Nortel Networks: Old Dog, New Tricks

By Baselinemag  |  Posted 2004-03-01 Print this article Print

Nortel, relatively slow off the mark, is counting on its strong customer base to make inroads.

Nortel, stung by the dramatic drop-off in telecom spending, has been slow off the Internet Protocol (IP) telephony blocks. In October 2003, for example, the company finally released common software for its IP-only Succession and legacy Meridian phone systems, giving customers a way to migrate from the older technology to full-featured IP-based systems.

But the company has secured a foothold in IP telephony largely because—like Avaya—it's well entrenched in the circuit-switched voice arena. An estimated 50 million enterprise phone lines are connected to Nortel equipment today.

The Klein Independent School District (ISD) in Texas selected Nortel phone systems in 2000 after evaluating offerings from Cisco and others. "We felt Nortel had a major position in the voice-communications marketplace," says Donald Chiu, the district's associate director of information technologies. Still, he notes, Nortel is an expensive choice: Klein ISD spent about $3 million to deploy 2,500 wireless, IP-based phones to teachers and staff. "For a school district, Nortel's pricing looks like a luxury. But I think voice communications is a required utility," Chiu says.

Some Nortel customers realized IP telephony saved money only after they started using it. In 2001, the House of Blues Concerts Canada began experimenting with voice-over-IP to connect its Nortel system in Toronto with its Vancouver office. The company found it cut long-distance charges by up to 80%, saving around $900 ($1,200 Canadian) per month, as most calls were between the two locations. "We save just unbelievable amounts of dough," says Howie Gold, manager of information technology.

For John Wegener, chief information officer at St. Michael's Hospital in Toronto, IP-enabling an existing Nortel private branch exchange (PBX) was the best means of adopting the new technology. "We had no reason to change from Nortel," he says. In mid-2002, St. Michael's deployed 140 IP-based phones, which has eliminated the costs associated with moving them among offices. The IP models simply plug into Ethernet- network jacks and are up and running; moving a traditional phone requires a technician to reprogram the PBX and can take up to two hours.

But otherwise, the IP-based phones provide exactly the same functions as the old ones, so Wegener hasn't felt compelled to roll out new units for the rest of his approximately 6,000 employees. "More pressing projects are taking precedence," he says.

Nortel Networks
8200 Dixie Road,
Brampton, Ontario L6T 5P6, Canada
(905) 863-0000

Ticker: NT (NYSE)
Employees: 36,960

Alex Pierson
VP/General Manager, Enterprise Business Networks
Oversees voice phone systems for business, including those based on Internet Protocol (IP). Joined Nortel in 1980 after graduating from college with a business degree.

Mark Bissell
Dir., Product Management, Enterprise Business Networks
In charge of development and strategy for the Succession line of IP voice systems.


Succession 3.0 is IP call-server software that runs on dedicated servers as well as Meridian 1 phone systems designed for circuit-switched networks. The Business Communications Manager (BCM) telephony and data networking system is aimed at small and midsize businesses and branch offices.

Reference Checks

Klein Independent School District
Donald Chiu
Associate Dir., I.T.
(832) 249-4440
Project: Texas school district connected the Nortel system at one location to its main office over a fiber-optic link, saving about $45,000 per month on regional phone charges.

St. Michael's Hospital
John Wegener
(416) 864-5766
Project: Toronto hospital added IP capability to its Meridian voice system for 140 phones.

Oregon Dept. of Transportation
Vance L. Snook
Telecommunications Coordinator
Project: Agency connects a Nortel phone system at its main Salem facility over IP to a Portland field office and to a Wilsonville prison that operates a 40-inmate call center.

Southwest TelecommuniCations Cooperative
Rod Wrege
Project: Minnesota educational-service agency uses Nortel BCM to link voice calls among five school districts over IP.

Buca Inc.
John Motschenbacher
Senior VP, I.T. and Purchasing
(612) 288-2382
Project: Italian restaurant chain uses Nortel's BCM to route phone calls placed to 104 eateries to a central reservations call center over IP connections.

House of Blues Concerts Canada
Howie Gold
Manager of I.T.
(416) 260-5700
Project: Concert promoter sends calls between its Vancouver and Toronto offices with Nortel's BCM, cutting long- distance charges.

Executives listed here are all users of Nortel Networks' products/services. Their willingness to talk has been confirmed by Baseline.


Submit a Comment

Loading Comments...
eWeek eWeek

Have the latest technology news and resources emailed to you everyday.