With converged networks, the stakes are higher for Nortel

It’s a well-documented fact that Nortel needs to get its financial house in order.

Nortel also needs to start showing technological leadership, and that it can execute.

This became apparent to me after back-to-back interviews with Nortel’s new chief executive officer, William Owens, and

chief technology officer, Greg Mumford.

What did I get from Owens? As expected, he promised that Nortel would clean up it books and offer “”complete transparency.”” He noted there are 650 people working on restating the financial results.

There is also the assurance from Owens, that despite all these accounting challenges, “”this (financial crisis) too will pass and there will be closure.””

On the question of technology, Owens is much less clear. When asked what Nortel’s technological priorities are, he listed everything from “”packet intelligence,”” to digital subscriber line (DSL), to voice-over-IP, to wireless, to computer security. He also cited his 20-plus years of engineering experience.

But Owens needs to do more than state his credentials and offer a checklist of technologies. He needs to articulate a vision. Fortunately for Nortel, there is evidence that some of this vision may be forthcoming from others. Like Owens, Mumford shows the resolve to turn things around. He speaks of profound changes in the network, of connecting all computers to all types of storage, of combining voice with data, and of shared networks that move seamlessly between wired and wireless connections. Unlike many technology visionaries, Mumford is realistic.

The problem, nobody has figured out a way to put all these pieces together into one universal network. While all the hype is over IP-based networks, IP is optimized for computer-to-computer communications and isn’t nearly as good for voice or video.

There is also the belief that we have total connectivity, we have this Internet, which is a network of networks, and we have ubiquity.

The reality is these individual networks are inefficient and segregated. Banks install their own high-capacity networks, while small business typically has some crude form of dial-up. Huge concerns remain over both security and quality of service.

It’s patchwork at best, and hardly optimized for all the multimedia applications of the future, let alone any form of convergence.

Adding intelligence to the network

Mumford says the problems will go away as intelligence gets added to every piece of the network, from the packet to the high-powered switches that control all communications.

But this is far from a trivial task that requires billions and billions of dollars of both R&D and capital investments.

And there’s where the next chapter in the Nortel saga gets interesting.

In fairness to Owens, he is CEO primarily for his business experience — not necessarily his technology vision.

He is there to restore integrity, and he knows what is needed beyond a clean set of financial books. “”These are billion dollar bets,”” he said, and talked of his willingness to make these bets.

Nortel has demonstrated it can be a successful gambler. Witness its entry into a fully digital product line and its move into next-generation wireless.

But with a fully converged network, the stakes are that much bigger. And even though Nortel has some how managed to keep its eye on the technological ball, the question that nobody can answer is whether the company will have enough left for the ante.

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