Nortel banks on carrier VoIP amid rumours of bankruptcy

Nortel Network Corp. continues to forge ahead with its key growth areas, particularly the carrier voice over IP (VoIP) and applications business, despite speculation the telecommunications equipment giant is exploring bankruptcy protection. This market represents significant potential for the firm as only a small percentage of traditional telco lines have made the jump from TDM to IP.Samih Elhage, president carrier VoIP and applications, says Nortel is still considered the number one player in the carrier VoIP, has been for the past six years, and plans to hold that ranking. He adds that despite the decline in spending from service providers, this area represents growth for the company in the future."I believe this business will continue to be a key segment for service providers for years to come driven by fact that only 5% of the TDM lines have been converted over to IP," he says, noting that this technology is required to convert to communications over broadband infrastructure.The downturn in the global economy is undoubtedly going to have a negative impact on vendor sales, but Elhage says service provider spending may simply be shifted to areas where they can generate more revenue.He acknowledges that spending on the network core will be less, but this money may be moved to areas such as applications and multimedia where higher revenue can be gained."The spend is shifting from operations side and network evolutions to more revenue generating ," Elhage says, noting that the voice over broadband solution can drive more revenue. "The carrier hosted business solutions would allow them to drive additional revenue and this is where more of the spend will happen."To maintain its leadership position in this market, Nortel plans to evolve its offering from being product oriented to one that is based on an end-to-end solution. Customers are no longer looking to buy a switch, a media gateway or a session border controller device - they want to buy a voice over broadband solution."So, we've evolving from TDM to VoIP to telephony applications servers, from infrastructure to software and applications from products to solutions," Elhage says of Nortel's strategy going forward.Through the carrier VoIP and applications business unit, the company is selling five primary systems. The consumer voice and multimedia solution enables service providers to tap into not only voice over broadband, but also allows them to add in video capabilities. Elhage says Nortel is seeing aggressive growth in this area.The second element is the business voice and multimedia system. This solution gives the enterprise the ability to "outsource their voice or communications infrastructure," Elhage says. Nortel worked with British Telecom to implement this type of solution for one of the UK government's departments.Migrating TDM infrastructure to VoIP and transit and multimedia connect are the next two lines of business in this group. The Nortel executive acknowledges these two product categories are seeing flat growth as service providers delay spending as a result of the economy. There are, however, specific pockets around the world where these products will continue to make sense, Elhage notes.The applications portion of this group is newest of them all and represents solid opportunities in the future. The unit is still at an "embryonic stage" but is "driving new opportunities", according to Elhage. Non-voice applications such as video and mobile advertising are two areas the company is exploring and are made possible because they sit on top of the VoIP-based infrastructure.Despite the ongoing restructuring and financial set backs, he insists Nortel is still performing quite well. "We shipped more than 8 million SIP (session initiation protocol) lines and since the beginning of the year we achieve more than 70 new customers," says Elhage, adding the company also reached a major milestone in hitting 100 million VoIP ports.The company is also continuing to win business from small carriers. The company has achieved an 80% win rate for the Call Server 1500 product which allows small networks to migrate from TDM to IP.So amid rumours of Nortel exploring bankruptcy protection, a warning of delisting from the New York Stock Exchange and a never-ending restructuring, the company appears poised to be a major player in service providers' evolution to new advanced communications services and applications.

Nortel banks on carrier VoIP amid rumours of bankruptcy

News | December 12, 2008

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