Next-Gen Genocide

The decision by Tellabs to kill off its Salix voice-over-packet product line raises one fundamental question: Is a shift in the direction of the media gateway and softswitch market under way, or did Tellabs make a blunder with its media gateway strategy?

Tellabs officials did not make themselves available to comment on the decision to terminate the Salix division, which it acquired for $300 million in a late 1999 buyout. But Brian Jackman, president of global systems and technology at Tellabs, said in an April 18 teleconference with analysts that the move was made in anticipation that stand-alone media gateways would soon become obsolete.

"We believe the functionality will be integrated into higher-order systems," said Jackman. "What we are doing is along those lines."

Some industry experts agree that other components in the network infrastructure could eventually take on the responsibilities of a media gateway, which acts as a bridge between the circuit-switched voice network and packet-based networks.

"Some of that is already going on," says Christine Hartman, an analyst with Probe Research. "I'm starting to hear that some folks are putting gateway functionality into other pieces of equipment." That gear includes DSL access multiplexers and digital loop carriers.

Others, however, suspect that Tellabs' decision was predicated on the company's difficulties of pairing the Salix media gateway with a softswitch, the software-based system that provides call control functionality in a next-generation voice switching system.

Officials at Sonus Networks, a leading provider of packet-over-voice systems, say that a tightly coupled softswitch is crucial to the success of a media gateway.

"If you don't offer both pieces, you don't have a place at the table with the customer," says Stephen Collins, VP of marketing at Sonus.

Tellabs had been pursuing a policy of pairing its media gateway with stand-alone softswitches. One of those partners, Telecom Technologies, was bought out by Sonus last year. Christin Flynn, an analyst with The Yankee Group, says that deal was a setback to Tellabs because it "shut down a potentially lucrative pipeline" into several major carriers.

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in The Net Economy.