Steve Wood, president of Nortel Networks, Australia and New Zealand, defends his company's moves into a wireless future.

Nortel Networks has recently announced several high-end wireless networking devices. Has the company left this push into the wireless market too late?

Nortel Networks is actually one of the pioneers in the wireless LAN market, releasing one of the first wireless products, a BayStack Ethernet switch, in 1997. Essentially, we believe the technology has gone through two distinct stages. During the first stage, the technology delivered little more than wireless connectivity and was often based on proprietary technology. Much of the intelligence was distributed to the access point, creating a high cost of ownership due to the difficulty of managing that environment on any scale. The second generation of the technology, where we are now, focuses on security and centralised management using international standards. The intelligence now resides not in the access point but in the network switching fabric and supporting management applications.

The third generation integrates the public and private wireless network environments. That is, 802.11 standards with 3G wireless technology. To scale in this environment, it is critical that the network intelligence is standards-based and centralised. We know that this integration has many challenges, and that our experience as a 3G wireless vendor will stand us in good stead.

What will be the biggest growth sector for Nortel in the coming year?

I don't think many people would disagree that wireless technologies are the area to watch for the whole industry. The demand for true mobility is driving the evolution of carriers' mobile networks and the growth in the increasingly competitive market for wireless networking products for enterprise. What's really pushing all this along is the end-user's desire for easier, more reliable and more flexible access to workplace resources. Consumers, too, are very soon going to expect ubiquitous wireless access to the Internet. We are already seeing the impact of these technologies, which are radically altering the face of business interactions and exchange. A laptop that has a CDMA 1X PC card or a 1X-enabled PDA, for example, can provide secure wireless access to a company's global network enabling workers to respond to email, connect to intranets etc, and distribute the features of other applications like IP Telephony--so the wireless transformation of the workplace is already here.

Why is Nortel having so much trouble with its patents? The company has been involved in at least three lawsuits since September of last year.

Patent litigation is a normal part of business for a global technology company like Nortel Networks and we are not experiencing any more issues than any other similar company. With organisations wanting to harvest more value from their patent portfolios these days, there is a corresponding increase in patent litigation. In fact, Nortel Networks has been much more active in asserting its patents against infringements, and has been very successful in these lawsuits, having collected more than US$25 million this year alone.

Nortel's Malcolm Collins recently levelled criticism at Cisco for using scare tactics on resellers who deal with Nortel. Is this a real concern for you or is it just headline grabbing?

Our senior spokespeople are not in the habit of making statements just to secure headlines. As a company, our channel partners are extremely important to us so we invest considerable energy in those relationships, through the nPower channel program. Our aim is to work with our channel to increase nPower members' profitability by continuing to develop effective sales tools, to focus on market coverage without over distribution, and to be a service partner, not a service competitor.

The nPower program is proving potent in delivering the advantages of Nortel Networks "One Network. A World of Choice." philosophy, to all sorts of businesses, and the number of new wins reflects that. Our enterprise business is very strong and the integrity of our technology, expertise, channel partnerships, and customer support speak for themselves.

Subsequent to the 1998 merger with Bay Networks, many observers have noted a distinct lack of interest in the acquired product lines. In hindsight, do you think this was a beneficial deal for Nortel?

I would disagree with this observation. The 1998 merger was a pioneering effort in the industry to put voice and data together. We all witnessed how the rest of the industry played a catch-up game at a much greater cost. Also, when you acquire a company, you are not just buying their existing product lines. It is the people, the culture and the knowledge in certain areas--we view such acquisitions holistically. By merging with Bay, Northern Telecom gained invaluable IP knowledge and expertise that has helped transform the company into the Nortel Networks of today.

On your Web site, it says that "Nortel Networks is positioning Australia as a centre of engineering and technical excellence for Asia-Pacific, and a key resource for regional R&D, applications development, and customer training." How much did you spend locally on R&D last year?

Globally, our spend on R&D in Q1, 2003, was about 20 percent of our revenues. We cannot provide local breakdown for revenues and expenses for 2002 but this gives you a proportional guide.

The Wollongong Centre is extremely successful. Its work on mobile location technologies has resulted in a carrier-grade, commercial product being deployed in other markets already. This product--Mobile Location Centre--has the advantage of being, so far as we are aware, the only software of its kind that runs on all three of the current and evolving mobile wireless platforms, that is, GSM, CDMA, and UMTS. The team's hard work on that product was recognised recently when MLC picked up an Australian Information Industry Association Award for Innovation in Telecommunications at CeBIT, which was a great validation of our investment in Australian R&D. It shows how a multinational can and should support and utilise local expertise but can also then leverage its own global experience and reach to bring the results to a commercial grade for international markets.

A recent report stated that Nortel had entered the third phase of its Secure Routing Technology (SRT) on Contivity rollout. Can you explain what this phase entails?

As the scope of enterprise VPN and remote access deployments have grown in recent years, enterprises require new products and services that can provide the performance, scalability, and security these deployments require. SRT is a software framework that tightly integrates VPN, routing, and firewall services within a single Contivity IP Services Gateway device. The recently announced third phase essentially involves new Contivity products and services to provide scalable performance and management consistency through unique features like dynamic routing over IPsec-based VPN tunnels, uniform security policies across VPN, routing and firewall services, and mix-and-match IP services software upgrades through a simple licence key. These new products help enterprises in their deployment of large scale VPNs and remote access networks.

What are the advantages of Nortel's new BayStack Operating System Switching Software (BoSS)?

BoSS is a single software operating system designed to enable enterprise customers to drive lower ownership expenses, including costs related to maintenance, upgrades, configuration, training, and deployment, for disparate switches typically deployed in wiring closet environments. It's a single software image that will give administrators the ability to control a stack of different BayStack devices as though they were a single system. One big advantage for IS managers is that BoSS will also dramatically simplify software upgrades by treating each of the elements of the stack as a single unit.

We've seen recent press releases describing deals such as that with Banverket in Sweden and T-Mobile in the US, but other than the recent Telstra project, what is the biggest deal that Nortel has secured recently in Australia?

Another significant milestone for us in recent months is our ongoing involvement with the CSIRO on the Centre for Networking Technologies for the Information Economy (CeNTIE) project. In January last year, our engineers and 10G Optical Ethernet technology played a key role in a demonstration of networked virtual environment technology undertaken by CeNTIE, a CSIRO-driven consortium developing a "super network" capable of delivering practical applications of programmable networking technologies to end users in Australian growth industries. As a founding member of CeNTIE, we also took part in further demonstrations with Senator Richard Alston in April this year, which involved the film post-production industry, among other end-user industries that will benefit from these advances, which allow temporary enterprises to be set up as required to collaborate on projects requiring large amounts of data to be exchanged.

About Nortel Networks
Nortel Networks delivers internetworking technology solutions to businesses, institutions, and governmentsâ€"ranging from PABX, wireless, call centre, and CTI systems to LAN, WAN, ATM, and IP infrastructures. Customers include ANZ Bank, Australian Department of Defence, Australian Tax Office, and Microsoft.

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