Will Sonus get Nortel's VoIP assets?

Could Westford, Mass.-based Sonus be on the verge of purchasing Nortel's VoIP assets? Well, Catharine Trebnick, senior research analyst at Avian Securities, believes such a marriage is imminent.

While Nortel has yet to announce a desired price for the assets, Trebnick said she thinks the Canadian vendor would want about $350 million.

Nortel may be in dire shape, but it does have a sizable VoIP customer base. According to Infonetics, Nortel held a 59.1 percent market share by revenue in North America and 29 percent in EMEA for softswitches. Regardless of where Nortel ranks in the analyst world's quarterly rankings, what Sonus or any suitor will want is the company's customer base.

During what I refer to as the softswitch boom in the late 1990s--a time when you saw the emergence of not only Sonus, but a slew of other hopefuls including CopperCom, Gluon, Metaswitch Santera and Taqua--Nortel continued to innovate and make large carrier wins for its softswitch and related VoIP gear.   

In 2002, for example, Nortel won a deal from Sprint LTD, now CenturyLink, to convert its aging Class 5 switching infrastructure to IP. Being a rookie telecom journalist, I asked Mark Chall, one of the engineers leading Sprint LTD's Circuit to packet project why he went with Nortel instead of one of the cooler startup softswitch vendors. His answer was simple: Only a large vendor like Nortel could provide the necessary support a large incumbent carrier requires.   

What I realized then was that what helps a successful vendor win a voice switching or any new network upgrade is not just great technology, but the service and support they can offer.

But even if Sonus gets the Nortel VoIP assets, I agree the much smaller company will need help. One likely scenario is that Sonus would seek the assistance of an integrator that could help it merge not only the technology but the culture of the company into Sonus' fold.

I also wonder if Sonus' recent troubles could be a distraction? Last year, Sonus saw the departure of both its CTO (some reports say he was ousted), and CEO Hassan Ahmed. More recently, the company announced 93 layoffs, what it said was the last segment of its ongoing restructuring.

Nortel's VoIP customer base, which includes large incumbent carriers such as CenturyLink, Videotron and Verizon, will want to be assured that whoever purchases the VoIP assets will continue to provide necessary customer support. None of them will tolerate missteps by a smaller company.

Of course, Sonus is not the only possible bidder for Nortel's VoIP assets. There's a chance Nokia Siemens Networks, left at the CDMA/LTE altar when Ericsson swooped in to purchase the assets, is still looking for that elusive North American presence.

A NSN bid could make sense. Although the former Siemens bought its way into the U.S. independent telco market with the purchase of the former Stromberg Carlson/General Dynamics Class 5 switching division in the early-'80s, NSN's presence in the U.S. telco market was trailed by Nortel and Alcatel-Lucent.

But if small fry Sonus does win out here, I think it will mark the end of a long era that saw the big boys buy the little guys.

If I were writing this column 10, or even six years ago, we would have seen Nortel buying Sonus for the simple reason of shutting them down or fumbling the ball altogether, but as the saying goes: times do change. --Sean

P.S.-- I'm filling in this week for Pete Wylie, who is on vacation and will return to action next week.