bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

quizIds

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

paywallTypes

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Andrew Chetham

As computer networks and telephone networks merge, a whole new and potentially vast market is emerging over which the giants of each industry are readying to battle.

 Ranged on one side are the likes of Canada's Nortel Networks, with decades of experience selling switched technology to the world's telephone companies. On the other are companies such as US-based Cisco systems, a comparative newcomer that has built its reputation on selling computer networks to businesses.

 Computers communicate by sending data in packets (known as Internet protocol or IP), which makes much better use of available line capacity.

 It has been clear for some time that the networks of the future increasingly will be based on this technology.

 Instead of differentiating between data, voice and video, it will all be the same; chopped up into digital packets, transferred down the line and reassembled the other end.

 These are referred to in the new telecoms jargon as 'unified networks' and everyone is claiming the high ground in their ability to deliver them.

 Cisco's pitch is that it has huge experience in delivering data, and in the future data will constitute the bulk of traffic.

 In the US, data already outstrips voice in volume. In Asia this is considered likely to happen in the next five years.

 'Traditional circuit switches will not be able to handle the volume of data effectively,' Cisco North Asia managing director Frankie Sum said, and the likes of Nortel and Lucent Technologies clearly do not doubt it.

 Last year, Nortel bought Bay Networks, a direct rival of Cisco, and Lucent recently bought Ascend, another company with IP expertise.

 Armed with its new subsidiary, Nortel reckons it is in the best position to deliver the unified networks of the future.

 'We can go into a carrier and say here is your path to IP,' said Nortel's managing director of Internet solutions in the Asia-Pacific region Matthew Chu.

 What Nortel has over the likes of Cisco is a long history of selling to telephone companies using switched technology.

 Despite the vast changes in the telecoms game, many carriers are highly conservative companies, often still state controlled, where relationships count for much.

  'We have a strong presence with the voice networks now we are in a position to offer the range of technologies; circuit switched, wireless as well as IP,' Mr Chu said.

 Nortel is gambling that by marrying its established carrier-focused business with the enterprise business of Bay it puts itself in the favoured position to be the dominant supplier of unified networks.

 Cisco admits that it is not easy getting a foot in the door with these established telephone operators.

 So far, Cisco has been focused largely on the enterprise market. It also has to learn new tricks.

  'We have to gain the confidence of customers who have been dealing with circuit-switched technology for 20-30 years,' Mr Sum said.

 However, changing the market dynamics also will alter the whole game, with new applications opening up new avenues for selling.

 For example, Cisco's biggest customer in the SAR is Hongkong Telecom, which uses its equipment in its Internet business and to deliver its video-on-demand service - which uses packet technology.

 But it is not only a question of new services. The biggest driver is liberalisation.

 New companies entering markets for the first time increasingly will want to move straight into offering cost-efficient, unified networks.

 IP technology offers a way to compete across the range of services with a much smaller capital outlay.

 But the speed of regulation across Asia is not particularly fast. Voice traffic retains for many countries a strategic security element, whereas data does not.

 The mainland, for example, while paying lip service to the idea of unified networks, seems set to plough ahead with the installation of simple switched technology in its bid to quickly increase its tele-density figures.

 So, while the carrier market is a key target, it is a longer-term target compared with selling networks to Internet service providers and large enterprises.



Computer and phone giants set for battle