Tellabs to acquire Wichorus to extend its Mobile Backhaul product portfolio

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To accelerate its transition from an optical transport vendor to an Internet Protocol network equipment company, Tellabs is acquiring mobile packet core maker WiChorus for $165 million in net cash. Tellabs counts 43 of the top 50 service providers as customers, with their IP mobile backhaul products deployed by 120 network operators. The acquisition extends Tellabs wireless backhaul products to a fast growing adjacent market- gateways for mobile IP traffic (such as the ASN Gateway for mobile WiMAX). That market is expected to reach $2.6B in 2013, sporting a better than 22% compound annual growth rate. The transaction is expected to close no later than February 2010.

"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 recognizes the mobile Internet is taking off and WiChorus has a product their service provider customers very much need. 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.

While Tellabs spends 17% of its revenues on R & D, they found it more expedient to acquire Wichorus’ mobile packet core technology than develop it internally. They believe this will make them more 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 today, 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 consumated.

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

  • Tellabs® 6300 Managed Transport System
  • Tellabs® 7100 Optical Transport Series
  • Tellabs® 7300 Metro Ethernet Switching Series
  • Tellabs® 8100 Managed Access System
  • Tellabs® 8600 Managed Edge System
  • Tellabs® 8800 Multiservice Router Series
  • Tellabs® Intelligent Network Management


We think this is a very good move for both companies and we predict more acquistions and consolidation in the network equipment market.  In particular, watch Ciena which has optical backhaul products, but nothing for the "3G/4G mobile packet core."