Caspar Weinberger, architect of the Reagan era's arms buildup, died in late March, in the middle of a week capped by Alcatel's $36 billion acquisition of Lucent Technologies Inc. Along with the man himself died the notion that changes in Lucent ownership could pose a unique security threat to the nation.
As in the Dubai Ports dustup, the legitimate questions about outsourcing that surfaced with the Alcatel deal were shrilly and speciously recast as questions of national security. For those who fret about a U.S. technology leader's being swallowed by a French conglomerate, a history lesson is in order.
In 1984, Weinberger rounded up defense and intelligence officials to argue that AT&T, and particularly its Western Electric hardware arm, should not be broken into constituent pieces as part of an antitrust settlement. Bell Labs was an irreplaceable resource for studying communications technologies, Weinberger maintained. The development arm of AT&T played a critical role in defense programs. And AT&T had been a friend of the National Security Agency.
Even 22 years ago, those arguments were overblown. When Lucent was created from the ashes of AT&T's hardware groups in the early 1990s, it was still a critical player in time-division-multiplexed switches, but the split of Bell Labs between Lucent and AT&T marked the beginning of the long, slow decline of Lucent's unique security role. With the explosion of Internet services in the 1990s favoring enterprise-hardware players like Cisco Systems Inc., even Lucent's role as an OEM contract supplier diminished.
When Alcatel made its first offer for Lucent in 2001, the U.S. equipment manufacturer still was a strong contender. Since then, it has spun off its semiconductor and enterprise-voice equipment groups as Agere and Avaya, respectively. Lucent has tried to expand its router base, but it has missed the boat in retaining a business in soft switches and packet switches to replace its dying TDM business.
And what of the security angle? The NSA now relies on a variety of carrier types and packet-based equipment to perform broadband intercept. Interestingly, coverage of the recent scandal on domestic intercept cited corporate involvement with NSA but mentioned neither Lucent's role as a hardware vendor nor the role of former interexchange carriers like AT&T. In the 21st century, what Cisco, Alcatel and a legion of Internet service providers do at network aggregation points is simply more important to NSA's mission than anything Lucent does.
It's legitimate to call for analyses of deals involving U.S. and foreign players, but the focus should be on where the money flows and how outsourcing is implemented. It is not legitimate to claim a security threat whenever a U.S. company is acquired by a foreign one.
No company based in this country is important enough to warrant special treatment anymore.
By Loring Wirbel (email@example.com), group editorial director for communications at CMP Media LLC's Electronics Group>