Looking for the white spaces

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The new CEO of Telcordia is looking for white spaces — places where the company should be operating but is not. But in his first six months in the job Dan Carroll has also found hidden treasure on the existing map: work that the company did for one customer that, with modification, can be developed into products that can be marketed more widely

Dan Carroll picture
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 shareholders.

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 telecommunications companies.

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 Telcordia came.

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 work.

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.

Delivering 2005

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 services."

But he is happy to talk about Telcordia's plan to expand its footprint geographically. "That's really part of this year's plan."

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."

Asking questions

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 customers."

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 just brilliant."

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 buried?

"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 focussed."

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 brand-new product."

Telcordia took the product it had for the US industry and tailored it for the specific application. That's just one example.

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 open".

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 says.

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 regions."

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 enough."

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 successful."

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 rolls forward."

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 that."

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 launching."

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 rating, etc".

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 history."

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 tremendously."

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 extended life."

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 wonderful product".

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 companies."

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 year."

Cable companies

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 turn."

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 areas."

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

Daniel Carroll
  • Appointed president and CEO of Telcordia Technologies since September 2005
  • BSEE and MSEE from New Jersey Institute of Technology
  • 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 Operating Companies
  • 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 Technology

Essential facts about Telcordia

  • Annual revenues: about $1 billion (not reported)
  • 3,200 employees worldwide
  • Ownership: Providence Equity Partners and Warburg Pincus
  • 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 firm
  • 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