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Shifting Perspectives – the 2013 Alcatel-Lucent Technology Symposium

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The week that began on Monday, July 9, 1962, was marked by two events that would still resonate around the world more than 50 years later. The second of these events was that, on Thursday, July 12, a band played their first ever concert together at a small club on London’s Oxford Street. They would later go on to become known as the “greatest rock and roll band in the world”: the Rolling Stones.

48 hours earlier, on Tuesday, July 10, a rocket blasted off from Cape Canaveral carrying a satellite not much bigger than the beach balls being played with on the nearby Florida beaches. The satellite was Telstar, and it heralded the beginning of a new era in global communications, being the first orbiting platform to relay telephone calls, television images and data.

Though long since out of commission, Telstar 1 is still up in space (and, for the record, the Stones are still rolling), but its backup ‘twin’ hangs today from the ceiling of the global headquarters of Alcatel-Lucent’s Bell Labs in Murray Hill, New Jersey. Earlier this week, a group of financial analysts, journalists and industry analysts got to see it, along with many of Bell Labs’ other historic innovations at the start of the 2013 Alcatel-Lucent Technology Symposium.

Each year the Technology Symposium presents these invited guests with a ‘deep dive’ into the company’s strategy, presenting the thinking behind the company’s product direction and longer-term vision of the still-evolving communications future.

CEO Michel Combes at Alcatel-Lucent's 2013 Technology Symposium

For this year’s event, which concludes today, the scope has taken on even greater significance as Alcatel-Lucent drives The Shift Plan further, industrially repositioning the company as a specialist vendor of IP Networking and Ultra-Broadband Access. However, that scope becomes even more significant when considering the dramatic changes taking place in the communications industry as a whole, something Alcatel-Lucent CEO Michel Combes stressed in his opening keynote address:

“What was working just five years ago for service providers doesn’t work anymore,” he said, pointing out that business models have been forced to regenerate as voice and text services no longer rely on their “legacy profit pools” and new entrants launch new ways of providing these basic telephony services.

Broadband demand, Michel pointed out, has sharply increased while the value ‘per-bit’’ has decreased, while in mobile access, the growth of new mobile users has reached a plateau indeveloped countries while revenues are low in developing markets. And the relationship between commercial providers and the consumer is changing as new entrants challenge existing service providers with attention-grabbing offers.

“I would argue,” said Michel, “that these challenges are the symptoms of a dramatic industry renewal,” demonstrating how, in markets like North America and China proactive investment in broadband access, the close cooperation between device manufacturers and application providers to create appealing content, creative and persuasive service marketing and the investment in new cloud services is creating a brand new value creation model.

It is into this model that Alcatel-Lucent is applying itself, taking a lead to specialize in areas its customers are or soon will be moving into themselves. One such area is IP networking: Basil Alwan, president of Alcatel-Lucent’s IP Routing & Transport business took the stage to outline why the company has placed such a significant bet on this technology.

The starting point for this rationale is the number of devices you and I as consumers own today and are likely to do so in the future that connect to a network – up to as many as ten devices. Couple that with the ultra-fast access of those devices to the network, and IP-based networks quickly become essential in dynamically providing reliable services that match the scale, need and experience expectations of each user, whether that user is the teenager checking Facebook every five minutes, the film fan wishing to download 4k movies, or the fire department using 4G LTE video to manage a rescue operation.

Basil Alwan, President of IP Routing and Transport for Alcatel-Lucent

In his presentation Basil Alwan outlined how service providers are adapting the way they provide their services, striking the right balance between being effective for their customers and efficient for their balance sheets. The combination of cloud and the network, Basil explained, along with the adoption of Software Define Networks and Network Functions Virtualization, are – in Alcatel-Lucent’s view – the cornerstones of new network designs, networks that are faster and more agile, as previously hardware-based functions become software-based, and that are intelligent enough to make decisions dynamically to provide the most optimal service for the end users – whether that end user is an individual consumer with a tablet device, or enterprises like banks which require vast, secure network resources just to manage, for example, ATM machines.

With IP networking on one half of Alcatel-Lucent’s equation as a specialist vendor, Ultra-Broadband Access is the other half of the company’s direction. Dave Geary, president of the company’s Wireless business outlined to the Technology Symposium the importance of being ‘first’: “Operators are investing in ultra-broadband to gain competitive advantage,” he said, pointing out how much of a precious commodity those first dollars are for a mobile operator launching 4G LTE services. “A fast and decisive launch of an LTE service increases market share and unlocks ARPU [average revenue per user],” he added, going on to point out some staggering statistics surrounding LTE adoption – for example that the launch of LTE services is leading to a tenfold acceleration of new device ownership, that LTE is attracting new subscribers at four times the speed of previous wireless technology launches, and that LTE was generating three times more data usage than 4G’s predecessors.

Dave Geary, President of Alcatel-Lucent's Wireless Business

Enabling operators to get to market fast, Dave explained, was the key principle of Alcatel-Lucent’s adoption of its “overlay” strategy for LTE, literally enabling service providers to build LTE networks onto existing infrastructure rather than building new networks from scratch, and in the process addressing consumer demand for capacity and performance.

To bring the opening phase of the 2013 Alcatel-Lucent Technology Symposium full circle, the program returned to Bell Labs, in the form of newly-appointed Bell Labs president, Marcus Weldon, who is also Alcatel-Lucent’s Chief Technology Officer. Marcus built upon the presentations given by Michel, Basil and Dave – as well as a guest presentation from Stephen Bye, the CTO of Sprint – by diving into greater detail about the role virtualization and the cloud will play in addressing both the needs of IP networks and the access networks that feed off them.

Marcus Weldon, CTO, Alcatel-Lucent and President, Alcatel-Lucent Bell Labs

Marcus examined the market impact network virtualization is having on the telecommunications industry. In particular, he explored the profound intersection of the network and the cloud, and the emergence of Software Defined Networks in transforming data centers as they become shared and flexible infrastructures that dynamically allocate “slices” of capability to each individual user.

Virtualization of certain network functions – especially those with, arguably, the biggest impact on the end user, such as voice, packet or video delivery controls – and their move to the cloud will, Alcatel-Lucent believes, have a significant effect on how networks are built and how services generate money.

Michel Combes, in his keynote, pointed out that operators can deploy services in a matter of hours or days, and roll them out swiftly across territories. Marcus Weldon, in his presentation, drew attention to how this agility forces a rethink of IT and network design to evolve the infrastructure itself into a service in its own right.

Which brings us back to what Alcatel-Lucent is doing under The Shift Plan. In all their presentations, Michel, Basil, Dave and Marcus all demonstrated how Alcatel-Lucent is positioning itself to lead the next quantum developments in the marketplace. In particular, Michel pointed out that positioning the company around IP Networking and Ultra-Broadband Access requires a cultural and operational shift, with many components evolving, from R&D at lab level to the encouragement of an entrepreneurial, start-up mentality, with businesses like the Nuage Networks subsidiary in California, and the CloudBand business based in Israel.

In previous editions, the Annual Technology Symposium has sought to showcase the breadth of Alcatel-Lucent’s product portfolio. But as that portfolio is deliberately narrowed to focus the company, the 2013 event has shone the spotlight on how, as Michel Combes put it, product differentiation needs innovation and disruption – leveraging existing competence while nurturing new ventures to meet the needs of all customers as they increasingly move towards cloud-based, network-virtualized services providing fixed and mobile ultra-broadband access.

And at the heart of all this is the same genetic innovation capability that turned the world on its head with Telstar. Telstar might, by today’s standards, be considered rudimentary technology. But in 1962 it represented a real revolution. That’s a word we tend not to use these days, as “evolution” is the more comfortable fit. But it’s clear that the technologies being discussed at this year’s Alcatel-Lucent Technology Symposium are, nonetheless, having a truly transformative effect on the way the world communicates. Just as that beach ball-sized satellite did 51 years ago.

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