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Alcatel-Lucent: The Network Matters

CHICAGO -- Convergence has been a key IT buzzword for years. For Alcatel-Lucent it means a few different things, because it applies to both IT convergence, as well as the convergence of the two companies.

In a meeting with press and analysts at NXTcomm here, Cindy Christy, president of Alcatel-Lucent North America, outlined how her company is transforming networks for the blended service economy.

"Enterprise networks are becoming so complex that it opens up advanced communication opportunities for ourselves and our customers," Christy said. "We're seeing a true change where broadband will displace traditional revenue streams."

The challenge for Alcatel-Lucent is how to help customers generate money in the new enterprise 2.0 environments.

Christy said that studies conducted by Alcatel-Lucent report consumer preference is shifting from wanting a monolithic service to wanting a blended service where the experience is integrated. That means carriers are moving away from the traditional voice-driven model.

In terms of packaging that offering, Alcatel-Lucent's study showed that, while consumers see bundling of triple play services as a discount vehicle, customers are willing to pay more for blended services. Those are value-added services where the traditional lines of voice, video and data are blurred.

"What is the communication experience that people want and how do we help our customer make money?" Christy added.

Fundamentally it's about user-centric services and, of course bandwidth -- lots and lots of bandwidth for voice, video and data. "It's about being able to manage and make sure users get the experience they want while driving bandwidth efficiency," Christy said.

The new networks being built do more than just enable connectivity; they also give carriers the ability to deal with the challenge of declining average revenue per user (ARPU). Christy explained that carriers can now get into personalized advertising and generate new revenue models for users.

"There are no such things as dumb pipes anymore; they are all smart pipes, given that blended services matter," Christy said. "How we deliver that value to consumers will drive better ARPU. Broadband matters because of what it enables."

Although networks and broadband matter, it all has to be transparent to users. From that point of view, Christy was pleased to report that the integration of the former Lucent and Alcatel is going well.

Alcatel and Lucent merged in April 2006 in a deal that created a $25 billion global networking powerhouse.

The integration extends to having a cross portfolio solution and a single customer-facing entity on the sales side. Behind the scenes there are still integration items being worked on. Christy was adamant, however, that employee headcount consolidation would not hurt sales.

"We as a company are transforming and we won't reduce headcount when sales are on the line."