Michel Combes, CEO of Alcatel-Lucent, on a visit to Israel, talks Nokia, The Shift Plan and why service providers are set to regain the initiative.
Michel Combes, CEO. Photo: Kobi Kantor.
The CEO of Alcatel-Lucent, Michel Combes, has brushed off rumours of a tie-up with Nokia, after reports surfaced last week that Nokia's board was considering the move as a strategy option.
"You will have to ask Nokia," said Combes. "I'm fully focussed on the Shift Plan, it is the right plan [for the company]; I don't want to be distracted by anything else."
Combes was speaking at the opening of Alcatel-Lucent's cloud R&D centre in Kfar Saba, Israel, where the company's internal start-up CloudBand is developing cloud technology for carriers.
Network Functions Virtualisation
CloudBand used the site opening to unveil its CloudBand Ecosystem Program to spur adoption of Network Functions Virtualisation (NFV). NFV is a carrier-led initiative, set up by the European Telecommunications Standards Institute (ETSI), to benefit from the IT model of running applications on virtualised servers.
Carriers want to get away from vendor-specific platforms that are expensive to run and cumbersome to upgrade when new services are needed. Adding a service can take between 18 months and three years, said Dor Skuler, vice president and general manager of the CloudBand business unit. Moreover, such equipment can reside in the network for 15 years. "Most of the [telecom] software is running on CPUs that are 15 years old," said Skuler.
Instead, carriers want vendors to develop software 'network functions' executed on servers. NFV promises a common network infrastructure and reduced costs by exploiting the economies of scale associated with servers. Server volumes dwarf those of dedicated networking equipment, and are regularly upgraded with new CPUs.
Applications running on servers can also be scaled up and down, according to demand, using virtualisation and cloud orchestration techniques already present in the data centre. "This is about to make the network scalable and automated," said Combes.
Alcatel-Lucent stresses that not all networking functions are suited for virtualisation. Optical transport is one example. Another is routing, which requires dedicated silicon for packet processing and traffic management.
CloudBand was set up in 2011. The unit is focussed on the orchestration and automation of distributed cloud computing for carriers. "How do you operationalise cloud which may be distributed across 20 to 30 locations?" said Skuler.
CloudBand says it can add a "cloud node" - IT equipment at an operator's site - and have it up and running three hours after power-up. This requires processes that are fully automated, said Skuler. Also used are algorithms developed at Alcatel-Lucent Bell Labs that determine the best location for distributed cloud resources for a given task. The algorithms load-balance the resources based on an application's requirements.
The distributed cloud technology also benefits from software-defined networking (SDN) technology from Alcatel-Lucent's other internal venture, Nuage Networks. Nuage Networks automates and sets up network connections between data centres. "Just as SDN makes use of virtualisation to give applications more memory and CPU resources in the data centre, Nuage does the same for the network," said Skuler.
Open interfaces are needed for NFV to succeed and avoid the issue of proprietary solutions and vendor lock-in. Alcatel-Lucent's NFV solution needs to support third-party applications, while the company's applications will have to run on other vendors' platforms. To this aim, CloudBand has set up an NFV ecosystem for service providers, vendors and developers.
"We have opened up CloudBand to anyone in the industry to test network applications on top of the cloud," said Skuler. "We are the first to do that."
So far, 15 companies have signed up to the CloudBand Ecosystem Program including Deutsche Telekom, Telefonica, Intel and HP.
Technologies such as NFV promise operators a way to regain market traction and avoid the commoditisation of transport, said Combes. Operators can manage their networks more efficiently, and create new business models. For example, operators can sell enterprises network functions such as infrastructure-as-a-service and platform-as-a-service.
Does not software functions run on servers undermine a telecom equipment vendor's primary business? "We are still perceived as a hardware company yet 85 percent of systems is software based," said Combes. Moreover, this is a carrier-driven initiative. "This is where our customers want to go," he said. "You either accept there will be a bit of canabalisation or run the risk of being canabalised by IT players or others."
The Shift Plan
Combes has been in place as Alcatel-Lucent's CEO for four months. In that time he has launched the Shift Plan that focusses the company's activities in three broad directions: IP infrastructure including routing and transport, cloud, and ultra-broadband access including wireless (LTE) and wireline (FTTx).
Combes says the goal is to regain the competitiveness Alcatel-Lucent has lost in recent years. The goal is to improve product innovation, quality of execution and the company's cost structure. Combes has also tackled the balance sheet, refinancing company debt over the summer.
The Shift Plan's target is to get the company back on track by 2015: growing, profitable and industry-leading in the three areas of focus, he said.