Telecoms operators that fail to take risks will be the first to fall in the wave of consolidation that is approaching the industry, according to Alireza Mahmoodshahi, chief technology officer of European telco Colt.
Speaking at the second day of the NetEvents conference in Geneva, Mahmoodshahi said that rolling out so-called next-generation networks (NGNs) was no longer a matter of choice for telcos that wanted to survive.
"NGNs as we see today are not a matter of choice. As a service provider it is a must-do in order to compete and deliver what our customers need," Mahmoodshahi said.
NGNs are packet-based, and carry IP traffic across their full length. This makes them much more efficient than today's legacy carrier networks and means they can run a wider variety of applications on a much simpler infrastructure. They should also provide users with much faster connection speeds.
BT's next-generation network — called the 21st Century Network — is the most high-profile next-generation network in the UK. It is forecast to cost £10bn to implement. But because it is fully IP, running it should cost £1bn per year less than the 16 networks that preceded it.
As part of its transition to a NGN infrastructure, COLT is trying to improve the amount of data and managed services it can sell in an effort to make up for a decline in revenues from voice traffic.
Mahmoodshahi has been overseeing an upgrade to the company's network so it can supply high-speed Ethernet services to enterprise customers.
"Ethernet is not new to Colt but we see there is a huge market for this service and customers are asking for higher speeds. Whether we're early or at the right time — only time will tell. I think the timing and the technology are there but now it is only a matter of rolling it out," Mahmoodshahi said.
Colt is under pressure to succeed with its data and managed services offering. The company saw its share price slump by nearly 11 percent on Thursday when it announced a cautious financial outlook for 2007.
Ovum analyst David James said that Colt's chief executive Rakesh Bhasin — its fifth in six years — must continue with his plan to migrate the organisation away from dependence on switched services.
"By ruling out Colt's participation in the continuing consolidation of the European telecoms market Bhasin is limiting the company's options. He needs to build on the achievements of his predecessor Jean-Yves Charlier if he is to turn the company into a major force in European next-generation telecoms services," said James.
But despite the challenges facing Colt, Mahmoodshahi told the audience of journalists and vendors at NetEvents that his company has little choice but to be bold and to innovate. "Yes there is going to be risk, but there is no glory without risk. Those who want to remain conservative forever — then they will be the ones to go," he said.
When questioned about how to tackle the fact that next-generation technologies eventually become legacy systems themselves over time, Mahmoodshahi said that the trick was getting the timing right between meeting customer demand for speed and embracing the latest technologies.
"I think that it is like when you buy the next laptop. You wait and wait and see new technology comes in, but there is no end to it. You cannot keep waiting — you have to go with what the market wants. If you do it properly, then moving from one legacy to another is easier than fork-lifting to a whole new technology," Mahmoodshahi said.
"You make decisions based on what you see and what you need to do. You want to minimise the legacy so that you do not always have the legacy chasing you," Mahmoodshahi added.