Interview with Michel Combes, CEO, Alcatel-Lucent

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Alcatel-Lucent are one of the key sponsors of the Broadband World Forum. Ahead of the show we speak to its CEO, Michel Combes, to find out more about how it is rising to the challenges facing the telecoms industry and meeting the needs of its customers.

As CEO of Alcatel-Lucent, you’re no stranger to challenges. What challenges do you see in the telecoms industry?

The telecoms industry is experiencing a fundamental shift in the way that it manages both its technology and its business. With high consumer demand for data services and ultra-fast connectivity, operators can no longer rely on low-investment, high-margin services like voice or SMS to compete and win. Instead, they are faced with the challenge of handling ever-expanding data volumes over networks built largely for voice communications. To meet this challenge, many operators are transforming their networks to an all-IP infrastructure. IP has become the heart of many networks because of its capability of handling greater demand for speed and capacity and its ability to understand the type of traffic it is carrying.  But this approach isn’t without its own challenges. For service providers to compete effectively, they have to make the migration quickly, smoothly and cost-effectively. They also have to make this transition while supporting their legacy network at the same time. If they miss any one of these crucial points, they have lost valuable time against their competition.

Having spent a great deal of my career in telecoms and watching these trends evolve, I understand the impact and implications for everyone in the ecosystem — from operators to vendors. So when I arrived at Alcatel-Lucent, I created the Shift Plan, which has focused the company on delivering IP and Ultra-Broadband Access to meet these new industry realities. This has meant putting IP, Cloud and Ultra-Broadband at the center of our portfolio and our operations. Our emphasis is on delivering these technologies — from high-speed fixed access like FTTx and vectoring to mobile broadband in the form 4G and small cells to core networking platforms based on the latest IP and virtualization techniques — so we can meet our customer and shareholder commitments.

What should operators be thinking about as they try to meet these challenges?

There are two keys to meeting the new realities of the industry. The first is recognizing that consumers don’t distinguish where their broadband comes from. In most modern societies it has become akin to a natural resources like air or water. People feel they need it to live and work. They are not concerned with labels like fixed, mobile, wireline or wireless. Consumers simply want reliable, ultra-fast broadband on their devices wherever they go.

To make this a reality, every part of an operator’s network — whether it is fixed or mobile — has to be built on IP. To handle the kind of data traffic consumers generate, mobile networks for example, have to use IP technology from the device, over the air via 4G LTE, through a radio access point, aggregated and funneled by routers at the edge, and finally sent into an all-IP core and eventually routed to its final destination. In a cloud world, a strong IP network, working with SDN and NFV, is not only desirable but essential.

The second key lies within building a strong ecosystem. No one in this industry can afford to think of themselves in terms of an island, it simply doesn’t work in a world where innovation is done in real-time and time-to-market is counted in weeks rather than months or years. To deliver this kind of rapid change requires close cooperation and shared risk. Companies must innovate by quickly embracing new business models, creating new partnerships and fundamentally changing the core of their culture to survive. Co-innovation with customers and partners is essential. Virtualized and distributed models work just as well for business as they do for network constructs. This is especially true in telecoms where the lines are blurring between enterprise and operator and between applications and web services.

But more fundamentally, this is not a time to wait and see for operators. They must not wait for the ideal market conditions, industry regulations or technological solutions. There is no perfect time for anything. Now is the time for them to transform themselves, their economies and the industry. In recent months we’ve seen courageous operators like China Mobile, Telefonica and Sprint make tough decisions about deploying Ultra-Broadband solutions in an uncertain climate. These companies recognize the benefit of this philosophy and will no doubt gain market leadership by acting boldly and decisively.

Virtualization is a hot topic right now — how is this going to drive telecoms and how do you see this playing out?

The real benefit to virtualization is that we no longer have to think about networks in the “fixed” sense. Virtualization is more about being able to dynamically change and scale the network based on the ebbs and flows of traffic on the network. So instead of experiencing a lack of capacity during specific times of the day in certain locations, you can ramp up the capacity when and where you need it to meet demand and quickly scale it back when it’s not needed. The building blocks for this architecture are IP and Cloud technology — both of which can be delivered “virtually” in a datacenter. This model is going to radically speed up and change the type of traffic flowing through the network so operators can cost-effectively handle demand for services such as HD video streaming, mobile video conferencing and remote data storage. Operators are going to be able to deploy services much faster and much more dynamically.

What are the implications of this Cloud-based future on networks? Does this mean we are we going to see more emphasis on mobile?

If there is anything that everyone can agree about — it is that Cloud is here to stay. On the consumer side – we already rely on the cloud. We are now living in a world where 100 hours of video are uploaded to YouTube every minute. To enable that, we must have uninterruptable Ultra-Broadband access everywhere we go. Once we have the Cloud architecture in place, it just becomes a matter of providing Ultra-Broadband access to the closest point to the consumer at highest data speeds — whether that is fiber or copper vectoring in terms of for wireline and 4G LTE in terms of wireless.

From my discussions with customers, they really want to accelerate investment at both the heart of the network IP to Ultra-Broadband Access, either fixed or mobile, on the other side. It is going to take both elements to make it a reality.  Just as an example of this, we just announced at this show a new wireline offering called micro-nodes. These are similar to a mobile ‘small cells’ in that they bring fixed ultra-broadband closer to users to massively add capacity where it is needed.  That is the truly surprising aspect of this industry. Innovation is happening everywhere — in the applications, in the cloud and certainly still in the network whether it is virtualized or not.  As users we just want to have our music, photos, videos, games when we want it wherever we want it regardless of the type of connection — it is exciting to be a part of making that happen.

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