Tekelec Demonstrates Traction in Emerging Diameter Signaling Controller Market with Verizon Wireless Deployment

| Aug 4, 2011 | IP Services Infrastructure
| Analyst: Joe McGarvey

Event Summary

August 4, 2011 – Tekelec revealed during its Q2 earnings call that it had secured a deployment of the company’s Diameter Signaling Router (DSR) at Verizon Wireless. Tekelec officials say the deployment entails installation of the DSR platform in the operator’s 4G network, where it will be providing load balancing, charging proxy and support for inter-carrier roaming between LTE networks, and in the carrier’s 3G network, where it will be providing load balancing and charging proxy functions. Verizon Wireless acknowledged the Tekelec deployment but declined to provide any details of the transaction.

Quick Take

Analytical Summary

• Current Perspective: Very positive on Tekelec’s revelation of a deployment of its DSR at Verizon Wireless, as the transaction arguably establishes Tekelec as the overseer of the highest-profile deployment in the very young Diameter signaling controller market. Verizon Wireless is among the most, if not the most, aggressive adopter of LTE and IMS, two all-IP-based technologies that are expected to serve as catalysts for the rapid growth of Diameter-based signaling in mobile networks. Tekelec can brandish the Verizon Wireless deployment as a badge of validation of its less-than-year-old Diameter signaling control solution.

• Vendor Importance: Very high to Tekelec, as the Verizon Wireless deployment represents a potentially lucrative source of revenue over the next few years, as well as contributing to putting Tekelec at the center of attention of an emerging segment of the market that is attracting significant interest from mobile operators looking for a solution to manage the explosive growth of Diameter-based signaling traffic – a need that will only intensify as they migrate to all-IP technologies. The deployment is also vital to Tekelec in that it marks a meaningful progression in the company’s crucial transition from revenue dependency on legacy equipment to greater dependency on next-generation equipment, such as the DSR and the EAGLE XG platform it resides on.

• Market Impact: High on the scattered early competitors in the Diameter-based signaling controller space because although there are still many battles to be fought and customers to be acquired in this sector of the market, Tekelec’s deployment at Verizon Wireless establishes an early benchmark in terms of high-profile public deployments. The deployment arguably trumps Traffix Systems’ association with Vodafone, though Traffix can still claim market leadership in terms of the number of deployments, boasting of more than 25 implementations of its Diameter Signaling Delivery Controller (SDC), compared to three by Tekelec. The other early entrants in the market, Acme Packet, IntelliNet and Openet have yet to announce commercial deployments.

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