NSN to push cloud computing to telco gear market

Mon Sep 19, 2011 7:00pm EDT

Related Topics

* Nokia Siemens Liquid Net for sharing net resources

* Capacity constraints growing for telecom operators

* First major step in commoditising telco hardware market

By Tarmo Virki, European Technology Correspondent

HELSINKI, Sept 20 (Reuters) - Nokia Siemens Networks (NSN) [NOKI.UL] unveiled on Tuesday its new Liquid technology which promises to ease telecom network congestion and possibly change the market for such equipment for good.

The technology from the world's No. 2 mobile gear maker after Ericsson (ERICb.ST) shares network resources across mobile and broadband networks, similar to cloud computing.

"For operators it offers a better use of capital. You invest in total network load, not in peak levels," Phil Twist, head of marketing at NSN's Network Systems unit, said in an interview.

Telecom operators around the world are struggling with a shortage of network capacity as the use of video on smartphones and tablets proliferates. The shortages usually occur during rush hours at specific locations.

Networks at city centres are crowded, base stations in suburbs which are scarcely used during the daytime. With traditional technology, operators have to buy new base stations for the centres to cope with the growth.

According to Nokia Siemens, up to 80 percent of base stations' processing capacity and up to half of core networks' capacity is unused.

CHANGING THE MARKET?

The technology of the 50-50 venture of Nokia (NOK1V.HE) and Siemens (SIEGn.DE) removes the computing power unit, one of the two key units of traditional station, from the base station. The network shares computing power between all stations.

It is the first major step towards using standard servers by telecom equipment makers which have been historically able to fetch strong margins from dedicated equipment.

The new network software provides most of the required features, reducing the need for dedicated equipment.

This poses a risk to market leader Ericsson, as well as Chinese players Huawei [HWT.UL] and ZTE 000063.SZ, which have stormed the market with cheap and strong dedicated hardware offerings.

In recent years, Ericsson and the Chinese firms have put strong pressure on NSN and Alcatel-Lucent (ALUA.PA) which have struggled to make a profit and have been forced to try to find the next breakthrough technology ahead of the others.

Nokia Siemens said it has already started deliveries of its Liquid products. Rival Alcatel-Lucent has unveiled a comparable, stripped down future base station, but it is scheduled to start first deliveries only next year.

(Editing by Richard Chang)

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