Convergence Plus Journal

MUNICH -- Siemens Information and Communication Networks' (ICN) is gearing up its product strategy toward next-generation networks (NGN) technology for companies and carriers. In fact, its longer-term goal is to lead the market in next-generation switching and next-generation access networks.

Prem Behl, Editor, Convergence Plus, met up with Anton H. Schaaf, member of the Group Board, Information and Communications Networks, Siemens AG, in Munich recently, and discussed the opportunities in India for ICN and specifically, for NGNs. Excerpts from an interview:

Convergence Plus: Would you like to share with us what you are doing with Bharti's network in India?

Anton Schaaf: I think we are one of their major clients. They are also one of our very good customers I would say. We are delivering a lot of technologies to them. We are delivering switches, transport, access equipment, etc. I would say we are delivering our entire portfolio to them.

We are happy that together with them we are in a position to develop the infrastructure for competitive carriers. We are talking about how we can intensify our operations with them by looking at different business models.

CP: Bharti is a very sound corporate as far as communications services are concerned. Are you going to be working with them for NGNs as well? Is that a part of the trans-migration that will take place with them?

AS: We are planning to do so and are talking with them. It is a normal competitive environment. We have to prove that we are better than the competition. We don't have a fixed relationship with them over a longer period. However, I think they are very happy with our performance and that gives us benefits. We are very confident that we will be able to keep a good relation with them.

CP: Bharti is also extremely good in terms of work ethics and principles. They do have a requirement for expansion of networks. Would you look at providing vendor financing to a carrier like Bharti as well?

AS: Vendor financing is something we will consider if it is required from us. It is not our goal in life to do vendor financing. Our goal in life is to supply equipment. We always judge the opportunity at that particular time and see how the situation is with the company. Do we think they have enough credibility to do so and would they request us to do so? Sometimes, they can get better financing from others. We have also heard a lot in the industry over the last two years that vendor financing was a very nice tool to try to gain market share. But it has to be economical and viable to do so. Now I am not saying that it's not the case with Bharti. However, first of all they have to ask us and secondly, we will have to look at the opportunity at that time.

CP: You are looking at a new business model or at least a revenue-generation avenue that is relatively new and vendors are beginning to look at this. There may be one or two other vendors who may be doing the same thing in terms of being able to manage networks for service providers. Is that something you will consider in India as well?

AS: I think if any opportunity comes, we will consider it very much. This is one of the areas that we think we can add value. We have said it in our strategic goals that we want to be able to run operations and support customers, if required. We have set up an organisation to do so. If Bharti asks us, we are going to consider it very seriously.

CP: Let's look at the public switched networks, which would be the government owned BSNL and MTNL. Orders are generally placed on the basis of tenders and lowest prices. How would you look at that particular market?

AS: The competition is fierce in India, as there are lot of incumbent suppliers. We have been there for a long time. I think it is a very competitive environment. However, we have shown that we can live with it and we can have our market share and profitability.

CP: So, you are prepared to compete on prices as well!

AS: We have been competing on prices in every market around the world. I will say that the mechanism you discussed about in India is very clear. The advantage of this clear mechanism is that you know where you stand, and that you have to come up with a very good price. But everyone must decide what is a good price. There is a saying: If you cannot look forward to lose, you lose. We believe that we can pick our price whenever we are ready to do so.

CP: Continuing with BSNL and MTNL, they have very legacy based infrastructure and would like to migrate to packet-based architecture. Keeping in mind issues like the tendering process, how do you like to encourage them to use NGN?

AS: I think it has to be on performance. We have shown that our solutions can deliver top performance. We can deliver them for good prices in any environment. We can do all of that in a packet environment and I think that there are enough opportunities. We have shown that the VoIP infrastructure can be, for example, an over-layer network on top of the installed layer. Then you have time to clean up the installed layer. You still have the benefits of the VoIP infrastructure.

CP: Reliance Infocomm has recently installed an entirely new network. It claims that it will have very large subscriber base in a very short-term future. It is also talking about the offering for a quantum level of services for customers and subscribers. Have you had any access to supply equipment to Reliance Infocomm?

AS: I think we have been talking to Reliance for a long time now. We have had a discussion with them four years ago. I think we have won an order with them, but I need to check. However, I am not sure on this matter.

CP: Are there any other service providers -- telcos or IXCs in India -- that you have plans to provide IP-based infrastructure to?

AS: There is nothing to my direct knowledge. We have a clear strategy. We are there to serve the market. We are not focusing on any specific type of operators or specific operator. When the incumbents or competitive operators ask us to deliver equipment and infrastructure solutions, we will do it. If there is any opportunity in the Indian market, we will be very happy.

CP: Do you think that NGN has a social implication for India, particularly in the rural markets?

AS: I think one has to be very careful by saying yes or no to that. NGN is a much more cost-effective way to create an infrastructure. That means, the budget to create an infrastructure for the rural applications is very small, but there is a better chance of realising it. An NGN architecture is more cost effective. It definitely lowers the barrier for developing infrastructure in rural areas in India. However, it depends on the Indian government and the operators to say that they want to invest in NGNs. I think we have given them the tools so that they are able to come up with the feasible implications faster.

Anton H. Schaaf, member of the Group Board, Information and Communications Networks, Siemens AG

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