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Dynamic Privatization Ignites Czech Communications Growth

January 1999
By Clarence A. Robinson, Jr.

Digital transmission and switching systems gain market foothold, expand to export markets, joint developments.

Central Europe’s efforts to open the economy to free enterprise are dramatically affecting the electronics and telecommunications industries. Nowhere is the emerging response to free competition more crisp than in the Czech Republic. There, new commercial and military communications system advances are stimulating rapid domestic and export growth.

In spite of a downturn in traditional Eastern markets and growing competition from giant Western companies, the Czech telecommunications industry continues to develop and produce digital technology products that drive market expansion. Competitive public purchase and transformation of one long-established company, which bucks government support trends, are paying off in rapid and profitable increases, according to a Czech industry official.

Using an entrepreneurial approach, the product lines and services of Tesla Telekomunikace Limited, which uses the TTC trademark, are expanding as new markets are forged at home and abroad, Dr. Ivan Rícar explains. He is Tesla Telekomunikace’s managing director.

Conversion from state control moved the firm from a research institute into a development and manufacturing enterprise through public auction. Along with the TTC trademark, the company also launched its TTC 2000 digital switching system for both commercial and military markets.

This company’s purchase and transformation by a group of 12 managers evolved out of its technical communications expertise. An example of this expertise is the company’s serial production and introduction of a DPS 2000 digital transmission system. TTC also gained certification by the International Standards Organization (ISO) 9001 and is concentrating its manufacturing capacity within a new Prague-based facility.

Over the past five years of steady growth, the company’s involvement in joint ventures with foreign partners includes TTC Marconi; TTC Bratislava and Tesla Telemechanika Limited, Prague; and Sattes Incorporated, Moscow. Another subsidiary, TTC Telecom, operates in Kosice, Slovak Republic.

Rícar believes that one of the reasons for the company’s rapid product growth is the concentration of scientists from its earlier traditional mission of supporting all Tesla enterprises in research activities. “The enterprise independence and privatization inevitably resulted in a change of orientation,” Rícar asserts. “The decision to keep its development base, to quickly apply modern components and technologies, and to build up a new production base of its own appeared to be proper and the only possible approach.

“Simultaneously, with the changes inside the company, there arose the TTC group, which includes subsidiaries in the Czech and Slovak Republics, Russia and joint ventures with foreign participation,” Rícar adds. This approach resulted in revenue increases from 128 million crowns ($4.3 million) at the onset of Czech privatization in 1992, to 965 million crowns ($32 million) by 1997. During this period, the company has gained manufacturing volume of 450 million crowns ($15 million), which can easily expand to 1 billion crowns ($34 million) without heavy investment, he relates.

In the four-year period between 1992 and 1996, TTC more than tripled its income while the number of employees remained roughly the same. The company’s state-of-the-art facility for series production uses surface-mount technology for automated assembly of circuit boards. Rícar points out that TTC’s revenues have increased twelvefold since the days before privatization.

Rícar links increases in revenue during the past year to the sale of transmission systems in the Slovak market, with major customers being Slovak Telecom, Slovak Gasworks, the Slovtransgaz Company, Trencín water-power plants and the West Slovakian Power-Engineering Corporation. He credits TTC Marconi, TTC Bratislava and TTC Telecom with gaining these contracts worth approximately 24.4 million crowns ($813 thousand).

In transmission technology alone, total TTC sales last year amounted to 278.5 million crowns ($9.28 million), representing an annual increase of 14.5 percent. The PCM 30U universal transmission system continues to be sold successfully, along with digital line systems for transmission over metallic cables and optical fibers.

The PCM 30U system’s set of modular subscriber units has been improved to include applications used in Russia. The technology has been approved for operation in the public telecommunications network of Russia and the Ukraine. This, together with the Lithuanian Telecom contract, resulted in a PCM 30U export share of 77.9 million crowns ($2.6 million), or 54.6 percent.

The company’s long-term activities in access networks enabled added business with its biggest customer, SPT Telecom, public telecommunications network. Other networks using the company’s system include Slovak Telecom and Lithuanian Telecom. Corporate private network users include CEZ, the Czech power engineering works; the Czech and Slovak energy distributing plants; air traffic control; Czech railways; Transgas and Slovtransgaz companies; and Gazprom, Mostransgaz and Mosenergo in Russia.

Having prevailed in a tough competition, Rícar says, TTC acquired and signed a contract with CEZ for the delivery of the synchronous digital hierarchy system, to build a national optical transport network of CEZ’s control and information system. Moving into new areas, TTC joined with TTC Marconi and CS Télécom in France for delivery of a telecommunications system to the United Arab Emirates.

Rícar maintains that the company’s underlying switching technology rests on the TTC 2000 digital switching system. He adds that this is an open modular architecture system, with distributed control that makes its use possible in the outlying parts of public analog or digital networks. The system also can work as a branch exchange that includes exchanges for private networks with special interface requirements—signaling, supervision and management.

Using a telephone set and an interface module as per European integrated services digital network (ISDN) standards, the TTC 2000 enables integrated services internally within a private network, regardless of whether ISDN has been introduced in a neighboring public network. The TTC 2000 system has been further refined and expanded for more applications through the addition of automated switchboard and paging, additional diagnostic facilities, telemonitoring and events indication, Rícar notes.

Recent TTC 2000 customers are Ceské dràhy (the Czech railways), Czech revenue authorities and the customs authorities, Rizeni letového provozu (air traffic control of the Czech Ministry of Defence), Vodné elektrárne Trencín (the Trencín water-power stations) and Trinecké Zelezárny (Trinic ironworks). In the application of the TTC 2000 to the Czech railway system’s telecommunications network, the company interconnected a network of 13 digital exchanges via optical fiber into the environment of obsolete equipment.

Buttressing quality and reliability in the TTC 2000, the company is adding and extending the range of software modules to facilitate easier network design. Not only did this reliability approach help TTC maintain the existing circle of customers, it also enabled penetration of the Czech market with low-capacity exchanges of 24 to 40 ports.

New services and functions also were added to the company’s automatic telephone information system, or ATIS-T. The ATIS-T systems, already operational in SPT Telecom’s digital exchanges and in all host exchanges in the central Bohemian region, have been upgraded.

With more than 44 years experience in research, the company’s technologies cover the whole range of telecommunications, Rícar insists. The areas of technology encompass switching and transmission systems, terminals and supplementary equipment, measuring and testing instruments, telemetry and telecontrol systems and the design of semicustom integrated circuits.

TTC produces, installs and maintains equipment for civil and special customers such as the Czech army and police. The Czech army’s tactical system uses a modular nodal switch based on an architecture from the TTC 2000. Known as the TTC 2000-M, the military configuration is considered more rugged and is supplemented by other modules and functions. This army switch is designed for easy reconfiguration and remote supervision in a network, including diagnostics and testing of selected segments and elements.

The actual construction of the switch is based on its modular architecture. The digital switching system, with decentralized control, is to a level of one-board modules. “This structure enables flexible change in functional features to meet user requirements on respective connecting nodes and to build complex but effective communications networks,” Rícar states. Large inner diagnostics and elaborate software support the system in providing useful services without physical presence.

A very important feature of the transfer switch is the possibility of connecting a subscriber’s station, equipment and networks of different configurations and various legacy platforms. This TTC 2000 approach allows interfaces with MB and UB analog systems, modem data systems in the V range, X-range data systems, integrated digital network systems according to International Telecommunications Union (ITU)-T standards, and digital ISDN systems.

A TTC-developed EUROCOM system ensures full compatibility with systems in use by North Atlantic Treaty Organization (NATO) armies. The flexibility of the TTC 2000-M has been confirmed during international combined endeavor exercises in Germany, in concert with signaling systems from 16 different armies. This switch was able to communicate via tactical means with the other switches in the network through interface conversion.

Rícar claims the military TTC 2000-M provides all of the basic and upgraded subscriber and network services customary in modern digital public and private branch exchanges. The systems allow data transmission, speech and data integration, connection of local battery telephone sets and the provision for ISDN services.

The intrasystem communication is controlled by two subsystems at the core of TTC 2000 operations. These capabilities include a 64-kilobit-per-second channel switching subsystem and a message (data packet) switching subsystem with a 16-bit parallel bus at an 8-megabit-per-second transmission rate. A maintenance and supervision panel uses PC/AT Intel 486 technology to associate switchboard, dispatcher supervision over connection, and collection and evaluation of traffic data functions. Diagnostics, system configurations, modifications of service categories and call charging are also controlled by the system. The software is run under Windows.

The TTC 2000-M is equipped with automatic supervision over each module operation. Diagnostic procedures detect and localize errors on a module level, and the maintenance terminal displays detailed error messages. The system’s capacity is up to 96 subscriber lines, and the mean time between failure is 500,000 hours per module.

In 1995, the company added a line termination unit in high data rate digital subscriber line, or HDSL, technology to the TTC 2000 system. Using HDSL technology enables termination right in the exchange of a transmission route composed of two (optionally three) pairs of metallic cable, without any other equipment. This approach allows multiplying the capacity of existing lines while decreasing demands and costs, as compared with standard links.

Also, the opticke linkove zakonceni (OLZ) 1, an optical line termination unit for primary pulse code modulation links, is offered as an interface module of the system. This approach simplifies network projections, allowing operators of public telecommunications networks to select an optimal solution in time and cost when building access networks, Rícar believes.

The company’s technology is being continually enhanced and its manufacturing capacity enlarged. TTC has founded six subsidiaries with foreign capital participation in most of them. These companies operate in telecommunications and related product lines in the Czech and Slovak Republics and Russia. TTC’s primary goal is to strengthen its position in the Czech market, expand in Slovakia and make its way to new foreign markets.

Domestic market plans encompass objectives that include the release of more products and services through transmission systems and development activities to supplement and enhance its systems. This company effort includes collaboration with its Italian partner on new solutions for access networks. Another objective is to provide further growth in manufacturing capacity. The company purchased a facility in Prague that was originally intended for growth in the Czech Republic by Phillips.

“This purchase provides an opportunity to concentrate manufacturing activities of the whole TTC group in one place, to organize them efficiently and to build a complete stock and supply base,” Rícar offers. “Our concentrated and joint efforts in Slovakia, especially the efforts by TTC Marconi and TTC Telecom, have resulted in being awarded a competitive contract from Slovtransgaz.” He also reports the award of a $2.5 million competitive contract by Lithuanian Telecommunications under rules set forth by the European Bank for Reconstruction and Development.

Somewhat apart from and yet highly important to the company is the development of the MAKO modular node switchboard for military use in building up digital tactical communications networks, Rícar emphasizes. This system provides voice and data communications and is adapted to withstand field conditions. The switchboard allows fast reconfiguration and remote management of the network, including diagnostics and testing of selected segments and elements.

TTC’s participation in NATO exercises in Germany, within the framework of Partnership for Peace, resulted in the MAKO prototype being rated among the most up-to-date technology capabilities. The company’s alpha-euro 30 ISDN telephone set successfully passed recent technical approval tests. In addition to use as complementary equipment for the TTC 2000 exchange, the equipment may now be sold separately. Until this approval, the alpha-euro 30 has been used only to complement deliveries of TTC 2000 in its private automated branch exchange modification.

Rícar’s approach to TTC management is to foster long-term relationships with customers. It also is based on improving and enhancing the quality of products and systems in accordance with ISO 9001. He is convinced that the company’s quality and innovative technology applications will increase market penetration and help expand manufacturing capacity. The company is taking deliberate steps to ensure a more fluent and transparent flow of information to stimulate positive economic effects, he stresses.