Nortel GSM buys fills voice switching gap for Ericsson
Published: 27 November, 2009
READ MORE: M&A | North America | Nortel Networks | Ericsson | Core Network | GSM
Nortel's final legacy may be to have transformed Ericsson from US outsider to dominant player, but the Swedish leader's acquisition of the bankrupt vendor's GSM activities in north America is not really about access, or 2G. The real motivation was to get hold of the mobile switching portfolio, an area in which Nortel had real, though often unsung, strengths.
Angel Ruiz, head of the much enlarged north American operations at Ericsson, told Telephony that the mobile switching business fills the final gap in the vendor's portfolio for the region, bringing it a valuable installed base. Nortel recognized the value of this legacy base, though often failed to leverage the advantage - when the firm unveiled its unified 4G strategy a few years ago, it was insistent that the switching base would be one of its most valuable entry points to carrier contracts, compensating for the absence from W-CDMA.
Ericsson has no such weakness there, but may exploit the switching base more effectively than Nortel did. "The idea is more to leverage the core assets," Ruiz said. "We want to help customers migrate their legacy switching infrastructure to LTE." Suppliers know migration to evolved packet core will one of the key areas of competition and value at the 4G stage - the core is far more strategic in the data heavy 4G network and can support the deployment of unified 2G/3G/4G networks, as at Telenor. And the 2G habit of buying core and RAN from the same vendor is dying as the two elements become decoupled, bringing Ericsson into head-to-head conflict with Cisco and its forthcoming Starent acquisition.
Ericsson's north American range now covers all the bases including CDMA, GSM and HSPA RANs, LTE access, IP backhaul and IMS, and packet cores for 3G and LTE. Apart from WiMAX, where Ericsson has chosen not to play, the only missing link, until the latest purchase, was the voice core/ mobile switching center (MSC).
Now the Swedish giant gains Nortel's MSC Server, which underpins 2G and 3G networks at AT&T and T-Mobile USA, among others. By contrast, most of Ericsson's own MSC sales have been to smaller GSM operators like Dobson - many of these snapped up in term by larger carriers, notably AT&T. Ruiz explained that Ericsson had defocused on the voice core in favor of the packet data core, and had failed to gain a major position at AT&T, even though the carrier had inherited many Ericsson switches along with its takeovers of Dobson and others. Now, with Nortel's GSM and CDMA packet MSCs, it can target every operator's switching needs. It will even supply the MSCs that Motorola resells to its iDEN customers, mainly Sprint Nextel. Of course the MSCs are a legacy business, but Ruiz says they will form a springboard for Ericsson to be in pole position to help customers migrate to new cores and IMS.
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