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Telecom Companies Grab Two Bright Spots After Last Year

The industry realigns itself to focus on 4G and Unified Communications Solutions.

As the telecom industry is grappling to shake off the aftereffects of recession, it is finding a lease on life in two new avenues that could prove to be game changing.

According to Market research firm Juniper Research, the number of Long Term Evolution (LTE) networks, otherwise known as 4G, is set to grow significantly with the number of subscribers exceeding 100 million by 2014. The LTE network is the next-generation, high-performance air interface for cellular mobile communication systems that promises at least five times the download speeds, about 100Mbps and a lower latency that would make VoIP and two-way calling more practical than on 3G networks, which is what is commonplace right now. The anticipated demand for 4G will fuel the need for embedded broadband and Ethernet IPs that have to be fed to an ever-growing number of new consumer form factors such as mobile Internet tablets, netbooks, media players, gaming consoles, etc. to provide network connectivity and interoperability. Juniper’s LTE report predicts that there will be multiple millions of LTE subscribers as early as 2011, and embedded LTE chipsets will become the second most popular means of access behind SIM cards by 2014. The excitement led by the myriad of Android devices and interest surge in augmented reality smartphones has created an emphatic shift of network investment toward mobile.

Mobile carriers have diligently geared up for the event. Verizon has kickstarted its 4G wireless network and plans on offering commercial LTE services in about 30 markets this year while aiming for nationwide coverage by 2013. Not too far behind, AT&T is working on having a fully ready LTE network in 2011.

Equipment suppliers and other mobile infrastructure companies like Cisco and Juniper Networks, which have strategically positioned themselves in niche wireless segments, will no doubt be greatly benefitted by this mobile tsunami, which is expected to explode even more as emerging markets catch up. The Chinese launched a 3G network in 2009 and India will start building its 3G network this year. This translates to more and more demand for connectivity on mobile networks without fear of impending saturation.

In anticipation of this trend, Cisco recently acquired Starent Networks to get its hands onto the IP-based mobile infrastructure solutions. With the jump in data applications all around and surge of hybrid gadgets, Cisco is seeking to place itself firmly as the technology provider that connects mobile traffic with the Internet.

The other market segment in the telecom arena that is touted to take off this year is SIP (Session Initiation Protocol) Trunking, an open industry multi-media signaling standard for voice over IP (VoIP) connects private branch exchange (PBX) to the Internet. As enterprises are still looking for ways to reduce their overhead cost, they are narrowing down on expenditures related to communication services and turning increasingly to VoIP and unified communications solutions. A study conducted by Frost & Sullivan on behalf of Cisco and Verizon found that collaboration tools like VoIP, instant messaging and high-definition video meetings resulted in cost savings averaging four times the return on investment for firms using the IP platforms. The survey interviewed 3,662 decision makers in small and medium-sized business as well as enterprises in various parts of the world, and found that 44 percent had deployed some form of unified communications already. I’m sure there are many more out there that are still looking for better communications solutions. Telecom companies have not wasted time to fill this real market void and have launched targeted SIP solutions either by themselves, through acquisitions, or by venturing into partnerships.

Skype opened up a Skype for SIP program for businesses last year to use with their existing SIP-based PBX or unified communications systems and save money on calls around the world. Sonus Networks announced major updates on its Border Switch with augmented voice over broadband and SIP business trunking services. It is also supposedly coming out with a standalone session border controller soon.

Acme Packet and BroadSoft are working together on a SIP connectivity product. Ingate and Dialogic, JAJAH and Microsoft have SIP deals in place as well.

The trend also points to SIP being packaged with VoIP as part of a unified communications platform and evolving into a managed services offering. The term unified communications is generally attributed to a set of products that integrates real-time communication services such as chats, IP telephony, video conferencing, etc. with non-real-time communication services like voicemail, e-mail, SMS, fax, etc., providing a synchronized, user-friendly interface.

Avaya’s recent acquisition of Nortel 's Enterprise Communications division seems to be a strategy in expanding on its existing SIP-based unified communications portfolio leveraging Nortel’s technology. Avaya’s two SIP-based products, Aura and Avaya Software Communication System, are targeting small and medium enterprises and provide unified communications that can be managed straight from the clients’ data centers. Alabama-based network equipment provider ADTRAN has also jumped head long into this hot market and launched a new line of NetVanta Unified Communications products for businesses of all sizes. It hopes to combine it with its existing enterprise product suite for a more comprehensive and complete enterprise solution.

All in all, it promises to be a year of revival for the telecom industry. The expected turnaround is no doubt well deserved after 2009’s abysmal performance due to tough macroeconomic conditions. The companies are doing all the right things by re-focusing and re-aligning themselves to new enterprise realities that demand instant, uncompromised unified communications solutions that are also cost-effective.

The above article was originally published in ITBusinessEdge.