Alcatel launches Europe's first IP Transformation Centre

Last week Alcatel officially inaugurated its new IP Transformation Centre (IPTC) in Antwerp, the first of its type in Europe. Dr Nicolae Oaca took a break from covering the hectic 3G market in his native Romania to summarise developments.

Inside the Alcatel IPTC, Antwerp

The Antwerp IPTC follows the opening of a similar facility in Texas - and precedes the IPTC soon to open in Shanghai. Antwerp is neither Alcatel's first nor last IP centre but it forms a major part of Alcatel's struggle as it seeks to become a world leader in transforming classical (switched circuit) networks into modern IP centric networks able to provide a total service package for voice, data, TV, fixed-mobile convergence. Michel Rahier, President of Alcatel Fixed Communications Group, explained to delegates attending the inauguration that Alcatel had been able to draw on the experience of larger projects when planning for the IPTC (AT&T, Telstra, BT and Telecom New Zealand were among the clients quoted).

The Antwerp IPTC had cost the company US$12.6 million in investment, development, integration and testing. The result is end-to-end IP networking solutions for customers in Europe, as well as in Africa, the Middle East, Central Asia and Latin America, bringing together experts from across the globe to design, test and build pre-integrated customer-specific solutions, as well as Alcatel reference solutions. Hosting more than 50 technologies within 1,500 m2, and hosting over 100 Alcatel experts from many disciplines including solution architects, network engineers, application and OSS/BSS specialists, and integration engineers, not to mention specialists from third party technology suppliers, Antwerp IPTC is large enough to host more than ten large scale projects simultaneously.

IP transformation at Antwerp IPTC

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IP transformation can last three or even four years, perhaps starting with a simulation in an Alcatel laboratory in order to find out the optimal solution in any project. Specialists at Antwerp IPTC will start from an existing network design, and integrate and test specific solutions, as well providing pre-integrated solutions when possible.

Classic voice-centric networks, designed to provide voice services and based on 'switched circuits', have experienced more and more problems when competing within stagnating or shrinking markets. In turn, more and more IP technology is being employed to provide services at the lowest possible tariffs.

The downturn in incumbents' business, as is happening with Romania's RomTelecom, has meant a decrease in market share, revenues, and net profit, as well as problems in financing development and, ultimately, in staying in business. Migrating to IP technology means not only cuts in costs due to simplified architecture but also brings the opportunity to increase revenues by providing new services above and beyond voice which demand faster and faster transmission speeds from classic copper wiring. Examples? High-speed Internet and TV.

What is more, IP transformation enables real fixed-mobile convergence. All of the above-mentioned could yield competitive advantages in the telcos' fight to retain clients, increase market share, improve companies' financial results and increase companies' market value. An IP-centric network could also mean a new business model and new partnerships.

Antwerp IPTC leverages Alcatel's experience in more than 40 IP transformation projects and more than 40 triple play projects for worldwide operators. To these one should add projects in the contracting phase: the China Netcom subsidiary Tianjin Netcom (according to TeleGeography News of September 14, 2006) which will probably supply the first project for the Shanghai IP centre, and Slovak Telekom, a contract at final discussion stage.

Antwerp IPTC and the Romanian market

 Which Romanian operators are interested in the IP transformation expertise that the Antwerp centre can provide? Well, primarily there is RomTelecom, which already has in place a four-year plan for migration to NGN. RomTelecom has already announced ?500 million offered over a three-year period, and had already selected Alcatel and Ericsson for IP transformation.

Unfortunately, the project is now on hold, being blocked by the dispute triggered by the decrease in RomTelecom interconnection tariffs ordered by ANRC, the Romanian regulatory body, at exactly the wrong time. The network can not support the proposed interconnection tariffs (as they are not fully digitalised) before the company's IPO.

RomTelecom therefore has no other option but to launch its IP transformation process immediately. Its results for 2Q06 demand immediate action, as well as a new approach. IP transformation, beside cost-cutting (opex), permits RomTelecom to provide new services (TV, fixed-mobile convergence, and others) enabling it to successfully compete with Orange Romania, Vodafone Romania, etc in the more and more convergent telecommunications market (voice, data, TV, fixed and mobile are the key areas where convergence is taking place) and retain clients. Other operators interested in Alcatel's IPTC in Antwerp could be RomTelecom's main competitors in fixed-line business: RCS&RDS and UPC Astral, both having newer networks. Accordingly costs could be lower.

With about 4.4 million fixed telephony users and 5.6 million lines switching capacity, Romania's IP transformation market could be valued at ?1 billion for a three-to-five year period, at about ?200 per line, considering that not all lines will be equipped for a total service package at the very beginning.

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