Verizon Embraces Packet Voice

With most carriers avoiding spending money on much of anything these days, Nortel Networks Corp. (NYSE/Toronto: NT) was celebrating what it calls a “good strategic win” yesterday, after Verizon Communications Inc. (NYSE: VZ) announced that it is using Nortel's packet switching equipment in large switching centers in New Jersey and Florida (see Verizon Deploys Packet Switches).

In yesterday’s release, Verizon stated that the deployments, which are designed to evaluate the reliability of packet technology, represent the largest application of packet switching technology for voice transmission by a local exchange carrier in North America. The deployment in New Jersey alone has, according to the statement, already successfully completed more than 1.8 million voice phone calls.

The announcement is important because it shows that Verizon, a relatively slow-moving RBOC, is finally coming around to using packet switching technology in its voice networks. Verizon, which did not return phone calls, didn’t mention in the release which other vendors’ equipment was evaluated for the deployment.

The financial impact for Nortel is less clear -- there was no dollar amount specified for the contract, and some analysts believe that Verizon may later buy similar equipment from other providers.

"This is not a complete deployment,” says Frank Dzubeck of Communications Network Architects, indicating that coming deployments may quite possibly be with equipment from other vendors. “No one that I know of is committing to just one vendor... [And] Verizon has a history of never giving all the jewels to a single vendor.”

Nortel officials declined to say what other vendors were involved in the bidding, but they did say it was a contested bid. Observers say they expect that Cisco Systems Inc. (Nasdaq: CSCO), Lucent Technologies Inc. (NYSE: LU), and Siemens AG (NYSE: SI; Frankfurt: SIE) were among the runners-up.

Still, most observers agree that yesterday’s announcement is good news for Nortel, which, as the incumbent vendor at Verizon, was expected to win. “It certainly gives them credibility,” says Current Analysis analyst Brent Wilson, pointing out that Nortel will likely keep its incumbent business at Verizon. “Without a doubt, Nortel is having success protecting its installed base. That doesn’t mean they have the best technological solution.”

“This is important for them,” Dzubeck says. “It verifies the fact that they have an excellent product.” More importantly than validating one vendor, however, he says, is that the move validates the technology being deployed. “Here’s an RBOC making a commitment. That blessing... shows that the technology is now deployable.”

Jenna Stanley, the director of Voice-over-IP Solutions Marketing at Nortel, says the announcement demonstrates that packet switching is replacing voice circuit switching: “This not only marks an increase in the volume of packet switching equipment being deployed... but also an increase of carrier comfort with the technology.”

Stanley claims that packet switching technology will enable Verizon to do faster call routing, as well as free up excess capacity that in a circuit switching environment is used just to get different tandem switches talking to each other. This use of packet switching technology to carry voice is known as voice trunking over ATM switches, or VTOA.

This is the third packet switching deployment deal for voice that Nortel has signed with carriers over the past year. Last fall, the company signed similar deals with both Sprint Corp. (NYSE: FON) and Qwest Communications International Inc. (NYSE: Q) (see Sprint, Nortel Ink Billion-Dollar Deal and Qwest Pushes Packets). Nortel refuses to put a price tag on what the Verizon deployment deal will mean to them, but if it comes close to what they claim they’ll pull in from the Sprint deal -- $ 1.1 billion -- it’s a big deal.

Current Analysis's Wilson, however, says that while this might be the largest completed deployment, other announced -- but yet incomplete -- deployments, like one at Sprint, will be far larger when they’re done.

Farooq Hussain, a general partner at Network Conceptions LLC, downplayed the size of the announced deployment. “1.8 million calls -- that’s less than a couple hours work,” he says, insisting that many carriers have already been doing packet switching for voice for years. “This is a good announcement for Nortel, but as a carrier announcement, it doesn’t carry any weight at all. They’re way, way behind everyone else."

— Eugénie Larson, Reporter, Light Reading
<<   <   Page 6 / 6
umustbejokin 12/4/2012 | 10:09:05 PM
re: Verizon Embraces Packet Voice Litewave wrote;
For me the point, especially if you want read the "tea leaves" is Nortel's point that this is an important stategic win as they put it.

Strategic win it may be, for now, but I wouldn't be so quick to guage any long term "migration" as you put it, you obviously missed my original point...


I can't think of anything dumber than being locked-in by a vendor for both Voice switching and a Packet switching backbone, which is what Nortel is trying to do obviously. But Verizon ain't dumb :-)

So, to my point if as you say;

"That Nortel's ATM gear is not doing anything special in Verizon's current deployment and can easily be supplanted with those from any number of next generation ATM switch vendors."

Why did they win?

techdocs 12/4/2012 | 10:08:56 PM
re: Verizon Embraces Packet Voice VERY SOON!! Canadian Press Release:
Nortel Sales May Miss Creditors' Covenant Demands, Post Says
By Joe Schneider

Toronto, July 5 (Bloomberg) -- Nortel Networks Corp., North America's No. 2 maker of telephone equipment, will likely miss sales and operating profit targets set out by the company's creditors, the National Post reported, citing an analyst report.

Nortel won't have positive cash flow until mid-2004, because sales of about $3.2 billion will fail to meet its break-even position, according to a report by Mark Rosen of Rosen & Associates Ltd., the Post said. Bank covenants require the Brampton, Ontario-based company to have operating earnings of $50 million by the second quarter, the paper said.

Even if Nortel renegotiates the terms with its bankers, it will be forced to cut its workforce by another 10 percent to readjust for even lower sales than the current projections of about $11 billion a year, the Post said.

Separately, the Post reported that a retirement plan for U.S.- based Nortel employees lost $1 billion last year investing in the company's shares, because the stock has plunged in value. The plan's assets shrank to $2 billion from $3 billion a year ago, the paper said.

(National Post 7-5 FP1) For the National Post Web site see {NPST }
litemyfiber 12/4/2012 | 10:08:50 PM
re: Verizon Embraces Packet Voice This kind of garbage belongs on Yahoo, not LR. I call on LR to ban this ID and anyone who posts this kind of tripe. This is a forum for professionals, not wackos and juveniles!
lucifer 12/4/2012 | 10:07:53 PM
re: Verizon Embraces Packet Voice These discussions began with a disparaging comment that Nortel's deal with Verizon was not for VoIP, but (...gasp, shock, horror...) for VoATM! Implication: VoIP is better than VoATM and Nortel is not "with it". I have some background in voice and packet data (goes way back to X.25, right up to ATM and IP and even MPLS), so I hope I am qualified to reveal the emperor's clothes...

VoIP, VoATM --- who cares? As long as the packet network is reliable and supports the CoS or QoS that voice requires, not a big deal!

Voice is probably the most difficult kind of traffic to adapt and transport on a packet network. Our physiology and psychology means that we expect low voice (guidelines are typically < 150ms one-way latency ) and will not tolerate change in time delay (jitter). Voice codecs are also sensitive to packet loss; I have seen requirements as demanding as < 0.01% packet loss.

Another really important factor is carriers' (and their customers') conservatism. Voice is a high revenue, profitable service; we expect that when we pick up the phone and dial that the call will always go through. If we dial 911, we want to be connected to emergency services ALWAYS. IP networks, certainly the Internet, don't provide this sort of guarantee without very careful engineering.

Put these service needs and voice over packet technology characteristics together and see what packet infrastructures meet the needs...and it turns out that there are several ways to build VoP CARRIER networks, at this time:

Use "native" IP (IP transported over a L2 without strong QoS capabilities) and engineer the network to minise latency and jitter. Usually requires over-provisioning of bandwidth on the IP network (which does cost money .. check the prices for GE and high speed POS interfaces). Worry about what happens if a link goes down, if the network routing tables have to be recalculated (can't make any CoS guaantees during reconvergence, can we?). Use diff-serv mapping to best effect.

Use IP with a QoS-enabled L2 (FR or ATM). Focus on the IP as offering the voice service transport and the ATM or FR as ensuring that the QoS and reliability needs are met.

Use VoATM, either AAL1 (simple mapping of Circuits/DS0s to ATM) or AAL2 (saves connection space in the ATM network and is more efficient in use of bandwidth)

There is lots of talk about MPLS as a network technology enabler that provides IP networks with the QoS and Reliability controls needed for voice. It's all talk right now; MPLS is used (in my experience) for IP Traffic Engineering and needs lots of simplification and real-world testing before it could be applied in a carrier's network for voice. Some experts even think that MPLS is getting more complex than ATM and what problem were we really trying to solve anyway...

And remember, VoIP, VoATM --- who cares? As long as the packet network is reliable and supports the CoS or QoS that voice requires, not a big deal!
Light bearer...
netskeptic 12/4/2012 | 10:07:49 PM
re: Verizon Embraces Packet Voice > These discussions began with a disparaging
> comment that Nortel's deal with Verizon was not
> for VoIP, but (...gasp, shock, horror...) for
> VoATM! Implication: VoIP is better than VoATM
> and Nortel is not "with it".

You got it 180 degrees wrong, I started this discussion with phrasing Verizon for ignoring the hype and skipping VOIP (which IMHO is nothing else than wothless vapor as long as we are talking about carrier side) for something more realistic.

Thanks for info,

lucifer 12/4/2012 | 10:07:32 PM
re: Verizon Embraces Packet Voice Netskeptic -- you're right; I misread your comments as ironic. Apologies.

Who is going to speak up about the VoIP myth? I see lots of Marketing hype (principally from Cisco but nobody is innocent) proclaiming that VoIP is the holy grail. Mixing metaphors, when will the naked emperor show up?

Light bearer
<<   <   Page 6 / 6
Sign In