INFRASTRUCTURE: Shaped up, Will Play

The telecom industry is undergoing a tough time and companies are trying to

reinvent themselves to boost their productivity. The worldwide equipment market

has declined by 40 percent in two years and equipment vendors are struggling

against serious financial challenges to remain profitable. Companies have no

other option but to optimize their resources.

In this background, Alcatel has undergone a restructuring to bring in more

operational flexibility. The company has restructured its business according to

communication solutions, thereby streamlining operations. From four divisions of

carrier networking, optics, space and components, and e-business, Alcatel has

restructured its operations into three divisions–fixed communications, mobile

communications, and private communications. The first focuses on fixed networks

and optical networks, the second on mobile networks, mobile phones, and wireless

transmission, while the third division focuses on enterprise solutions, space

solutions, transport solutions, and integration and services.

In 2003, Alcatel is focussing on fixed broadband, solutions integration, and

multimedia mobile. But in India, the focus is on fixed broadband, IN and

solutions integration.

Fixed Communications



In India, the company is banking on broadband and IN as these are the hot

areas for FY 2003-04. The company is very strong on the fixed line switching

business as it has a market share of around 50 percent. In broadband, the

company has bagged a 6,000-port network order from Sri Lanka and is planning to

leverage its presence in the Indian market when broadband deployment is made in

the country by the incumbent operator.

	NUMERO UNO OF FIXED COMMUNICATIONS
	Item	Worldwide Standing	India Position
	Wireline Switch	In Top 5 club	Supplied 1.2 million lines in 2002
	Broadband	Number one in Broadband Access	In India, the market is opening up as both MTNL and BSNL has large plans for ADSL.
	Intelligent Network	Number one in IN	BSNL has come out with a large tender and is opting for 5 additional platforms
	Optical Networks	Number one in optical  networking (DWDM)	Received orders from Bharti

Mobile Communications



Alcatel was late in entering the GSM space and was unable to make its mark

in India except bagging the Koshika order. But the company plans to make up for

the loss now. It has formed a joint initiative called Evolium with Fujitsu for

3G infrastructure, where it is developing a single multi-standard platform for

GSM/GPRS/EDGE and WCDMA. The product is undergoing re-engineering every nine

months for continuous cost reduction. Apart from infrastructure, the focus is

also on applications as it helps in adding value. To demonstrate openness and

interoperability, the company has tied up with more than 170 partners for

infrastructure and content.

In the mobile arena, the company has deployed 3G Reality Centers across the

world to build interoperable solutions. 3G Reality Centers have been deployed at

Velizy in France, Plano in the US, Sao Paulo in Brazil, Adelaide in Australia,

Tokyo in Japan, Seoul in South Korea, and Milan in Italy. Plans are to launch

more such centers at Rijswijk in Netherlands, Stuttgart in Germany, Malmo in

Sweden, Shanghai in China, Cascais in Portugal, Kuala Lumpur in Malaysia, and

Taipei in Taiwan. All this will help in developing a wide array of services in

different geographies through 3GRC partner program and repeat success stories

around the world.

The partner program has been created for developing a strong local ecosystem

of partners for providing value-added content for augmenting ARPU. In field

trials, the company is providing services like videophony, video conferencing,

video mailbox, video messaging, presence/phonebook, infotainment, gaming, and

live sport events.

On the handset front, the company is focussing on GPRS and WAP. This year,

the company is planning to launch One Touch 535 MMS, One Touch 735 camera, One

Touch 332 Color W@P, and One Touch 331 W@P. The company has recently launched

One Touch 320, One Touch 525 GPRS, One Touch 526 GPRS InFusio, and One Touch 531

Color. It is planning to launch a few models in the Indian market.

On the space front, the company hopes to close the Agrani and Gagan deals.

The Gagan project will get completed by 2008 and open up new opportunities. All

this will help the company make a recovery and be ready for the next phase of

infrastructure deployment.

Pravin Prashant

"Market revival is just one year down the line"

Gerard Dega executive vice president, Alcatel EMAI

Are we seeing signs of revival? If yes, when do we see the worldwide

market picking up?



Europe is in a bad shape. In the US, there is consolidation and the market

has been flat for the last three years. In Asia, there has been an increase in

demand but there is some saturation in few regions. It is difficult to say that

it will pick up this year. But it will definitely pick up in 2004. At present,

service providers are not investing in GSM equipment because the market is in a

bad shape and they are waiting for UMTS to come. As a result, the network is

becoming worse and currently we are at the bottom of the curve. But the market

will go up once the service provider starts investing in the infrastructure.

What

is happening on the Evolium range of 3G switches, where you have tie-up with

Fujitsu?



The company has deployed 2,000—3,000 stations in Japan, France, and

Portugal. In Japan, the company has the largest installed base of Evolium

switches. At present, these networks are not commercial but are expected to be

so in 2004—05. The company is also developing applications along with service

providers and is confident about the future.

How do you compare the Indian market with China?



The Indian market is a difficult and frustrating market. The opportunity is

huge and there is also an aggressive competition between players and the local

industry. The clients are good at negotiation skills as know how to extract

maximum from their suppliers.

In terms of software competence, India is ahead but in market size, China is

much larger and has invested much more in infrastructure.

What are your major plans in India?



In broadband, BSNL and MTNL are modifying their expressions of interest. We

plan to participate in broadband network of the incumbent operator. We are

participating in a major way in the NIB Phase II project.

We are serious about making the Agrani project a success

Pierre De Bayser senior V-P (marketing and sales) Alcatel

Space

The slowdown has also affected the satellite industry. So

how are things moving on the satellite front?



There has been decrease in orders for all satellite players. Last year, we

had three satellite orders whereas on an average we used to have around 6-7

orders. On the satellite front, navigation satellite has an increasing trend

whereas all other segments like telecom, military, and meteorology are

decreasing.

Has

economic slowdown impacted your R&D activity? What is your spend in R&D?



On the R&D front, we are improving our R&D project after every three

years and it is high on our priority. The percentage on R&D has not changed

and it has been constant. We have been investing around 18 percent of our

turnover in R&D in 2002.

Subhash Chandra’s Agrani project has been delayed for a

long time. What is the status on that?



The company is looking at a quick finalization of the Agrani funding, which

is led by IDBI and has ICICI and SBI as it partners. The company is waiting for

financial closure and waiting for the banks to take a final decision. There was

a high-level meeting recently where clarity was sought on some issues.

Agrani is a common baby so we want to make it a success. The

project has been going on for a long time and both Alcatel and Zee will find a

solution.

GAGAN–Navigation Project

Presently,

there are two satellite navigation systems–Global Positioning System (GPS)

of  the US and Global Navigation Satellite System (GLONASS) of Russia. But

both these navigational systems are under military control. Alcatel is playing a

leading role in GNSS1/ EGNOS and GNSS2/GALILEO. The company is the prime

contractor and system designer for EGNOS and is the founding partner for

GALILEO. GNSS1 is the first-generation global navigation satellite system for

satellite-based positioning and timing. It comprises regional complements to the

GPS and GLONASS constellations designed to improve performance and security and

meet the needs of the civilian users. EGNOS is the European component of GNSS1

and will be based on a fleet of geostationary satellites and ground

infrastructure. EGNOS will have three GEO satellites and 48 ground stations. The

system is designed to meet the needs of the international civil aviation

community as well as terrestrial and maritime users. In EGNOS, the augmentation

system is better than the existing system and one can expect an accuracy level

of 6x6m from the present level of 15x15m.

GAGAN (GPS and GLONASS Augmented Navigation) is the future

Indian satellite-based navigation system and is similar to EGNOS in Europe and

WAAS in the US. GAGAN would be the first step towards GALILEO and is considered

to be an opportunity for cooperation between India and Europe. The project is a

necessary step for air traffic development but can be used for train

infrastructure and others.

GAGAN project is managed by Airport Authority of India (AAI)

and Indian Space Research Organization (ISRO). To be implemented in three

phases, the total cost of the project is around 100 million euros. The first

phase is for building the technology demonstration system (TDS) and it is

expected to cost around Rs 100 crore. The second phase will focus on measurement

with TDS while the third phase will focus on installing the full system.