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Nortel swims in data stream
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June 10, 1998: 10:42 a.m. ET
CEO Roth is 'very excited' by company's high-tech data strategies
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NEW YORK (CNNfn) - The future of the telecommunications industry is increasingly dependent on data transmission and other high-tech businesses, Northern Telecom (Nortel) CEO John Roth said on CNNfn's "Business Day" Wednesday.
"I guess 1996 was the year when packet [data] traffic exceeded circuit [voice] traffic . . . in the telephone networks for the first time," he said, adding that the trend will never be reversed. "Data traffic will forever be larger than voice traffic, and that's the way the world will be from now on."
The statement came shortly after Nortel's Tuesday announcement that it had formed a marketing alliance with Microsoft Corp. (MSFT) to exploit Nortel's 1-Meg Modem technology, which delivers high-speed Internet access over conventional telephone lines.
Roth also said Nortel's cooperation with Sprint Corp. (FON) in the networking industry will continue.
"We're going to be part of the Sprint backbone [packet-switching] network with our high-capacity ATM switches," he said. "The edge devices currently used in the network are Nortel products. This is something we've seen coming for quite a while."
As for its own business portfolio, Roth said that, rather than pursue high-profile technology mergers like that between Tellabs (TLAB) and Ciena (CIEN), Nortel will expand through selective acquisitions.
"What we've been doing is acquiring smaller companies," he said. "We've recently acquired a company called Aptis [Communications Inc.], we've taken investments in very high-tech companies. We're assembling a product line using technology from these leaders."
He refused to comment on rumors that the company is investigating an acquisition of Bay Networks Inc. (BAY), saying that "rumors are going fast and wild and there's all kinds of conjecture, but that's rumors."
As an example of Nortel's exploration of new data transmission technologies, Roth praised Nortel's trial venture of sending data over British power lines.
He said the company has power-data contracts with six power utility companies across Europe and is investigating ways to exploit the technology's market potential.
"It's quite exciting," he said.
Nortel stock (NT) was down 7/16 at 64-1/2 in early trading Wednesday. 
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Northern Telecom
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