Digging into the packet core

Mobile players have invested more than $3 billion in the packet core space during the past six months alone. And, according to those in the market, the reason is clear: Thanks to dramatic increases in data traffic, and the looming prospect of widespread 4G, the packet core is poised to become a critical element in operators' management of mobile broadband.

"We do expect to lead this mobile transformation," boasted Kittur Nagesh, director of service provider marketing and, according to colleagues, the architect behind Cisco's massive, $2.9 billion acquisition of packet core provider Starent.

Kittur Nagesh, director of service provider marketing cisco tellabs"It filled a fundamental hole in our portfolio," Nagesh explained.

Cisco's packet core buy-in headlined a rash of investment in the space during the back half of last year. Tellabs in October purchased WiChorus for $165 million, and that same month Hitachi snatched up bankrupt Nortel's LTE packet core business for the bargain-basement price of $10 million. And among the big boys, Ericsson launched its Evolved Packet Core solution based on its SmartEdge platform, while Alcatel-Lucent announced its own EPC offering based on its successful 7750 platform.

Perhaps not surprisingly, this rash of investment followed closely on the heels of two high-profile packet core contract awards. Early last year Verizon Wireless named Starent as one of the suppliers of the packet core for its forthcoming LTE network. Separately, in September, WiChorus nabbed packet core contracts with both Clearwire and Open Range Communications.

When asked whether Verizon's selection of Starent sparked Cisco's interest in the company, Nagesh replied: "Oh, definitely."

Catching fire

Peter Jarich current analysis"With deals just closing and products just getting to market this year, it's clear that 2010 will be the year for Evolved Packet Core and packet core posturing to turn into real packet core competition," wrote Peter Jarich, an analyst with Current Analysis, in a recent FierceWireless column.

So why the sudden interest in the packet core for wireless? To answer that question, it's worth taking a brief tour through the evolution of wireless networks, and a peak at the functions of the core itself.

"The packet cores are essentially routers that take traffic and route it to the Internet," Current Analysis' Jarich explained during a recent interview. "The reason packet cores are more important than ever is because data is more important than ever."

When wireless carriers first added data to their mix of services--think GPRS, circa 2002--speeds were painfully slow, devices clunky, and only the most data-hungry, tech-savvy users pushed their bits and bytes over the network. To offer even the most basic of data services, operators had to invest in packet cores that would essentially act as the translator between their radio networks and the Internet, tracking and billing users' data surfing. On the voice services side, a similar box has long helped push cell calls to the public switched telephone network.

However, during the early days of mobile data, expectations far outstripped actual usage, and wireless users' disinterest left a number of startups--WaterCove, Tahoe Networks and others--high and dry. Such companies had developed advanced packet core technologies in anticipation of operator's investment in the space, but due to the underwhelming demand for data (WAP was a spectacular flop among regular consumers) those companies were forced to modify their plans. In the meantime, established heavyweights such as Ericsson, Nokia Siemens Networks and Alcatel-Lucent--and more recently Chinese players Huawei and ZTE--generally supplied carriers' packet core needs alongside other network elements.

However, some startups in the packet core space did manage to make a go of it. According to Current Analysis' Jarich, Starent managed to hang on due to its bet that data traffic among CDMA operators would take off more quickly than among WCDMA carriers. Thus, the company was well positioned to win Verizon Wireless' LTE contract since it had already managed to secure the carrier's 3G packet core business.

tellabs wichorus packet coreWiChorus, meantime, was a relative late-comer to the packet core space, and therefore designed its product in anticipation of the coming 4G revolution. "They have a platform that was specifically designed for 4G and smartphones," confirmed Vikram Saksena, executive vice president and chief technology officer of Tellabs, the new owner of WiChorus' packet core offering.

Saksena said the years of anemic data traffic essentially put the packet core market on hold, as operators focused on building out their networks and drumming up interest in their offerings. (Remember the days of Sprint Music Store and Cingular Video?)

And then, Saksena said, the market exploded.

"The world dramatically changed about a year, year and a half ago, due to the iPhone," he said. "The older generation packet core could not keep up with smartphones. ... The 3G networks are seeing 4G traffic." ...Continued

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