Tag Archives: Avaya

An illustration in market disconnect

Lucent Logo, bearing the "Bell Labs Innov...

Lucent Logo, bearing the “Bell Labs Innovations” tagline (Photo credit: Wikipedia)

By George Mattathil – Forbes article, “How AT&T Can Go Shopping In Europe And Keep Its Credit Rating” by Maggie McGrath, provides an illustration how the financial markets are disconnected from reality and creates havoc with real businesses.

AT&T no longer has any competitive advantages, except its ability to borrow huge amounts of capital from financial markets. For starters, AT&T is not the company what most people think it is. Financial wizardry has reduced it to “at&t.”

Financially driven decision-making started at the original-AT&T with the decision to keep the then profitable long distance business and divest the technology (Lucent, Avaya, Agere) and the customer-connecting access networks (Baby Bells.) AT&T then followed it by another disastrous decision to buy TCI cable network, since it no longer had customer-connecting networks. As the original fantasies did not materialize, AT&T was forced to spin off the cable business to Comcast, and lost billions in the process. The result was one of the reconstituted Baby Bells, SBC, bought AT&T and renamed itself as the current ‘at&t’.

SBC had been mirroring the original-AT&T financial strategies for maximizing earnings — such as downsizing, shutting down research, not investing in network upgrades, etc. As an example, after the acquisition of Pacific Bell by then SBC, market leading research activities at Pacific Bell were terminated.

Current ‘at&t’ financial wizardry is based on customer-connecting networks of the constituent Baby Bells of past SBC.

Vodafone, in turn, benefited from Verizon’s financial wizardry. An estimated $20 billion investment by Vodafone in Verizon Wireless has turned into a $145 billion payback.

Seems the success of network operators is not based on how well they run their network operations, but how much they can borrow — a lesson learned probably by watching how Washington operates!

Impact of the financial wizardry by network operators is not limited to news generation, or even contained within their respective organizations. Network being a key enabler for economic activity, the costs and pain of network operator missteps are distributed to their customers and the entire economy. But the financial benefits from the wizardry are seldom shared, except, may be, as increase in share price.

Another impact, not easily identified, is the current turmoil at Alcatel-Lucent. AT&T used to be a major Lucent customer. But plans to migrate their infrastructure to VoIP (Voice-over-IP) make the current infrastructure and major Alcatel-Lucent product lines redundant. This has made it necessary for Alcatel-Lucent to reorganize their business operations. And placing a question mark on its future.™¦

Related>

Avaya beefs up switch architecture to compete with Cisco, HP, others

By Jim Duffy – The new Ethernet Routing Switch (ERS) 4000 series switches are designed to help enterprises optimize networks for collaboration, and simplify the convergence of voice, video and data. One of the key new features of the line is a boost in stacking bandwidth from 320G to 384Gbps.

The switches are compatible with Avaya‘s Virtual Enterprise Network Architecture (VENA), a blueprint unveiled a year ago to allow users to optimize the network for business applications and services through virtualization.  VENA is competing with other network virtualization and fabric architectures from Cisco, Brocade, HP, Dell, IBM, Extreme, Enterasys, Alcatel-Lucent, and others. more> http://tinyurl.com/mj6z6fx