Interview with Mauro Sacchetto, CEO, Pirelli Broadband

Why do you offer customized products rather than standards based products? Does that business model scale for you?

Our business model targets telco operators and not the retail market. Due to the increasing complexity of IP-based services (VOIP, IP-TV, etc), customization of products is a key driver towards a successful implementation of each service. We add value by working closely with telcos from the beginning. We tailor the solution for each customer and their network environment. We are able to scale our business model thanks to our platform approach, where we have a main baseline of development of HW and software that is always up-to-date thanks to our active participation in the major standardization bodies and that can be easily tailored to match each telco specific need

Can you give us some examples of customization in CPE for VoIP? Can you also mention some names of your service provider customers?

VOIP is meant to provide basic telephony over IP. On top of that IP technology allows us to implement a series of additional services and features that can be customized, such as conferencing, fax, presence, instant messaging and so on. Fastweb is one of our major customers and is seen by the broadband community as an innovative player in the triple play arena. We have been working with them since the early stages and we have been one of the first companies to deploy commercial triple-play products.

You have WiFi enabled VoIP products. Is WiFi or WiMax the way to bring fixed and mobile networks together?

Several technologies are competing within different service models and scenarios.

Fixed operators are looking for convergence starting from their fixed infrastructure and mobile operators starting from their mobile infrastructure. There is a bunch of technologies that can allow this to happen, WiFi, WiMax, HSDPA and so on. Definitely today SIP-based technologies (the one we have gathered a strong experience in) seem to be the right ones to allow IMS networks to happen and implement a single-network converged approach. On the client side, we believe several technologies will allow client devices to hook on the converged network. Today WiFi and 2/3G are the first candidates for this convergence path.

You have recently announced a dual mode phone. What is the near term future of these phones given that the FMC standards are constantly evolving? Do you think this is the right time for you to invest in these phones when the standards have not been ironed out yet?

For a company like ours that is a strong player in the fixed broadband market, being a forerunner in dual mode devices can enable us to open new business opportunities before mobile market leaders dominate the scenario. Since this a new market with still a lot of customization required, it is exactly the moment for us to enter. Once standards are set, we will have gathered sufficient visibility and experience and a good competitive advantage

Have you signed up any service providers for your dual mode handset?

At present, we have signed two relevant contracts in Europe with leading operators such as Arcor (Germany) and Free (France).

Do you have confidence in the Voice over broadband model, which is essentially best efforts telephony? How will a service provider be able to provide QoS guarantees here given that a voice call will travel over various networks over which the originating carrier will have no control?

We have confidence in Voice over broadband since we have demonstrated in real service deployments that quality is reliable and can exceed users’ expectations if the end-to-end chain is properly designed. To this purpose, we merge our expertise on both the CPE access gateway and on the endpoint (such as the Dual Mode VoIP phone) to apply consistent and coordinated QoS mechanisms.

You are able to customize security features for customers. What unique challenges does wireless security bring to you as opposed to wireline security?

At the wireless protocol level, we apply our state-of-the-art security standards and algorithms. On top of that, we implement a “no-compromise” security approach for additional security mechanisms.

Can you point at certain differentiating remote management features that are available to the end users of your products?

While we have been contributing to the creation of industry standards for remote management, we work daily to address the service automation of new application scenarios that are not covered yet by current standards, and for which we therefore create specific solutions that minimize time-to-market. The user has no direct interaction with remote management, but rather benefits from a friendly, easy and no-trouble user experience. Among a number of breakthrough implementations, the automatic configuration that we have introduced in Dual Mode Phones is certainly one that has turned the problematic user experience of WiFi phones into a straightforward one as it is normal for a standard mobile phone.

What do you think is the future of a residential gateway? What will it look like in 10 years' time?

We believe it will be the central communications hub in the home that will enable/control not only telco services (triple and quad play) but also healthcare, domotics, e- governance, etc. services. We think that there is an incredible opportunity to have all these services converging through the domestic hub, providing also new business models such as nomadism over end-users (ie each end customer residential gateway becomes an access point for friends).

People have historically not been keen on using video telephony applications. Does triple play change that in any way?

Our belief is that video telephony has not spread significantly because it does not offer the required flexibility and appeal of service. As an example the screen is still small and you are bound to a physical location in the house that could not be comfortable for video services. The possibility to have video calls on the TV set through a set-top box offers a completely new scenario for end-users who could make a phone call sitting on their sofa while they watch their favorite TV program or download their VOD movies

How are your access gateway products doing in terms of shipments?

We have recently exceeded 5M units shipped to the market, all in the segment of high-end products (data-only modems represent a small fraction of our business).

How do you perceive the competitive threat coming from Chinese access gateway vendors who can significantly undercut you in terms of pricing?

New services have to be supported through extensive SW development and customization that can be implemented through a dedicated team that works daily with end customers. Chinese vendors are able to offer appealing prices but have no local presence and customer management capabilities

By the way, does tyre business help you in any way in your broadband gateway business?

For over a century, the history of Pirelli has been the history of tyres. A history built on quality, technology and high performance tyres, in which Pirelli is the world leader. Tyre positioning and, more generally, the strong Pirelli brand awareness underpin our products, which are seen as high-quality, innovative and reliable. Besides, Pirelli worldwide presence in the Tyre business, with 160 countries served, can give us additional opportunities, especially in certain markets such as South America, where Pirelli is a very strong player with a history of over 80 years.

What are the various trends in access gateways?

1) Different WAN connectivity: on top of xDSL, Fiber (Ethernet and PON), wireless (HSDPA, 4G, Wimax). 2) New models of client connectivity : on top of Ethernet and WiFi, UMTS mini base stations. 3) Increased services enabling : domotics, healthcare, e-governance etc.

What are the various trends in IP set top boxes?

1) Convergence of IP-TV with DVB-T to exploit existing terrestrial television services …  this will allow telcos to avoid burdening IP networks with contents that can be accessed over the air. Besides, some content owners charge licenses for Free to Air content to telcos for distribution over IP networks. 2) High Definition. 3) Video conferencing capabilities.

How do you view the overall regulatory environment for VoIP around the world? Is it creating additional opportunities for you or not?

The market adoption of VoIP is definitely creating new opportunities for us. We have been a first mover in VoIP and we have demonstrated that you can achieve today a quality of experience and a quality of service that can exceed the mobile and POTS voice standards. All the forward-looking incumbent operators have realized that VoIP brings a new perspective to traditional voice services and are embracing its adoption - in several cases brushing aside the regulatory pressures.

What are the challenges that remain for Pirelli with respect to VoIP?

At Pirelli, we are already working beyond the current state-of-the-art deployment of VoIP, and we are developing a number of innovations that will further exploit the un-tapped potentials of the IP technologies. Voice is in fact just one of the elements of a multimedia user experience.

Where do you see Pirelli Broadband five years from now?

Pirelli will continue its strategy to exploit the opportunities in the marketplace.  For example, today people speak of a saturated mobile market. Pirelli was able to address an underserved market through an innovative dual-mode solution offering.