Telecom Timeout

A blog

December 10, 2009  7:19 PM

How will Huawei rise to be top telecom vendor? It all goes back to service layer

Posted by: Jessica Scarpati
4G, Huawei, LTE, telecom vendors

You can’t dump on Huawei Technologies for being a telecom equipment vendor whose prices are cheap and quality even cheaper. The Chinese vendor is gobbling up European 4G contracts, and Huawei has its sights on North America for LTE contracts.

Market watchers are saying Huawei is winning over carriers by improving the quality of its products while keeping its prices low, raising the likelihood that “Huawei” soon will be spoken in the same breath as Alcatel-Lucent, Nokia Siemens Networks, Ericsson, Juniper Networks and Cisco Systems.

But telecom consultant Tom Nolle, president of CIMI Corp., says there are more pieces on the chessboard that will contribute to Huawei’s rise. Raise your hand if you get lost.

It starts with the service layer.

“This spring, one of the things we pointed out was [Huawei's] service layer strategy,” Nolle told me last week. “It was more visible on their website in the early part of this year than any of the other vendors — more than Cisco, more than Juniper.”

Who cares about the service layer, right? Wrong. Since carriers aren’t making any more money pushing bits around while revenue is capped (as long as there are unlimited voice and data plans — whose bright idea was that?), Nolle says telcos have sought to cut costs by tightly coupling network operations with service-layer architecture.

But most vendors didn’t heed carrier’s calls for service layer strategies in time and put the nails in their own coffins, he says. Software companies jumped in for the kill.  We’re not talking rinky dinky startups either — IBM and Oracle are playing here, Nolle says.

“The major equipment vendors could’ve shut Huawei out of the major markets by simply doing what their customers were asking for, and they did not do that,” Nolle says. “In that subsequent period, lacking any way to increase their opportunity, the operators have become more focused on cost … and some of the operators now believe that network equipment can never solve service-layer problems.”

Up until this year operators were happy to see service-layer solutions come from network equipment vendors, Nolle says. Cimi Corp. is projecting that next year, they will only look at software companies.

Where does this leave Huawei and the rest of the bunch? Competing on price, Nolle says.

“Against Huawei and ZTE, they cannot win,” he said. “If Huawei steps in and starts to win the most strategic of all the current deployments, which is 4G, and starts to win some big players, that’s going to be very bad for everybody else — and it’s quickly going to become terminally bad.”

December 8, 2009  1:55 PM

TM Forum launches cloud services ecosystem to promote enterprise adoption

Posted by: KateGerwig
cloud computing, cloud-based services, TM Forum

The TM Forum has rallied major industry players to form a cloud-based services ecosystem to look at — and remove — impediments to the uptake of cloud services and technology by enterprises.

With the focus on major global enterprise uptake of cloud services, the Forum started off its annual Management World Americas conference in Orlando with a star-studded lineup of companies backing its cloud initiative, including the likes of Alcatel-Lucent, AT&T, BT, Cisco, EMC, HP, IBM, Microsoft, Nokia Siemens Networks, Telstra, Amdocs, Microsoft, IBM and CA, as well as enterprise buyers Commonwealth Bank of Australia and Deutsche Bank.

In an industry often surrounded by hype, cloud services have more hype than any other issue surrounding them, said TM Forum President Martin Creaner. The TM Forum wants a major place at the table to separate the hype from enterprise-buying reality and plans to bring buyers and sellers together to sort out the issues.

So make room for another acronym, because at the center of TMF’s effort is the Enterprise Cloud Buyers Council (ECBC), whose purpose is to understand the needs of large global cloud buyers. Key service and technology suppliers will launch programs designed to remove barriers to the growth of commercial cloud services.

“There are no common benchmarks or best practices, and there are security issues to address,” Creaner said. ”If there’s a BT cloud failure, customers need to be seamlessly transferred to another provider’s cloud. How that happens is an issue that needs to be addressed.”

Despite cloud hype, the industry is still in the chaotic stage. “We can either watch it form or jump in to help by working with the buyers and the sellers,” Creaner said.

December 4, 2009  8:47 PM

Gaze into the 2010 telecom industry predictions

Posted by: Ddevine
2010, inCode, MVNO, Predictions, smartphones, Telecom, telecom trends

Gaze into's crystal ball to learn what lies ahead for the industry in 2010.

As gets set to close the books on 2009,  we turn our attention to what the future will bring. (As always, we hope the answer is, “Better things.”)

Strategic business and telecom consulting firm inCode recently released its annual forecast of the telecom industry trends that they predict will make headlines over the next 365 days, and over at the mothership, Executive Editor Kate Gerwig has the breakdown of this year’s predictions. From smartphones hitting the skids to a new lease on life for MVNOs, we’ve got the details that’ll give you a head start on the new year.

December 3, 2009  7:53 PM

Ciena OK’d for Nortel optical/CE biz, judges tell NSN ‘too little, too late’

Posted by: Jessica Scarpati
Ciena, mergers, Nokia Siemens, Nortel, NSN, Telecom

So far, the bankruptcy court proceedings for auctioning off Nortel’s assets have been lacking some good old-fashioned courtroom drama for us in the peanut gallery.

Competitor A puts in bid, Competitor B drives it up, someone wins, courts say OK, everyone goes home and puts out press release promising this is a great fit and the merger will be nice and smooth.

Paging Jack McCoy! Please breathe some life into this!

Until this week, the auction for Nortel’s optical and carrier Ethernet business, Metro Ethernet Networks, seemed to be following the usual script. United States and Canadian bankruptcy courts were moments away from approving the $769 million bid for one of the most prized jewels in the fallen Canadian vendor’s crown. The deal would be $530 million in cash plus $239 million in convertible notes, due 2017.

Enter Nokia Siemens Networks, which along with its private equity partner, One Equity Partners, had driven up the bidding while it was still on the chopping block.

But apparently Nokia was hemming and hawing for a week over how badly they really wanted the assets. After declining to top Ciena’s bid more than a week ago, Nokia Siemens decided Tuesday it could pay Nortel $810 million in cold, hard cash, as Reuters reported.

That set up Wednesday’s fight in court, with Nokia Siemens and some creditors arguing the auction should be reopened, in part because Ciena’s convertible securities were overvalued.

After roughly seven hours of argument, testimony and cross-examination, Nortel’s attorney said his team had a reached a deal in the hallway outside the court that would lead to the withdrawal of the last major objection.

Judges in Delaware and Ontario accepted the Ciena/Nortel deal and “declined to hold up the acquisition,” the Associated Press reported.

Guess money doesn’t always talk.

November 24, 2009  12:29 PM

Good MEN are hard to find: Ciena to pay $769M for Nortel’s CE/optical biz

Posted by: Jessica Scarpati
Carrier Ethernet, Ciena, Nortel, NSN, optical networking

From stalking horse to ponying up more than three quarters of a million bucks, Ciena will be taking home most of Nortel’s Metro Ethernet Networks (MEN) business for $769 million, the companies announced Monday.

Ciena was chosen as the winning bidder for Nortel’s optical and carrier Ethernet assets after putting in the original $521 million bid more than six weeks ago. Unfortunately, there’s no Buy it Now button in bankruptcy court and someone drove the bid up for the bankrupt Canadian vendor’s assets.

A little birdie talking to the Reuters wire service seems to think it was Nokia Siemens Networks.

The final bid by Nokia Siemens Networks, which had teamed with private equity firm One Equity Partners, came “very close” to Ciena’s offer, the source said.

Despite the press release love-fest between the two vendors, the tech desk at Barron’s points out Ciena shareholders are not going to be happy with the IOU part of this deal.

The purchase price will be $530 million in cash plus $239 million in 6% senior convertible notes due 2017. The interest rate on the notes will ratchet up to 8% if the stock price falls below $13.17, Friday’s closing price. (Which it already has, by the way.)

But enough of the horse race. What’s next for carriers?

Light Reading says there will be a significant overlap between Ciena/Nortel products, particularly in WDM transport. Editor Craig Matsumoto also points out Ciena will likely get a leg up in the gigabit Ethernet world, but notes the long-term worth of the merger for Ciena is still anyone’s guess.

Whether it’s all worth it to Ciena is still up for debate, though. In the year since Nortel first tried to sell MEN, some of the shine has come off, says Simon Leopold, an analyst with Morgan Keegan & Company Inc.

“Buying this Nortel asset is like buying a used car. You know it’s a used car, but you’re not sure: Has it been in an accident? Is everything working right? We know some talent has left, and we know that the value’s declined. We know it’s damaged goods, but we don’t know by how much,” Leopold says.

November 16, 2009  9:34 PM

Huawei ascends to optical networking prominence in $3.6B market

Posted by: KateGerwig
Alcatel-Lucent, Cisco, Huawei, optical networking, Ovum, ZTE

<Did you see the blaze of light as Huawei’s streaked past Alcatel-Lucent on its way to becoming the top optical networking equipment vendor for the first time in Q3? Upsetting long-term record-holder Alcatel-Lucent, Ovum reported Asia-Pacific markets are tearing up the market segment, especially in China, which Ovum said is propelled by 3g mobile network builds. And when China builds, Huawei benefits. Huawei now leads the optical market by almost 3%, Ovum said.

Clearly on a roll, the Del’Oro group reports Huawei is in second place in the mobile networking market in Q3, still far behind Ericsson, but Huawei’s market share went from 11% last year to 20%.

Overall, the optical networking market is down 10% compared to Q308, but global spending still totaled $3.6 billion in Q3 and a recovery appears to be in progress. Several of the top 10 optical vendors have seen improved revenue (including Cisco, Fujitsu, NEC, Tellabs and possibly Nortel), but ZTE, the other Chinese powerhouse, edged out Fujitso for #4. In the hard-knock life category, Nokia Siemens Networks (NSN) fell from #5 in Q308 to #8th, behind Tellabs, a year later. Comeback-kid Cisco also edged out Ciena to re-enter the top 10.

November 16, 2009  6:07 PM

Want to get married in Vegas? There’s an app for that, says NSN

Posted by: Jessica Scarpati
applications, ARPU, integrated services, mobile devices, Nokia Siemens, Nokia Siemens Networks, smartphone applications, smartphones, wireless, wireless carriers

We’re hearing a lot these days about how carriers are seeing their average revenue per user (ARPU) go down with the advent of unlimited voice and data plans, so they will have to make their money partnering with developers of smartphone applications or themselves offer integrated services.

At SuperCOMM 09, I heard from Michael Mullineaux, marketing manager at Nokia Siemens Networks, who demonstrated an application that would combine location with e-commerce and book an evening in Las Vegas from a mobile device.

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November 5, 2009  7:33 PM

Trouble in paradise: Amazon dumps Sprint for Kindle, falls into the arms of AT&T

Posted by: Jessica Scarpati
Amazon, ARPU, AT&T, kindle, Sprint

Ah, young love. When Amazon launched the Kindle almost two years ago, the company proposed to Sprint Nextel Corporation: Support us! The wireless carrier accepted. They took the solemn vow to be partners in sickness and in health, in good times and in bad.

Although the Kindle was earning Sprint only $2 ARPU, the carrier was still reaping huge profit margins as Amazon picked up most of the operational costs.

But they say one in two marriages end in divorce, right? This couple is no exception. Amazon Kindle Director Russell Baker confirmed Amazon is dumping Sprint for AT&T so that it can support international users, according to FierceWireless.

“Sprint’s network uses CDMA technology, while AT&T’s uses the much more widespread GSM technology … Amazon’s decision to drop the CDMA Kindle is a blow to Sprint, which in the first quarter of the year touted its sales of the Amazon Kindle e-reader device as driving the majority of its 394,000 wholesale additions.”

No word from Sprint yet on this. We hope they’re not drowning their sorrows in a gallon of Edy’s, as we’re prone to do after a bad breakup.

UPDATE: Sprint spokeswoman Stephanie Greenwood responds.

The Kindle DX operates on the Sprint mobile broadband network, so Kindles currently in use or already in the sales pipeline will still be powered by Sprint. Sprint has enjoyed a long and successful relationship with Amazon—since the Kindle first launched. We understand their international strategy and look forward to working with them on future projects.

November 5, 2009  6:51 PM

Video: Service providers don’t have to be swept away by IP tsunami

Posted by: Jessica Scarpati
4G, ARPU, LTE, next generation, supercomm

While tongues were wagging at Supercomm 2009 about and upcoming decision from the FCC on net neutrality, I took some time to sit down and learn more about the long-term challenges telecom operators are facing over the next year.

Brian Wood, vice president of marketing for Continuous Computing, a San Diego-based component manufacturer for network equipment providers, laid out the road ahead from where he sees it.

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October 27, 2009  7:40 PM

Nortel loses another arm as Hitachi steps in for LTE bits

Posted by: Ddevine
4G, Hitachi, LTE, Nortel, wireless broadband

Continuing its bankruptcy-ignited fire sale, Nortel announced that it has struck a deal with Tokyo-based electronics heavyweight Hitachi to part with a piece of its Long-Term Evolution (LTE) business — specifically, “certain assets associated with the development of next generation packet core network components,” according to a press release — for $10 million. Not that it’s trying to be cryptic or anything.

Of course, Hitachi will face lots of LTE competition from other vendors. Despite that, the insolvent Toronto-based vendor said:

Under the agreement, the assets include software to support the transfer of data over existing wireless networks and the next generation of wireless communications technology, including relevant non-patent intellectual property, equipment and other related tangible assets, as well as a non-exclusive license of certain relevant patents and other intellectual property.

Nortel said the agreement excludes legacy packet core components for its global system for mobile communications (GSM) and universal mobile telecommunications system (UMTS) businesses. Its GSM and GSM-Railway businesses are slated for an open auction on Nov. 9.

While Monday’s announcement did drop some new information on the asset front, the song remained the same for Nortel’s embattled shareholders.

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