Optimistic mood prevails at global plenary panel

ATLANTA--Despite the topsy-turvy year of record highs followed by record lows in stock valuations for telecommunications companies, growth in demand for Internet access, wireless subscriptions and escalating data traffic continue to be cause for future optimism.

"The reason I am optimistic is that the fundamental drivers are intact," said Ned Barnhold, president and CEO for Agilent, one of the speakers at Sunday evening’s "Global Communications Directions Plenary Panel" at Supercomm in Atlanta.

"The issue today is the imbalance of capacity and demand. You have to work through the excesses and that will happen," Barnholt said.

Chris Earnshaw, group engineering director and chief technology officer for BT and the moderator of the panel discussion, said that despite the pessimism in the financial markets, the underlying business remains strong.

However, the optimism of the panel is tempered with a resetting of reality and expectations, he said.

Jost Spielvogel, president, optical networks, Siemens Information and Communication Networks and CEO of Optisphere Networks, cited a Winston Churchill saying, calling today’s situation for telecommunications "not the end, not the beginning of the end, but the end of the beginning."

"The fantastic voyage of 2000 ended abruptly. Now there is the reality of 2001," he said.

The drivers of the industry continue, he said, including globalization, disruptive technologies and the explosive growth in wireless, IP applications and e-business.

What happened to the industry, he said, is "misleading expectations." Revenues and earning do not always run parallel with capacity and build-up, he explained, leading to an overstatement of the business opportunity. "Growth needs to be balance with demand," he said.

With Internet and wireless subscribers along with data traffic growing, the panelists agreed there is a need to build next-generation networks and services to drive usage.

In 2000, Barnholt said data traffic matched voice traffic. In 2001, data traffic will be six times voice--and growing, with the prediction that in 2008 there will be 99 times more data traffic than voice.

The dilemma, he said, is that traffic is explosive while costs are growing faster than revenues. "We need to get more revenues from data and have less reliance on voice," he said.

Stefano Pileri, president, network services, Telecom Italia, suggested that people in the industry need to "go back to fundamentals. The value is not just how many customers you have for free ISP services. It is the value in economics."

Today’s economic climate, he said, means it is important to invest where necessary and "do more with less capital expenditures."

With a rise of the "smart" network, Pileri said carriers are forced to use two drivers today-–efficiency and innovation. That means a need for more simplicity in the networks.

"We can’t increase the capacity of all layers. We need the network to be thin," he said.

Hugh Bradlow, chief technology officer for Australia’s Telstra, said the industry is moving toward IP dial tone, but why this hasn’t happened yet is the current emphasis on optical technologies.

"Those aren’t the real issues. Switched digital video is not addressed," Bradlow said.

The Internet, he said, also needs to solve routing scalability and security issues and he called for the industry to meet the need for plug and play operations support system (OSS) and address network complexity issues in an "industry generic fashion."

As an example of how the industry has changed for telecommunications companies, Paul Grosse, president and CEO of Deutsche Telekom in the United States, outlined how Deutsche Telekom has evolved into four divisions and is more focused today on internationalization, following the carrier’s acquisition of Voicestream.

The divisions now include T-Mobile, which he said is now the first trans-Atlantic GSM carrier; T-Online, the world’s second-largest Internet service provider after AOL Time Warner; T-Com, for fixed-line residential and small business services; and T-Systems, IT and telecom services for businesses targeting the top fifth of companies.

Jack Waters, chief technology for Level 3, said the industry is in the midst of a shift to a technology model after being a utility business. "Rapid technological change has to be realized," he said.

Waters predicted a major platform shift in telecommunications with systems of 40 Gb/s coming down in cost, multiprotocol label switching (MPLS) becoming ubiquitous in network hardware and Ethernet becoming ubiquitous as service providers use it to lower cost.
Wayne Walley is Editor in Chief of Global Telephony. He can be reached at wayne_walley@intertec.com.