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KPN Chooses Lucent as Prime Integrator for All IP Network Transformation Project| August 30, 2006 | Business Telecom Services - Europe Analyst: Dustin Kehoe
On August 28th KPN named Lucent as its prime integrator for the deployment and integration of its All IP Next Generation Network (NGN), based on IP Multimedia Subsystem (IMS). Lucent is responsible for the migration of KPN’s existing services and customers to the new All IP network to meet KPN’s announced marketing objectives. Analytical Summary • Current Perspective: Positive on KPN for naming Lucent as the prime integrator for its All IP network transformation project, and for building a Next Generation Network (NGN) Transformation Global Centre of Excellence (CoE) in the Netherlands. The move promises cost-savings of around EUR 850 million by 2010 and rapid deployment of new services. While many carriers talk-up the benefits of IP, fixed and mobile convergence, few have committed to such significant investments, preferring a conservative NGN overlay strategy instead. • Vendor Importance: High to KPN as the company needed to follow through with its EUR 1 to 1.5 billion investments into building an NGN to realise the necessary cost-savings through the consolidation of legacy networks, core and access, into an all IP platform. Equally, it is also important for KPN a have a robust infrastructure in place to support the rapid deployment of new services. This will be important for offsetting the continual decline in revenue from its fixed network business. • Market Impact: High on the Dutch telecom services market, because KPN’s move to develop its NGN based on IP Multimedia Subsystem (IMS) will have strong repercussions for its national competitors within the enterprise (e.g., BT and Verizon Business), SME (e.g., COLT and Versatel) and residential segments (e.g., UPC and Scarlet Telecom). If OPTA can follow through with its promise of a ‘light touch’ regulatory response, KPN will be in a stronger position to operate from a lower cost-base and differentiate through innovative services (e.g., bandwidth on demand, fixed to mobile convergence and IPTV). Recommended Competitor Actions • Local telecommunications services competitors to KPN (e.g., Tele2/Versatel, Scarlet Telecom and Priority Telecom) need to continue targeting customers with the message that they are more flexible and responsive than the incumbent. • Pan-European competitors (i.e., BT and Orange Business Services), for their part, should underscore their own NGN plans and ability to offer seamless cross-border services across a wider footprint than KPN. • Competitors should also highlight that while KPN’s plans are ambitious, the operator’s NGN strategy is far from complete. They should point out that KPN has not concretely detailed any new products to the market. At the same time, the projected cost-savings of EUR 850 million is a long way out and not guaranteed. • Carriers should also consider the BT method, wherein the carrier itself took the prime integrator role, giving vendors smaller domains in which to do technology-specific system integration. This approach can work for very large incumbents with well established technology organisations, and with the requisite project management skills.
Recommended End User / Customer Actions • Large corporate customers should begin discussions with KPN over how its NGN plans will improve actual services. This should focus on issues dealing with IP, as well as fixed to mobile convergence. While KPN is still a long way out, customers can still initiate this dialogue.
Also read: Lucent to Transform KPN’s Network with Help of New Global Center of Excellence - Carrier Infrastructure - Global
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