Ericsson buys another pearl: ACC acquisition aimed to increase IP presence

Ericsson is streamlining its business focus and buying companies to help fill in the gaps in its product line. The company announced last week that it is acquiring Advanced Computer Communications, which will become part of Ericsson's datacom business unit. ACC develops carrier-class remote access products under the Tigris brand name.

"The acquisition of ACC is in line with our string-of-pearls acquisition strategy, acquiring primarily small to medium-sized companies to strengthen our presence in data networking," said Anders Igle, executive vice president at Ericsson.

Ericsson is pushing to become a solutions vendor with a full portfolio of products, said Michael Thurk, vice president and general manager. "Unlike other competitors, we are not taking a box-by-box approach about our acquisitions," he said. "We developed a strategy that brings various components together-infrastructure, management, services and access-into a full solution for our carrier customers."

The ACC purchase will help Ericsson provide carrier-class access systems to the Internet protocol (IP) market, which has a 40% annual growth rate, said Thurk. ACC plays in the IP market, and Ericsson and ACC already have an established relationship.

More acquisitions are in Ericsson's future, Thurk hinted. The company is evaluating several potential acquisitions for its three other business areas. And in six months, Ericsson will re-evaluate its access segment.

For the ACC deal to go through, Newbridge Networks had to sell its majority stake in ACC, a move Newbridge was happy to make, said Terry Matthews, Newbridge chairman and CEO. Newbridge will continue selling Tigris products, and Ericsson will join Newbridge in developing Carrier-Scale Internetworking, a standards-based architecture for IP services.

"For Newbridge, this represents quite a strengthening of our relationship with Ericsson, and this includes the arrangements Newbridge has with ACC, including joint R&D programs, manufacturing and reseller agreements across the total ACC product line," Matthews said.

While the ACC acquisition makes sense for Ericsson, Newbridge's role is curious.

"The most interesting thing about that [announcement] was the part of Newbridge," said Tim Smith, principal analyst for wide area networking at Dataquest. "[Newbridge] will be a competitor and a cooperator [with Ericsson]. It seems like odd bedfellows. There is still more to come as that relationship continues to evolve."

But while acquiring Newbridge is certainly within the realm of possibility, it wouldn't fit with Ericsson's "string-of-pearls" approach, Smith noted.

Bell Atlantic Mobile last week announced a series of single-rate pricing plans for digital service targeted at both business customers and consumers. A national plan, DigitalChoice SingleRate USA is for customers who travel and use mobile service extensively, while DigitalChoice SingleRate East offers three pricing plans for consumers within Bell Atlantic's territory. Both will be provided without long-distance and roaming charges.

The SingleRate USA plan "puts Bell Atlantic Mobile in a leadership position for the very high-end customer with a per minute rate as low as 10cents per minute," said Dennis Strigl, group president and CEO of Bell Atlantic Wireless Group. The plan offers 1600 minutes from and to anywhere in the U.S. for $159.99 a month.

The SingleRate East service is offered for $39.99 for 60 to 100 minutes, $59.99 for 150 to 250 minutes and $99.99 for 800 minutes.

The plans will not directly compete with AT&T's One Rate, Strigl explained, because Bell Atlantic is including service for low-end customers within its territory. "Only 2% to 3% of our customers range outside the East Coast," he added.

The carrier did not disclose the long-distance companies it will work with to provide national service.

The plans will not be a "big deal financially" for Bell Atlantic, said Bob Egan, an analyst with The Gartner Group. But it will affect the wireless market overall. "The bottom line is, all these moves by AT&T and Bell Atlantic will work to lower costs for wireless and, more importantly, bring predictability of cost to wireless service," he said.

In a related announcement, Bell Atlantic Mobile released plans for an On-Line Communications store to be available later this month.

DTI CHOOSES PIRELLI Digital Teleport Inc. awarded Pirelli Cables and Systems a $240 million contract, making Pirelli its exclusive supplier of fiber optic cable and primary supplier of wavelength division multiplexing equipment. DTI is creating an 18,500 route-mile fiber optic network covering 37 states.

MCI EASES INTO IP VOICE American Diversified Group's Internet telephony group signed an agreement with MCI under which MCI will provide unrestricted long-distance domestic calling for ADGI's IP voice customers. ADGI's plan, concentrated in Latin America, provides international calling for 25cents a minute regardless of the call's originating country.