrastructure for all public and private operators to share facilities for proving last mile wireless services to rural customers. Broadband wireless access will consists of a mix of 3G/4G cellular, mesh WiFi, and WiMAX. Those wireless access networks will be interconnected to India’s fiber optic backbone for extended reach and a multiplicity of services.
This fiber optic network to Panchayats has a projected cost of $6B and will be totally operational in two years time.
In May 2012, Indian Television’s Digital Edge reported: “A total of 1,47,463 ( 59.49 % ) out of a total of 2,47,864 village Panchayats had been covered with broadband connectivity as of March 2012.
A rural Wire-line Broadband Scheme has been launched under Universal Service Obligation Fund (USOF) to increase broadband penetration in rural and remote areas. Under this scheme, BSNL will provide 8,88,832 wire-line broadband connections to individual users and Government Institutions over a period of five years. As on March 2012, a total of 3,58,978 broadband connections have been provided.”
http://www.indiantelevision.com/headlines/y2k12/may/may24.php
Perspective and Conclusion
While lots of people say government should get out of the way and let the private sector take over industrialization and information infrastructure in India, Sam believes that most companies won’t take on those projects due to uncertain ROI and capital expenses. In sharp contrast, the Indian government now has the political will to move forward with its innovation agenda.
Let’s hope so.
Here are three incisive comments from very respected sources, plus this author’s opinion and a rebuttal:
1. Madhu Pitke, an IEEE ComSoc member for several years who is helping expand its activities in India
“Communication in India has been, until recently, under the total control of government. In the 90s, with the liberalization of the economy, mobile communication has caused a revolution in India. There are probably be more than 700 million mobile phones now. The main reason has been affordability. However, broadband communication has yet to make significant inroads into the village.This is changing rapidly with the emergence of new low cost technologies and the several initiatives undertaken by the government. Fiber networks have reached areas that are within a 10 to 20 km from a large section of the 600,000+ villages. A new Gigabit National Knowledge Network – NKN (Sam Pitroda’s initiative) is being set up to provide broadband connectivity to schools and other educational institutes throughout the country. NKN is also expected to play a key role in taking the broadband to the villages. This is further aided by the goverment’s plan of making available low cost tablets (Aakash) for around $ 50 to each school student.
The problem to be tackled is providing an affordable, user friendly access solution which in my opinion is already on the horizon. About $50 of fixed cost per connection and a monthly rental of about $5 for unlimited use of the broadband (2+Mbps). I hope to write a separate article on this some day.
Meanwhile, it’s true that the Panchayats (local government bodies) are responsible for providing (wireless broadband) connectivity to the villages…. ultimately.”
Alan’s comment on Panchayats providing last mile wireless broadband to the villages: I don’t believe they have the IT/wireless telecom skills or experience to select and deliver the appropriate wireless broadband access network along with the compatible/ matching wireless devices from different vendors. Even if they did complete the job, the result would likely be a proliferation of technologies and frequencies used throughout India, which would make it prohibitively expensive to standardize on mobile devices for the villagers/population. Those wireless devices (fixed or mobile) would have to be ultra low cost as villagers don’t have income to pay $500 or more for a smart phone/device.
Sam Pitroda’s rebuttal: Here is an attempt to clarify the confusion raised about Panchayat provided last mile wireless broadband access to villages in India.
About the role of IEEE ComSoc (by Madhu): “It has helped the communications engneering and academic community (including the students) well informed of the progress in research and development and prepared them for dealing with future challenges through the large number of conferences, workshops and lecture meetings throughout the country.”
2. Suhas Patil, a colleague and friend of Alan’s for almost 30 years, Prof. Patil set up Alan’s 6 week business development trip to India in Nov-Dec,1990. A former Professor at MIT and the University of Utah, Suhas is the founder of Patil Systems (later renamed Cirrus Logic) and the CEO/Chairman of Cradle Techologies (with offices in Puna, India and Mt View, CA).
“Lots of success for India’s telecom revolution, but credit for it should not go to the Indian government. They came to opening the communication segment kicking and screaming. The advocacy role that TiE (and maybe US government) played in persuading the Indian government to open this segment. Again, there are Department of Information and Electronics changes in the (government issued) rules that play havoc with investment. The Ministry of Finance is now proposing a retroactive tax, which would be very damaging to those who have taken the risk of investing in India (infrastructure developement).”
Editor’s Note: A recent article in the NY Times corroborates Mr. Patil’s view expressed above, especially regarding the proposed retroactive tax.
India’s ‘Telecom Revolution’ Turns Ugly, May 4, 2012
Facing new regulation and retroactive taxation, telecommunication companies in India are revolting – foreign companies are pulling out of the country, local executives who were once cozy with government are publicly condemning official policies, and several operators are suing or threatening to sue the Indian government.
“We have probably the most destructive regulatory environment virtually since the inception” of this sector, said Sanjay Kapoor, chief operating officer of Airtel’s South Asia operations, during a meeting Thursday of telecommunications operators in New Delhi organized by the Cellular Operators Association of India. “The recommendations are flawed and retrograde, regressive and uncertain in a fashion that it would irreparably harm consumer interest.”
India’s Finance Ministry said during the budget announcement this year that it plans to retroactively tax foreign acquisitions into India, a plan that seems aimed at Vodafone of Britain, which could owe several billion dollars. Vodafone is fighting the Indian government in international courts, and other foreign companies, including telecom operators, could follow suit, deal-making experts say. Vodafone’s chief executive attended the Wednesday meeting but did not speak publicly.
Already, telecom operators are shutting shop in India.
http://india.blogs.nytimes.com/2012/05/04/indias-telecom-revolution-turns-ugly/
Basant Khaitan, a life long colleague and friend of Alan’s who spends considerable time in India with two start-up companies he’s involved with there.
“India will become a large market but one has to have patience (relative to fast growing economies like China, Brazil, Russia, etc.) I have often said China is a country which has a high and different trajectory than others. The Indian Government should actively do whatever it can to provide for BB infrastructure. My considered judgment is India’s broadband subscriptions will grow about 15-20% a year. That’s not a bad growth number by any stretch, but the current base is small for a country like India.
Even if Government somehow manages to implement the so called NKN I, personally, remain skeptical about dramatic growth in broadband use. Less than 4% of Indian households have broadband service. ARPU for most (500M+ out of about 650M) cellphone users is less than $4 per month); these users don’t have a smartphone and often are not capable of reading or sending a text message. I am not sure how many will just shell out even $5 extra each month for Internet which they barely know about. I am also equally skeptical about $50 tablet. It is also one of those government hypes; over-promised and grossly under-delivered! I sent my application online to get one about 8 months ago. As of today, I have not even received an acknowledgment of my application. My Indian friends are living the same experience.
The problems are education and cultural including leisure time. Much of growth in Internet usage is due to the educated class (high school or beyond). Corporate use is also growing but it is asymmetrical. Government sector including many government-owned industrial enterprises have also been quite slow to adopt Internet. For every Sam Pitroda you will come across at least 20 senior officers who barely use the Internet.”
References:
http://www.sampitroda.com/index.php?option=com_content&view=article&id=21&Itemid=127&lang=en
http://iii.gov.in/
http://iii.gov.in/index.php?option=com_content&view=article&id=283:broadband-to-panchayats-whitepaper&catid=49:reports&Itemid=37
http://railwaymodernisation.gov.in/
http://iii.gov.in/index.php?option=com_content&view=article&id=286&Itemid=205
http://www.indianchild.com/panchayats_system_india.htm
http://www.indiatechonline.com/it-happened-in-india.php?id=616
http://www.indiantelevision.com/headlines/y2k12/may/may24.php
http://www.iloveindia.com/indian-heroes/sam-pitroda.html
http://telecomlead.com/inner-page-details.php?id=8828&block=News
http://india.blogs.nytimes.com/2012/05/04/indias-telecom-revolution-turns-ugly/
Cisco to increase Market Share in Developing Countries hit by Global Economic Slowdown
Cisco Systems will take advantage in the current slowdown in telecom-equipment spending by investing in emerging markets to expand its market share, CEO John Chambers told CNBC on June 22nd.
The information technology company’s business is growing in some emerging markets and Cisco is taking a longer-term approach than the next few quarters to see the results of its investment, Chambers said in an interview at the St Petersburg International Economic Forum.
Cisco invested in Russia over three years ago and its business in the country grew by 50 percent last year and it has increased “in the high teens” so far this year, according to Chambers.
“You can actually pick up more market share gains when things are slowing or right before they’re picking up than you do in normal times, When we see things starting to slow in an area that’s actually when we may invest more aggressively,” Chambers said. “We see the emerging economies not only as being able to grow … faster than our traditional business but we see them as an opportunity for us to begin to talk about how do you change the whole economy,” he added.
While developed countries’ governments did cut spending on IT around 15 months ago, continuing to reduce investment in the area is not a good strategy for these governments because the quality of their services such as healthcare, education, security of defense would drop, Chambers said.
Read the complete article & watch the interview at: http://www.cnbc.com/id/47916867
Comment:
We were disappointed that Chambers did not name the technologies for the emerging markets that Cisco is investing in. As Cisco has no presence in wireless infrastructure (other than mesh WiFi) or mobile computing, we wonder where the company will pick up market share.
Healthy Growth in N.A. Home Networking Devices led by MoCA (Multimedia over Coax)
Introduction:
Infonetics Research recently released excerpts vendor from its latest Home Networking Devices market share and forecast report.
HOME NETWORKING DEVICE MARKET HIGHLIGHTS:
•Global sales of home networking devices grew 20% in 2011 from 2010, to $7.98 billion
•Infonetics expects a cumulative $43 billion to be spent on home networking devices over the 5 years from 2012 to 2016, as the growth of tablets and other devices in home networks necessitate additional connectivity options
•MoCA (multimedia over coax) embedded set-top boxes (STBs), FTTB optical network terminals (ONTs), coax-Ethernet adapters, and WiFi broadband routers are driving growth in home networking device market
◦Cable operators and telcos in North America, especially Verizon, are increasingly using MoCA devices to deliver services like whole-home DVR
•D-Link extended its revenue share lead in the highly competitive broadband router market, followed by NETGEAR and Cisco
ANALYST NOTE
“Tablets, connected TVs, digital media players, and a growing list of other devices are driving sales of home networking devices, and this is nowhere more apparent than in North America, which captured 37% of networking device revenue in 2011,” notes Jeff Heynen, directing analyst for broadband access and video at Infonetics Research. “We expect the demand for broadband peripherals, especially those with integrated MoCA chips, to continue to increase globally as operators in all regions roll out new home automation, energy management, entertainment, and communications services that require high-end networking devices.”
To buy the report, contact Infonetics Sales: http://www.infonetics.com/contact.asp.
Comment & Observations:
It’s interesting to note the dominance of MoCA over HomePNA in Home Networking, despite it’s higher cost. HomePNA operates in the 4-36 MHz frequency range, whereas MoCA runs over a 50 MHz wide channel in the 975 to 1525 MHz range, which requires a (presumably) more expensive RF components. MoCA home networks use existing coaxial cable in the home to send information between devices. In N.A. most homes are coax wired, and Verizon as well as MSOs are taking advantage of that to deploy MoCA.
We also don’t see much of IEEE 802.11n or ITU-T G.hs deployed in home networks, despite the tremendous hype leading up to their respective standardization.
Related Infonetics Report: Pay-TV Services and Subscribers
Infonetics Research released excerpts from its latest Pay-TV Services and Subscribers report, which forecasts and analyzes the telco Internet protocol television (IPTV), cable video, and satellite video services markets.
PAY-TV MARKET HIGHLIGHTS
. The global pay-TV market, including cable, satellite, and telco IPTV video services, totaled $261 billion in 2011 and is forecast by Infonetics to grow to $371 billion by 2016
. North America is again the highest-value video market due to high ARPU, but Latin America and Asia are gaining ground as a result of expanding subscriber bases
o Case in point: Mexico’s América Móvil’s pay-TV subscribers and revenue grew in the triple-digit percents in 2011 from 2010; KT’s grew in the double-digits
. DirecTV and Comcast remain the global market leaders for pay-TV revenue and subscribers
o DirecTV enjoys the highest ARPU due to the high take rate of its value-added services and premium content such as the NFL Sunday Ticket
o Comcast is the global pay-TV subscriber leader, with over 22 million subscribers in 2011
. In 2011, the top 20 pay-TV revenue leaders accounted for 50% of the revenue, while the top 20 subscriber leaders represented just 30% of subscribers
ANALYST NOTE
“Cable video still makes up over half of the global pay-TV market, but revenue growth is decelerating due to a slowdown in new subscribers, especially in the lucrative North American market, as competition from satellite and IPTV operators intensifies and as OTT offerings from Netflix, Hulu, and others siphon away a small, but growing number of households,” notes Jeff Heynen, directing analyst for broadband access and video at Infonetics Research.
Sprint to extend Business Ethernet coverage in U.S. and Overseas- 143 markets & 38 countries!
Perhaps many readers were wondering why SPRINT was upgrading their core network backbone. (See Sprint to Scale Core Network to 40G/100G .. on this website). SPRINT is perceived by most folks as a wireless carrier that’s behind the curve in deploying LTE (they incorrectly chose WiMAX as their “4G” technology). That widely believed perception is not accurate as SPRINT has ALWAYS been a well respected wireline carrier. For over 30 years SPRINT has offered wireline public data network services to enterprise and government customers. Those services have included X.25, ISDN, Frame Relay, IP VPN and (recently Business Ethernet).
The 3rd ranked U.S. telco has just announced a major expansion of its Business Ethernet (AKA Carrier Ethernet, EoC, EoF and other names) coverage for enterprise and wholesale customers in the U.S. and abroad. It plans to more than double its U.S. footprint to 143 markets while expanding service to Argentina and Poland overseas. SPRINT now delivers a variety of Business Ethernet services to 38 countries. For more information, please visit: http://www.sprint.com/business/resources/FactSheet_EthernetServices.pdf
A Sprint spokeswoman cited “strong” demand for Business Ethernet, which provides dedicated and aggregated speeds from 2 Megabits up to 1 Gigabit per second. With lots of aggregated 1G Ethernet traffic (as well as other traffic types like IP VPN), one can understand why the telco is upgrading their core network to 40G/100G as described in my previous article.
Introduced five years ago (and based on the IEEE 802.3ah Ethernet First Mile standard of 2003), Carrier Ethernet access is geared for businesses and Sprint’s wholesale partners. Outside the U.S., Sprint currently offers Ethernet in 36 countries including Brazil, Canada, China, India and many European countries. Businesses can now choose from 18 aggregated and 16 dedicated Ethernet speeds.
“Aggregated Ethernet access can provide a cost-effective alternative to traditional TDM access, while Dedicated Ethernet access expands easily to meet specific customer bandwidth needs, offering fixed-rate and fractional (burstable) billing,” Sprint noted in a press release (see url below).
Stephanie Greenwood, a spokeswoman for Sprint, said the company doesn’t reveal the number of Ethernet customers or total sales tied to such services. However, she noted customer demand has been robust. “We knew customer demand would be strong and we had expectations, which have been met,” she said. For more information, please see the press release:
And an earlier article detailing Sprint’s Business Ethernet roll-outs several months ago:
Sprint to launch Business Ethernet service in New U.S. and Global Markets
Sprint to Scale Core Network to 40G/100G and later 400G with Ciena’s 6500 Packet-Optical Platform
As part of its Network Vision program, Sprint will be able scale its core network initially to 40G and 100G, and later to 400G b/sec by using Ciena’s 6500 packet optical platform. The updated network, powered exclusively by Ciena, will enable Sprint to enhance transport network scalability, cost and performance. It will also enable Sprint to support growing demand for wireless and wireline high-speed data service offerings, reaching core network speeds of 40G and 100G today with the ability to scale to 400G and beyond in the future.
Iyad Tarazi, VP of Network Development & Engineering, Sprint, said that with Ciena’s coherent optical technology, “we are able to expand our network to address growing demand for high-speed data services today, with a built-in path to deliver higher-speed data services in the future.”
TELECOM-PRO Comment: That 400G transmission will be needed soon for core networks is a startling revelation, since 100G is not yet widely deployed. Ciena had earlier announced that BT (UK) would be a 400G customer.
Alcatel Lucent said in May that 20 customers are ready to deploy its 400Gbit/s Photonic Service Engine based equipment when it’s commercially available at the end of the year.
http://www2.alcatel-lucent.com/blogs/techzine/2012/the-400g-photonic-service-engine/
Huawei’s new 400G DWDM system provides a capacity of up to 20 Tbit/s over a single fiber (C-band) and a transmission distance spanning 1,000 km without electrical regeneration.
Some pundits are even talking 1Terabit optical transmission will be needed soon in the core network! We find that very hard to believe. While the core/backbone network increases capacity, there appears to be a huge lag in providing fiber to cell towers and commercial buildings which would result in higher speed mobile backhaul and business communications (Internet and private line/virual private line). We also think that inter-(telco) office links need to be upgraded to 1G/40G before we see a real need for 100G/400G in the core. So we believe that upgrading telco backbone networks to 400G and beyond is premature at this time.
Ciena brings SDN functionality to new network architecture- OPn (July ComSocSCV meeting)
Ciena has introduced a networking platform that includes many of the principles of software-defined networking (SDN) to support full programmable switching using application programming and network-to-network interfaces. OPn is designed to provide superior network functionality at the control plane by making networks more responsive to applications and services such as VoIP and network virtualization.
OPn spans Ciena’s optical and packet layers and will involve programability at multiple layers of the network, enabled both through application programming interfaces (APIs) and through network-to-network interfaces that are “subtly different,” said Ciena CTO Steve Alexander. OPn will also involve bypassing certain network functions, thereby simplifying data forwarding plane functionality.
Every major vendor is declaring an SDN plan, it seems, and there might be a fight brewing over who gets to provide the control plane that will reach into multiple layers of the network and orchestrate tasks such as moving virtual-machines.
http://www.lightreading.com/document.asp?doc_id=221843&
SDN will be the focus of the IEEE ComSocSCV July 11 meeting in Santa Clara, CA (organized by this author):
Software Defined Networking (SDN) Explained- New Epoch or Passing Fad?
Abstract
After several years of research, Software Define Networking (SDN) has finally become a reality. At this year’s Open Networking Summit, Google announced it had already deployed its own SDN design in the backbone network that interconnects all its Data Centers. NTT and Verizon hinted that they’d deploy SDN soon, while network equipment vendors indicated they were committed to the concept. IT executives and managers are also taking notice. One pundit predicted a ‘new epoch’ in networks based on SDN- for data centers, campus networks and WANs. But what exactly is SDN and the associated OpenFlow protocol that the Open Networking Foundation (ONF) is standardizing?
Speakers
- Guru Parulkar is the founding Executive Director of Open Networking Research Center
- Dan Pitt is an Executive Director at the Open Networking Foundation
More info at: http://www.ewh.ieee.org/r6/scv/comsoc/index.php#current
FT: Vodafone and Telefónica to share their mobile networks
Vodafone and Spain’s Telefónica, which operates the O2 mobile service in the UK, will share their cell towers, masts, radio equipment and local transmission kit in a 50/50 joint venture aimed at improving user coverage and accelerating the development of new fourth-generation (4G) mobile services. The agreement could reduce the companies’ UK mobile network costs by 25 per cent, producing combined savings of more than £1bn by 2015, said Emeka Obiodu, a telecoms analyst at Ovum.
“There is the obvious possibility for this arrangement to be extended into other important European markets in which Vodafone and Telefónica compete – Germany and Spain for example,” said analysts at Espirito Santo. “The agreement has the potential to significantly improve network quality, speed to market with 4G, lead to much better cash generation, and enhance returns on capital in the UK market for both companies.”
The new joint venture between Telefónica (O2 in the UK) and Vodafone – which will not affect the way they compete for customers – is an extension of a collaboration agreed in 2009, which did not cover all sites or radio and local transmission equipment.
The companies said the deal will create one grid of 18,500 cellular sites, allow indoor coverage of 98 per cent of the UK population with second and third-generation wireless technologies by 2015, and 98 per cent population coverage with fourth-generation technology by 2017.
“Our motivation is the fact we have 4G coming round the corner,” said Guy Laurence, chief executive officer of Vodafone UK. “It was a natural point for us to do this because we have to replace equipment anyway. It makes sense to do so at this inflection point.”
This sharing of cellular network infrastructure could serve as a blueprint for similar deals across Europe, as wireless telcos search for ways to reduce cost and add capacity. Europe’s largest mobile phone companies are examining fresh ways to trim costs in a market beset by rising investment demands, increased regulatory pressure and weaker consumer spending.
http://www.ft.com/intl/cms/s/0/be188e8e-b069-11e1-a79b-00144feabdc0.html#axzz1xDIBXEV4
AJW Comment: This sharing of cellular infrastructure has been talked about for a long time and is now finally happening in the UK and some places in Europe (see below). But it doesn’t appear likely in the U.S.- at least not with the 4 leading mobile operators- VZW, AT&T, Sprint or T-Mobile. Why not?
NY TImes reports:
“The costs of building LTE networks in saturated European markets has also prompted Telenor, a Norwegian operator, and Tele2, a Swedish operator, to merge their networks in Sweden. In Germany, both O2, the nation’s No. 3 mobile operator, and E-Plus, the No. 4 owned by KPN of the Netherlands, are examining venture options for their businesses.
“As network quality perceptions are becoming more about how fast and reliable networks are in any location rather than who has the best coverage, there is less and less logic in every operator in a market having their own entirely independent network infrastructure,” said Philip Kendall, an analyst at Strategy Analytics in Milton Keynes, England.
Mr. Dunne, the O2 chief executive, said the operators would investigate ways to cut up to 10 percent of their combined cellphone masts. In a note to clients, Sanford C. Bernstein & Company, a New York investment fund manager, said the network venture could generate up to 1.5 billion euros, or $1.9 billion, in savings for each operator. The network venture aims to help O2 and Vodafone keep pace with Everything Everywhere, which was created in 2010 and displaced O2 as Britain’s No. 1 operator.”
