Startup Atrica Inc. has won a deal with France Telecom SA (NYSE: FTE) that bodes well for the emerging Ethernet services market -- in Europe, at least.

The news is set for announcement tomorrow. It follows earlier news of an Atrica win at Al-Pi Telecomunicacions, a subsidiary of the French carrier (see Euro CLEC Says 'Oui' to Atrica). France Telecom also is an investor in Atrica (see Atrica Attracts $75M).

While it's not giving out the value or duration of the deal, Atrica says both its A-8100 Optical Ethernet Core Switch and A-2100 Optical Ethernet Edge Switches are involved. France Telecom already has live traffic for high-speed Internet access, Ethernet private line, and transparent LAN services running over the startup's gear in Paris, say Atrica spokespeople. They say France Telecom plans to expand to 25 metro regions over an unspecified time period.

France Telecom had not répondéd to calls by press time.

Not surprisingly, Atrica execs are thrilled at scoring with a European incumbent. "We hope this is the first in a long line for us," says VP of marketing Tim Dixon. He says the trial took more than a year and that being subsidized by the carrier made no difference in the selection process. "Close to twelve vendors started out the selection. We had the same gates and approval process to win."

Names of the other runners couldn't be established at press time, but Atrica made clear it had won over Cisco Systems Inc. (Nasdaq: CSCO) and Riverstone Networks Inc. (Nasdaq: RSTN) in the earlier contest at Al-Pi.

At France Telecom, Atrica's real coup could be on the design front. "There's a lot of talk about Ethernet-over-Sonet/SDH, but here we have a European incumbent looking at more than Ethernet-over-SDH," says Sterling Perrin, senior research analyst at IDC.

Atrica concurs. "The biggest significance is that carriers are seeing that an alternative solution can meet their needs," says Atrica CEO Vivek Ragavan. "When one carrier makes that determination, others are going to fall into line. It's an indication this market is gaining."

But Atrica still has goals to meet. It's early days in the Ethernet services market, and, according to Perrin, the rollout pattern will be unique.

"With optical Ethernet, we see pretty much a reversal of the sequence of adoption in other optical markets," he says. U.S. regulatory issues, the capex downturn, and other factors are making the rest of the world the seedbed for Ethernet services. Indeed, in Perrin's view, the Asia/Pacific region should be first to glom on, followed by Europe, and then North America.

Atrica's been busy setting up shop in Asia (see Atrica Gets Japanese Distributor, Atrica Expands in Asia, and Atrica Announces Agreements), but so far hasn't publicized any big wins there. And its sizeable stable of carrier investors doesn't include an Asian incumbent.

It's also questionable whether Atrica's all-Ethernet proposition will fly once the North American market starts to ramp up. According to Perrin, RBOCs may resist a technology that threatens the Sonet infrastructure.

Still, Atrica's activity can't be underestimated in a market where any money's welcome, and any incumbent win is a herald of future potential.

How big a market is at stake? Perrin's still working on his forecasts but says Ethernet telecom equipment will be a "multibillion-dollar market" by 2006, and services revenue will exceed that.

— Mary Jander, Senior Editor, Light Reading
www.lightreading.comMovers and shakers from more than 100 companies – including Atrica, Cisco, and Riverstone – will be speaking at Lightspeed Europe. Check it outat Lightspeed Europe 02.