N-GEN Communications Web-based Seminars ©NGCS

Seminar - An Overview of Communications Technologies

Module 1 - An Overview of the Communications Industry                                                                Slide 8 of 26   _________________                                                                                  __________

                                              Impact of New Strategies

                                        Carriers Developing New Infrastructure

                                        Carriers / Manufacturers Acquiring Needed Skills

                                        Developing New Markets

                                        Shrinking Core Business

The carriers, with convergence strategy, developed IP networks in parallel to their PSTN, acquired IP-skilled employees and trained their existing staff for IP technologies. At the same time equipment manufacturers had to develop products for the new infrastructure. They were skilled in developing voice switches, so acquired companies for the new products. Their market focus also changed. They started catering to other than telephone companies. The telephone companies started developing and marketing the Internet-based services.

Most carriers have put the emphasis on building a new IP network to offer IP- based (voice, data and video) services and eventually to migrate all services from the old platforms to it.

Carriers, to implement their convergence strategy, bought companies and skills to supplement the existing skills. Nortel bought Bay networks for $6B (US) to include IP products in their portfolio. Nortel, apart from selling to the carriers, decided to get into the Enterprise market to compete with CISCO. Telus bought a wireless company for $6B (US) to expand into the East coast market to compete with Bell Canada. Bell Canada created a new company - Bell Intrigna to compete with Telus in the west coast market.

Carriers and equipment manufacturers paid prime price in the late 1990s to acquire new skills and to get into their competitor's market. Their core markets were shrinking. Nortel's switching and optical communications segment was losing money. Nortel went from 90,000 employees in 1999 to 40,000 employees in 2003.