With its US$2 billion acquisition of Redback Networks this week, Ericsson is now in direct competition with some of its biggest partners -- Cisco and Juniper -- in the red-hot carrier edge routing market. However, the move is more of an effort to obtain IP and Ethernet technology which it can use to pull its telecom and mobile infrastructure products forward into the IP-based future of telecom, says Karl Thedeen, Ericsson's vice president of wireline products. But that's not to say Ericsson isn't looking to grow Redback's market share and technology itself.
What does Ericsson get with its $2 billion Redback acquisition?
IP routing has been a hole in our portfolio. What we've looked for is a product like this, which fits into the heart of the IP network, with the possibility to add applications. Redback's products are not only a payload and routing platform, but something that can host advanced services -- applications such as security, quality of services and deep packet inspection.
What we want to do is scale the technology, so we can address more parts of the routing market. We also believe that we'll be able to use Redback's technology in other Ericsson products, such as our softswitch and IMS products, as well as DSL access and our range of mobile base stations. The growing importance is to add IP and Ethernet capabilities into those products.
How might Ericsson products incorporate Redback technology, or vice versa?
If you take VoIP applications, there are session border gateways and other functions that we believe you need to build closer to routing. If you take voice applications, or IPTV applications, they would run on servers. But parts of those could work on routers, in areas where some of that traffic manipulation and understanding of IP flows is necessary.
Other things such as proxy functions in IMS, we'll look into whether we should run those things on a Redback platform or keep them on their existing platforms. We won't load the entire IMS application suite onto a Redback product.
How will the deal affect your partnerships with Cisco and Juniper, which are the leaders in the carrier edge router market?
Cisco and Juniper are important parts of our offerings, because of their installed base and the breadth of their portfolios. With Cisco, we have an arrangement on the wireline side, and with Juniper, we have a co-development effort for [General Packet Radio Service and 3G routers]. We intend to keep both partnerships. We think Cisco and Juniper are very important for our ability to act as a solutions provider. And our systems integration people often use their products. We don't foresee any changes in those relationships.
Even though you will be competing directly with Cisco and Juniper for carrier edge router deals?
That will add some factors that we will need to have in mind when we co-operate with Cisco and Juniper. On the other hand, there will be a lot of opportunities where this will not be hindering us at all. For example, if we integrate our softswitch technology into a Juniper core routing environment, it's very important for us and Juniper to have a good partnership so we can make that work.
Now that you're in the carrier edge routing market with Redback, does Ericsson have any interest in service provider core routing?
The good thing with Redback's technology is it gives us a lot of flexibility. The technology can be scaled down to smaller aggregation roles, and Ethernet switch routing. But it's also possible to scale it up to get into part of the core routing market. We have not decided exactly which track we will go down first. That's something we'll need to conclude. But one of the prerequisites of the acquisition was to find a technology that can fit into Ericsson's products, but also adds flexibility in how we address different parts of the market. We know the IP market in general is not so standardised as some of the markets we already operate in, such as the mobile space.
What is an edge market today may be more of carrier Ethernet market tomorrow. And maybe the technology in the core market today could become more of an edge technology in the future. It's hard to judge where a technology will fit in a couple years time. But the flexibility in the Redback products is there to do a lot of things.
Why are IP and Ethernet technologies important to mobile providers and equipment makers?
There is a change in mobile backhaul technology, from 2G to 3G to 4G. This is going from T-1/E-1 TDM technology to Ethernet, IP-based backhaul networks. So that's one important transition for us to follow. If you really look into the 2009, 2010 timeframe when High Speed Packet Access (14Mbit/s mobile data) becomes more commonly deployed, those networks will be standardised on IP between mobile base stations and access gateway nodes. In that sense, all the transmission, all the logic will happen in an IP environment. So from that sense, we believe it's very important for us to have very good ownership of edge and access routing technologies.
You'll see convergence where both wireline and wireless networks are working on the same IP network. But that IP network needs to have telephone-grade characteristics. So it's very important for our mobile business to have ownership of this technology, but equally important for our wireline business to grow into [IP] and make sure we cover it from two angles.
What is driving the growth in the carrier edge routing market?
There are a number of things. There is a consolidation of business services, from ATM, Frame Relay and X.25 into IP VPN-type services with MPLS. That's driving a lot of new products into the network. The move away from legacy access services is driving a change in architecture. All the speeds are going up tremendously.