Oracle's acquisition of Tekelec adds to integrated telco application platform vision. What's next?
Oracle has bought Tekelec for an undisclosed sum. Although Tekelec cost the private equity investors led by Siris Capital $780 million in January 2012, it is not known what return those investors have made. The Mobile Network has not heard back from Siris yet despite a request for comment, and Oracle did not disclose terms of the deal. Sources at Tekelec also referred The Mobile Network only to publicly available material.
So why has Oracle bought Tekelec?
Oracle said that with Tekelec and Acme Packet products, it "expects to deliver the communications industry's most complete portfolio spanning Customer Relationship Management, Business and Operational Support Systems, Service Delivery Platforms, Network and Service Control, and end-user applications." Tekelec gives it network and service control technologies to address these increased network workloads as well as, through its policy products, the ability to monetise cloud, over-the-top, and personalised services.
When Oracle bought Acme Packet earlier this year and said it wanted to work to build up a comprehensive telco network applications play, thoughts quickly turned to who it would buy next? What would Oracle need to add to enable it to complete its presence?
Acme Packet may cost Oracle aroud $2 billion but it doesn't give Oracle a complete network applications presence - despite Acme's "IMS in a box" play and its number one position in SBCs (Session Border Controllers): the elements provide traffic control between different domains.
One critical element in building "out of the box", IT-based network applications is providing solutions that can manage the impact on the control plane and the growth in signalling traffic that operators will see with real time events in the network. That is why charging, policy-enabled subscriber services and subscriber data management are becoming tightly coupled, along with signalling.
Dean Bubley of Disruptive Analysis told The Mobile Network, "In the short-to-medium, there are synergies with Oracle's BSS/OSS and CRM products, and also linking subscriber management (which is very database-intensive) to control of the network in terms of policy and resources."
A further strategic driver is that Oracle is keeping a keen eye on the SDN and NFV plans of operators, and expects to be able to take advantage of virtualised instances of network functions.
"I'm expecting those network elements such as signalling routers and various forms of gateways to be near the top of the list to be "virtualised"," Bubley added.
For further evidence of this longer term goal, these recent quotes from an interview conducted by Oracle with The Mobile Network at Mobile World Congress shows the ambition the company has. Note the emphasis on scaleable signalling architecture, and how Oracle's exec talks of scaling the user plane and control plane independently of each other, and at the same time consolidate onto the same platform.
"We are looking at opportunities where they have a new platform to plug into the network: anywhere where a pre-integrated box could be a benefit, which could be service deployment on an IMS core for VoLTE, IP messaging. That includes things like the entire EPC into 4G networks, IMS services, IMS apps, the entire data plane and control plane offerings in the network are all areas that ONAP fits in. VoLTE, MMTel, RCS types of services, all those are the right kind of use cases and workloads that ONAP could fit in. We're looking into the packet core, signalling gateways, PDGs; all an ideal fit for bringing those capabilities onto ONAP.
"If you look at the whole evolution of IP architecture, you have to find a way to consolidate your signalling, versus distributing the user plane to the edge. How do you enable that, because in all-IP the signalling traffic is not proportional to the user plane traffic, unlike in circuit switched. Because of that you dimension your network to centralise your signalling as one example and move user elements to the edge to provide throughput and latency. So those kinds of capabilities is where we are looking to. Signalling is one part, and is highly critical into providing these new services. When you want to architect that kind of a network, you must find a way to provide fewer nodes from point A to point B because that translates into latency. That's how we look at ONAP, for example, as a fabric where you have the ability to scale the user plane and the control plane independent of each other, and at the same time consolidate onto the same platform."
So where does Oracle go next? Disruptive Analysis' Bubley thinks that three directions are possible: 1) Moving "up" towards communications applications and services, especially around voice/video/messaging. This could point towards cloud/API specialists like Voxeo or Twilio, or perhaps to WebRTC players such as Zingaya or Thrupoint
2) Getting deeper into the "nuts and bolts" of the network, in terms of hardware products and virtualisation (eg maybe F5 Networks or an SDN startup)
3) Moving more towards network policy control (eg Openet, Volubill)
Ovum's Dana Cooperson, principal analyst, said in a note distributed to press: "Expect Oracle's telecom-focused competitors (Alcatel-Lucent, Huawei, Ericsson, etc.) and its IT-focused competitors (HP, SAP, SAS Institute) to do more strategic soul-searching and, as their financial situation allows, to pursue acquisitions of their own. Key areas for strategic shoring-up include customer experience management, applications enablement, big data analytics, subscriber data management, and network and service control intelligence."
Siris Capital led the acquisition of Tekelec in early 2012, and Tekelec was one of two holdings in Sirrus II, a fund that holds only US tech investments. The other holding is TNS, which Sirrus II acquired earlier in 2013 for $862 million.
Tekelec built its policy products on acquisitions of Camiant and BlueSlice in 2010 for a combined $165 million.
Oracle is not the only player making moves to add policy or signalling smarts in an effort to provide solutions that increase network control and IP monetisation opportunities. Most recently, Cisco bought policy control provider BroadHop for an undisclosed sum.
Tekelec marked Mobile World Congress with the launch of a new strategic direction called THE THINKINGNETWORKS REVOLUTION. You can download that white paper here.