With the capital woes in the telecommunications sector forcing companies to focus their efforts, Burnaby, B.C.-based Telus Corp. has responded by announcing it will be the first major Canadian carrier to transform its networks from circuit-based technology to one single Internet Protocol (IP)-based
“”next-generation”” network for voice, data and entertainment services.
Telus chief technology officer Girish Pathak says Telus is taking the step and has decided to lead the telecom pack for three reasons.
The new IP-based network will allow Telus to offer a wide range of new services to business customers and consumers, the elimination of a network layer will mean greater operating efficiency and lower capital costs, and the company will be able to adapt to new technologies and services more quickly.
No need to get too far ahead
“”The timing primarily has to do with how far the technology has come forward in the standards arena,”” says Pathak. “”This is the right time to make the investment. You don’t want to be too far ahead of the industry. You want to be with the industry leading the way.””
While today a customer would need three different infrastructures for voice, video and data, the next-generation network will allow all those services to be integrated on to one network flowing seamlessly right to the user’s laptop.
Besides the efficiency and technology benefits, Pathak says the decision to move to IP was also influenced by Telus’ decision to carefully direct its strained capital resources to investment in the future and the support of its current customers.
Bell expected to follow suit
“”From where I’m sitting it brings the best decision from our leadership in terms of what we are going to do and what we’re not going to do,”” says Pathak. “”For example, I could have continued to invest in (Asynchronous Transfer Mode) infrastructure, but with the IP announcement I made it very clear we’ve stopped investing in the ATM side of the house.””
The timing for the move to IP looks good to Warren Chaisatien, senior analyst for telecommunications research at IDC Canada. Chaisatien says Telus needs to have a fully converged infrastructure to deliver the types of next generation services that the important and profitable business customers will want.
Chaisatien also sees benefits for Telus from a cost perspective. The capital squeeze is forcing carriers to do more with less, what investments they do make need either a quick ROI or other significant benefits.
“”With this new IP infrastructure Telus will be able to combine voice and data onto one infrastructure, eliminating the need to maintain expensive separate networks,”” says Chaisatien.
While it hasn’t said it publically, Chaisatien says Bell Canada is working in this space as well and with Telus’ move, Bell will be forced to quickly follow suit.
“”I see this move has having a very profound impact on the telecom market in general,”” says Chaisatien, comparing it to the move from analogue to digital technology 20 years ago. “”The features we take for granted today were made possible by that move, and going forward we’re going to see the same thing with the IP-based infrastructure.””
Bon Hastings, an analyst in the Vancouver office of Raymond James Ltd., agrees this is a good time for Telus to make the move to IP, which is a sound investment of the company’s capital resources that should pay strong dividends for the company down the road, especially as it continues its break into Central and Eastern Canada.
With the recent announcement that Telus Mobility has expanded its wireless network across Atlantic Canada and with the move to an IP-based network, Pathak says Telus is on track with its strategy to build a national data IP and wireless footprint.
“”We’re committed to this, and we’re getting confirmation from the street that it is the right strategy,”” says Pathak. “”From a footprint standpoint we’re pretty close to the finish line.””
One service platform
Now, Telus is set to shift its focus from building the infrastructure to delivering the services and building its customer base.
“”We need to think how we can play in an integrated voice, video and data services arena,”” says Pathak. “”Up until now, you’ve always had to think about three different platforms but that’s no longer necessary. We can focus on development of services on a common IP platform.””
IDC’s Chaisatien says Telus’ eastern expansion has generally been successful — although the degree of success varies by segment. Its acquisition of PCS carrier Clearnet Communications Inc. two years ago helped the company in eastern Canada. It is building a product offering similar to Bell, but Chaisatien says it still has work to do cracking the enterprise market.
“”I think Telus still has quite a lot of work cut out for them with the dominance of Bell, and I think Telus is still trying to find the best channels to get to the enterprise market,”” says Chaisatien. “”They’re building channels and partners to penetrate the enterprise market, and the IP network will give them quite an edge going forward.””