Sue Spradley heads what is arguably Nokia Siemens Networks most important division: North America. Despite losing an important auction for Nortel’s LTE assets, Spradley’s determination to become the dominant infrastructure vendor in North America is undeterred.
Wireless Week Associate Editor Maisie Ramsay recently spoke with Spradley about what the future holds for the company. Below is an edited transcript of their conversation.
Wireless Week: You were recently appointed to Nokia Siemens Networks executive board. What should the industry take from that appointment in terms of Nokia Siemens Networks’ overall strategy? What does it mean for the North American market in particular?
Sue Spradley: It’s consistent with our overall strategy. Since the beginning, Nokia Siemens Networks has said one of the markets we needed to grow our success in is North America. My appointment is both a reflection of that and the fact that our strategy hasn’t changed over the past couple years. [My appointment] gives Nokia Siemens Networks’ executive board a direct line to customers’ needs in North America, which are not always the same as in the rest of the world.
WW: Nokia Siemens Networks was the stalking horse bidder for Nortel’s CDMA/LTE assets, but those assets were won by Ericsson at auction. What decisions went behind your choice?
Spradley: Obviously we’re disappointed in the outcome of the auction, but we made a very cognitive choice in the stalking horse bid: We could have done it quietly, but we decided to make it clear to the Canadian government, to the U.S. market, to the world that we’re in North America and we’re here to stay. Part of our strategy was to look at specific acquisitions of Nortel assets that could help our growth strategy.
As far as what happened at the auction itself, we had a value that we felt was right for that business. We stuck to our beliefs and I think we made the right choice - time will tell.
Regardless, it hasn’t changed our strategy. Not winning those assets didn’t mean that we’ll fold up our tents and just go home. It was just one of many areas of growth we see in North America and we will continue to pursue the rest of our strategy.
I really do want to emphasize the point that we made the decision to go public. I wouldn’t change that for the world. We sent a very strong message both internally and externally that Nokia Siemens means business about this market. Our customers got that loud and clear regardless of the outcome.
WW: How has the outcome of the Nortel auction changed your forward-looking business strategy for the North American market? Are you upping the ante with your own internal research and development because you didn’t get those assets?
Spradley: Ottawa was one choice for us to have a North American center of excellence for research and development. Because of not winning the assets, we decided to increase staff at our Dallas R&D facility where we already have 600 employees and focus that center more on North American LTE requirements. In that sense that’s a change, but you don’t hear me saying it’s a revolution. We already had an R&D center there, we were already working on LTE there; we just decided to grow the population in Dallas further.
We are going to be a player in North America, we have already established that with the growth that we demonstrated. [Nortel] was just one of many avenues that we were going to go down. That one is closed so we’re going to go down other ones now.
WW: Nokia Siemens Networks North American sales rose 31.6 percent last quarter to 208 million Euros. What’s behind this increase?
Spradley: Since Nokia Siemens formed, its goal was to grow in North America. The number one thing we decided to do when I joined was diversify, to really go after new market opportunities. The easiest example I could give you was the focus we put on Canada, where we won Telus, Bell, Videotron and Globalive. We’ve also grown our existing transport business and packet core business, just look at the IMS win with Verizon.
WW: How many contracts to do you have in North America, and with whom?
Spradley: Many customers do not like to release their contractual obligations. It’s just how we do business. We’re very respectful of our customers’ requests in that area. We let the numbers and our performance speak for themselves.
WW: How are LTE and WiMAX deployments affecting business for Nokia Siemens Networks?
Spradley: My sense is that we’re in very early days for 4G when it comes to LTE and WIMAX. You see some announcements for trials, but I would say the verdict is still out on which vendors are really going to win in the space. 2G taught us that having the first trial equipment doesn’t mean you’ll be the best for large scale deployment.
That said, we’re in a great place in the industry because a lot of learning is going to come from both. We believe that 4G is a path to the future. Whether you take a path going to WiMAX or take a path going to LTE, you may realize different capabilities and functions in your networks but both are means to getting that great new experience that consumers want.
WW: How are you dealing with existing deals that Nokia Siemens Networks missed out on? Where you see opportunities for expansion?
Spradley: I think you have to be careful. This is what we saw in 2G to 3G: There were a lot of trial announcements, but then when it came time to deployment and really operating a network, things changed a bit on who the leaders were [in the vendor space].
There’s a lot of focus around LTE around radio. Obviously that’s exciting to us but backhaul and transport is going to be as important in 4G. The market is not just about radio, it’s also about transport and managed services. Are all these operators really going to try and run all these networks themselves, or are they going to seek people like us to help them manage and run the networks? In the future, is winning managed services just as important as winning the radio?
WW: What is the biggest challenge that you face going forward to 4G?
Spradley: I don’t think it’s just our company. The industry faces the distinct fact that it is early days for the technology. Companies have to have the wherewithal to be invested in 2G, 3G and fulfill the research requirement going into 4G. For the industry, the challenge is managing these technologies and skills.
Winners in 4G are going to understand where the market is going and invest accordingly. Nokia Siemens Networks want to make sure we don’t just deliver a bunch of technology. We want to deliver technology our customers can use so that their customers have a dynamic experience on the network. We think that’s the ultimate goal of 4G.
WW: In the wake of Canada’s spectrum auction, its market is rife with new entrant carriers. Are there any new entrant Canadian operators who might go straight to 4G?
Spradley: I don’t know of anyone that’s going [straight] to 4G. My sense is that would be complicated to do because Canada just doesn’t have the population to drive it, to get the ecosystem behind it.
WW: Generally speaking, how are the U.S. and Canadian markets different in terms of 4G deployments?
Spradley: Canada has actually been a bit of a challenge to the vendor community. You might have to provide service to both downtown Toronto and rural Saskatchewan at the same time. Those are two different populations with two different types of consumers, the temperature variances are tremendous, but it’s a market we’re excited to be a part of.
WW: Nokia Siemens has been touting its Rural Utility Service (RUS) credentials. How do you see federal stimulus funds affecting your business? Have the stimulus funds caused you to reexamine your WiMAX plans?
Spradley: We remain committed to 4G, whether it’s LTE or WiMAX. If we find a rural customer that wants a WiMAX deployment, we’ll pursue that in the same way we pursue anything else.
We do have the RUS acceptance for the wireline IP DSLAM/DWDM and HSPA wireless networks, and are focusing our products to be acceptable for those funds. We hope to see some new customers for everything from the technology, to building it and perhaps even managing the networks as we go forwards.