Alcatel-Lucent's Big Moves Will Reward Investors By 2013

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It shouldn't surprise investors that maintaining a clear vision of the future helps companies remain competitive in anticipating the needs of consumers. With the increased popularity of smartphones, virtual workplaces, and streaming media, consumers need reliable, fast internet service for work and entertainment, it has been estimated that 655 million smartphones will be shipped worldwide during 2012. One company that will capitalize greatly on this trend is Alcatel-Lucent (ALU). By expanding both locally and globally, Alcatel-Lucent is in prime position to both increase its bottom line and stock value. Here is what I found:

High-Speed Internet Service in Rural Areas

Over the past few months, Alcatel-Lucent has increased wireless coverage to rural areas throughout the US including Texas by partnering with local communications and Internet service companies. Under these agreements, local providers can offer services like 4G LTE to areas that may not have had any Internet service until now. And while the overall impact of high-speed Internet service to these areas remains unknown, local businesses, government offices, schools, emergency services, and other organizations should benefit greatly over time.

Another advantage of bringing high-speed Internet service to remote areas is increased brand awareness. But with increased competition from other Internet providers like Verizon (NYSE:VZ), Alcatel-Lucent needs to align itself with Internet service providers that people trust to remain profitable.

Verizon recently launched a new program called HomeFusion Broadband, which relies on a router to provides those outside city limits (where high-speed Internet service like Verizon FiOS is common), the opportunity to enjoy faster Internet speeds. And since Verizon is also a popular brand, customers may opt to purchase this type of service rather than go through a local provider using Alcatel products and services.

Increasing High-Speed Network Capabilities All Over the World

Recently, in addition to bringing high-speed Internet to rural areas in the US, Alcatel was awarded a contract with Chinese Telecom to help provide nearly 31 areas in China with Internet access.

International telecommunications company Bharti Airtel recently chose Alcatel to help it design an IP access network to serve a variety of countries including Asia and Africa. The effort to provide this service correlates to increased demand to high-speed Internet needed to power home computers, tablets, and smartphone devices.

Alcatel was also selected by Telefonica to provide 3G femocells that extend the wireless capabilities of existing Internet equipment. These units will be used throughout Europe and South America to help Telefonica appease the growing demand for faster Internet service by customers in these regions.

Investors should be pleased that other telecom companies want to use Alcatel's products and services as this only furthers the reputation of the company. Building a solid reputation globally takes time, but as the company continues to prove itself on the global front, its reputation will only grow.

Alcatel's Message: Look to the Future

During a recent speech at TIA:2012, Robert Vrij, Alcatel's president of the Americas stated that the telecom industry needs to strive to bring more wireless services to customers. He also made it known that Alcatel will continue to provide this type of service as well as additional products and services.

From an investment perspective, keynote speeches like this one give investors an idea of how the company plans to move forward in the future. In Alcatel's case, the company has worked hard to promote wireless network technologies and high-speed Internet. Investors should anticipate additional products and services that offer wireless capabilities and even faster connection speeds in the future.

Customer Demand and Industry Competition: A Delicate Balance

For most companies, balancing what customers want and keeping up with the competition requires a strong brand that people trust along with an innovative and creative team that keeps producing new and useful products and services. Having expert marketing and development teams is key to staying ahead in the telecom market. With offices in over 130 countries, Alcatel-Lucent has dedicated teams that work very hard to continually move the company forward.

I think investors need to be careful when it comes to future innovation simply because some companies get so wrapped up in creating something new, that current products and services tend to suffer a bit from neglect. Other telecom companies like AT&T (NYSE:T) and Sprint (NYSE:S) have both been under fire for providing inadequate customer service and other issues.

And while it's unclear how or why customer service, billing, and other issues occur, the damage to a company's reputation can be great. Depending on how a company handles the situation, customers may decide to flock to another provider instead of waiting for possible outcomes.

In addition to providing customers with great customer service and high-speed Internet access, telecom companies must also make these services and products affordable. Even though Alcatel-Lucent helps regional telecom companies provide these services, competition from larger telecom companies like Comcast (NYSE:CCS) can affect future revenue.

For example, Comcast offers a variety of price points for customers, including reduced charges for low-income families. Depending on the number of families that sign up, other Internet providers may see loss in overall earnings if they don't offer similar programs. And even though this would not directly affect Alcatel's profits, over time, if local providers can't maintain a solid customer base, they might not seek out a large company like Alcatel to help them expand into other areas.

Investors need to take a close look at the competition to determine if Alcatel is a company worth investing in for the long term. Decreased demand for the company's products and services by local providers could end up costing investors.

Network Profits

For a company to remain successful, it must remain profitable. Even though wireless networks have been around for some time now, I think Alcatel is making the right decision by tapping into worldwide markets that have limited or no Internet access. It is astounding how many regions around the world that don't have reliable Internet service. Most people take for granted that they have a network that will service all their Internet needs. But Alcatel and its competitors have realized that there are entire segments in need of these services and are taking the steps necessary to fill these needs.

Based on my research, I would highly recommend buying Alcatel-Lucent now. The company is in a strong position to capitalize on the growing demand for high speed internet service. The company is taking huge steps to ensure its growth in both the short and long-term.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.