Monday, November 14, 2005

Telstra Selects Alcatel, Ericsson and Cisco for Network Transformation

Telstra announced a Network Transformation Project that will migrate its Australian voice and broadband access networks into a single IP-based infrastructure. The carrier aims to have 80% of its Internet customers on broadband in three years (today 50% are on broadband).

CAPEX plans for the next generation IP network call for an investment of more than A$10 billion over five years, of which A$2-3 billion is incremental over existing plans, with the IP core in place by the end of 2007.

Telstra has selected three strategic vendors for this multiyear project:

Alcatel will provide network design and integration, product supply, deployment, maintenance and on-going support, in relation to broadband access, Ethernet aggregation, fixed next generation voice and network integration. More specifically, Alcatel will provide Telstra with IP DSLAMs, Fibre to the Node (FTTN) and Fibre to the Premises (FTTP) solutions, Optical Ethernet Aggregation, NGN Softswitches and associated Media Gateways.

Alcatel will also create a Hosted Integration Centre, which will support integration testing and introduction of technology into Telstra's network. The aim of the centre is to provide a single facility to support product testing, trials and customer demonstrations. Telstra and Alcatel have entered into a Memorandum of Understanding under which they will negotiate formal agreements to reflect their strategic partnership. The proposed five-year agreement is worth AUS$3.5 billion (EUR 2.18 billion or USD 2.55 billion).

Ericsson will provide a 3G city-to-country mobile network strategy based on WCDMA 850 MHz. Ericsson will provide a broad range of services including design, construction, support and maintenance services and equipment for its 3G core and radio access network infrastructure. The new national network builds on the existing agreement where Ericsson is upgrading Telstra's GSM network to 3G/WCDMA, supplying softswitch core and radio access network equipment, including HSDPA and network rollout services. The companies are negotiating a formal agreement.

Cisco Systems will provide an IP core network. Specifically, Telstra will deploy the Cisco carrier routing system (CRS-1) to support a full range of services to all sectors of the Australian market, including supporting IP Core transit for Ethernet services for business customers and Triple Play consumer services.

Telstra's Network Transformation Project coincides with a larger strategic plan to reorganize the company. This plans calls for:

  • Reducing the number of Telstra's 52,000 full time equivalent (FTE) positions by between 6,000 and 8,000 over three years and 10,000 over five years

  • Introducing a A$200 million field staff training program to provide Telstra people with the skills in building, running and maintaining next generation networks>/li>

  • Cutting costs by simplifying processes and systems

  • Cut the number of different network platforms from about 330 by 60 % within three years.

  • Cut the number of business and operational support systems from about 1200 by 75% in three years.

Telstra issued new financial projection based on its plans.
  • In June 2005, Telstra named Solomon (Sol) Trujillo as its new CEO, replacing Dr Ziggy Switkowski. Trujillo was previously a nonexecutive Director and then CEO of Orange based in London, one of the largest mobile companies in Europe. Earlier, he spent 26 years with US West Inc, including serving as its Chairman, CEO and President for 5 years. Trujillo left US West in June 2000, following the merger with Qwest Communications.

See also