Nortel Networks Ltd. sees an opportunity to steal market share from router manufacturers through its provider backbone transport (PBT) business. Philippe Morin, president of Nortel's Metro Ethernet Networks business, also said Nortel expects to announce a 40-Gbit/s PBT product by the end of the year, during an investor conference call today hosted by Prudential Equity Group LLC analyst Inder Singh.

Nortel was an early supporter of PBT, a controversial technology designed to bring carrier-grade transport features at an Ethernet price point. But a number of equipment suppliers have recently joined the market, as carriers begin to look more closely at PBT. (See PBT Gathers Support, PBT: New Kid on the Metro Block, Will Fujitsu Join PBT Parade?, and Huawei Joins PBT Fan Club.)

The technology got a huge boost when BT Group plc (NYSE: BT; London: BTA) announced it would be used in the carrier's 21CN next-generation network project, a contract that Nortel and Siemens AG (NYSE: SI; Frankfurt: SIE) won. Outlining his company's view of the PBT market and the opportunity in it, Morin touted Nortel's first-mover advantage in the market, due to its early focus on PBT and its BT 21CN win. (See BT Rethinks 21CN Core Strategy, Nortel, Siemens Win PBT Deals at BT, Nortel on PBT: Today BT, Tomorrow the World!, and BT Pressures Vendors Over PBT.)

The BT win was "a huge vote of confidence," which has led to a number of trials and interest in Nortel's PBT solution. "Since January [when the BT win was announced], we've been on a lot of planes and in a lot of meetings" with potential customers, Morin said.

Now Nortel believes it can win share in the Ethernet transport space and elsewhere in the telecom equipment market. Believing that in next-generation networks carrier Ethernet and optical technologies will continue to move together, Morin says this will provide an opportunity for Nortel to grab market share from traditional router manufacturers.

But he said that despite the company's early success, it is continuing to enhance its PBT portfolio. As part of this initiative, Nortel is working on a 40-Gbit/s PBT solution, which Morin said he expects to be launched by the end of the year.

The company is also participating in the standards process and working with other vendors in the PBT space on interoperability. Admitting that PBT is still in early stages of standardization, Morin said that the process is moving quickly but will probably take 18 months to two years to run its course.

Even so, customers don't appear to be daunted by lack of standardization. "Customers like BT are comfortable with where [PBT] is now," Morin said. "BT is not waiting for standards to get approved."

Morin says Nortel is collaborating with PBT players to build ecosystems of vendors and suppliers, and to improve operability among them. He said that with many PBT vendors, Nortel is not competing head to head, but working together to offer end-to-end solutions to customers.

The real competition in metro transport, he says, isn't coming from other PBT vendors, but from Multiprotocol Label Switching (MPLS) and VPLS (virtual private LAN service) competitors. While Nortel will work to create interoperability with MPLS, Morin believes that PBT offers advantages in metro networks, where "we don't believe MPLS can scale."

Despite the BT win and current trials with Tier 1 carriers, Morin believes in the short term that most North American PBT buying decisions will come from Tier 2 companies. Nortel is also targeting MSOs for PBT-based business services and wireless providers looking to extend wireless backhaul networks.

"We're very happy with market movement and takeup," Morin says. "We're happy with the level of [customer] engagements."

— Ryan Lawler, Reporter, Light Reading