Siemens AG (NYSE: SI; Frankfurt: SIE) has invested more money in General Bandwidth Inc. (GB) and has announced a strategic relationship with the vendor. Siemens first invested in the company back in 2001, but it added more backing in the past 30 days.

Neither company will say how much the investment was, but both Siemens and GB are talking up the strategic relationship.

For Siemens, this is a crucial deal as it allows the vendor to push General Bandwidth as the preferred media gateway in its Next Generation Exchange (NGE) solution. The NGE is Siemens's plan to provide a circuit-to-packet migration -- and Class 5 switch displacement -- solution for U.S. carriers (see Siemens Unveils VOIP Package).

Siemens's pitch to carriers is that with NGE, they can keep their old access network and upgrade it as needed. Meanwhile, with a softswitch, some gateways, and some other elements in place, the carrier can start turning off its Class 5 switches and adding IP-based calling features to allow it to compete with what the cable companies, Vonage Holdings Corp., and Skype Technologies SA are rolling out. And it can do all this without losing any of the emergency services capabilities or calling features currently provided by its TDM switches.

For GB, having Siemens as a strategic partner and investor helps the company prove that it isn't quite as beholden to its other big vendor partner and investor, Alcatel, as it once seemed (see Alcatel Reins In General Bandwidth). Also, this gives GB an entrée to large incumbent carriers -- the kind its gear was designed to attract in the first place.

Siemens will resell General Bandwidth's G6 gateway, alongside the Siemens Surpass hiQ 8000 softswitch. Siemens says several G6 platforms can be hosted by a single hiQ 8000 to support networks above 100,000 access lines -- so its NGE solution has the ability to scale to meet even the largest U.S. IOCs.

The German vendor sees GB's gateway as being the key connection between the carrier's legacy access network and the public switched telephone network. And GB says its advantage over other gateway vendors is that it can offer the functions of a trunking gateway and a "reverse" gateway in the same chassis (see General Bandwidth Spins in Reverse).

By opting to work with GB, Siemens is reiterating to carriers one of the same thoughts that Heavy Reading spelled out in its report on media gateways nearly a year ago:

Siemens says it will work with vendors of all sorts in its NGE effort, but it will have preferred partners in case the carrier has no specific vendor preference. In fact, Harald Braun, president of Siemens Carrier Networks, says another Siemens preferred vendor will be media server maker IP Unity Inc., a company Siemens invested in back in 2003 (see Siemens Funds IP Unity).

This NGE strategy stems from carrier requests to stop investing in new TDM equipment and to have a softswitch architecture that migrates to a next-generation network. Braun says the NGE strategy is "U.S. first, but not U.S. only."

He says the solution is shipping to two carriers now and Siemens has several more carriers evaluating NGE. Braun says his goal is for Siemens to have "double-digit" NGE customers by the end of the year.

— Phil Harvey, News Editor, Light Reading