Alcatel-Lucent’s Vrij says U.S., global momentum will continue

You don’t see too many telecom executives talking about destiny, but Alcatel-Lucent (NYSE:ALU) Americas President Robert Vrij is willing to give fate at least a little bit of credit for Alcatel-Lucent’s recent momentum.

The emergence of smartphones and tablets has created a mobile data boom coinciding with the development of ALU’s next-generation radio and mobile core product lines. U.S. operators’ aggressive pursuit of long-term evolution (LTE) has given ALU a key outlet for that new technology in one of its principle markets. And just as the new mobile networking revolution is set to take off, ALU is ahead of schedule in preparing a new radio access architecture that could fundamentally change the way the industry deploys mobile networks, Vrij said.

He’s not chalking everything up to chance—Alcatel-Lucent played an active role in the events of the last few years—but Vrij certainly won’t dismiss the impact that device vendors and its operator customers made in creating this market.

“As I look over the last two years, I feel our destiny is in our hands,” Vrij said in a recent interview. “We’re seeing growth in almost every single part of our business.”

Alcatel-Lucent has just jumped past Juniper Networks (NASDAQ:JNPR) in the carrier router market, while its recently taken big strides in bringing 100 Gb/s optical transport to market. But ALU’s biggest momentum of late has been in U.S. wireless market, where it will build two of the largest long-term evolution (LTE) network footprints in the world. The Verizon Wireless (NYSE:VZ, NYSE:VOD) LTE radio access network, evolved packet core and IP multimedia subsystem contract is worth $4 billion over the next four years. The AT&T (NYSE:T) deployment is less aggressive at launch but likely will grow to a similar size. And if Sprint (NYSE:S) makes the decision to move LTE later this year as expected, ALU will have three massive U.S. LTE deployments on its hands.

As the wireless industry’s spotlight shifts to North America, Alcatel-Lucent finds itself basking in the light. Alcatel-Lucent still faces considerable competition. By virtue of its Nortel acquisitions, Ericsson (NASDAQ:ERIC) has become a wireless force rivaling its arch competitor. While ALU has a major hand in the advanced network upgrades of the three of the top four operators, Ericsson is the only vendor deploying radio gear with all four.

Without mentioning his primary U.S. competitor by name, Vrij acknowledged Ericsson as serious competitive threat, but he also said he’s willing to pit ALU’s product line against any competitor’s. Ericsson and Alcatel-Lucent have both won pieces of the two major operator LTE deals in the U.S., but Vrij pointed out that ALU has managed to take each contract a little bit further than its competitor. While both vendors won VZW’s radio and mobile core contacts, ALU also took home a piece of the IMS deployment. ALU was on the list of AT&T’s operators IP domain vendors, while Ericsson was not. ALU even managed to upsell AT&T on its network analytics and monitoring platform when the radio contracts were handed out.

“Different competitors can solve the problems of different pieces of the portfolio,” Vrij said. “We have some advantages because of the pure breadth of our portfolio.”

It’s not just Alcatel-Lucent’s current portfolio that gives the vendor an edge, Vrij said. ALU recently unveiled its future wireless architecture, lightRadio, which changes the fundamental design of the network. Big dedicated macro-cells will be replaced by small low-power integrated radio-antennas that can be deployed in clusters or separately to create a highly distributed network. Meanwhile, lightRadio can move the baseband processing out of the cell site entirely, virtualizing it in a private cloud where its resources can be applied to any antenna or any radio technology.

Other vendors are working on similar technologies, most notably Nokia Siemens Networks (NYSE:NOK, NYSE:SI) which is developing an architecture called Liquid Radio. But ALU’s is starting trials in the third quarter with China Mobile on a virtual radio access network deployments that will put even the most complex elements of lightRadio into a live network by year end. ALU plans to start selling its first commercial lightRadio ‘cube’ in 2012.
“We’re talking about a [cell site] no larger than a baseball,” Vrij said. Bell Labs and its partners in the GreenTouch consortium are developing technologies that will make distributed antenna architectures not just zero-footprint but nearly zero-power, Vrij said. “If you listen to the Bell Labs guys and the modeling their doing, we could lower power consumption by a factor of 1000,” he said.