Telecom seals internet protocol deal with Alcatel

11.25am

Telecom New Zealand has announced it will partner with French equipment maker Alcatel to upgrade its fixed network. The deal will see Alcatel bring Telecom's fixed network up to IP or "internet protocol", the standard that combines voice and data over the same line. It will include Telecom's links with customers in Australia.

Telecom said it hoped to make "significant" operational savings which were likely to run into the tens of millions of dollars over the next few years.

The agreement was Telecom's most major move yet towards broadband and more sophisticated services, an industry observer said.

"The distinguishing element of this relationship is that Alcatel will be the primary supplier of equipment to provide new services in New Zealand," Telecom's general manager for network investment, Rhoda Holmes, said.

She said Telecom currently invests around $300 million in capital expenditure each year on its New Zealand network.

"We envisage that over time, a large slice of this expenditure in New Zealand will go to Alcatel."

The move came as Telecom addressed its annual $600 million operational cost base, Mrs Holmes said.

"The total relationship benefits will come from lower costs as a result of more efficient operational models and increased revenues as we use Alcatel's global knowledge and expertise about products and services."

The new IP network would mean Telecom could combine voice and data on the same line, roll out new services more quickly and cheaply, and increase data speeds for many customers.

Mrs Holmes said the changes meant taking the huge leap from the digital world to an IP world. Alcatel would design and supply the operational support systems (OSS) for the network. EDS, Telecom's IT service arm, was expected to integrate the OSS with the carrier's business systems.

The agreement was based on partnering rather than outsourcing, Mrs Holmes said.

Mark Giles, Alcatel New Zealand's managing director, also welcomed the decision. He said one out of every five subscribers in the world was "Alcatel connected".

- NZPA