Tekelec Plays Mediator for Operators & Apps

DUBLIN -- Management World -- Tekelec is helping wireless operators welcome -- reluctantly, for some -- over-the-top (OTT) applications into their fold with upgrades to its Diameter Signaling Router (DSR), announced Tuesday.

The DSR sits in the operator core and can now connect OTT apps, such as social networks, video or music services, to the network, giving the operator a direct billing relationship with the app and the ability to extend its policies and service rules to it. The idea is that the wireless operator can change up how they bill for said services or even get the OTT player to subsidize usage of its app in exchange for not counting it against the data cap.

Another example Michael Heffner, Tekelec's director of product management, suggested is to have video count against the cap only in standard definition, but charge the app provider for the bandwidth required to deliver an HD video.

Tekelec also said Tuesday that it has signed up six mobile operators and four hub providers for DSR since the beginning of March, bringing its total to 19 customers across 10 countries. (See Tekelec on a Tear and Tekelec Launches Signaling Router.)

Why this matters
The wireless operators have a tenuous history with OTT apps that ride on their networks and, in a lot of cases, make more money than they do. In fact, earlier this month Sprint Corp. (NYSE: S) CEO Dan Hesse spent much of his time on stage in a CTIA keynote bemoaning this dynamic, saying several times that companies like Apple Inc. (Nasdaq: AAPL) and Amazon.com Inc. (Nasdaq: AMZN) "ride over the top of wireless investments."

That may tick the wireless operators off, but it's become a fact of life for them, so their best bet may be partnering. As Heffner says, they both have something that the other wants. For the OTTs, they want the last-mile access to subscribers and control over network quality. For the wireless operators, it's clearly about more revenue. It might not be an arrangement YouTube Inc. would agree to, Heffner concedes, but he says a Netflix Inc. (Nasdaq: NFLX) or Hulu LLC would likely be on board.

"Over-the-tops have capitalized on the fact that the giants were asleep at the wheel," he says. "But, they can't guarantee QoS, and they don’t own the last mile. The carriers do. Now these guys are waking up [to the fact] that they control a valuable link on this chain."

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— Sarah Reedy, Senior Reporter, Light Reading Mobile