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Optical/IP

Juniper Jumps to Germany

Today's announcement that Juniper Networks Inc. (Nasdaq: JNPR) will supply routers to a European CLEC (competitive local exchange carrier) Star 21 Networks AG highlights Juniper's aggressive and focused strategy in the European market.

Terms aren't being disclosed, but the contract is a multimillion-dollar deal "in the double digits," spokespeople say. Star 21 is an alternative service provider based in Germany that's partially funded by Nortel Networks (NYSE: NT), which also has a reseller deal with Juniper. Other investors in Star 21, which together have contributed $500 million to the carrier, include Dresdner Kleinwort Benson, GE Capital, IBM Corp. (NYSE: IBM), and Telesoft Partners.

Juniper's signed a contract to deliver eight M160 routers and eight M10 routers to Star 21 points of presence (POPs) in key German cities by year's end, including Dusseldorf, Frankfurt, Munich, Hamburg, and Berlin. These routers will help link Star 21's terrestrial dark fiber network, which is based on IP services generated by Nortel's long-haul OPTera gear.

More Juniper routers are on order, Star 21 says, and will be used to expand the carrier's network over the next year to a range of European countries, including Austria, Poland, Romania, Spain, and Switzerland.

Star 21 hints that it originally would have liked an all-Nortel solution in its network. "Nortel's Vesalar product wasn't ready. We didn't have a choice but to go elsewhere for the functionality we needed," says Christian Golaszewski, COO of Star 21. Despite its close ties with Nortel, Star 21 says it tested routers from competitors Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7) and Cisco Systems Inc. (Nasdaq: CSCO). In the end, he says he chose Juniper for its performance and support of MPLS both at the edge and core of the network. Golaszewski concedes it didn't hurt that Nortel finds Juniper a more acceptable alternative than Cisco.

The choice of Juniper by a Nortel customer also highlights a growing industry sense that Nortel is reselling Juniper routers as the most acceptable placeholder for their own high-end IP router, now in development (see Nortel Discloses Terabit Router Plans ).

Does this mean Star 21 will replace Juniper with Nortel routers in the future? No, says Golaszewski. "We'll stay with Juniper. We have a close relationship with them, a personal relationship," he says. "We'll stay with them at least for the next couple of years."

Meantime, analysts say Juniper's strategy to invade Europe is a sound one, with or without Nortel in the background. "The European market's opened up; carriers have hit well because of deregulation," says one Wall Street analyst, who requested anonymity. The deal reflects well on Star 21, too, she says: "Juniper and Redback don't give vendor financing, so it indicates their buyers are financially stable."

Juniper officials said they will continue to pursue deals that put them on the map in Europe.

"There's a buildout in Europe happening right now," says Juniper spokesperson Niek van Bemmel. He says Juniper's been mining the opportunity by expanding its organization "a couple of hundred percent" in Europe this year, with plans to more than double organizational growth there in 2001. Evidence of the tack can be seen in a range of recent announcements, including a mobile IP routing deal with Ericsson AB (Nasdaq: ERICY), signed last week (see Ericsson, Juniper Join on Mobile Routing).

Other vendors too are looking to Europe, saying opportunities there are on a sharp curve upward. Recently, for instance, the CEO of ADC Telecommunications Inc. (Nasdaq: ADCT) quoted worldwide sales opportunities to blast Wall Street naysayers at an earnings presentation (see ADC Shares Perk Up).

Rumor also has it that Juniper archrival Avici has been busy in Germany, winning a key contract with Deutsche Telekom AG (NYSE: DT) after more than a year of negotiations. Sources at Avici would neither confirm nor deny the rumor. Deutsche Telekom did not return phone calls.

-- Mary Jander, senior editor, Light Reading http://www.lightreading.com

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