Tellabs bursts into packet core business with WiChorus buy

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Tellabs bursts into packet core business with WiChorus buy

By CAROLINE GABRIEL

Published: 23 October, 2009

READ MORE: M&A | Core Network | Backhaul | LTE

In the old days, large cellcos had a simple purchasing chain - RAN, core network and backhaul, as often as not, came from a single supplier, one of the major network equipment vendors. The picture shifted somewhat in 3G, as operators realized that the core would be vital to differentiate their services on an increasingly commoditized RAN, and started to look for best of breed choices. As 4G approaches, they need to push intelligence into every aspect of the network to drive advanced services and manage exploding traffic efficiently. So the core and the backhaul take on new sophistication and the vendors that specialize in those former backwaters see their chance to grab pole position among the carriers.

Cisco is the giant that most clearly stands to benefit, and recently improved its hand by acquiring the original 3G core network specialist, Starent, whose dowry included deals with major cellcos, including the Verizon Wireless LTE core network contract. While this combination takes on the RAN/core combinations of Ericsson and the others, it will face a new challenger too, in the shape of Tellabs, which has burst into the packet core field by acquiring start-up WiChorus. The smaller firm will bring the first core network product specifically created for the new standards, WiMAX and LTE, and a high profile contract as Clearwire's core network supplier.

Tellabs has never competed in this segment before, though it is well known to carriers because of its strong position in mobile backhaul and Carrier Ethernet. As the transport and core network domains come closer together at the 4G stage, with operators moving towards end-to-end Ethernet/IP and intelligent traffic management, it will be increasingly logical for vendors to cover multiple domains of the network (look for more moves by backhaul majors, and RAD's recent moves deeper into the access space).

Rob Pullen, CEO of Tellabs, said data management and transport have been converging with 4G technologies. His firm will pay $165m for WiChorus, and Pullen argues that the purchase brings the most advanced technology on the market - 12-18 months' headstart on the rivals, he claims - and good timing. "When you think about it, we have the perfect storm of events happening right now," he told Dow Jones. "We've benefited from the growth of the mobile internet in our backhaul business, definitely, but our customers are now asking us to integrate core functions into our backhaul products." He says WiChorus' SmartCore supports eight times the throughput of Starent's ST40 and four times more internet connections and active users than other core platforms. This product will be sold as a standalone system for LTE and WiMAX and as a gateway serving node for HSPA, but will also be quickly integrated into other Tellabs lines, particularly the Ethernet switching and network management products, to create a single platform. Tellabs said it will also incorporate its internet offload software, enabling carriers to offload up to 70% of internet traffic before it reaches the core.

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