Alcatel reported a drop in revenue from North American customers in the second quarter as major carriers reported dips in net broadband line additions. But the vendor expects an increase in the second half of the year to compensate for the continent’s weak second quarter.

“In 2004 in North America, we saw a strong first half and a weaker second half,” said Mike Quigley, Alcatel’s president and chief operating officer. “This year we’re seeing the opposite.”

While Alcatel reported revenue increases in every other geographic region, second-quarter revenue from North America, which represented 14% of the total, was down 10%, in U.S. dollars, from a year earlier. The biggest geographic growth area was the miscellaneous “rest of the world” (which includes Latin America, Russia, Africa and other places), where quarterly revenue was 44% higher, in euros, than it was a year ago, contributing 31% of second-quarter revenue. Alcatel’s biggest revenue source, Western Europe, contributed 40% of the quarter’s 3.1 billion euros in revenue.

Overall revenue was up 8.5% from a year earlier to 3.14 billion euros, and net income doubled from a year earlier to 196 million euros. Wireline revenue was down 6% year-over-year to 1.2 billion euros, mobile revenue rose 35% to 958 million euros and private line revenue rose 7% to 981 million euros.

On a global basis, Alcatel is benefiting from a decisive and widespread move by carriers toward triple-play services, Quigley said, expecting to ship 3 million lines of IP DSLAMs this year, or close to 15% of the total number of DSL lines it expects to ship. Seventy percent of the operators engaged with Alcatel are interested in IPTV, he added. “There is almost no wireline customer we have that’s not talking to us about triple play.”

All that activity in access is also driving growth in optical equipment like IP routing aggregators, as access traffic pushes demand for higher capacities upstream. However, as sales of ATM gear are declining, Quigley wished to dispel the myth that IP DSLAMs represented a significant cost saving per port than ATM ports. “Frankly, that was a non-issue put out by a lot of people that Ethernet-based DSLAMs were going to be much cheaper,” he said. “That simply isn’t the case.”

Regarding Alcatel’s efforts to supply SBC Communications’ multibillion-dollar fiber-to-the-node deployment dubbed Project Lightspeed, Quigley remarked, “Things are frankly going better than SBC and ourselves could have expected for a project of this complexity. That doesn’t mean there aren’t a few speed bumps from time to time, but we work very closely together [with SBC] to overcome them.”

When asked about the need for consolidation among telecom equipment vendors, Alcatel chief executive officer Serge Tchuruk said the company was not currently proceeding under the assumption that a large merger is essential for its success. “Most of the players would like to see something happen, but they’d like some other guys to mate together so they get the pain in doing this and [give] the benefit [to] everybody else,” he said. “There are ways you can go which are not massive consolidation between giants, which can also help. Hopefully you’ll see a few of those things happening. I’m not talking about Alcatel. I’m not really actively pursuing big consolidation as an indispensable way forward.