|Dan Carroll: What
do you have buried
down there at Telcordia,
asked the shareholders
It was, it must be said, something of a surprise when Matt
Desch left Telcordia after just three years as CEO. Desch had
been appointed by Telcordia's former owner, the
security-oriented engineering company SAIC, had begun the job
of reshaping it, and had helped to find it new owners, a couple
of private investment groups.
Telcordia was bought by Providence Equity Partners and
Warburg Pincus only about a year ago. The general feeling in
the industry was that Desch would stay on as CEO under the new
But that was not to be, and on September 1 Telcordia announced
that its new CEO was to be Dan Carroll.
They appear to have a lot in common. Both are veterans of the
old Ma Bell empire which shaped and ran US telecommunications
under the old AT&T brand until the 1980s.
Desch started at AT&T Network Systems and then Bell
Laboratories, which after the AT&T break-up moved from Ma
Bell to Lucent Technologies. He then spent 13 years at Nortel,
leaving in 2000 to serve on the boards of several new entrant
Carroll also started at AT&T in the old days, and also
spent many years at Lucent, where he was finally COO of its
business communications services division until the call from
So they have similar backgrounds, and in some ways Carroll
will continue the moves Desch started — to give
Telcordia an international perspective and to open its eyes
more to mobile communications.
An odd remark, maybe, but Telcordia also emerged from the
break-up of AT&T in 1984 as the creature of the
fixed-line-fixated local phone companies, the Baby Bells. Some
of them have changed out of all recognition in the last year or
so, especially thanks to consolidation, but it's only a year
ago that Ivan Seidenberg, CEO of Verizon, wondered why anyone
would want to use a cellphone from their home and expect it to
There's still the lurking feeling in the US industry, still
possibly in the now-grown-up Baby Bells and until a couple of
years ago in Telcordia, that the only real phones are those
with wires attached.
SAIC took on Telcordia, originally called Bellcore, in the
late 1990s and under its ownership Desch did a lot to move it
away from its roots in the US wired industry, bringing it into
new markets in terms of both technology and geography.
So how is Carroll planning to move the company further?
"When I got here there were three objectives for me," he says.
"The first one was to deliver our 05 year. That ended in
January of this year. The second was to have a plan for 06,
which revolves around a re-energisation of the product line,
looking at some new spaces. The third phase, which we're
currently in, evolves around looking ahead towards white
spaces: places where we think Telcordia should be playing but
is not playing."
Telcordia can solve that third problem internally, by
partnering, or by acquisition, he adds. "That one is currently
underway. I won't say too much about that one, because we're
right about the middle of it."
That sounds like there's something happening, a process that
is going on? "Internally, we have a way that we're looking at
it. I have some people assigned full time to it, and I'm
personally involved. You don't get involved at looking at those
spaces without it being a call from the top."
That is "very active at the moment", says Carroll, "but
again we're not really talking or announcing anything". Or even
"describing the areas we're going to look at", he adds
cautiously. "Let's just leave it that we are looking to expand
our footprint, especially around the way we bring products and
But he is happy to talk about Telcordia's plan to expand its
footprint geographically. "That's really part of this year's
First, he turns back to 2005. "Fortunately we had a very
strong finish, which allowed us to exceed our sales targets,
allowed us to achieve our financial targets that our owners
were looking for. At this point we are feeling pretty good
about the business — the health of the business and
the direction of the business."
There were a number of staffing changes, "as you might
suspect whenever there's a change in ownership", says Carroll.
"Part of it was me coming."
Beyond his appointment, Telcordia has brought people in
"from almost outside of telecom in the classic sense", he says,
"because I think as I see the business evolving and as we move
more to CIO and off-the-shelf type products we needed to bring
people in who were familiar with that kind of direction".
New software chiefs
Carroll has brought in a new head of software development,
Mala Chandra. She was a vice president at Motorola working on
its security strategy for its seamless mobility initiative, and
previously worked at Sun, Oracle and Tandem. Her official title
is executive vice president for software systems.
"She's just been a wonderful inspiration and leader for
getting the classic Telcordia kinds of focus but also driving
the whole new areas that we need to be looking at," says
Carroll. "She's had great traction."
Another key appointment is Polly Sumner, president of
Telcordia Global Services. Another Oracle veteran, where she
was vice president of its telecommunications industry group,
she was most recently CEO of an analystics company called
AlphaBlox, which IBM bought in 2004.
"It's not just installation kinds of services that we're
talking about here, but it's really transaction kinds of
services, software as a service, and as I looked within
Telcordia it's amazing how much stuff we already had that
fitted many of those software-as-a-service models and
transaction-based businesses. The issue was, they were just
buried somewhere throughout the entire company," he says.
"We've essentially pulled all those out in the last six
weeks or so and are going to run them as part of a separately
focussed piece of our business."
Now this is extraordinary. A company normally knows what its
products are and does its best to sell them. Yet here is the
CEO of a company saying that there were marketable products
"buried", in his words, within the company and no one had
identified them or tried to market them.
So why were they buried? Was it no one's job to spot their
market potential, after being developed for internal uses or
for particular customers?
"I think probably both of those items," says Carroll. "I
don't think there really was a focus on how you valued it.
That's one of the big things that our new owners have brought.
Both Providence and Warburg have investments in these kinds of
areas. They're familiar with it."
So when Carroll met Providence and Warburg, "they were just
asking questions", he says. "What do you have buried down there
at Telcordia?" they asked. "It was amazing what we found," says
Carroll now. "We are working to highlight those. We are working
to grow those."
They have "amazing growth currently", even after only a few
weeks. But it's still odd, isn't it, that they should be
sitting there unexploited?
"Telcordia was a very functional, project-driven company,
almost since its inception — even if you go back to
the old Bellcore days. It essentially did projects that were
given to it by its owners."
That meant there was product development over a number of
years "that was focussed simply on a customer", he explains.
"We would get a contract from a customer and we would develop
it for a customer."
Now, he adds: "One of the things that's more in my generic
background is you bring products to market." You do that with a
lot of customer input, "but thinking about it more in terms of
not just a single customer solution but how you take a solution
and replicate it, make it easy to move forward to a number of
customers", he says. That is better than just solving one
problem at a time for a customer.
Given that these products, buried within Telcordia, were
each developed for one particular customer, how easy has it
been to develop them so that they are applicable to more than
the original company.
"Some were more obviously multi-company. Some were focussed
on a single customer. We're not there yet, but as part of this
year's plan we will be accelerating the way we look at it, the
way we think about it. In some cases we just weren't even
selling the application to the next customer. It was so
focussed on a single customer or a small subset of
This project is really big for Telcordia, he emphasises. "It
is a major piece of how I focussed the business, how we're
working on the business."
Opening up their visors
And what has been the reaction from Telcordia's staff? "I'm
absolutely encouraged. The response out of the organisation has
really been incredible. Suddenly they're allowed to open up
their visors and see what it is they can do with the
capabilities they have. It is one of the exciting things about
coming back to a company like Telcordia. The people here are
Given that he has found these treasures buried in Telcordia
that he has been able to enthuse people to market to other
customers, were there any nasty surprises that he also found
"Nasty surprises?" laughs Carroll. It seems that he's just
been talking about the nasty surprise. "I guess when I came I
just wasn't aware of just how specifically an almost contract
by contract focus they had. They just didn't bring it like a
classic product company, a product and service company."
There is, in Carroll's voice, a sense of genuine
astonishment. There clearly was a huge blind spot in
Telcordia's vision. "That was the biggest surprise, quite
honestly," he continues. "I'd just not seen it that
But it can be remedied. There is "the opportunity of
changing the mindset and the dialogue", he says, and
encouraging people to "think about the project they work on
each day". As part of that, he says, they should always
consider: "Wow, we can take this globally."
Telcordia has already had some success "in the latter part
of last year, with just taking a few of these". For example,
number portability in Greece, he says.
"We essentially took what we developed for the US market
here, and found it was very applicable. Obviously we had to do
some work to it, but it wasn't like you were doing a whole
Telcordia took the product it had for the US industry and
tailored it for the specific application. That's just one
Check Telcordia's website, and you'll find the contract for
a number portability project with EETT, Greece's
telecommunications commission, dates back to September 2004. So
maybe Carroll's predecessors were already onto the idea of
reusing systems originally designed for the US, a year or more
before he joined.
The project covers fixed and mobile numbers in Greece, and
is a five-year contract for a number portability clearing house
to be run by Telcordia.
"Again that's just one example of the kind of things, but
it's representative of what's capable here."
Nevertheless, when he thinks about 2005, "one of the things
that occurred to our sales growth was we focussed on
international", particularly in the last half of the year. In
Europe, the Middle East and Africa "we grew 60%", he says, and
in Central and Latin America "we grew 60%". Telcordia is "just
getting our feet on the ground in Asia Pacific but what I'm
sensing in dialoguing with customers is that we have a
wonderful reputation that has sort of been locked up or not
In the UK he has recently met BT, "and it was amazing what
we saw, as we just started dialoguing, as to what might be
doable, simply because we just didn't have the presence in the
past — like in EMEA and in the CALA region", he
Expansion in Europe and Latin America
He's planning to start addressing that this year in a big
way. "Part of our 06 plan has a major resource deployment both
in Europe and in the entire CALA region," he says. "We just
expect that we're going to continue to see tremendous growth
there. We're putting service people in there, we're putting
technical people in there, we're putting sales people in these
That is "all a baked in part of the plan", and there is
"hiring going on as we speak", he adds. "We're pretty excited
about that for 06."
Those growth numbers are interesting, but is Carroll able to
give an overall sales figure for Telcordia in these regions in
the year ended January 2006 so we can judge the scale? "We
generally don't cover, other than to our specific owners, and
as you know we're privately held, but it's a significant part
of our business. It's not $10 million grown to $15 million.
This is a substantial portion, triple digit kind of numbers
we're talking of here."
What about an overall figure for Telcordia's annual sales?
Is that available? "I thik about $1 billion," says the press
officer on the conference call. Carroll responds: "Close
Not only did Carroll encourage Telcordia people to dig
things out and add them to the product line, but he took a
close look at the existing product line, he says. "I have a
clear view that we simply need to be number one in capability,
feature, function and price if we're really going to be
What is built into the plan for 2006 is "a series of
releases of essentially all our going-forward major products".
He believes that by the end of this financial year they "will
be recognised as having number one capability".
There are a couple in that category already, he says:
Network Engineer, a geospatial network management system; "We
have the Granite suite, Service Director, and several others
that are essentially in the OSS space, which we believe will
really be major leaders in their market spaces as we roll
towards the end of the year."
Telcordia bought Granite, a privately held company, for an
undisclosed sum almost two years ago.
New applications for IMS
"The other one has been one of our absolute major
successors, the Maestro product line," says Carroll. "Our IMS
is rolling exceptionally well globally. We feel very good about
that product, really a suite of products there. One of the
thing we're looking at is that we'll be opening it up a little
bit to some additional third-party applications as the year
Applications "are an interesting thing", says Carroll.
"People talk about them and want to have lots of applications
but there are usually half a dozen to a dozen applications that
are really what sell. Everything else is nice, and make nice
long lists, but there is probably a dozen applications in the
IMS world that will be 80% of the revenue streams."
Telcordia is looking "very closely" at opportunities to
partner with others, "and make it easy to use our platform", he
adds, "but I think what you'll see on our version of IMS will
be a rich applications set but maybe not the longest list in
the world as far as applications go. We think there are about a
dozen apps right now that are especially going to be the major
players over the next couple of years. So we're focussed on
So what are those applications? "There's an awful lot of
publicity about IMS. Everybody says they've got one. We are
doing well when you look at who's actually buying and paying
money for them versus lots of trials under way."
Obviously "all the major equipment providers have IMS
capabilities", he says. "In most cases we're a little
different, right, because we're sitting at the application
layer, which we think is an advantage, which allows our
converged application server to handle both the old world and
the new world, and allows you to bring forth the features that
will allow you to operate smoothly in both."
That's one differential, he says. "The other differential is
essentially we're equipment agnostic as far as to what we
drive." As customers look at IMS "they're not going to
single-source anything", he says.
Enhancements to Maestro
That allows Telcordia — as customers deploy
"anybody's softswitch" — to use its Maestro product.
"That will ultimately be defined to be the product that really
does what it advertises to do." The company is planning
"significant enhancements" to Maestro.
The virtual network operator market is also a considerable
focus for Telcordia. It is doing "a series of hosted
applications", he explains. "We've got over a dozen major
customers, most of which we have not announced. It's
interesting, if you're an MVNO and you want to launch into the
marketplace — almost all of them — you'll
hear our announcements come as they announce that they're
That means there are a lot of MVNOs lurking in the
marketplace ready to emerge. "More than lurking," says Carroll.
"They're getting ready to roll here. We'll probably have some
announcements over the next six, eight, 10 weeks." This
interview was conducted in early March, so that means from
early May onwards.
Right now they'll all in the US. "We are looking at how to
expand that," he says.
Telcordia is thinking of moving one step further, so it
hosts the solutions. "The equipment will actually be owned by
us. They won't have to go out and buy networks."
The current MVNOs — that Telcordia has announced
— use the Sprint network for both pre-paid and
post-paid operations, "but that will be one of those kinds of
services that we're looking at which have great opportunity for
lots of people", he adds.
Telcordia is "even talking to the existing wireline folks
about using a hosted solution, so they don't have to get into
it from the hardware perspective", he adds. That is, just to
make it clear, hosting an MVNO for a wireline operator.
How much of the system would Telcordia host? Normally an
MVNO would have "some upfront order entry system" and will have
"some backend billing capability", he says, "but essentially
we'll get in the middle and do all the transactions, the
Would Telcordia go further than that, into what is
effectively an outsourcing solution, employing the staff on
behalf of the telco? "Not really," says Carroll. "That probably
beyond where we are at the moment. Essentially where we are at
the moment is we provide the staffing to run the equipment and
run the server set, and do all of those things for them."
Model to be proven
But "these are all early" in the planning process, he
emphasises. "I think we'll see that grow substantially as the
year goes on and — of course — there is a
question: ultimately how successful are MVNOs? That is still a
model to be proven, although there's lots of people like Virgin
and others in there. We'll see how that one plays out."
Nevertheless it is an important new activity for Telcordia.
But it's so far in the US only, where there has been an
upsurge in MVNO activity in the past year or so. "Thinking
about how we take this global is an opportunity for us," says
Carroll. "We shall see how that plays out."
Which leads us to a point we touched on earlier. How much of
what Telcordia does in the US can be translated into the
international market, or how different — for lots of
historical reasons including technological and regulatory
— in the US market from the rest of the world? What
sort of learning curve does Telcordia need to get out?
"I think if you look at the kind of products we're talking
about, our going-forward products, the learning curve is much
less," says Carroll. "Clearly if we were trying to take any of
our legacy OSS products, I think that would be an impossible
task. Even for us. Because they were so driven out of a US
telephone company, AT&T, regional operating company
But look at the company's new products, he adds —
"the Granites of the world, the Maestros of the world: they
were designed to be much more deployable". The architecture
"allows you to move it very quickly into places".
Telcordia has "had wonderful success with Maestro in
Brazil", he says. "It's up and running. It's growing
He points to "our whole thought process of the new
products", including its Elementive range. "We try to be open.
You wouldn't use those words necessarily to describe some of
our legacy products."
One of the things that Chandra, the software head, "has
brought to us is a whole area round four or five of our older
legacy products, converting them this year into essentially a
services oriented architecture which will we believe extend
even their life".
That means "you will now be able to access the data that is
sitting in these legacy systems" and interoperate with "the
latest and greatest kind of systems".
Legacy OSS products
Not all. "We have a suite of 70 or 80 legacy OSS products
which essentially were the foundation of this company back in
the 1980s. There is a handful, half a dozen, that look as if
they have enough staying power, with not that much work to
convert the architecture. We think even they will have some
But only in Telcordia's original home market. "We're not
talking about taking those globally," he says. "The products
that go globally are the Maestro set, the current OSS set,"
such as Granite, "and they compete quite successfully".
Telcordia is competing with these "every day, every week",
he adds: "Some we win, some we lose. So far on the IMS side
we've been very successful on our win rate with Maestro. It's
playing very well." Price and service capabilities mean "it's a
And he sees Maestro and the OSS ranges give footholds into
new customers, giving Telcordia to "roll in with the rest of
the product line", so that it "can try and demonstrate the
value of the entire suite of products that Telcordia has, as
well as the services we provide".
Oh, and we haven't talked about the applied research group,
he adds towards the end of the interview. "We have joint
development labs being created in Taiwan and other places.
We'll be looking in India." The company already has a
relationship with Tata, the Indian industrial giant that owns
VSNL and Teleglobe. "We will also be putting our own
development group in India."
All that means that "we're working on our globalisation",
says Carroll. "not that we're ignoring the US market".
Yes the US market is changing rapidly, with a succession of
mergers and takeovers, including those affecting AT&T. "I
worked with AT&T for a while, so those I have to get my
head around. Which iteration was it? Back at the divestiture
time in the 1980s."
Serious about IPTV
Is this process, though, creating new opportunities for
Telcordia as operators try to consolidate their systems, or
does it actually mean there are fewer customers?
"You're right. Clearly it is fewer customers. But what we're
seeing is that they're getting really serious around IPTV and
broadband. One of the things we continue to do is enhance this
old product set to play well. Even some of our legacy products
have been enhanced to allow it to handle all the latest and
greatest state-of-the-art systems that are being deployed."
There is an opportunity for growth with the newer products
as the legacy products "are slowly getting replaced".
There will also be opportunities as the local companies
merge with long-distance companies, he says: the new AT&T,
for example. "Telcordia wasn't positioned early on to do
long-distance things." It was owned by the RBOCs, which were
restricted from long-distance services until just a few years
ago. "The task was to support the local operating
And the old AT&T, after it was spun off from the RBOCs
in 1984, "was viewed as the competition for many years, many,
many years". So Telcordia "was not positioned there".
Now Telcordia sees an opportunity to expand its services to
the long-distance companies as they are integrated back with
the local operators such as SBC — which has taken the
old AT&T name — and Verizon.
"It's really too early. Even though they've been talking
about those mergers for so long, the detailed engineering
planning is still work in progress, and will be for another
Finally, let's turn to Telcordia's new owners. We mentioned
earlier their suggestion that Carroll should dig out buried
products, but how else has he found them? "They very different
kinds of owners," he says. "Providence tends to be very widely
deployed with cable companies in Europe. They're more on the
services side. Warburg is clearly much more of a product,
software kind of owner."
They manage things differently, and "they do bring great
value to us", he adds. "We're working with Providence trying to
enhance our offerings to the cable market. They have been able
to get us just wonderful contacts to work with us." They've
been helping, particularly with European carriers.
"They're relatively long-term investors. They've
demonstrated that over the years. One of the nice things for me
is they're not out looking for a quick flip. They're very
interested in our total long-range development programme, our
product offerings, our redeployments. They're really looking
for a multi-year growth rather than some sort of quick
And finally, if Carroll were the CEO of a telco, what would
be top of his agenda now? "They have major cost issues that
they have to address. They're seeing real-time competition from
cable, from a whole bunch of upstarts, and the whole IP world
is upon them. If I were a CEO I'd continue to look at my cost
structure and my offerings out there: how do I stay in front
for my major business customers as well as my metropolitan
He talks to real telco CEOs frequently, of course. "They're
just looking to find a way to really integrate these systems to
reduce costs, how do they really apply these systems on new
service offerings, so that they can be rapidly deployed. They
do have a little bit of a burden. The quality expectation we
all have of a telephone company is very high. I have a lesser
expectation of my cable company. The cable does go out. But I
expect my phone to always work." GTB
- Appointed president and CEO of Telcordia
Technologies since September 2005
- BSEE and MSEE from New Jersey Institute of
- MS in Management from the Sloan School of
Management at MIT
- Had a variety of executive level positions at
AT&T, Western Electric and Lucent
- At AT&T, he was responsible for the business
and residence billing systems as well as the access
systems between AT&T and the Regional Bell
- Before joining Telcordia, he was COO of the
business communications services division at Lucent,
where he was responsible for a global $7 billion
business that provided telecommunications systems to
large and small business enterprises
- Member of the board of governors of the
Electronics Industry Association
- Member of the advisory council of the School of
Industrial Management at New Jersey Institute of
Essential facts about Telcordia
- Annual revenues: about $1 billion (not reported)
- 3,200 employees worldwide
- Ownership: Providence Equity Partners and Warburg
- Bought for $1.35 billion in cash from SAIC
- Set up as Bellcore with the break-up of old AT&T in
1984, renamed Telcordia
- Grown from serving the seven regional Bell operating
companies to customer deployments at more than 800 commercial
and government sites worldwide
Main businesses include
- Global communications solutions
- Global IMS service delivery solutions
- Telcordia Global Services
- Applied research
- Software carries 80% of US telephony traffic
- Specialises in operations support systems, network
systems, business support systems and services for all types
of communication networks
- ISO 9001, TL 9000 certified software development
- Holds more than 800 patents with background of research
and development that led to ADSL, ATM, Frame Relay, SONET,
AIN, ISDN, among others
- Headquarters in New Jersey, US