Patricia Russo is chief executive officer of Alcatel-Lucent. Before helping to spearhead Alcatel’s tie-up with Lucent, Russo was chairman and CEO of Lucent. She helped launch Lucent in 1996.
Q: It seems the wireless infrastructure market has experienced some turbulence over the past several years. How do you view the strength of the wireless infrastructure market today?
A: Regarding market conditions, we see a couple of key broad industry trends. From an end-user perspective, we clearly see that demand for interactive video and Web-enabled services are leading to a proliferation of content and applications that will be the catalysts for growth in traffic on both wireless and wireline networks. We also see telecom service providers developing into Full Service Providers, combining their fixed and mobile assets to more effectively address the consumer, enterprise and wholesale market sectors. While there has been some softness in certain areas of the market, ultimately we believe that these trends will drive further growth in terms of wireless network infrastructure. It is also important to note that the growth in wireless data, which now accounts for about 20% of operator revenues, requires a fundamental rethinking of network architectures. The introduction of video and other multimedia and social networking applications on wireless networks are already beginning to place enormous demands on other areas of the network in terms of mobile backhaul, core transport networks, content delivery platforms and even more esoteric areas such as subscriber data management. So we see the opportunities for growth expanding well beyond the radio access network.
Q: How is Alcatel-Lucent positioned along the technology front in North America as wireless carriers begin their transition from 3G to 4G networks?
A: We expect to see 3G networks thriving for many years to come, in North America and around the world. In terms of 4G, Alcatel-Lucent is ideally positioned for the transition from 3G to 4G. We count the largest wireless operators in North America as our customers, and we have worked closely with them to manage their transition from 2G to 3G, and we continue to support their efforts as they enhance their networks and introduce new services. There is a clear consensus in the industry that all 4G technologies will be based on the fundamental techniques of OFDM, MIMO and IP — three building blocks already available in WiMAX, where we are the global leader with 22 commercial customer contracts and more than 70 trials around the world. As importantly, we have made important strides toward the commercial introduction of LTE, most notably through the establishment by Alcatel-Lucent and NEC of a joint venture dedicated to LTE. The whole point of this joint venture is to enable us to accelerate the availability LTE to better support of the network evolutions of leading customers around the world, such as Verizon, with whom Alcatel-Lucent has already initiated a LTE trial program.
Q: LTE, WiMAX, UMB. Is there a place in the industry for the bevy of next-generation technologies?
A: We certainly think there is room in the market for multiple next-generation wireless technologies. To date we have seen operator commitments to both WiMAX and LTE, each of which offer distinct value propositions for different kinds of operators based on factors such the spectrum they own, the legacy networks they may have in place and the business model they are looking to pursue. UMB is expected to offer similar capabilities to WiMAX and LTE and certainly could meet the needs of operators to deliver 4G services, should they choose to go down that path.
Q: Some carrier executives have recently called on a more unified approach to network evolutions that might include a variety of standards. What is Alcatel-Lucent’s position on a move to a more unified approach?
A: We definitely see benefits in the development of a more unified approach to the development of next-generation wireless technologies. In fact, we’re already seeing a great deal of commonality between the different emerging next-generation standards in terms of the use of common techniques such as OFDM, MIMO, and the underlying transformation to IP. At the same time, each operator has their own unique requirements and needs to chart their own course depending on their spectrum holdings, go-to-market strategy and the kind of network they have in place today.
Q: Where do you see a majority of Alcatel-Lucent’s wireless business coming from in the near-term?
A: There are several bright spots in our wireless business. For instance, the CDMA/EV-DO market remains an attractive business, generating cash and profitability and offering a great deal of opportunity for further innovation to support our customers’ evolving business needs. Our GSM/EDGE business also is profitable and is growing strongly quarter over quarter since the first quarter of this year, generating top-line growth and with an improving backlog. W-CDMA remains a challenging market, but we are having our successes and we see strong opportunities for our femtocell product, which is helping us to make inroads with some new customers. And while WiMAX is a nascent market, it looks very promising, particularly since it provides a means for fixed operators and ISPs to enter the wireless market while offering to some mobile operators an interesting option for providing broadband services, whether fixed or mobile.
Q: What impact if any do you expect from the 700 MHz auction on the infrastructure business?
A: On the whole the impact of the auctions will be positive. Ultimately, all of the auction winners will be building out networks, whether they are expanding existing networks, launching new technologies to complement their current networks or starting from scratch. In every case this represents a good opportunity for infrastructure vendors like Alcatel-Lucent.
