Carriers: Innovation not at standstill

BOSTON - It's still true that carriers are spending mostly on technologies that will help them reduce operational costs and keep future capital spending in check. But a panel of service provider executives speaking here recently said their companies are also forging ahead with technology rollouts that will let them offer advanced services and provide better customer service.

The panel, which included representatives from CTC Communications, Genuity, Verizon and TeleChoice, kicked off the Massachusetts Telecommunications Council's annual investor's conference.

While Verizon is reducing its spending from $17.4 billion last year to $14 billion or $15 billion this year (with wireline spending expected to drop as much as 23% and wireless as much as 12%), that still leaves the company with plenty of capital to devote to new technology.

Among its priorities are upgrading operational support systems and its ability to conduct e-business with customers and suppliers, said Paul Lacouture, president of Verizon's Network Services Group. Spending will also go to World Trade Center recovery efforts - about $1.5 billion over three years - fast packet technologies including Gigabit Ethernet and passive optical networks, and wave-division multiplexing.

The carrier needs to improve its systems for swapping traffic between wireless and wireline facilities as wireless traffic booms, and for supporting an increased presence in the long-distance market, Lacouture said.

While much has been made of the telecom industry's overinvestment in network capacity, Lacouture said Verizon still needs to boost bandwidth.

"We do not have a surplus of capacity in many locations" outside of the backbone, he said. The company will further invest in or at least investigate access technologies such as DSL, fixed wireless and fiber to the home, he added.

Genuity, which is partially owned by Verizon, will squeeze capital spending this year to between $400 million and $500 million, down from $1 billion last year and $1.8 billion the year before. But with 5,000 enterprise customers to serve and traffic volumes more than doubling, the company is focusing on provisioning new services faster, delivering better service-level agreements and better tracking network usage, said Steve Blumenthal, senior vice president and CTO.

The service provider has more than 1 billion minutes in voice-over-IP usage and continues to invest in that technology, while expanding its VPN capabilities and virtual meeting offerings, Blumenthal said.

CTC, which spent $107 million in 2001, will use the $60 million to $70 million it spends this year on products supporting its regional optical network buildouts and migration to Multi-protocol Label Switching, among other things.

While other service provider executives talked optimistically, panelist Russ McGuire, chief strategist for TeleChoice, did not. During his presentation, his first slide read: "Budget Exists For: Nothing!" and he said carriers are looking for anything they buy to pay for itself within one quarter. He later amended that assertion to eight to 12 months.

"Most carriers are operating more from the fear side than the growth side," he said.

Carriers even are balking when vendors offer them free equipment and software, because even testing such products costs money, he said.

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Massachusetts Telecommunications Council

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