Continuing its mobile acquisition streak, Cisco Systems announced it will purchase United Kingdom-based small cell firm Ubiquisys in a deal valued at $310 million. Cisco, which has been eyeing the small cell market for some time, said that the transaction will enhance its portfolio of products for carriers as they expand into heterogeneous network architectures and offload more traffic onto small cells.
The deal is expected to close in the fourth quarter and Ubiquisys employees will be integrated into Cisco's Service Provider Mobility Group, reporting to Partho Mishra, vice president and general manager of Cisco's small cell group.
Small cells are one of the main components of HetNets, and because their signals travel over a shorter range than macrocells, they let carriers deliver a faster and more consistent voice and data experience. Most small cell deployments in the United States are in their infancy, but carriers expect to expand small cell rollouts in the years ahead as they work to bolster their LTE networks.
For example, AT&T Mobility (NYSE:T) will deploy more than 40,000 small cells during the next two years as part of its expansive Project Velocity IP (or VIP) network upgrade. Verizon Wireless (NYSE:VZ) has plans to deploy 200 LTE small cells this year.
According to a recent report from Infonetics Research, increasing demand for small cells, driven by LTE deployments, will push the small cell market to a value of $2.7 billion by 2017. The report predicted 4G small cell shipments will overtake 3G shipments by the end of 2013. South Korea's SK Telecom has deployed close to 40,000 small cells and is the leading adopter of 4G public access femtocells to date, said Infonetics, which tapped Asia Pacific to lead the small cell market in 2013 with 50 percent of all units shipped.
The Ubiquisys acquisition is the latest in a string of mobile-related purchases Cisco has made in the past several months to strengthen its portfolio. Cisco's main mobility pitch to carriers is one that many vendors have been making in recent years: that it is designing networks with more intelligence built in, allowing carriers to better monetize data traffic.
Kelly Ahuja, senior vice president and general manager of Cisco's Service Provider Mobility Group, told FierceWireless that Cisco had been building its own small cell capabilities during the past several years, focusing mainly on residential femtocells for 2G and 3G networks. However, he said Cisco was drawn to Ubiquisys not just for its hardware capabilities but also for its software, which allows carriers to turn on small cells through the cloud when extra capacity is needed.
That kind of ability, Ahuja said, is part of Cisco's broader strategy to add more intelligence to network designs. "This is not just about the small cell," he said. "It's about the mobility architecture and intelligence in the network architecture."
Ahuja said Cisco remains open to additional acquisitions, but he said "we feel like we have a lot of the capabilities that we need" currently.
Cisco's recent acquisitions in mobile include $475 million for Intucell, which specializes in self-optimizing network (SON) software; BroadHop, which provides more than 70 policy installations at service providers around the world; and $1.2 billion for Wi-Fi and cloud networking vendor Meraki.
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