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Mobile & Wireless
Overture Networks bulks up on wireless backhaul
Acquires Ceterus Networks to complement its business Ethernet porfolio
by Sean Buckley
It would seem almost unthinkable in this current economic climate that any vendor, much less two smaller vendors, would even consider making an acquisition.
But Overture Networks — an independent vendor that found its initial calling in business Ethernet services over TDM and IP-based networks — is seeing an opportunity to expand its own capabilities to serve the burgeoning wireless backhaul market segment.
With the addition of Ceterus’ product set, a portfolio that includes its most recently released all-optical Universal Transport Solution UTS 4000 can better target two growth segments in the Ethernet market: wireless backhaul and carrier Ethernet services.
“The timing might not seem obvious, and even though the macroeconomics aren’t great, I think it’s a great time to pull things like this together,” said Dave Stehlin, former president of Ceterus Networks and the new President of Overture Networks. “As some other people may be hunkering down and defocusing, I think this gives us an opportunity to improve our focus on some areas that the market recognizes as the two highest growth areas in carrier Ethernet — cellular backhaul and carrier Ethernet to enterprises.”
Stan Hubbard, Senior Analyst with Heavy Reading believes Overture’s move will enable it to not only better target wireless backhaul, but also to position itself to target new carrier accounts in both North America and Europe.
“I see this move as a way to put the new Overture in a better competitive position to weather the global economic slowdown and address two of the three primary growth markets for Ethernet (business services and cell tower backhaul),” he said. “The combined company will have an even stronger presence in North America — where the bulk of customers are concentrated — but the vendor also has a growing customer base in Europe, including players like COLT and Cable & Wireless (which acquired longtime Overture customer THUS).”
Spotlight on backhaul
The timing of the acquisition, especially with many, if not all of the major wireless operators in the process of preparing their next-gen LTE and WiMAX 4G network evolution paths is quite timely.
While Clearwire/Sprint is taking the WiMAX route, the majority of Tier 1 telcos such as Telstra, Verizon, Bell Canada, and AT&T are moving towards Long Term Evolution (LTE) over the course of the next two years. This transition will carry bandwidth requirements that would be far too expensive to fill with traditional rented E1/T1 circuits.
Even without LTE or WiMAX, Infonetics Research argues that the sheer increase of worldwide wireless subscribers to an estimated 4.4 billion by 2011 combined with an increase in mobile data use is forcing wireless operators to migrate to an IP/Ethernet-based wireless backhaul.
With these scenarios as backdrop, Infonetics forecasts that "the IP/Ethernet segment of mobile backhaul will rack up triple digit 5 year compound growth from 2007 to 2011."
Thus far, the majority of the action with IP/Ethernet backhaul has been on the international operator front.
In addition to T-Mobile, Swisscom Mobile and Telecom Italia, Australian incumbent Telstra completed a nationwide backhaul network for both its wireless and business service customers.
At the same time that wireless carriers are making their respective next-gen migrations, they will have still have to support a mixture of everything from standard T1 to Ethernet for their existing 2G and 3G networks.
Given that reality that wireless operators will have to support a mixture of 2G, 3G and 4G wireless services, the recently released UTS 4000 optical platform can bridge the legacy to next-gen all-IP/Ethernet backhaul gap on their own timeline. The product can support a mixture of converged Ethernet and T1/E1 pseudowires services over native Ethernet.
“One of the things I am excited about is the UTS 4000 product that Ceterus developed, which is a carrier class platform for delivering Ethernet as well as TDM pseudowires with a focus on cell towers but it can be used for business services as well,” said Jeff Reedy, CEO of Overture Networks. “We’re positioning Overture Networks to help carriers deliver Ethernet today and then help them migrate their network as it evolves.”
Competition heats up
When wireless communications consisted mainly of voice calling — and it still is a big part of wireless communications — requirements for wireless backhaul were largely relegated to renting T1/E1 circuits from the local ILEC.
However, the dawn of new smart phones like the iPhone and an increasing amount of wireless data is surpassing the capabilities of the T1 and is giving newfound awareness to wireless backhaul.
These factors have created a competitive vendor and even service provider market for wireless backhaul.
With the Ceterus gear in its arsenal, Overture can now compete more effectively with the likes of traditional incumbent players (Alcatel-Lucent, Nokia Siemens Networks, Ericsson, Tellabs and the struggling Nortel) not to mention other independent vendors (Accedian and Turin, which acquired Carrier Access and its Tier 1 customer base last year).
But the service provider opportunity for wireless backhaul is just as robust.
With the wholesale carrier arms of the traditional ILECs such as Qwest are reporting increases in the amount of wholesale bandwidth. (see Qwest bulks up its wholesale capabilities)
Stehlin sees multiple opportunities for wireless backhaul that run the gamut of both wholesale and wireless operators.
“Most of the wireless carriers will be buying wholesale or through a parent if you’re Verizon Wireless, for example,” he said. “You have to understand what their requirements, timing, and specifications are so you have to interface with the wireless carriers and an ever-increasing set of wholesale providers.”
Another key wholesale wireless backhaul segment is the cable industry, which in some cases is also developing their own wireless services play.
Case in point is Cox Communications, which is targeting backhaul on two fronts.
Already providing fiber-based business services and wholesale capacity to other carriers, Cox has been finding a growing audience of wireless operators for its fiber, microwave and even coax-based services. What’s more, Cox has deep fiber networks and a well-built IP core network it can leverage. (see Cox finds gold in the commercial services market).
More recently, Cox is in the process of building out its own 3G wireless service offering.
And with cable operators continually rolling out business grade Ethernet services, the new Overture could expand further into another territory ripe for fresh approaches.
“You see all the cable MSOs getting bigger into business services, and you can consider backhaul to be a subset of that,” Stehlin said. “Number two, many of them have their own plans to offer their own wireless service and own some spectrum. Number three, if you look at the new Clearwire where three of the cable players are significant investors, I am sure they have plans to be more than just a passive investor.”
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