Cisco backpedals on WiMAX with Starent buy

This week's $2.9 billion acquisition of Starent Networks indicates that Cisco is backpedaling from its WiMAX focus and shifting it to LTE as the 4G underpinning of next generation mobile data networks.

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Previous to acquiring Starent, which make gateways to connect multiple radio access networks – Wi-Fi, WiMAX, LTE, 2.5G, 3G, CDMA and UMTS/HSPDA – to an IP packet core, Cisco acquired WiMAX vendor Navini Networks in 2007 and became a key supplier to Clearwire for its mobile WiMAX buildout. But in the interim, big mobile operators AT&T and Verizon -- both Cisco customers – announced plans to adopt LTE instead of mobile WiMAX as their 4G service delivery platforms.

Cisco's LTE product offerings, meanwhile, were limited to a gateway on its 7600 series routers via the Cisco Service and Application Module for IP (SAMI). Cisco also recently outlined a plan to build up its professional services capabilities to support LTE buildouts.

But Starent now gives Cisco a complete mobile packet core offering – one targeted almost specifically at LTE and Universal Mobile Telecommunications System (UMTS), according to Starent President and CEO Ashraf Dahod, who will now lead Cisco's new Mobile Internet Technology Group, which is essentially Starent inside of Cisco.

"Our goal is to aggressively focus on the UMTS and LTE markets," Dahod said during a conference call on the Cisco acquisition. "That's where the future is; the future is LTE."

Analysts say Cisco is moving with the market.

"Cisco is now placing its bets on LTE, which will be the big 4G winner," says Laurence Swasey, senior analyst at Visant Strategies. "Mobile operators around the world are all in different stages of moving toward LTE. WiMAX was always a dark horse for the mobile world."

Swasey says LTE provides more voice capacity, "better data crunch" and better revenue per subscriber than mobile WiMAX. He says vendors like Cisco put early bets on the technology as a placeholder until the dust settled around which 4G technology would win out.

"A lot of the telecom and computer industry players were initially looking toward WiMAX to be an early savior," Swasey says. "LTE was still [immature]. But LTE makes much better sense. The only question was: When will everyone get on board?"

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