Convergence Reality:Telia's Trials
Cisco loses an integrated network contract.
What went wrong?
by Gote Andersson.
teledotcom.com
Building an integrated, multiservice network is easier said than
done. Just ask frustrated executives at Telia AB (Stockholm),
which last month scrapped a hard-won and highly publicized
contract with Cisco Systems Inc. (San Jose, Calif.) for
equipment and services.
Despite considerable effort, Cisco has not been able to supply
a multiservice asynchronous transfer mode (ATM) and
Internet protocol (IP) network to Telia as specified in a
contract signed in February. Telia had hoped to deploy its
integrated network by January 2000. Instead, Telia is going
back to the drawing board, forgoing the new network to
simply upgrade its X.25/frame relay network with equipment
supplied by Nortel Networks Inc., in order to meet increasing
traffic demands, says Marianne Nivert, the executive in charge
of Telia Network Services.
Problems like this, say analysts, are going to be inevitable as
service providers and data equipment manufacturers venture
into the uncharted waters of multiservice network deployment.
Cisco's troubles with Telia represent a disappointment that
goes beyond simply losing a 500 million SEK (US$60.5
million) contract. The setback comes just as Cisco is trying to
shore up its reputation as a carrier-class equipment supplier.
When first announced, the order was seen as something of a
breakthrough for Cisco, which was able to undercut the offers
of traditional telecommunications equipment providers such as
Nortel, Lucent Technologies Inc. and L.M. Ericsson AB
(Stockholm).
By June, however, the honeymoon was over. Nivert says
Cisco was warned about its failure to meet the prescribed
delivery schedule for the new equipment. Soon after that, Telia
began working simultaneously with other suppliers.
At the time, Goran Marby, managing director of Cisco
Sweden, asserted that his company was on target to supply
the necessary equipment and fulfill the contract obligations. By
August, however, it was apparent that the equipment supplier
was not hitting its deadlines.
This did not sit well with Telia, who has developed a
reputation for pushing vendors very hard to deliver equipment,
says Chris Lewis, research director at The Yankee Group
Europe (Watford, U.K.). "Telia is in the forefront of incumbent
thinking for next-generation networks. It has some very
ambitious national and international plans," says Lewis, adding
that the Swedish carrier viewed the need to abandon its
original plans as a setback.
So what went wrong?
"There wasn't one technological thing that led to the decision,"
says Carl Engineer, director of marketing at Cisco. "Telia was
on a schedule and had to move forward and offer services."
Telia has three national data communications networks. An
ATM network is based on equipment from Lucent and
General DataComm Inc. (GDC, Middlebury, Conn.), which is
primarily used to offer local-area network (LAN) interconnect
services. The IP network, based on Cisco gear, is the fastest
growing Telia network. The third network is an X.25/frame
relay network used to supply packet-data services.
With traffic growing rapidly, Telia was faced with the prospect
of upgrading the capacity of all three networks. But the carrier
elected to replace the ATM network with a multiservice
network that could, over time, support the traffic of all the
other networks.
Telia and many other international service providers share the
belief that a single IP-based network will ultimately provide
more efficient, scalable communications traffic support with
dramatically reduced operational costs, and it was this vision
that Cisco brought to the table in February. The contract
called for Cisco to deliver network equipment, operations
support systems (OSSs), education and consulting services.
"Networking is the easy part," says Robin Bosworth,
managing director at telecom consultancy Schema Ltd.
(London) "The hard part is integrating the front- and
back-office support systems for billing, customer support and
provisioning."
Neither Cisco nor Telia has commented publicly on specific
technical problems that contributed to the botched network
plans, but tele.com sources say the service provider's
concerns rested on the capabilities of Cisco's support systems
rather than the gear itself.
Cisco remains confident in its multiservice network equipment
strategy as it continues to win contracts from service providers
such as Qwest Communications International Inc. (Denver)
and Telef¢nica S.A. (Madrid). And it hasn't given up on Telia,
either. "We continue to have a lot of work with Telia on many
different fronts," says Cisco's Engineer. Cisco, meanwhile, is
on track to provide equipment for an IP-based multiservice
network for Telenor A/S (Oslo). Telenor and Telia have
announced merger plans. The deal is expected to be finalized
in four weeks. |
