with Rick Corker, head of Nokia Siemens Networks, North America
Nokia Siemens Networks appointed Rick Corker to lead its North American business nearly two years ago, following his successful stint as head of NSN's Asia-Pacific region. Corker met with FierceBroadbandWireless Editor Tammy Parker during the 2013 Mobile World Congress to discuss NSN's strategy and business prospects for North America. The following is a lightly edited version of that conversation.
FierceBroadbandWireless: What's the main message you would like to get out at this show?
Corker: I think the big story for us was that we just had our best ever Q4. In fact, we had the highest operating margins in our industry. Given the transformation journey of the last 12 months I think we're starting to see a real turnaround in business. The tough decisions we took in terms of reducing the head count, reducing the portfolio, we're starting to see that in the numbers now in terms of strong cash growth and strong profitability. We're looking to keep driving that growth. The other part of our strategy was around the three priority markets--Japan, Korea and the United States. We had growth in all three markets, so that strategy is also bearing fruit in terms of having a stronger presence in the technology lead markets. In fact, I think North America was our fastest growing region in Q4 globally for NSN.
FierceBroadbandWireless: Last year when we met at the Mobile World Congress, I wrote a headline based on our interview that read, "Nokia Siemens says small cells, optical are keys to U.S. expansion," but NSN has since sold off the optical business to Marlin Equity Partners. Can you reflect on how the goals from a year ago have changed?
Corker: The optical business was growing in the U.S. We had a strong optical base, a healthy business, but obviously that is being transferred out. Regarding small cells, we continue to invest. Our global center of excellence for small cells is outside of Chicago in Arlington Heights. We have a big R&D center where we've been taking in a lot of the requirements for the U.S. market. I think generally what we've seen on small cells, it's been a little bit slower to take off than we thought. We've kind of gone through the hype phase. I think we're starting to see now with the traffic growing, in the next 12 months we'll see more real deployments of small cells. I think a year ago it was hyped, but I think we'll start to see practical deployments coming in the next 12 months. That's an important one for us.
I think regarding our growth, a year ago we were in the midst of the uncertainty of merger of AT&T (NYSE:T) and T-Mobile. That was a big swinger for us because once that deal didn't go through, T-Mobile, which has been a long-term partner of ours in the U.S., had to go back out and really begin investing in their network. And of course we were successful in winning a large part of their network modernization contract. In the last 12 months our growth has come from LTE macro deployments. We've had Bell and Telus in Canada, LTE deployments with T-Mobile--which is the largest, though the majority of their LTE will happen in 2013--and we were successful in winning U.S. Cellular (NYSE:USM) contracts. We've had good growth with LTE. That's actually our fastest growing segment now.
FierceBroadbandWireless: That's been a nice surprise.
Corker: We had planned for it, but T-Mobile was the biggest swinger. That's given us scale in the U.S., and that's been important. The other operators see that we have a strong presence, and we've been able to execute well on that. LTE's been a good growth engine for us. We still see that as a big growth engine going forward.
The other area where we're seeing good growth is the IMS core. We've been growing rapidly as Verizon Wireless (NYSE:VZ) grows, but we've also being growing with some smaller operators in the core. We believe we have around 40 percent market share in IMS core in the U.S.
FierceBroadbandWireless: Let's talk about NSN's show announcement regarding Liquid Applications, which use network base stations to enable more localized information delivery. How does this news impact your business in North America?
Corker: This concept is very new. We've just launched this, though we've been actually working with one U.S. operator in the background for some time on Liquid Applications in terms of trials and technology. The idea here is to use the unique aspects of the base station. Every base station has a location and of course we have full user information at the site itself. So you can start to do real-time analysis of who's in the cell site, where they are and then by understanding the local area, we can put in applications. It's not just caching video content there that may be relevant for a tourist site. There's a lot more than that. We believe there will be applications that we can put out to individual nodes that will be relevant to that particular location. It's going to be very interesting for the U.S. market. The U.S. is a big video market. It's one of the fastest growing for data applications in the world. I think it's relevant for the U.S. because the U.S. is already quite advanced in terms of these types of technologies.
We've just announced the trial with SK Telecom in Korea. I think we believe the technology's already very strong. We've been developing this for quite some time now. It's now all about working with the operator ecosystem [and] the over-the-top ecosystem to see, How do you build a business out of this?
FierceBroadbandWireless: So this trial you're doing with a U.S. operator, is it as far along as the trial with SK Telecom?
Corker: I really can't say. (laughs) You know the rules.
FierceBroadbandWireless: Well, I had to ask.
Corker: (still chuckling) SK Telecom is our official trial.
FierceBroadbandWireless: NSN has not been able to score LTE RAN contracts with the two elephants in the room, AT&T and Verizon. What does it take for you to gain LTE RAN business from them?
Corker: We need to keep being successful, keep building our scale in the U.S. The bigger we become, the more confidence we develop in terms of our LTE capability. That's the first step for us. We're the only vendor globally who has all three top tier customers in Japan, all three top tier customers in Korea and we're now very relevant in LTE in the U.S. I think it would be hard to believe that any Tier 1 operator would not see the value in NSN's technology. We'll continue to just keep building our LTE leadership.
We have 78 LTE contracts globally, and we believe we have an extremely strong LTE portfolio. With any large operator, it's just a matter of finding the right opportunity that matches their requirements with what we have to offer. We have existing relationships with both Verizon and AT&T, and we look to build on those in the future.