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Enters the softswitch market with its first sale to the incumbent carrier on the tiny British island of Jersey

December 13, 2002

3 Min Read
Marconi's First Softswitch Sale

Marconi plc (Nasdaq/London: MONI) announced its first customer win for the SoftSwitch XCD5000 (see Marconi Sells SoftSwitch).

Jersey Telecom, the incumbent carrier on the British island of Jersey, says it will use the gear to introduce broadband voice and multimedia services across its network. Details of the contract were not disclosed, but a Marconi spokesperson admits that this is not a significant win in terms of the dollar amount. But it is a strategic win for the company.

Why? Marconi announced this product back in June of 2001 at the Supercomm tradeshow in Atlanta, and to date it has not announced any customers for it. Although the company claims it's in several trials right now, any named customer win at this point is worth noting.

The island of Jersey, which sits in the English Channel between England and France, is only 9 miles long and 5 miles wide -- smaller than Manhattan with only a fraction of the population. It’s home to roughly 87,000 residents and 5,000 businesses, most of which are involved with off-shore finance. Almost every national and international bank has a presence in Jersey. About £1 billion is invested in the island’s banks at any one time, says a spokesperson for Jersey Telecom.

As a result, Jersey Telecom has become a sophisticated adopter of new technology. It has already been offering a corporate voice-over-IP solution to some of its enterprise customers. In order to offer this service, it resells smaller PBX-replacement softswitches from Nortel Networks Corp. (NYSE/Toronto: NT) and Mitel Networks to enterprise customers. Now it is looking to extend VOIP services across its entire network. The long-term plan is to replace Marconi’s System-X, a digital public telephone system, with new carrier-class softswitches, says the spokesperson. System-X currently links Jersey Telecom’s fixed telephone and data infrastructure to the rest of the world.

From a technical perspective, this is an important deployment, but because of Jersey’s size it is not likely to ever be a significant financial win. Marconi will need to find larger, incumbent carriers to also adopt its softswitch. This could be difficult, given the current carrier climate (see Softswitches Head for a Shakeout).

For example, Sonus Networks Inc. (Nasdaq: SONS), the only publicly held company dedicated to softswitches, forecasts a 60 percent revenue slide for its third quarter. The company’s revenues were down roughly 60 percent in the second quarter, too. Lucent Technologies Inc. (NYSE: LU), which was a pioneer in early softswitches, has decided to stall any further development until the market matures a bit more (see Lucent Clarifies Product Strategy).

Other key players in the market include Nortel, Cisco Systems Inc. (Nasdaq: CSCO), Siemens AG (NYSE: SI; Frankfurt: SIE), and Telica Inc.

Nortel has won deals with large carriers in the U.S. such as Sprint Corp. (NYSE: FON), Qwest Communications International Inc. (NYSE: Q), and Verizon Communications Inc. (NYSE: VZ) for its Succession Communication servers. The company has also won several European and Asian deals (see Tiscali, Nortel Deploy VOIP). Siemens is also making a big push with softswitches (see Why Siemens Sold Unisphere).

— Marguerite Reardon, Senior Editor, Light Reading

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