Ericsson to acquire Vonage to create a global VoIP network and communication platform

Ericsson has agreed to buy VoIP network operator Vonage for $21 per share, for a total of $6.2 billion. The board of directors at Vonage approved the deal, which will enable Ericsson to expand its enterprise operations globally and build on its integration of Cradlepoint in September 2020.

Vonage reported revenues for the 12 months to end September of $1.4 billion, with an adjusted EBITDA margin of 14% and free cash flow of $109 million. The merger price represents a premium of 28% to Vonage’s closing share price on 19 November and 34% to the volume-weighted average share price for the three months to 19 November.

Vonage’s presence in the Communication Platform as a Service (CPaaS) segment will provide Ericsson with access to a complementary and high-growth segment, the company said. The combination will also accelerate enterprise digitization and the development of advanced APIs made possible by 5G. Over the longer term, Ericsson intends to deliver services to the full ecosystem, including telecom operators, developers, and businesses, by creating a global platform for open network innovation, built on Ericsson and Vonage’s complementary solutions.

The cloud-based Vonage Communications Platform (VCP) serves over 120,000 customers and more than one million registered developers globally. The API (Application Programming Interface) platform within VCP allows developers to embed high quality communications – including messaging, voice and video – into applications and products, without back-end infrastructure or interfaces. Vonage also provides Unified Communications as a Service (UCaaS) and Contact Center as a Service (CCaaS) solutions as part of the Vonage Communications Platform.

VCP accounts for approximately 80% of Vonage’s current revenues and delivered revenue growth in excess of 20% in the three-year period to 2020, with adjusted EBITDA margins moving from -19% in 2018 to break-even in the 12-month period to 30 September 2021. Vonage’s management team projects annual growth of over 20% for VCP in the coming years.

Börje Ekholm, President and CEO of Ericsson, says: “The core of our strategy is to build leading mobile networks through technology leadership. This provides the foundation to build an enterprise business. The acquisition of Vonage is the next step in delivering on that strategic priority. Vonage gives us a platform to help our customers monetize the investments in the network, benefitting developers and businesses. Imagine putting the power and capabilities of 5G, the biggest global innovation platform, at the fingertips of developers. Then back it with Vonage’s advanced capabilities, in a world of 8 billion connected devices. Today we are making that possible.”

“Today Network APIs are an established market for messaging, voice and video, but with a significant potential to capitalize on new 4G and 5G capabilities. Vonage’s strong developer ecosystem will get access to 4G and 5G network APIs, exposed in a simple and globally unified way. This will allow them to develop new innovative global offerings. Communication Service Providers will be able to better monetize their investments in network infrastructure by creating new API driven revenues. Finally, businesses will benefit from the 5G performance, impacting operational performance, and share in new value coming from applications on top of the network.”

Rory Read, CEO of Vonage, says: “Ericsson and Vonage have a shared ambition to accelerate our long-term growth strategy. The convergence of the internet, mobility, the cloud and powerful 5G networks are forming the digital transformation and intelligent communications wave, which is driving a secular change in the way businesses operate. The combination of our two companies offers exciting opportunities for customers, partners, developers and team members to capture this next wave.”

“We believe joining Ericsson is in the best interests of our shareholders and is a testament to Vonage’s leadership position in business cloud communications, our innovative product portfolio, and outstanding team.”

References:

https://www.ericsson.com/en/press-releases/2021/11/ericsson-to-acquire-vonage-for-usd-6.2-billion-to-spearhead-the-creation-of-a-global-network-and-communication-platform-for-open-innovation

CEO and CFO presentation (pdf)

Two webcasts on November 22, 2021:
9:10 AM CET: Replay 
3:30 PM CET: Replay

Session Border Controller (SBC) for Enterprises and VoIP Service Providers

by Nellie Marteen

Introduction:

If you are new to Unified Communications (UC), it could be challenging to learn its many components. Some acronyms could be confusing.  For example, SBC- Session Border Controller.

SBC is a network element used to protect Session Initiation Protocol (SIP) based VoIP (most enterprises use VoIP as the telephony service over the Internet).  SBC may be deployed in the enterprise/customer premises (see Figure below), the VoIP carrier network or in the cloud as discussed later in this article.

SIP is used to initiate, maintain, and pause the working of VoiP and SIP services. The primary purpose of SBC is to enhance connectivity and address safety problems. However, some companies do not use SBC despite knowing its many benefits.

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SBC in the enterprise/customer premises is shown in this Figure:

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Advantages of using SBC:

1. Quality of Calls

Session Border Controller can enhance call quality and provide ease of use. SBC enables the IP Private Branch Exchange (PBX) to be placed on the LAN among a separate IP address. They can do significant things such as normalizing hosted PBX signaling between the PBX as well as the service provider and providing critical routing capacities.

SBCs also assure interoperability of VoIP and video gadgets, examine VoIP lines, analyze call quality, and many more to name. SBC is a must if you get complaints about dropped or missed calls, reduced call quality, or both.

2. Connectivity

The primary function of SBC is to connect a company’s communications infrastructure to the hosted PBX service providers, private vendor network, and public internet. Additionally, SBCs have various essential roles, such as maintaining and securing networks.

An organization can save time and money by using SBCs. They can easily route their phone traffic via internal IPs rather than conventional circuit switched phone networks. Organizations can route phone calls instantly without paying for individual, traditional phone lines.

3. Safety

This is the benefit that many companies do not recognize. If a SBC recognizes a potential security threat, it can instantly remove/block that problem. After spotting the threat, it will alert the host computer(s) with the threat details and the protocols applied to normalize it. Also, SBCs can send the threat date to other businesses’ branches to look out for the same security breach. IT teams can be aware and utilize the data to look out for future security threats.

4, Mitigation of DoS Attacks and Continuity of Service

SBCs use pattern recognition technology to find unusual activities like a strange traffic surge while a DoS (Denial of Service) attack [1.] is ongoing. DoS strikes can take down entire networks resulting in unexpected downtime.  Firewalls are generally not sufficient to prevent DoS attacks.

SBCs decrease threats and defend business communication systems from DoS attacks.  DoS strikes can interpret phone and video conferences and steal important information or infect systems with malware and viruses. And if the system gets down due to a DoS attack, the organization may have to suffer for an unknown amount of time.  

You can watch a short video on how SBCs detect and defend against DoS attacks.

Note 1. A denial-of-service (DoS) attack occurs when legitimate users are unable to access information systems, devices, or other network resources due to the actions of a malicious cyber threat actor. The most common method of attack occurs when an attacker floods a network server with traffic. In this type of DoS attack, the attacker sends several requests to the target server, overloading it with traffic. These service requests are illegitimate and have fabricated return addresses, which mislead the server when it tries to authenticate the requestor. As the junk requests are processed constantly, the server is overwhelmed, which causes a DoS condition to legitimate requestors.

5. Security

Hackers and other bad actors have found new ways to interrupt business communications services and upgrade their ways to disrupt older security measures. Here, SBCs take care of the protection. It is crucial to have up-to-date methods supported. Additionally, an extra layer of security from SBCs are crucial to safely maintaining VoIP solutions.

SBC Challenges:

SBC can be a complex piece of technology – one that demands a certain amount of expertise to set up and maintain.  It is not a set-and-forget technology; as additions, moves and changes of voice service occur, the SBC must be configured to recognize them.  Also, the IT department must actively manage SBC devices adding to their workload.

Who controls the session border?

For the enterprise, it is obviously desirable to be able to secure network connections, so their IT department should manage the SBC.  Yet the VoIP carrier — whose network is being connected to — is also concerned about such things as QoS, lawful intercept of voice traffic and management of the voice connection.

For these reasons, communications carriers who offer VoIP connectivity often want to manage the session border controller or specify the controller that the enterprise will use. This is clearly at odds with an enterprise that wants to mask its internal networks from external intrusion. SBC, from the standpoint of the carrier, breaks the end-to-end management of call completion and complicates regulatory obligations such as access to 911 services and call intercept.

SBC in two VoIP carrier networks is depicted in this diagram:

Complicating this situation is the introduction of cloud-based session control. In this scenario, the SBC functionality is provided through a cloud service. Advantages are that the enterprise can offload a great deal of the management overhead associated with SBC maintenance. The drawback is that VoIP traffic latency can increase dramatically as it transits a much larger network.

Conclusions:

We have described and detailed all the significant benefits of SBC in this article, along with the challenges an IT department must deal with to effectively use SBCs. The important topic of whether the enterprise or carrier should control the session border was discussed along with cloud based session control.

It should be crystal clear that enterprises using VoIP should integrate SBC within their business communications system – either directly or via their VoIP service provider.

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References:

https://www.voip-info.org/session-border-controller/

https://ribboncommunications.com/company/get-help/glossary/session-border-controller-sbc

https://searchunifiedcommunications.techtarget.com/tip/Session-border-control-The-good-the-bad-the-ugly

https://www.ir.com/guides/a-complete-guide-to-session-border-controllers

https://us-cert.cisa.gov/ncas/tips/ST04-015

https://www.ecosmob.com/session-border-controller/#1

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About Nellie Marteen:

A senior software developer with 8+years of experience guiding teams to develop the most competing SessionBorder Controllers solution. She believes in sharing her knowledge to create unique, innovative software solutions for businesses.

Nellie is also a blogger who writes about a variety of topics.