Alcatel buys in wireless routing, shops around in Wi-Fi

Beyond the carrier base

The suppliers of mobile infrastructure are increasingly looking to penetrate Cisco’s enterprise networking territory as voice and data converge, and that means taking a new interest in Wi-Fi. Motorola has already set out its stall, and now Nokia and Alcatel are both heavily tipped to be on the WLAN acquisition trail in a bid to spread their wings beyond the carrier base.

Alcatel has been moving steadily into the enterprise sector, but lacks a major 802.11 offering. Although it has an OEM deal for Colubris access points, this is mainly focused on hotspot-in-a box products for carriers. As Colubris itself expands out of its ISP base into the enterprise, it could be a natural fit for Alcatel, but the French giant has reportedly been talking to a range of start-ups.

NEC has stolen a march by allying closely with Airespace, which makes voice-optimized Wi-Fi gear. This would seem to protect Airespace from Alcatel’s or Nokia’s advances, though there are rumors that the French company has approached this switchmaker. Another switch start-up heavily focused on voice is
Meru Networks, which claims to have outdone the upcoming 802.11e quality of service standard with its own access points.

On its more traditional cellular infrastructure turf, Alcatel has acquired WaterCove Networks, which makes GGSN (GPRS Gateway Support Nodes) for 2.5G and 3G networks. This wireless router technology provides the main interface between the carrier’s radio and packet networks. New generation ‘intelligent’GGSNs also can handle IP traffic management and various types of billing, including charging subscribers based on content type.

As multiple services differentiated by content become the way forward for the operators, and as the broadband wireless networks converge on IP, this element of the mobile infrastructure is gaining a whole new significance. Hence Nokia’s acquisition last year of the intellectual property and key personnel of another start-up in this sector, Tahoe Networks, and Alcatel’s decision to take control of this technology itself, rather than buying in Cisco GGSNs as it has in the past.

WaterCove was founded in 2000, with backing from Comdisco Ventures, Orange Ventures and inOvate Communications Group.

Other start-ups in the field include Megisto and Starent, both of which must now be counted as takeover targets for the big equipment vendors in this space, and for wired IP router suppliers that look set to expand into wireless, notably Juniper.

Megisto has accepted that wireless routers will be the preserve of the big guns and is now focusing heavily on the services delivery aspect of this product sector, trying to distance itself image-wise from the wireless router shakeout, and says it will announce the first customer for its Mobile Services Delivery System at the 3GSM conference later this month.

The company says it has moved away from GGSNs and is now focused on value added services, enabling operators to manage content charging and packaging and pricing schemes such as prepaid.

As in its original territory, however, there is always Cisco to contend with. The giant recently launched its 7609 and 7613 Mobile Exchange platforms for enhanced billing, and is threatening specialist start-ups such as ProQuent and P-Cube.

Announcing Alcatel’s fourth quarter results, CEO Serge Tchuruk said that two areas of growth in 2004 are expected to be 3G build-outs and the company’s strategy of supporting multimedia applications over mobile and fixed networks, a sector where it hopes for 20% revenue growth this year, and where WaterCove
will be significant.

The French company narrowed its fourth quarter loss to €524m from €1.12bn in the same period last year, mainly because of cost cutting, but revenues fell to €3.77bn from €4.51bn, with the strong euro the main factor. Operating profit leapt to €331m from €20m. For the full year, net loss narrowed to €1.94bn from
€4.75bn, on sales that fell back to €12.51bn from €16.55bn.

© Copyright 2004 Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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