“DLD Will Completely Change the Technologies that We Deploy”

Vijay K

Gupta, Lucent Technologies Ltd.

Why

do most MNCs enter in JVs and then take complete control after

some time?

That

is a very philosophical question that you’ve asked me.

The reasons

must be very practical…

The

alliances and the breaks are always made to address particular

market needs. As the market changes, good companies will always

adapt themselves to address that market in the most efficient

manner, because the customer is not concerned whether it is a JV

or not. You cannot be dogmatic about these things.

What are these

market needs? And why do people get out?

The

regulation/legislation might be one factor. For example, Coke

and IBM walked out in mid-70s because the regulation said they

had to have less than 40 percent foreign equity. They had either

to dilute or go out. They chose to get out. There were companies

like Philips who actually decided to dilute.

Then, you have the fiscal

environment. When customs duty was at 200-250 percent, importing

goods was very expensive. Today, customs duty at 35 percent or

so, manufacturing may not be as critical because you can import

at cheaper rates. If you don’t respond to these changes, you

are sunk.

Third, technological

changes may force you to do things. The customer now wants the

latest. The local demand may not permit to renew your product

ranges fast enough locally. In that case, you may be forced to

import. You may need to change your business model accordingly.

So it is the environment,

the legislation, the fiscal barrier, and customer’s

expectation, which force the companies to change their plans.

Always keeping in mind that I am not looking at my company in

isolation. Around the corner, there is a competitor who has the

choice.

Good companies always have

a value system; they are sensitive to how they are looked at.

They don’t play a short-term game. Basically, it is responding

to the environment.

The same

reasons apply to a particular industry segment. But Lucent

entered into a fresh JV when others like Alcatel or Ericsson

were taking full stake…

That

is not entirely correct. We (AT&T at that time) started with

a transmission JV way back in 1992. In 1995, we started a

switching JV. Then we went further and set up an enterprise JV.

When the market opened to private sector, the new operators were

looking at total end-to-end solution. So we integrated all the

JVs into one. We were simply responding to market changes.

In the next

2-3 years, where will your revenues come from?

DoT,

in whatever form, will remain the dominant purchaser of telecom

equipment for many years to come. DoT will improve with

competition.

At the same time, together

with DoT, we will see new private operators–wireless

operators, fixed-line operators, and ISPs.

Both DoT and the private

operators will use the same kind of equipment. DoT has very

ambitious plans. Four years from now, it plans to put 10 million

lines a year. And for that, it needs equipment at a lower cost,

which we have to supply them.

How long will

the distinctions remain?

For

a long time to come. For the simple reason that we have very low

telephone penetration. The common man does not understand what

the Net is. It will be quite some time before the Net actually

becomes a home-to-home thing in India. We have 60 million TV

sets in this country–three times the number of telephones.

That is not a nice situation. People are in the receiving mode.

They should also be in the transmitting mode.

On one side, we have this

mass market where we have to provide minimum access. On the

other, we have pockets of markets where we have broadband

access, business services. We have to live with this duality in

India. We have to serve both the markets.

I was talking

about the distinction among service providers.

There

is a regulatory barrier for private operators. You need separate

licences for these services now. Over a period of time–may be

in four to five years–that distinction will no longer be

there. To a limited extent, that is happening. Most basic

telephony operators are also planning to provide broadband

Internet access. Some operators are even talking of wireless

Internet access in Delhi. It will happen in metros in one year’s

time.

However, we have two

operators providing multiple services–the DTS and MTNL. MTNL

is providing both Plain Old Telephone Services (POTS) and

looking at broadband services using DSL technology. It is

offering limited mobility service, Internet service, and will

soon provide cellular service. It is also setting up its own

gateway. And they are looking at how to set up a long distance

network. That is true convergence.

And Lucent is really

looking forward to that, as we have a very clearly defined

roadmap for that.

Apart from the

history, the Bell Labs name…do you have any tangible USPs to

address this opportunity better than others?

I

think Lucent is very strong in two or three areas. We are

leading the revolution in the optical networking area. We have

very high degree of investment in R&D in areas like DWDM.

Then, we have a plethora of technology. It is not just idle

talk. We can give you packet-switch end-to-end network. Not many

vendors have this ability. And if they do, it is not in as

advanced stage as ours. We were the first to announce the 7 R/E

concept of packet-switched network. We packed 120 years of

experience and 300 feature of the voice-switch to a packet

network.

But in today’s

game of high-market caps and M&A, what stops a company, say

Cisco, to get that in a short time period?

We

are investing $4 billion in R&D every year. You can have

high valuations in the market-place, but if you do not invest in

research and building the expertise, how long can you sustain

it?

We have also acquired more

than 20 companies in recent past including niche market leaders

like Ascend, Kenan, and Octel. You have seen us building

expertise in newer areas by both research and acquisitions. And

yes, it is not only acquisition. We have also spun off our

enterprise business recently as a separate company, as that

requires a different kind of focus.

Will the new

DLD operators deploy significantly different technologies?

Oh

yes, anybody who builds a backbone now will have a packet-based

network. It will certainly not be a TDM backbone any more.

Because it must be able to carry almost any kind of traffic, it

has to be a true multi-services backbone. Yes, different people

have different views on the choice between ATM and IP. But it

will be a packet-switched one for sure.

Second, it will be a

backbone that will certainly have DWDM. Today, 10GB might look

very good to us. But in six months, terabit will be normal. And

you cannot throw away the fibre that you put in the ground.

In fact, DLD is one area,

which will bring a complete change in the technology being

deployed.