In a remarkably candid speech, Metaswitch Networks CEO Kevin DeNuccio pointed out the key issue fixed-line service providers will face in the coming decade: innovation.

As you might expect, DeNuccio pointed out that the industry, on a global basis, is “very healthy,” as usage of communications is growing “everywhere.” What you might not have expected, from a company whose stated intention is to be the “world’s leading vendor for voice switching platforms,” is a frank observation that “nearly 25 percent of U.S. homes have no fixed-line voice connection,” and that some estimates are that as much as half of all U.S. homes ultimately will have no fixed-line voice connection.

It is one thing to note that the fixed-line business now has to be built around broadband services, as DeNuccio did say. It is perhaps another to argue that there are successful business models for voice services, despite all those challenges.

But that is precisely what DeNuccio indicated Metaswitch Networks intends to do. “Innovation” is the key, and that is where Metaswitch intends to put its effort.

Noting that innovation today comes from the likes of Apple and Google, DeNuccio pointed out some of the obvious constraints. Service provider revenue is up, but net income and profits are down.

Calling this a “massive pressure” on telcos, DeNuccio also noted that venture capital funding of telecom equipment firms has dried up. The point is that innovation helpful for telcos will not come either from the likes of Google and Apple or new VC-funded firms.

Instead, the industry will have to rely on its own creativity, and steadfast support from firms such as Metaswitch Networks, DeNuccio said. And despite mobile’s importance, the “home is a crucial end point that has to be defended,” DeNuccio said.

“Global and mobile is where we are going,” he added.

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