Executives from Alcatel-Lucent (ALU) presented the company's latest technology roadmaps and innovations at its recent Technology Symposium in (and just outside) Paris. Stephen Carter, Chief Marketing, Strategy & Communications Officer, described the six key trends as ALU sees them:
- Cost Experience Transformation
- The Apps and Content Value Chain
- Critical Network Infrastructure
- Internet of Things
None of these is a particularly new idea but they neatly sum up the key battlegrounds for ALU’s core customer base, the network service provider industry.
The continued evolution of wireless technologies is well documented, as global 4G rollouts will be the focus of attention for the next few years. But ALU has a key interest in the transformation of fixed line broadband as well, having played the leading role in establishing the dominant xDSL technologies over the past couple of decades. In spite of the global predominance of wireless access technologies, it may come as a surprise that fixed access still has a vital role to play, in mature markets at least.
For many years there has been much talk of fiber-to-the-home as the ultimate fixed broadband solution, but the relatively limited commercial deployments of such solutions (such as Verizon’s FioS) have been slow to emerge and, if anything, are showing signs of plateauing rather than becoming de facto alternatives. BT is the latest telco to stumble on its plans for FTTH (or FTTP – Premises – as it prefers to call it): installations during the trial phase are taking seven hours on average, against a target of four, and it is reported that a quarter of installations are taking as long as two days to complete.
There just doesn’t seem to be any obvious solution to the dreaded last mile challenge, which is less about developing ever more advanced communications technologies than about the need to invest in shovels and spades to dig up roads, pathways and gardens. The labour required for such “replacement” wires is pretty much fixed cost, unless anyone is suggesting an unlikely collapse in labour rates; and, as BT is demonstrating, you just never know what physical or organisational obstacles will lie in the way of new wire installations.
ALU thinks it has come up with a viable alternative to FTTH. As part of its High Leverage Network architecture, for which video services are seen as a major driver, it believes that the established copper access infrastructure can be upgraded to support speeds of up to 900Mbps. Key enabling technologies behind this transformation are vectoring (involving the removal of crosstalk), as well as quadruple bonding of copper pairs. Four pairs are not commonly available, but the technology would still provide bandwidth of nearly 400Mbps over two pairs over a distance of 400 metres.
ALU’s major challenge is to convince its service provider customers that any such next gen network investments will generate sufficient return from new service and application revenues. However positive a spin ALU puts on the potential for new data-sapping video services, our reading of service provider strategies is a high degree of caution about any significant net revenue growth impact from such services. As Telefonica noted recently during its investor day, incumbent telcos are projecting very modest revenue outlook (1-4%) for the foreseeable future, in spite of accounting for new service growth globally across wireless and wireline businesses. New network investment will continue but it is driven by competitive dynamics rather than the expectation of discovering a new pot of gold. Whether regulators decisions on next gen network policies, in Europe in particular, can have any impact on the established trendline seems doubtful at best.
Client Reading: Broadband Service Provider Performance Benchmarking: Europe Q4 2010