Nortel Networks' Frank Dunn Sees Evolution to Converged Networks

"Telecom is once again a great industry," said Frank Dunn, CEO of Nortel Networks, "because it is clear that there is significant continued subscriber growth globally and that this growth can be tied into GDP growth worldwide." Still, Dunn recognized that carriers are financially stressed for a variety of reasons, not least of which because voice services have become a commodity. Dunn believes the price leaders will continue to be the wireless carriers, carrying larger amounts of traffic and driving down the cost per minute. Margins are being hammered and the future business model for existing services "does not look pretty" The real opportunity, said Dunn, occurs as the industry reaches the convergence inflection point.


Dunn argues that the networks of tomorrow will have a dramatically lower cost than today's infrastructure. He believes carriers around the world have now come to accept the need to evolve to a common packet core architecture as the only way to survive the future. Thinking that it is OK to maintain the status quo with existing networks, Dunn warns, will get them into a lot of trouble. Dunn believes that the deployment of converged networks is now no longer about technology so much as about the regulatory environment.


Regarding the financial outlook, Dunn said Nortel Networks has returned to financial stability and expects to be profitable again soon. However, the big CAPEX budgets from major carriers are not going to return, said Dunn, because no business model could ever support that level of spending again. He believes the spending ratio of CAPEX to revenue for major carriers will remain at the historic levels in the low-teens. Nevertheless, Dunn predicts a dramatic shift from circuit-switched to packet technologies over the next few years. For suppliers such as Nortel Networks, this means more value must be delivered for less money.
http://www.nortelnetworks.com