Simon Gibson

We spoke recently to one of Denphone's original founding partners Louis Leclerc, about the recent news regarding Nortel's Chapter 11 bankruptcy filing, what this bodes for Japan, and the future of the local PBX market. Louis Leclerc hails from Canada and during the 1990's worked for Nortel which combined with his 15 years of experience working in IT and more specifically in the telephony field, gives him the ideal background to analyze the current situation.

SG: How do you think the decision by Nortel to go into Chapter 11 will impact the telephony market?

LL: Obviously this is pretty big news for the telephony industry and we have yet to see what the long term repercussions for Nortel will be. With Nortel having roughly a 5% market share here in Japan I think the next 6 to 12 months will be critical for Nortel in terms of both keeping up with advances in telephony technology as well as maintaining the ability to offer a high level of support to their customers in the Japanese marketplace. I think it highlights the importance of avoiding technologies that are very proprietary. Open standards such as SIP offer protection against just this sort of event. Using open systems, like the Asterisk open source PBX software platform that the Denphone PBX's are based on allows clients the opportunity to choose different handset and server vendors as they aren't tied in to a particular proprietary platform. There are other open platforms such as SIP Server that have similar advantages. The Cisco Call Manager platform now supports the SIP standard, and Cisco are embracing more open VoIP standards than Nortel. This seems to be a winning strategy for them going forward. Avaya, Mitel and other appear to be somewhere in the middle.

The Japanese domestic market is dominated by the local Japanese PBX manufacturers, so there will be less impact from the Nortel bankruptcy. The main challenge for the domestic firms is the inroads that have been made by VoIP platforms from Cisco and Avaya as well as downward pricing pressure from open standards in general.

It is hard to imagine, but what if Microsoft went bankrupt? That would leave a lot of companies with a huge support problem. It sounds like a strange thing to consider, but then Nortel was one of the largest PBX manufacturers in the world. If you are looking to protect your companies technology investment then these are the kinds of things you need to consider.

SG: Let's jump back a bit, can you tell me a little about your experience working for Nortel and with Nortel equipment?

I started working for Nortel after graduating from McGill University. Most of the work I was doing was programming DMS100 switches. These switches were the biggest sellers in the Nortel line of Digital Multiplex System (DMS) telephone exchange switches. They basically provide local service and connection to the PSTN (Public Switched Telephone Network). They provide a combination of POTS (Plain Old Telephone Service) , mobility management for cellular phone systems, sophisticated business services such as Automatic Call Distribution (ACD), Integrated Services Digital Network (ISDN), and Meridian Digital Centrex (MDC). You can find these switches in use by telcos around the world.

The programming I did for these switches was in a language called Protel. This is a proprietary language much like C. The C programming language as you may now was developed at Bell Labs when they were known as AT&T Bell Laboratories, and Protel is quite similar to C, being the programming language for Nortel equipment.

Denphone has done some quite interesting work with Nortel equipment, for example, some subcontract work for Nortel here in Japan where Denphone was asked to connect an asterisk server to a Nortel phone switch. This required analyzing the protocol differences between the Asterisk PRI (PRI's are also known in Japan as INS1500) implementation and the Nortel phone switch PRI implementation. The Asterisk driver was modified to resolve the mismatch and enable the two systems to route calls.

Denphone provides support and maintenance for Nortel PBX systems, but recently we have found that the increasing costs are driving our clients to look at alternatives. Denphone has carried out a number of Nortel switch replacements recently. Installing a new Asterisk based system is usually cheaper than maintaining a current PBX solution. This is especially true for smaller office system setups.

SG: So where do you see the telephony market, particularly in Japan going from here?

I think it is going to head much the same way that we have seen the server and database markets move over the last 5 to 10 years. If you think back 5 or so years in the database market then everyone was exclusively using proprietary solutions such as those offered by Sybase, Oracle, SQL Server or even further back Ingres. Today however, cost and licensing considerations have driven a large majority of companies to also use open source databases such as Postgres or MySQL - in fact you would be hard pressed to find a large company now that doesn't have one of these databases running somewhere on their systems. The same goes for linux server setups. So I think telephony, with open source platforms such as Asterisk and SIP Server, is going to head in the same direction. The increasing number of open source platforms such as Asterisk means that rather than employing proprietary hardware, you will be able to use generic server hardware to run your PBX. This significantly reduces costs. These systems also don't require all the cards and hardware that other systems do to offer features such as voice mail and conferencing, so there are some big price savings to be had in those areas.

Aside from open source systems, we will see increasing use of PBX platforms that support open standards, particularly as more VoIP phone systems are deployed. One final wild card is the impact of Skype. This is widely used in Soho environments in Japan, and we expect it to be integrated into corporate platforms, though exactly how this will happen remains to be seen.

SG: Thanks for taking the time to talk to me today.

LL: You are welcome.