Alcatel-Lucent offers a prescription for telco success

Alcatel-Lucent won the prestigious Infrastructure Technology award at Mobile World Congress 2012– literally the Oscars of the infrastructure industry. Its LightRadio technology has been making waves and helped it win deals with customers all over the world. In addition to its role on the red carpet, Alca-Lu also worked with Telefonica to light up the LTE network in Barcelona.

While the 3G network was congested most of the time and attendees were having a hard time making calls (Wi-Fi has been much better this year), LTE network was blazing fast averaging 30-60 Mbps download and 10-25 Mbps speeds (of course, the number of LTE subs on the network were small). The experience on HTC’s LTE device was terrific.

Given all this attention, plus the challenges facing its customers when it comes to providing more data every year I thought Alcatel-Lucent might shed some light on trends and solutions for the next year in mobile. So, I caught-up with Wim Sweldens, President, Alcatel-Lucent Wireless Division to discuss the state of the industry.

Wi-Fi as about to become part of the carrier network.

Sweldens is tired of hearing the term Wi-Fi offloading used unabated. Even at the show, Wi-Fi offload was being discussed along with LTE in the same sentence. However, with Wi-Fi, operators are also offloading the customer, he said – exposing the customer to potential security problems and perhaps exposing the operator to a loss of revenue opportunities during that session.

Sweldens argued that with Alcatel-Lucent’s Light Radio WiFi, operators will be able to more intelligently onboard the customer to their network and provide the same level of service and security as they do with their cellular network. Sweldens suggested that this is a good marriage between the radio and the IP world to give the best to customer while preserving the value for the operators.

Additionally, with operator policies governing the Wi-Fi network, they will be able to do better traffic management by quality of service, application type, network conditions, pricing plans, etc. This is specially helpful in venues such as airports, sports arenas, city centers, and malls where large number of users congregate. The switching between the cellular and Wi-Fi network is completely abstracted from the user and the experience is not disturbed to attend to the network needs of the device.

I saw similar direction of integrating Wi-Fi with the cellular infrastructure and policy framework from other infrastructure providers as well. Customers shouldn’t get charged for Wi-Fi, but it will just help operators to manage their network better and keep the customers on their network. It will also help subscribers manage the data caps for activities such as data intensive video downloads.

LightRadio and new paradigm in technology creation.

Often, infrastructure technology development is done in insolation. Customers (operators) provide input and their wish-list, but the engineers from the two segments don’t work hand-in-hand creating new technologies. Alcatel-Lucent took a new approach to bring solutions to the market quickly. It opened up its product development and R&D to its customers and built the Light Radio technology together with them. Alcatel-Lucent went from idea to products in a year, and now has several contracts done. The collaboration with China Mobile has been particularly notable with Sweldens himself spending quite some time with the engineers in China.

LightRadio and the new economics of cellular.

While the industry was initially skeptical about the performance gains of the small cell architecture but the results look promising. Sweldens said that Alcatel-Lucent is seeing 4 to 10x capacity gains. Typically, LTE gives you 50 percent gain in cost advantage but that is quickly sucked up by consumers downloading more on faster networks. Thus, the margin equation doesn’t increase dramatically with LTE. But deploying a small-cell architecture proves to be much more cost-effective.

When operators think about operating their network, they have to worry about the total cost of ownership of the new technology. Sweldens estimates that LightRadio reduces the total cost of ownership by approximately 40 percent as it is easier to deploy and operate and it is more energy efficient. Just introducing LTE might not help improve the margins, new cell-architectures and traffic management strategies will be needed to provide the needed improvements over the course of this decade.

Chetan Sharma can be found at his website or @chetansharma on Twitter. He is also a member of the GigaOM Pro analyst community.