Hard on the heels of its February announcement that it was purchasing session border controller market leader, Acme Packet (News - Alert), for $2.1 billion, Oracle sent shockwaves through the service provider vendor market with the revelation today that it was gobbling up Morrisville, NC-based network signaling, policy control and subscriber data management company – Tekelec (News - Alert). 

The move is not merely and indication of Oracle desires to extend its already impressive reach into the network service provider market through the expansion of its offers, but also is a reflection of the fundamental changes service provider network architecture are undergoing, as they transform from legacy voice-centric ones to IP-based/data center-centric ones, with which the integration of mobility that leverages network virtualization and applications management – and delivery across multiple channels in a cost-effective and agile manner – will be paramount, if the service providers are to keep their centrality in evolving services markets.

Tekelec acquisition gives Oracle (News - Alert) a comprehensive set of offers

Oracle, while not disclosing the terms of the deal, made the intentions behind the Tekelec move quite clear; “As connected devices and applications become ubiquitous, intelligent network and service control technologies are required to enable service providers to efficiently deploy all-IP networks, and deliver and monetize innovative communication services,” said Bhaskar Gorti, senior vice president and general manager, Oracle Communications. “The combination of Oracle and Tekelec will provide service providers with the most complete solution to manage their businesses across customer engagement, business and network operations, service delivery and end user applications.” Oracle was also careful to note that this acquisition fits hand and glove with the Acme Packet one to provide what they believe will be “the most complete communications offering that will enable service providers to engage with customers, improve operations, control network resources and deploy innovative communications services.”

Ron de Lange, president and CEO at Tekelec., added that, “In an increasingly mobile and social world, customer experience is about optimizing network performance and personalizing services based on what engages, moves, and inspires people…Together with Oracle, we expect to accelerate the pace of service innovation by helping service providers transform the way they manage and monetize the explosive growth in signaling and data traffic on their networks.”

Tekelec and Acme Packet—as the world turns

As I noted back in February when the Acme Packet deal was announced, while Oracle does posses one of the broadest set of applications, social and platform services, infrastructure services, and storage solutions tailored for the network service providers, it relied on others for what had been a critical missing link in helping SPs transform in the form of SBCs—hardware that performs mediation between legacy networks and SIP-based ones which are dominating the session control layer.  The same could be said in terms of the capabilities that Tekelec brings to the table.

In fact, given what is going on with the death of the PSTN and the explosive growth of mobility and the associated accelerating of all things that are cloud along with the move to virtualization to accommodate all of the above, the Tekelec acquisition from a strategic perspective may be more important.

The reason for the criticality of having Tekelec is that while the headlines always seem to focus on the “data storm” BYOD device proliferation and the need for apps and more “immersive”/bit consuming functionality like video and content-rich file transfers are placing on networks, what tends to be over-looked is the concomitant data torrent all of those apps are putting on service provider infrastructures. In many ways, the growth the signaling data explosion is exponentially larger, and could impact service provisioning and the user experience, more than just the sheer volume of content being exchanged. 

A simple way of thinking about this is to look at those screens on your smart device and all of those apps. Now think about the moves you must make to turn most of them off at various times to ensure you have enough battery life to do what you need to do. Many if not most of those apps are constantly pining your device. They are using the signaling network for updates on status, location and to provide such capabilities as automatic updates. In short, each app is generating a tremendous amount of signaling traffic. 

This is significant because without the deployment of next-generation Diameter signaling, an area where Tekelec is a market leader, we have already seen mobile service providers forced to throttle back their networks during bursty events so that the networks do not crash from the signaling overload. 

Oracle is aiming at shortening the preferred vendor list

A major reason why the Oracle move to acquire Tekelec and bring signaling in-house to be combined with the IP transformation capabilities of Acme Packet is to position the company to shorten the service providers’ preferred vendor list. Reality has always been that the service providers, particularly the largest ones, while they enjoy the flexibility of having multiple vendors, at the same time prefer to deal with a short list of “trusted partners.” 

As all networks go end-to-end IP in a converged scenario and rely on data centers for the delivery of all of their services over multiple media, particularly as the arms race to deploy 4G LTE (News - Alert) accelerates around the world making the mobile world IP-based as well, service providers are likely to turn to vendors that can assist them with a holistic set of transformation capabilities. This will include not only hardware and software but also professional services. Oracle is certainly upping the ante on every sector that supplies solutions to the service providers. And, the fact that they have become very aggressive in going after vendors that have critical components but have been in essence point solution providers in a world where being able to provide and manage the complexity of a converging service delivery environment is smart. 

By being a first mover in consolidating key parts of what will be needed by service providers as they transform, and grabbing now two assets with significant traction in their respective marketplaces (Tekelec is in over 300 service providers around the world), Oracle is positioning itself well, and to say the least will have boardrooms around the industry pondering what to do next. 

Will you be a hunter or the hunted is now a big concern? The Tekelec deal might not seem like a big deal but it is. It is big because, signaling is important in and of itself and being able to combine it with the existing capabilities and those of Acme Packet is going to make for Oracle having a strong value proposition with a customer set that is going to have to accelerate its network transformations in order to ward off the prospects of being just “dumb pipe” companies. It is also big because like it or not it is hard to imagine how this will not be a trigger for an interesting round of industry restricting. 

In fact, look for lots of interest in the other companies signaling companies in the months ahead.