A Bellcore Retrospective: Ericsson Readies to Write Telcordia's Next Chapter

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Big news in the telecommunications space today: Ericsson announced plans to buy Telcordia.

The fact that Telcordia is being bought is not so much the news here. Reports surfaced earlier this year that the company was seeking a buyer.

Rather, what’s interesting here is that Ericsson, one of the two biggest systems integrator vendors in the telecom industry (the other being Alcatel-Lucent) to U.S. service providers, is now bringing the storied Telcordia into its fold.

Telcordia is the organization formerly known as Bellcore, which was created back in 1984 as the research and development arm of the seven regional Bell companies. The Baby Bells, as they were also known, were created to deliver local telephone services in various regions of the U.S. following a court order that led to the 1982 breakup of the nation’s monopoly phone system. The split also made AT&T its own company, which at the time was charged with delivering long-distance phone services.

Anyway, it was Bellcore (renamed Telcordia in 1999), that was considered to be the organization that led the way for the regional Bells, at least from a technical perspective. It was lauded for the extreme reliability it helped the regional Bell networks deliver, and it was central to such industry innovations as SONET, which still exist today. But Bellcore/Telcordia was also criticized for enabling the regional Bells to move “in lockstep”, as many called it in the late 1980s and early 1990s; the opinion was that no single Bell company was thinking for itself, but rather following the moves of its brethren.

But as the cable TV companies took the lead with their broadband network builds and then began offering phone services, the regional Bells began to move in different directions. That eventually led them to question the value of using the same R&D effort.

In 1995, the regional Bells decided to sell Bellcore. And two years later that happened, as SAIC moved to acquire the company. A new CEO, Matt Desch, took over at Telcordia in 2002 and pushed to bring its significant breadth of networking knowledge not just its existing customers, the Bells, but to other service providers as well. That was a big challenge given the company’s long history and traditional focus on narrowband wireline networks. But that was probably the least of the company’s challenges given that around that same time the industry faced the dotcom bust and ensuing telecom nuclear winter.

SAIC eventually sold off Telcordia, which today is owned by Providence Equity Partners LLC and Warburg Pincus.

Today Telcordia is still considered a very important company in the billing and operations support systems space and has significant intellectual property, product and human resources. That explains why Ericsson, at a time in which many vendors are trying to expand their businesses to deliver not just gear but professional services solutions, is interested in purchasing Telcordia.

“The importance of operations and business support systems will continue to grow as more and more devices are connected, services become mobile and new business models for mobile broadband are introduced,” said Hans Vestberg, president and CEO of Ericsson. “In this context, Telcordia brings very skilled people and knowledge, a large business in North America and other markets, as well as a good multi vendor product portfolio.”

If all goes as planned, Ericsson will acquire 100 percent of the shares of Telcordia for $1.15 billion in an all cash transaction, on a cash and debt-free basis. The plan calls for approximately 2,600 employees to join Ericsson.

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Edited by Jennifer Russell

Executive Editor, IP Communications Magazines

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