Cisco urges telecom firms to tackle inefficiency

By Yoon Sung-won

Cisco Korea said Wednesday SK Telecom and other telecom companies should cope with inefficient network business structures through virtualization technology to effectively compete with global players.

“Local telecom service providers are ill-positioned. They are relatively inefficient and slow as they have operated separate networks for fixed-line connections, mobile customers, business-to-business and media due to technological limits,” Cisco Korea’s systems engineer and manager Sean Wang said at a press conference Wednesday.

Wang said local telecom companies including SKT, KT and LG Uplus do not have a cloud data center overseas and thus are seriously disadvantaged in providing cloud services to overseas countries alongside device makers such as Samsung Electronics.

On the other hand, global IT firms such as Google and Amazon are operating in the global scale and are capable of launching new services quickly without such problems thanks to cloud computing and network virtualization technologies, he said.

Cisco also said the network virtualization technology will help telecom companies save network operation expenses in their Internet protocol television services.

Expectations are that there is much to be seen for Cisco in attracting local clients to make extra investment for the new technologies amid a lukewarm atmosphere for them among Korean firms.

“We already signed to a deal with some 20 companies, including Australia’s Telstra, to upgrade its network business structure based on cloud and virtualization,” Cisco Korea’s service provider sales director Park Jae-beom said. “We also are talking to a certain Korean telecom firm for a deal, though we cannot specify its name now.”

Cisco has emphasized cloud computing, network virtualization and what it calls the “Internet of Everything” to diversify its portfolio.

In recent years, the world’s leading network system vender with almost 65 percent global market share has encountered a business slump.

Its net profit between August and October of last year was $1.8 billion, down 8.4 percent year-on-year. Being chased after by Chinese companies such as Huawei and ZTE, its business in China and the Asia-Pacific region was hit the hardest as the sales in the regions dropped 33 percent and 12 percent, respectively, in the same period.