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Optical/IP

NetCentrex Tackles IMS (and Huawei)

French VOIP system supplier NetCentrex SA is joining the throng of next-generation system suppliers preparing for the adoption of the IP multimedia subsystem (IMS) fixed/mobile convergence architecture, but believes it will be a number of years yet before full IMS capabilities are in commercial use.

The vendor's founder, chairman, and CTO, Olivier Hersent, says the company is developing its IMS capabilities while it looks for ways to help service providers bridge the gap between their legacy systems and the IP next-gen networks that will support the true IMS platforms that will generate and manage services for fixed and mobile users alike (see IMS Guide).

He says NetCentrex, which provides softswitch and IP applications server (Centrex) technology to more than 40 European service providers, is developing its IMS capabilities now, with a view to introducing some elements in the coming months. (See Parla.it Uses NetCentrex, AOL Germany Chooses NetCentrex, NetCentrex Wins in Bulgaria, Eircom Uses NetCentrex for VOIP, and Tiscali Picks NetCentrex for Euro VOIP.)

But Hersent says fully fledged IMS, which requires fixed and mobile carriers to be operating IP networks, isn't coming any time soon. "Mobile 3G, or UMTS, networks won't be fully IP until after 2010, so IMS won't be real until after that time. What we're seeing at the moment [at industry events such as VON Europe] will become a reality in about five years' time," Hersent believes.

This is still the time to be building IMS capabilities, though, as applications developers, equipment companies, and carriers latch onto the services convergence potential of IMS (see IMS: What Are the Hot Apps?, Ericsson, Broadsoft Snack on Danish, and IMS: Pulling the Pieces Together).

"We're building our S-CSCF [Serving Call Session Control Function] now, which is a relatively small amount of code, and we're currently deciding what to do about the P-CSCF [Proxy Call Session Control Function], which, basically, is a session border controller. We're also developing a local number portability function," says Hersent, adding that his company's first deployment of an IMS-capable system will likely be in September this year with AOL Germany, a recently announced customer (see NetCentrex Wins at AOL Germany).

"You don't have to wait for full IMS to use packet-based systems, and we're developing our technology so that carriers won't have to replace it in the future" as they migrate to all IP networks.

But while the IMS market heats up, Hersent knows NetCentrex needs to find a niche if it is to see off its main competition and stay on carriers' radars during the coming years. And with Chinese vendor Huawei Technologies Co. Ltd. one of its key rivals, Hersent believes a competitive pricing strategy is not the answer.

"We can't compete with Huawei on price, so we need to find another way to be relevant to the operators."

Instead, Hersent plans to appeal to carriers' service creation needs rather than their wallets. He says a key focus for NetCentrex will be the pre-integration of applications, such as voicemail, into the systems NetCentrex delivers to carriers. "About 60 percent of our R&D efforts are now focused on pre-integration. This allows carriers the ability to launch services quickly. We want to be closely aligned with the marketing departments of the carriers, so we can react to their services needs."

He believes this approach will give NetCentrex an edge over rivals such as Huawei, Italian softswitch player Italtel SpA, and fellow French firm Cirpack, which was recently acquired by another Gallic go-getter, Thomson (NYSE: TMS; Euronext Paris: 18453). (See Italtel Boasts Softswitch Share and Thomson Buys Cirpack.)

"They don't have a focus on pre-integration, so although we may not be the cheapest I believe this will be our long-term differentiator," says Hersent.

But it's not just those companies NetCentrex needs to stave off. Graham Beniston, Heavy Reading analyst at large, says that while the French firm has done well to win so many customers, it's going to face increasing pressure from the large, traditional telecom vendors because of carriers' increasing reliance on those firms for their integration and support capabilities.

"You get cycles where there are openings for smaller vendors such as NetCentrex, but then the market closes off and becomes dominated by the larger companies, just as Lucent and Nortel did with TDM switches in North America," says Beniston.

He sees the softswitch market heading that way, especially as large carriers, such as BT Group plc (NYSE: BT; London: BTA), look for a small number of vendors to provide a vast array of capabilities that cover the full range of voice, data, and video services (see BT Unveils 21CN Suppliers).

NetCentrex has plans in that area, too. It's already set up a joint venture, IPlay3, to target the needs of triple-play hopefuls (see NetCentrex Teams for Triple Play and NetCentrex Beefs Up IPlay3 Team).

While that venture is in its infancy, the European VOIP-based business is still growing, with 2004 revenues hitting €26 million (US$31.8 million). (See NetCentrex Reports 2004 Sales.) The company's systems now support 1.5 million IP telephony lines, with FastWeb SpA accounting for 600,000, says Hersent.

He adds the Italian triple-play pioneer will soon launch IP Centrex services using his company's technology. That sort of contract extension is giving the company an increasing share of the IP applications server market: Infonetics Research Inc. analyst Kevin Mitchell says NetCentrex was "in the top three for voice applications sales in the first quarter of 2005." (See Infonetics Reports on VOIP Gear.)

And like rival Italtel, NetCentrex has its eyes on North American expansion. With the iPlay3 business already targeting U.S. telcos, Hersent says his company is now eyeing the cable market (see Italtel: We Need US Partner). "We're talking to Scientific-Atlanta about opportunities in the U.S. cable market," says the CTO.

— Ray Le Maistre, International News Editor, Light Reading

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