A Conversation With: Petri Lyytikainen
Chief technology officer for Canada at Nokia Siemens Networks talks about last year's merger and many other topics including a corporate vision called Connect The World.
July 1, 2008
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CNS: The formation of Nokia Siemens Networks (NSN) brought together two distinct corporate cultures. How easy or difficult has the whole transition been?
Lyytikainen: I have not personally been part of this size a merger before, but what I’m hearing from other people who have is that this has gone extremely well and we are hearing the same feedback from our customers.
There are a couple of key points that this company has done right to make it as smooth and manageable as possible. First, this is all about the people. You want to get them excited and motivated about the new company.
We have had a clear and consistent vision from the beginning, which is to connect the world, which includes a couple of key components that have really helped us in combining different assets of both parent companies and guided our various businesses when it has come to establishing a strategy.
By 2012, there will be 5 billion people connected or around 70% of the world’s population. Right now, that number sits at around 3 billion.
They will be connecting through wireless or wire line broadband. The connections themselves will be everywhere in both developed and developing countries.
This leads to 100-fold traffic growth in the network. That will give us and the industry the right magnitude target when developing next generation systems. Telecom, Internet, media and IT domains are all converging. We believe that those providers and carriers who can offer the highest level of simplicity in the next-generation network — connecting people and content — will be the winners.
But good strategy is not enough. Another key cornerstone has been strong emphasis in combining two strong, distinct cultures and creating values for the new company.
Tremendous effort has been put in discussing and formulating the new values at all levels of the company. We have actually hosted culture workshops to this day. We feel we’ve embraced the strengths of each company and enabled a manageable transition that’s laying the foundation of an even stronger company moving forward.
CNS: As a global company, clearly you invest a great deal of capital in R&D. What key technology areas are you currently focusing on?
Lyytikainen: Innovation and leadership continues to be our strength and focus and R&D is at the heart of our organization. Together with Nokia, our parent company, we are investing a lot in this area. We are among the top 10 among all industries and clearly number one in the telecom industry.
We need to deliver faster speeds and an improved user experience, but also at the same time, we need to dramatically decrease the cost structure both in terms of carriers’ opex and capex.
There are many initiatives today including LTE (Long Term Evolution) for radio where we have already made tremendous strides in developing cutting edge products. The world’s largest operators have selected us for their LTE trials. Other areas of focus are, converged, converged core networks to enable converged applications for fixed and mobile domains, and IP transport, particularly in optical and Carrier Ethernet.
CNS: Nokia Siemens has publicly stated that one of its primary goals is to ensure that IP applications are as truly mobile as voice in all mobile networks. Can you describe to me what the network of the future will look like?
Lyytikainen: We see that networks of today must undergo a huge transformation to a much more simplified architecture that would embrace IP technologies and accommodate this 100 fold traffic growth. Next-generation networks will use optical transport and aggregation and be based on IP to enable significantly cheaper transport over larger bandwidth.
The flat architectures are absolutely crucial in order to bring carrier costs down and improve the end-user experience. Flat means having less network. In fact, we have been innovation leaders with large international operators in flat architectures providing ideas in the standardization and developing commercially available solutions.
Also in fixed access technologies we are driving the cost per megabit down with next generation DSL technology and optical access technologies. This development both on the wireless and fixed side is enabling the growth of connectivity to users wherever they happen to be.
The service layer of the network will enable any service over any access technology on any device. Instead of just voice and text messaging there will be many more applications and the same multimedia applications we use today in fixed networks will be available also in mobile networks. This all requires a faster, more flexible way of deploying new services and applications. The cost of introducing new applications or bundling existing ones needs to be reduced in terms of integration related investment to the existing network as, for example, OSS and BSS domains. Service Delivery Framework and IMS will be key in enabling this.
CNS: In mid-May, the company won the Excellence in Innovation award from the Telecom Equipment Manufacturers Association for an offering called Village Connection. What does it entail?
Lyytikainen: It is designed for new growth markets where we need to be able to provide solutions in a cost efficient way.
Today, half of the world’s population live and work in rural areas. It is a real challenge for many to have affordable connectivity for them to communicate. Based on our studies, typically people pay roughly US$10 a month for mobile services, but for these emerging rural markets we need to make it even cheaper.
Village Connection is a solution that enables a franchise-based business model between an operator and a local village entrepreneur. It benefits the village and benefits the operator who can now extend their network coverage without huge rollout costs to rural areas.
It is an IP-based network architecture that supports both voice and SMS. Installation is simple as is the ability to manage the network.
CNS: Since joining Nokia in 1992, you have worked extensively in the mobile network infrastructure space. What are the biggest changes you have witnessed during that time?
Lyytikainen: It is good to look back now and again. I can certainly say that it has been an interesting ride because so much has happened. What comes to my mind first is the tremendous growth. Mobile communications has really expanded to all markets and countries in the world. Our company alone is doing business in 150 countries and over one billion people are currently connected through the Nokia Siemens infrastructure.
The second point is the consolidation of this industry as a result of fierce competition. That happened first on the carrier side and more recently on the vendor side. You really need to have scale to play this game where large upfront investments are needed in order to develop new product streams. You need to have at least a number two market position in order to finance that. The third change is the variety of customers. We used to deal only with traditional mobile operators, but for a long time now we have been dealing with all kinds of customers: fixed, hybrid, service providers, Internet players. And the fourth point is that operators’ focus is shifting from operating their networks to serving their end users in the best possible way. This shift is already happening big time elsewhere in the world but just coming to North America. This means operators focus on marketing and customer service and let somebody else manage and operate their network. This is of course one of the big opportunities for us in North America.
CNS: You oversee a team of wireless technology experts who work specifically with Canadian carriers. What are those carriers asking you to do for them?
Lyytikainen: We feel extremely positive about the opportunities here in Canada. They are interested in talking to us because of our thought leadership in this industry, which is guiding carriers in th
eir transformation to next-generation networks. We can offer many leading edge solutions that can significantly lower capex and opex and help Canadian carriers to differentiate in the marketplace.
We are also clearly the number one vendor in 3G networks. We have the most customers and commercial operating networks in the world. Bringing this to Canada gives us unique differentiation and it also helps Canadian carriers.
CNS: The Canadian team for Nokia Siemens hosted an analyst dinner last year to discuss what they have been doing to establish a brand in Canada. What inroads have you made since then?
Lyytikainen: A year ago our focus was to introduce ourselves to the Canadian marketplace. In the last 12 months we have gained a lot of traction with operators and carriers in this country. We feel very positive about our opportunities and the position in this market.
Our commitment to Canada is understood, which has allowed us to now be known as a serious player in what can only be described as a fiercely competitive environment.
All in all, it has been an extremely exciting year for us.
CNS: What is the Rich Communication Suite initiative all about and have any Canadian carriers expressed an interest in joining?
Lyytikainen: This is an important initiative. Today, consumers are familiar with enriched communication applications on the Internet. However, the fact is that multimedia services in general have not taken off in the mobile domain as quickly as we had hoped. One key obstacle has been the lack of interoperability between different devices and networks.
We all know from text messaging, how vital interoperability is for mass market takeoff.
The initiative was announced in May 2007 by some major players including device and network vendors and carriers.
The intention is not to create new standards, but rather specify a core feature set that can be implemented using existing standards, in order to ensure that different devices, networks and clients can work together. It covers all sorts of multimedia services such as voice, instant messaging, retail and chat. We view this as being very useful for the industry. The door is fully open for Canadian operators to join.
CNS: There appears to be an acute shortage of qualified ICT workers in this country. Do you agree with that statement and, if so, what needs to be done to resolve the problem?
Lyytikainen: We have not faced the issue that much yet, but I have certainly heard about the concerns.
We are one of the global leaders in this industry and we do have the responsibility to foster environments that attract qualified workers. The strength of our future and innovation frankly depends on the consistent entry of new talent each year. We need both the senior people and the fresh talented ones entering into this industry.
We are involved in some community initiatives that focus on education in general in math, science and technology.
In Canada, we have sponsored and funded some university programs and scholarships. You need to keep students excited about all the opportunities.
CNS: Finally, NSN conducted a study in conjunction with the London Business School and consulting firm LECG last year, which found that even the world’s most connected countries are not exploiting the full potential of telecommunications and computing technologies. Why is that?
Lyytikainen: As a company, we want to orchestrate lots of discussion about how ICT is used in various countries and spearhead conversations with the key influencers in different countries.
Canada actually did pretty well. It ranked fourth, however, the study found that there were gaps in consumer usage and skills and also low mobile and 3G penetration.
Every major country and every major company needs to ask themselves if they are using technology to make people’s lives easier.
As far as Nokia Siemens is concerned, we need to continue focusing on a better and simpler end-user experience when it comes to devices and the network as well as affordability and enabling more cost efficient networks that lead to more affordable and versatile usage of networks.