Mike Zafirovski, Nortel president and CEO.

"This is the heart and soul of Nortel."

It was with that comment about the relevance of the company's local R&D operations that Mike Zafirovski opened up his remarks to a sold-out audience Thursday morning at Scotiabank Place.

After almost a year at the helm of the telecommunications company, the native of Macedonia was in town to kick off the fall slate for OCRI's Technology Executive Breakfast series.

He was introduced by the honourable John Manley, who, since leaving federal politics, has joined the local office of law firm McCarthy Tetrault and taken a seat on Nortel's board.

In his remarks, Mr. Manley emphasized his confidence in Mr. Zafirovski's ability to restore Nortel's reputation and prominence after years of weak stock performance and accounting issues.

"I'm excited about the prospects of this great Canadian company going forward under his leadership," Mr. Manley said.

For his part, Mr. Zafirovski heaped praise on new chief technology officer John Roese, appointed in June, and the two men shared the podium during the morning's presentation. Nortel's CTO has traditionally been the senior executive for the company in Ottawa . Mr. Zafirovski dubbed Mr. Roese "the spiritual leader" of the company's R&D efforts around the globe.

Much of the morning dwelled upon Nortel's past glory as a leader in innovation and its impact on the evolution of the tech sector in Ottawa. The big question, of course, is what the future holds for the company and where the opportunities lie for it to grow.

The executives detailed three trends that are "happening right now" that will have a direct impact on consumers and offer Nortel the opportunity to take the industry lead.

The first is "hyperconnectivity", in which individual consumers are always plugged into the Internet with some kind of enabled device, be it in the office, at home, on their person, or in their vehicles in the form of telematics.

The second is "network-aware applications" where applications, hosted over a network, are easily tailored and adapted to specific needs in a way that traditional shrink-wrapped applications could never be.

The last is "true" broadband, which Mr. Roese defined as "seamless handoff" that provides uninterrupted mobility between, home, office and any point in between over high-speed wireless networks.

The opportunity for Nortel lies in the services-oriented architecture and network communications infrastructure that must be built to support these technologies and allow services to expand, not just across urban areas, but thousands of square miles of rural territory as well.

Mr. Zafirovski cited the importance of Nortel's alliance with Microsoft, announced in July, and the sale of its unsuccessful UMTS business to Alcatel a month ago as key steps towards reinventing the company to take advantage of these market opportunities. Mr. Roese added that Nortel also has the advantage of getting "to be a bit of an arms dealer," since its patented technology is part of the key industry standards over which these services will be delivered.

The bottom line is that product innovation will be key to Nortel's future and the R&D operation in Ottawa will play a key role. Mr. Zafirovski did not directly say that more jobs are coming to the capital or that R&D operations would be consolidated here. However, in response to a question from Tropic Networks CEO Kevin Rankin, he said that Nortel is looking to regain the culture of innovation that once existed but has since been lost with its R&D efforts fractured across a number of different sites around the world.