NEW YORK-Northern Telecom Ltd., Toronto, completed its $7 billion-plus acquisition of Bay Networks, Santa Clara, Calif.
Nortel is the third-largest wireless infrastructure supplier in the world. Wireless telecommunications remains the fastest-growing of Nortel’s five independent business units, each of which currently brings in about $4 billion in revenues annually to the company, according to Nortel.
“The next frontier in wireless is third generation for mobile data,” said John Roth, Nortel chief executive officer.
As part of his new role as president of Nortel, Bay Networks President David House “will help the Wireless Networks group in Dallas design end-to-end data networks for wireless mobility … using a combination of Nortel’s wireless networks and the [Internet Protocol] networks Bay specializes in,” Roth said.
For a long time now, data traffic over telecommunications networks has grown at a compound annual rate of 30 percent, while voice traffic has grown at a compound annual rate of 3 percent, he said. Measured in “volume of bits,” data traffic now comprises the largest proportion of telecommunications, although voice communications cost 10 to 13 times the price of data.
“Carriers are using voice technology to service data traffic. While today’s voice network handles voice (communications) just fine, voice technology is 20 times less efficient in handling data,” Roth said.
“This is leading all carriers to look at how best to handle data.”
The transition to packet data from circuit switched data, a process that likely will take a decade to complete, represents a related opportunity for the combined company, Roth said. Consequently, Nortel has just established a new Carrier Packet Network organization in Boston to work on providing “heavy duty, mission critical networks that operate alongside traditional voice networks,” he said.
To Nortel’s work force of 73,000, Bay Networks, now a wholly owned subsidiary, will add 15,000 employees, all specializing in providing mission critical IP routing for large corporations. Bay Networks’ expertise will enable Nortel to fulfill the demand from wireless and wireline carriers and large businesses for unified networks comprising packet and circuit-switched data and wireless and fiber-optic telecommunications, Roth said.
“This is becoming more and more important, and we are one of the few companies able to offer, package and smooth the transition to unified networks,” he said.
