"We are very excited about this acquisition and believe that, together (the
combined company), will revolutionize the mobile Internet," said Tellabs
Marketing Communications Manager Ariana Nikitas.  She further stated the
acquisition would extend Tellabs mobile backhaul product portfolio (see CHART
below) to a fast growing adjacent market.  "The resulting products will
enable service providers to deliver richer experiences to mobile end users," she
said.

Tellabs has a large portfolio of transport and network management products for
wireless backhaul.  These include the following:

Analysis:

Tellabs recognizes the mobile Internet is taking off and WiChorus has a product
their service provider customers need to take advantage of this opportunity. 
Sales of smartphones are growing more than 30% a year while netbook sales have
been very strong.  People are spending more time surfing the Internet while
on the move.  As a result, Tellabs’ mobile customers expect mobile data
traffic to grow 30% to 50% a year for the foreseeable future.  AT&T
recently indicated its mobile traffic has quadrupled over the past year.

Such high growth demands scalable, next-generation network architectures to
deliver 3G and 4G multi-media and video services.  This acquisition will
enable the combined company to help facilitate delivery of those services, while
providing richer experiences to mobile Internet users.  It will enable
Tellabs to compete with Ericsson, Alcatel-Lucent, and Cisco (which recently
announced its acquisition of Starent Networks) in the 4G/3G mobile packet core
market.

Since Tellabs (and many other companies) haven’t been spending much money on
R&D, they were forced to make this acquisition to remain competitive in the
mobile backhaul market.  Independent of that, Tellabs has a very high
opinion of WiChorus’ mobility management and routing technology.

On a conference call Thursday, Tellabs CEO Robert W.  Pullen said the
Wichorus platform was a "purpose- built 4G (WiMAX, LTE) architecture that is
backward compatible with 3G (GGSN, HSPA, HSPA+)." As a result, it can be sold to
WiMAX operators now and 3G or LTE operators in the future.  Tellabs stated
there were two potential service provider customer types for the WiChorus
platform:

- Those that are optimizing their 3G mobile networks and evolving to 4G (LTE).
- Those that have leapfrogged 3G to deploy 4G (Mobile WiMAX and LTE).

Wichorus’ "best in class" deep packet inspection capability and performance was
particularly attractive to Tellabs.  It was said to produce much less
throughput degradation than competitor mobile packet core products. 
Tellabs claims that the WiChorus 4G packet core product offers eight times more
throughput than competitive offerings. 

The Wichorus SmartCore? platform was said to address the unique requirements of
the mobile Internet:

- Includes a full range of mobile IP products (from low entry price to highly
scalable) for applications including GGSN, LTE and WiMax, plus new application
enablement with superior DPI capability. 

- Offers 8 times more throughput, 4 times more simultaneous Internet connections
and active users, compared with competitive platforms in gateway applications.

- Uniquely combines world-class application analytics with a mobile core gateway
for improved traffic engineering and network optimization. 

- Enables customers to analyze and monetize more than 400 of the top mobile
Internet applications. 

- Makes mobile networks content-aware and context-aware, with personalized
application-awareness. 

- Outperforms other platforms in delivering mobile Internet capacity.  For
example, competitors’ capacity significantly degrades (as much as 30% to 50%)
during deep-packet inspection (DPI)

- Delivers new and differentiated applications such as Internet offload and
distributed LTE gateway.  The SmartCore? platform can offload as much as
70% of traffic at the network edge, increasing core network efficiency and
improving user experiences.  As a result, customers can save as much as 50%
in capital expenses, compared with the present method of operation. 

The WiChorus ASN Gateway is being sold to Clearwire and trialed by other mobile
WiMAX network providers.  Tellabs CEO Pullen said that the company’s next
product will be for "business services delivery" using femtocells and picocells. 

When asked to comment on future product plans, Ms.  Nikitas declined,
stating that the acquisition had not yet taken place and could not comment till
the merger had actually been consummated.

Opinion:

We think this is a very good move for both companies and we predict more
acquisitions and consolidation in the network equipment market.

Reference:

http://www.tellabs.com/news/2009/index.cfm/nr/79.cfm

While overall cell phone growth has stalled, smart phones adoption continues to
be the one bright-spot in the industry.  With the popularity of the iPhone
and other smart phones, mobile data usage has doubled every 6 months, but the
corresponding revenue has not kept pace and consumers have become increasingly
unwilling to pay much more.

The traditional model for most operators has been to start with voice and then
build a hand-full of walled-garden applications to generate incremental revenue. 
But consumers increasingly want access to rich content and the "real internet",
not some stripped-down version.  The dilemma for operators has therefore
become how to provide the access and services that their customers demand, while
still providing a reasonable return on their network investments.

WiChorus recently announced that it will be providing its SmartCore 4G packet
core solution for Clearwire’s WiMAX network.  In simplest terms, the
wireless packet core is the part of the network that makes mobility possible –
providing the key interface with all devices on the network including
authentication, management and termination of sessions, among other functions.

Today’s 4G networks can be broadly grouped in 3 areas:  the access network
which includes the radio base stations, the wireless packet core which manages
mobile subscribers and their sessions (which with WiMAX is known as the ASN
gateway), and the IP network which includes the routers and switches necessary
to connect to the internet.

In the past, operators would typically source complete end-to-end solutions from
the major infrastructure vendors including Motorola, Samsung, Alcatel-Lucent and
others.  Under the new approach, operators are requesting that vendors
de-couple the core network from their proposals and provide quotes for each
parts of the network separately.

"This is more of a horizontal approach which takes the best-of-breed gateway and
then provides operators the ability to mix/match with various radios," says Eric
Andrews, VP of Product Management for WiChorus.  "This approach also ensure
that all vendor base stations will interoperate with each other and the packet
core network selected by the operator."

This approach is also being used by other operators such as Verizon with their
planned LTE network.  Verizon selected vendors Ericsson and Alcatel-Lucent
for its base stations, but also selected Starent Networks for its wireless core
network.

Another advantage is cost -  providing increased leverage in the
negotiations with an operator’s infrastructure vendors.  With the wireless
core removed, operators can better evaluate and compare proposals on just the
base station equipment.  With the recent addition of Huawei as one of
Clearwire’s infrastructure vendors, driving down costs further must certainly be
an important consideration.

Focusing on the Core

While other vendors provide complete end-to-end solutions, the company was
founded on the sole mission of building the best purpose-built 4G core network. 
"The importance of the mobile core is that it help operators profit from this
new business" says Andrews.  "We sit right between connecting all of these
subscribers to rich content and provide a lot of value added intelligence to
operators to enable them to do content monetization and network optimization."

The announcement with Clearwire reflects the first commercial announcement for
the 4 year-old company which has spent the last 3 years quietly developing its
technology.  Last year, Clearwire issued an RFP and mandated an "open IP
core." They started with a total of 12 vendors, whittled that down to 6 and
after extensive field trials, finally selected WiChorus.  The company has
not disclosed which Clearwire markets it will operate in only that they "will be
in multiple markets." WiChorus was also selected by the WiMAX Forum for use in
its certification labs as it moves beyond testing the air interface to the core
network.

But why would Clearwire not select the ASN gateway from one of its current
infrastructure providers Motorola or Samsung?  "The companies who make the
best base stations are not always the ones that make the best packet cores",
said Rehan Jalil, president and CEO of the WiChorus.  "This is also true in
other parts of the network such as devices, routers and switches.  This
approach allows operators to select the best-of-breed equipment for each part of
their network."

"Our equipment typical has more capacity than 5, 10 or 20 of our competitor
boxes", says Andrews.  "We designed the technology from the ground-up using
a state-of the art architecture that has more capacity."

Optimizing the Network

Utilizing a single vendor for the core network also ensures that operators can
offer a consistent level of services across all of their markets.  For
example, content based charging and uniform level of service can be rolled out
across all markets.

Mobile data networks also provided a new set of challenges and must be actively
managed to ensure a healthy network and good quality of experience for all
subscribers.  What applications or users are putting strain on the
networks?  What times of day?  By actively monitoring such activity,
specific polices can be developed and help shape the service levels that
operators put in place.  While "throttling" internet applications has
received a lot of attention in the press, it is absolutely essentially in the
spectral confines of a mobile environment where the actions of one user can
create can create problems for the entire network.

To remain competitive, operators must also find new ways to monetize their
networks.  "We have this networks intelligence and content awareness that
allows us to some interesting things with content monetization," says Andrews. 
"For example, an operator might provide a premium QOS depending on the
application and derive revenue from different applications, such as gaming. 
We have the intelligent infrastructure in place to make that happen."

As one of the highest profile WiMAX operators, Clearwire’s ASN strategy should
have implications for other operators.  "A number of operators are now
coming to us", says Andrews.  "A few years ago, operators were looking for
end-to-end solutions, now they all want best-of-breed.  A lot of operators
are looking towards Clearwire and they are forcing this to be a more open
eco-system."

While overall cell phone growth has stalled, smart phones adoption continues to
be the one bright-spot in the industry.  With the popularity of the iPhone
and other smart phones, mobile data usage has doubled every 6 months, but the
corresponding revenue has not kept pace and consumers have become increasingly
unwilling to pay much more.

The traditional model for most operators has been to start with voice and then
build a hand-full of walled-garden applications to generate incremental revenue. 
But consumers increasingly want access to rich content and the "real internet",
not some stripped-down version.  The dilemma for operators has therefore
become how to provide the access and services that their customers demand, while
still providing a reasonable return on their network investments.

WiChorus recently announced that it will be providing its SmartCore 4G packet
core solution for Clearwire’s WiMAX network.  In simplest terms, the
wireless packet core is the part of the network that makes mobility possible –
providing the key interface with all devices on the network including
authentication, management and termination of sessions, among other functions.

Today’s 4G networks can be broadly grouped in 3 areas:  the access network
which includes the radio base stations, the wireless packet core which manages
mobile subscribers and their sessions (which with WiMAX is known as the ASN
gateway), and the IP network which includes the routers and switches necessary
to connect to the internet.

In the past, operators would typically source complete end-to-end solutions from
the major infrastructure vendors including Motorola, Samsung, Alcatel-Lucent and
others.  Under the new approach, operators are requesting that vendors
de-couple the core network from their proposals and provide quotes for each
parts of the network separately.

"This is more of a horizontal approach which takes the best-of-breed gateway and
then provides operators the ability to mix/match with various radios," says Eric
Andrews, VP of Product Management for WiChorus.  "This approach also ensure
that all vendor base stations will interoperate with each other and the packet
core network selected by the operator."

This approach is also being used by other operators such as Verizon with their
planned LTE network.  Verizon selected vendors Ericsson and Alcatel-Lucent
for its base stations, but also selected Starent Networks for its wireless core
network.

Another advantage is cost -  providing increased leverage in the
negotiations with an operator’s infrastructure vendors.  With the wireless
core removed, operators can better evaluate and compare proposals on just the
base station equipment.  With the recent addition of Huawei as one of
Clearwire’s infrastructure vendors, driving down costs further must certainly be
an important consideration.

Focusing on the Core

While other vendors provide complete end-to-end solutions, the company was
founded on the sole mission of building the best purpose-built 4G core network. 
"The importance of the mobile core is that it help operators profit from this
new business" says Andrews.  "We sit right between connecting all of these
subscribers to rich content and provide a lot of value added intelligence to
operators to enable them to do content monetization and network optimization."

The announcement with Clearwire reflects the first commercial announcement for
the 4 year-old company which has spent the last 3 years quietly developing its
technology.  Last year, Clearwire issued an RFP and mandated an "open IP
core." They started with a total of 12 vendors, whittled that down to 6 and
after extensive field trials, finally selected WiChorus.  The company has
not disclosed which Clearwire markets it will operate in only that they "will be
in multiple markets." WiChorus was also selected by the WiMAX Forum for use in
its certification labs as it moves beyond testing the air interface to the core
network.

But why would Clearwire not select the ASN gateway from one of its current
infrastructure providers Motorola or Samsung?  "The companies who make the
best base stations are not always the ones that make the best packet cores",
said Rehan Jalil, president and CEO of the WiChorus.  "This is also true in
other parts of the network such as devices, routers and switches.  This
approach allows operators to select the best-of-breed equipment for each part of
their network."

"Our equipment typical has more capacity than 5, 10 or 20 of our competitor
boxes", says Andrews.  "We designed the technology from the ground-up using
a state-of the art architecture that has more capacity."

Optimizing the Network

Utilizing a single vendor for the core network also ensures that operators can
offer a consistent level of services across all of their markets.  For
example, content based charging and uniform level of service can be rolled out
across all markets.

Mobile data networks also provided a new set of challenges and must be actively
managed to ensure a healthy network and good quality of experience for all
subscribers.  What applications or users are putting strain on the
networks?  What times of day?  By actively monitoring such activity,
specific polices can be developed and help shape the service levels that
operators put in place.  While "throttling" internet applications has
received a lot of attention in the press, it is absolutely essentially in the
spectral confines of a mobile environment where the actions of one user can
create can create problems for the entire network.

To remain competitive, operators must also find new ways to monetize their
networks.  "We have this networks intelligence and content awareness that
allows us to some interesting things with content monetization," says Andrews. 
"For example, an operator might provide a premium QOS depending on the
application and derive revenue from different applications, such as gaming. 
We have the intelligent infrastructure in place to make that happen."

As one of the highest profile WiMAX operators, Clearwire’s ASN strategy should
have implications for other operators.  "A number of operators are now
coming to us", says Andrews.  "A few years ago, operators were looking for
end-to-end solutions, now they all want best-of-breed.  A lot of operators
are looking towards Clearwire and they are forcing this to be a more open
eco-system."

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In his keynote presentation at the WiMAX Forum Global Congress event held in
Amsterdam last month, Barry West, who now heads up the international interests
of Clearwire, said one of his priorities in the coming months was to persuade
operators to adopt WiMAX Profile C.

At first glance, the need to do so might seem strange.  Why would any
operator not want to choose Profile C, which stipulates an open and
non-proprietary interface standard (R6) between the BTS and the ASN Gateway? 
As Profile C operators are not tied into one vendor for BTS and ASN Gateway
equipment, they can force prices down through playing off different suppliers
against each other.  They can also choose the suppliers that can best
support the functionality and services they want to offer over their network
rather than being tied to one vendor that might not be up to the job.

But, as West implies, the case for Profile C is not clear cut; if it were, he
would not need to campaign for its adoption.  Despite the apparent
advantages of Profile C, some ‘turnkey’ vendors are still successfully tempting
operators with the two other Profiles available between the BTS and ASN Gateway:
Profile A and Profile B.  As both Profiles can create vendor lock-ins, they
stand in the way of WiMAX interoperability progress between multiple vendors
and, potentially, lower equipment prices.

In some cases, though, there are strong arguments not to use Profile C,
particularly if operators can avoid the expense of a large ASN Gateway. 
While Cisco believes that Profile C is the better choice for WiMAX operators
offering mobility services, not least because it centralizes the decision-making
for call handoffs between different BTSs – which then makes it easier for the
operator to control RAN traffic and offer QoS – this functionality is clearly
not necessary for a WiMAX operator focused on fixed and portable services only. 
"Where handoff is not required, Profile B can be adequate," says Paul Sergeant,
Mobile WiMAX Solutions Manager at Cisco.  "Profile C still has some
advantages, even in this case – such as QoS – but it may not justify the extra
cost."

Profile B does not define any interface between the BTS and the ASN Gateway, so
it is possible for Profile B vendors to pursue proprietary solutions and lock in
their customers.  Due to increased customer demand, however, many of the
big WiMAX suppliers that started out by supplying profile B equipment, including
Cisco (through its acquisition of Navini Networks) are now shifting to Profile
C.  According to Sergeant, nearly all of Cisco’s 20-plus commercially
deployed WiMAX operator customers are moving from Profile B to Profile C. 
This is an encouraging sign for Barry West and all those in the WiMAX community
campaigning for open network architectures, particularly if R6 interfaces can be
fairly easily software-installed on Profile B kit as Sergeant indicates.

Profile C Stumbling Blocks

One potential fly in the WiMAX interoperability ointment is Motorola, which has
long been a Profile B supporter.  Although Motorola’s WiMAX literature
points out that its wi4 equipment is ‘functionally aligned with Profile C’ – no
doubt largely due to intense pressure from Clearwire to which it supplies
802.16e kit – there is a feeling in the WiMAX community that Motorola will not
be able to make the transition from Profile B to Profile C as easily as others. 
One senior executive of an independent ASN Gateway supplier, who wished to
remain anonymous, told Wimax.com: "Some companies have hardware pieces which are
very difficult to change to Profile C and Motorola is one of those companies. 
They may have a hard time making the change [to Profile C]."

One person willing to go on record about Motorola is Peter Ziegelwanger, CTO at
Wimax Telecom, a small operator with a network presence in Austria, Slovakia and
Croatia.  "[Profile C] is a complete change in Motorola’s core network
architecture and has a lot of impact on its existing networks," he says. 
Wimax.com was not able to get a response from Motorola regarding how many of its
customers it has moved from Profile B to Profile C, or to get an update on how
many interoperability partners it has (or is in interoperability testing) for
its BTS and ASN Gateway equipment.  However, with at least 19 WiMAX
contracts to its name, as well as what it says is more than 75 WiMAX
‘engagements’ in 44 countries worldwide, Motorola is a major WiMAX player. 
The speed that Motorola moves to Profile C will play a big part in how far the
R6 interface is made available in different parts of the world. 

Another big Profile C stumbling block is Alcatel-Lucent, which is a keen
advocate of Profile A and has no plans to develop Profile C WiMAX equipment. 
While the R6 interface is used between the BTS and the ASN Gateway under Profile
A, the RRM (Radio Resource Management) is split between the BTS and the ASN
Gateway: the RRA (Radio Resource Agent) resides in the BTS while the RRC (Radio
Resource Controller) is placed in the ASN Gateway.  The upshot is that
operators using Profile A must have the same supplier for the BTS and the ASN
Gateway.  And for some operators, if the price and performance is right,
Profile A is a reasonable (if not ideal) solution.  Wimax Telecom, for
example, selected Profile A equipment from Alcatel-Lucent to roll an 802.16e
network in Croatia. 

"We do not support an open R6 interface as there has been no market request for
it so far, at least in the ‘enhanced wireless DSL’ market segment that we are
targeting, and where we have seen the bulk of market activity in terms of WiMAX
deployments," an Alcatel-Lucent spokesperson told Wimax.com. 
"Additionally, the vast majority of WiMAX deployments are single RAN supplier
deployments, and even in those cases where there are networks supplied by
several RAN vendors they are typically split into different areas/cities, each
of them being supported by one RAN manufacturer."

Like Motorola, Alcatel-Lucent has a big 802.16e presence around the world. 
As of the beginning of 2Q 2009, the French-US supplier was supplying 802.16e kit
for 15 commercial networks worldwide, with a total of 36 Mobile WiMAX contracts
under its belt.  Alcatel-Lucent’s resistance to Profile C is and will be a
big restraining factor on the spread of R6.

Profile C Momentum

The Profile C question marks hanging over Motorola, plus the outright Profile C
defiance from Alcatel-Lucent, shouldn’t detract from the significant amount of
interoperability progress that has been made on IOT and partnership-forming
between different BTS and ASN Gateway vendors via the open R6 standard and
Profile C.  Much of the groundwork on this has been done – through
necessity – by the smaller standalone BTS vendors that don’t have the resources
to develop ASN Gateways, such as Alvarion, WiNetworks, Aperto and Airspan. 
They need Profile C to get a foothold into the market. 

The WiMAX Forum is also embarking on a NWIOT (Network Interoperability Testing)
certification program that will only rubber-stamp equipment using R6 as part of
Profile C.  The WiMAX Forum had previously taken the position of letting
the market decide between Profile B and Profile C – it had earlier dropped its
support of Profile A – much to the annoyance of the smaller, independent WiMAX
kit suppliers.

The WiMAX Forum’s unequivocal backing of Profile C is warmly welcomed by the
likes of WiChorus, a standalone supplier of ASN Gateways and Home Agents that
has been active in promoting Profile C through its own IOT initiative, the One
Open WiMAX program.  "We have reached the tipping point for Profile C,"
says Rehan Jalil, WiChorus’ CEO, "but still a lot of work needs to be done."
Part of that WiChorus work, says Jalil, is supporting base station vendors even
if they are not yet fully Profile C compliant.

In the past, turnkey WiMAX kit suppliers would typically say to their
prospective operator customers that Profile A or Profile B was the way to go
unless they wanted to get embroiled in time-consuming IOT with multiple vendors
with little chance of a satisfactory outcome.  That argument is much less
convincing now, particularly as Clearwire has been a staunch Profile C supporter
from the beginning.  Barry West, when persuading operators to go down the
Profile C route, can also say as part of his sales pitch that they don’t need to
do any IOT on vendors’ kit that has already been tested on Clearwire’s network.

Profile C looks the way to go for most operators going forward but it may take a
bit of time yet before it becomes what the open architecture proponents crave –
a de facto standard.

Ken Wieland has been reporting and commentating on the telecom industry for
15 years. He has held various senior editorial positions, including most
recently as Editor of WiMAX Vision magazine at Informa Telecoms & Media. Now
working as a freelance telecoms writer, Ken contributes analysis and opinion
pieces to a number of websites, including the EIU (Economist Intelligence Unit). 
He can be contacted at
ken2wieland@yahoo.co.uk.