Nortel Targets Carrier VOIP Migration

Nortel Networks Corp. (NYSE/Toronto: NT) wants to speed up voice-over-IP (VOIP) adoption.

All-in-all, that's not very surprising. What is surprising is that Nortel is ready to make a heavy pitch for VOIP applications to legacy phone switch customers. Tomorrow (February 18), the vendor plans to unveil new TDM-to-IP migration features for its Succession line of softswitches and multimedia servers.

VOIP has lots of attractions for carriers, but adding it usually means installing and running a parallel network. The sheer longevity of most carrier voice gear has been a disincentive to adding that extra network, even if doing so promises savings and service options (see VOIP: Big Promise, Big Wait).

Now, though, Nortel says carriers needn't wait until their voice gear completes its life cycle to get going with VOIP. The centerpiece of this week's launch is a set of features meant to help carriers add IP-based applications to networks that contain a mix of circuit- and packet-based equipment.

Thanks to the enhancements, Nortel's Succession softswitches, including the Succession Communication Server 2000, take in voice from old-fashioned TDM-based PBXs as well as from IP-based ones.

Through new H.323 interfaces and support for Session Initiation Protocol (see SIP Is Hip, Say VOIP Promoters), all traffic -- whether it comes from PBXs installed as part of a managed service on carrier customers' premises, or it comes from POP-installed gear for hosted services --is converted to IP format. This gives carriers with mixed networks the means to run the kinds of applications that are key selling points for VOIP -- those that promise new sources of revenue through enhanced services, such as Centrex IP.

At least one analyst says it's a pitch that should appeal to a range of big carriers that have entrenched Nortel voice equipment, such as U.S. RBOCs. "These carriers have a big TDM investment," says Brent Wilson, principal analyst at Current Analysis. They aren't cottoning to a "build it and they will come" approach to VOIP, he says. They need to see how enhanced VOIP applications pay off now, on existing facilities. "Nortel's telling them they can get enhanced service revenues on their existing infrastructure, not VOIP."

It's not clear whether Nortel's VOIP incentives, in the form of the new products and services it's offering for Succession users this week, will help speed up VOIP adoption. So far, Nortel can point to just two customers with plans for its new gear: Canadian carrier Telus Corp. (NYSE: TU; Toronto: T) and e-commerce provider First Data Corp. (NYSE: FDC). More are on the way, spokespeople say.

Wilson says Nortel's strategy of playing to its existing infrastructure is "absolutely vital" to the company's future, and he lauds Nortel's progress, compared with that of rival Lucent Technologies Inc. (NYSE: LU), which also is playing to its installed based but won't have SIP capabilities on its 5E-XC line until later this year (see Lucent's SBC Win: Confusing News).

Still, competition's afoot, particularly on the international front. While Nortel is "holding its own" internationally, Jim Lawrence, program director at Stratecast Partners, says Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and LM Ericsson (Nasdaq: ERICY) are catching up. "There are many other competitors, including the likes of Marconi, many startups, and the PacRim vendors, who are not sitting on their hands," Lawrence says.

Some competitors are seeking to compete with Nortel on features and pricing among prospects that don't have Nortel gear installed -- a profile that could apply to some rich greenfield prospects internationally. Softswitch competitor Sonus Networks Inc. (Nasdaq: SONS), for instance, recently announced international connectivity and traffic management capabilities for its wares (see Sonus Adds Software).

Another vendor, Telica Inc., is ready to make it's own announcement this week, describing contract awards from five new customers, all independent telcos or regional CLECs. For greenfield deployments like these, albeit stateside ones, Telica cites reductions in capital and operational costs as significant differentiators from offerings coming from the legacy switch vendors like Nortel.

Clearly, the race is on to help boost VOIP services among incumbent and newer carriers. Whether these new products speed VOIP migration overall remains to be seen.

— Mary Jander, Senior Editor, Light Reading
IP Everywhere 12/5/2012 | 12:37:35 AM
re: Nortel Targets Carrier VOIP Migration No mention of peer to peer VoIP was made here. Large and medium enterprises are working to deploy peer to peer VoIP over their data networks even for inter-campus using CPE based IP PBXs. Support for VoIP which does not have to traverse the PSTN would seem the direction to go rather than equipment with large DSP farms for going from IP to PSTN. That was part of the reason that VoIP never lived up to its potential in the late 90s (in addition to cost, and huge complexity of running and interoperating both networks). How is this announcement different from when gateways were doing VoIP in 1999 when many equipment vendors tried to do GR303 to a class 5 or class 4 from a gateway with a VoIP lineside? I think I saw this movie.

It's not "The sheer longevity of most carrier voice gear has been a disincentive to adding that extra network", it's the fear of cannibalizing their lucrative revenue stream from PSTN lines that is the disincentive. They need to do this and also figure out how to charge for it. This has always been the case when a new service threatens to cannibalize an old existing service.
Consultant 12/5/2012 | 12:37:33 AM
re: Nortel Targets Carrier VOIP Migration I am not sure that claim is true. There is huge amount of intracompany voice traffic. When I worked at AT&T we estimated it to be 10% of the entire LD market. Not insubstantial.
cc_junk 12/5/2012 | 12:37:33 AM
re: Nortel Targets Carrier VOIP Migration Most large enterprises I have met have told me that there main voice volume is exernal to/from outside the company. Intracorporate call was not a important issue for them compared to what the provider might do for the extra-corporate voice needs. They need to value adds from VoIP that applies their call centers and IVRs. Like not tying up two voice ports when the call is transferred to call center, which VoIP will do.
IP Everywhere 12/5/2012 | 12:37:23 AM
re: Nortel Targets Carrier VOIP Migration I saw a recent stat from a major IXC, couple of PTTs, and a CLEC which said that that traffic volume between campuses of the same enterprise has grown substantially in the last 2 years. The numbers which I saw were more like 25%. I have to admit that it is not clear why though.

Also, as VoIP continues to pick up speed, inter-enterprise peer to peer will become considerably more important; this would of course bypa PSTN as well.
Milano 12/5/2012 | 12:37:10 AM
re: Nortel Targets Carrier VOIP Migration An interesting aspect of intra company traffic is that it can be transmitted at low cost using VoIP over dark fiber in urban centers. We have a VoIP project here to connect seven buildings of a university based downtown. My guess is that this is the kind of case where some early VoIP deployment will happen.

That being said, a dark fiber cable here can be built for $10,000 per mile. Not sure how that compares to other urban markets.

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