Expert View

March 5, 2003
Transition to NGN is must

Pradeep Chakraborty

MUNICH -- Operators today are focusing on reducing the capital expenditure and bring costs under control. The other driver is building up an NGN network, that allows bridging the gap between carriers and enterprises. Convergence Plus recently caught up with Daniel Rui-Felicio, president, carrier sales, Siemens IC Networks, in Munich, Germany, to find out how viable are NGNs in today's depressed telecom market. Excerpts from an interview.

Convergence Plus: There seems to be a lot of gap between rhetoric and the actual use of NGNs. Why?

Daniel Rui-Felicio: The analysts presentation has clearly covered the percentage of revenues invested in the market during the last years. The operators have focused on reducing the capex in the strongest possible way, and bring costs under control. The other driver is clearly the complexity to build up an NGN network. To that, add the delay in the investment in NGN networks.

CP: Therefore, in this depressed telecom market, NGNs can provide players with new opportunities, revenue streams and services. How quickly can this happen?

DRF: The transition to an NGN network is must. Nowadays, when you have to go by the service, you always have to bridge the gap between voice and data services. Here again, you are still dealing with two networks. You have to bridge the gap between the carriers and the enterprises. That is really hindering the provision of competitive services to the end users. There are clear arguments for IP based technologies as data transmission increases a lot.

CP: Do you think that NGN is viable, given the current trends in the use of data?

DRF: Yes, I think it is must. People do talk about the fact that the Internet usage has slowed down a lot. That is correct. However, there is still enormous growth. Every service provider, whether he is pushing the service or not, will have to deal with this tension between the volatility and the high amount of data that he will have to provide. In addition, that's what forces him to rethink on his investment and to optimise his network infrastructure.

CP: Why is it that whenever there's all this talk about data, the Internet has to come in? What if the Internet was not in the picture? Is there a need to go away from that model, considering what has happened over the past two to three years?

DRF: I think there is! The Internet protocol is a symbol of availability of this network to everyone. That's what made it explode so much. You could be talking about closed networks. However, I don't think that a mesh of closed networks would bring about the same explosive growth in information transport as the Internet protocol has brought about.

CP: What would be the key drivers of NGN?

DRF: I recently had a chat with a mobile service provider, and asked him a question: where is the growth in your business coming from? As you know, service providers have had tremendous growth. However, if you look at their business models and their margins, it is not better than that of the fixed service providers. Nevertheless, it is convenient to use and fantastic!

I further asked him: Where do you see the future? Services, yes! Very clearly, applications, yes! So how do you find 'the' killer application? He said: There is no clarification. However, there is a need to be flexible, and develop and test new applications. You must be able to test those applications without spending $10 million in being able to provide the service. The idea is: you have a platform, we are there with a 1/10th of the cost than in the past. As a service provider, you are able to provide the service, test it, see if it picks up, and with time, increase it. The goals are very different from country to country and from market to market.

Now, this person, from a renowned mobile operator, also said they were working with partnerships. I was interested as we have our ReSurpass model. He said that we needed to open up our platform to application development, and to the people who come up with these ideas. We have over 20 partners now. There are a multitude of applications. The business model is now becoming different. It has now become much more dynamic. That's why the operators are rethinking their partnerships.

CP: How many NGNs are currently operational?

DRF: We have 61 NGNs running. All the relevant operators know that they have to go in this direction. We also have many projects in commercial use with the operators. I am convinced this is picking up speed.

CP: How useful will be NGNs for the IXCs to leverage their core IP/ATM networks to carry voice?

DRF: It all depends a lot on the business models. If the carriers are not able to define the business models, they can be trapped in a utility model. Nevertheless, yes, NGNs can be a good solution for the IXCs.

CP: How easy or difficult it is to integrate wireless with NGNs, especially in the context of 3G services?

DRF: It is already happening with Telemar in Latin America -- the integration of fixed and mobile. Telefonica is also doing it. Operators are providing lot of services, including billing. We are seeing a real pick-up in the market. It will also for 3G services.