Nortel Closes Content Switch Deals

The good news: Recent contract wins by Nortel Networks Corp. (NYSE/Toronto: NT) could mark it as a survivor in the market for multimedia content switches. The bad news: The market could morph yet again with the advent of sophisticated edge routing and MPLS switching technology.

Today, Nortel announced that Retecal, a cable telecom provider in Spain, will use Nortel's Passport 8600 multiservice WAN switches, outfitted with Alteon Web Switching Module blades, to create a new 15-node broadband multimedia network spanning a four-city area in Spain's large Castilla y León region (see Nortel Wins Spanish Cable Deal). While the carrier is just offering data at rates to 1 Gbit/s today, it plans to add voice over IP (VOIP) and higher rates in the future, according to Nortel spokespeople in Spain.

Separately, last week Nortel announced the signing of a one-year deal involving multiple products for India's Reliance Infocomm Ltd., which offers a range of services over a 60,000-km, 2,700-site network. Along with other gear, Nortel will supply standalone Alteon Web Switches and a variety of Passport multiservice switches, including the Ethernet-based 8600 (see Nortel Supplies Reliance in India).

Analysts say the use of Nortel multiservice switches with Alteon add-ons highlights a couple of key trends and signals Nortel's strength in a market niche.

It's probably much cheaper for some cable operators (such as Retecal) to use Ethernet-optimized products like the Passport 8600 in place of traditional routers, because the routing involved isn't as complex as Internet routing, according to Scott Clavenna, president of PointEast Research LLC and director of research at Light Reading. In addition, features such as traffic prioritization, key in multimedia networks, can be accomplished without the expense and complexity of a full-blown router, Clavenna says.

This tack seems have caught on. "Many service providers are using and considering a number of L2 and L3 technologies to deliver more services more simply in their networks," writes Michael Howard, principal analyst and cofounder of Infonetics Research Inc., in an email.

Another trend revealed by the recent announcements has to do with content management, which is the specialty of Nortel's Alteon line, offered as both a standalone unit and a blade for other platforms, including the 8600. At least one analyst says Nortel is building on its position as market leader.

"The Alteon box is still the industry leader," says analyst Irwin Lazar of the Burton Group. He says other vendors aren't showing content networking as a strong suit. F5 Networks Inc. (Nasdaq: FFIV) has backed away from the space, he says, while CacheFlow has migrated into a new area (see CacheFlow Puts on Blue Coat) and Cisco Systems Inc. (Nasdaq: CSCO) is playing catch-up (see Cisco Does Content Switching).

If Nortel can show some momentum in sales of its Alteon wares, Lazar says, the vendor just might wind up as the "last person standing" in the content-switching market.

But despite such a position, Nortel may not have long to cherish the role. A host of competing solutions for managing multimedia content are proliferating. Multiservice routing switch competitors such as Riverstone Networks Inc. (Nasdaq: RSTN) are making their own inroads. And a range of other gear, notably products that use MPLS as a means of content delivery and quality of service, loom on the horizon (see IP Quality of Service).

Notably, though, in both recent announcements cited, the emphasis isn't on content management, or even on multimedia services, alone. For Retecal, Nortel also is providing OPTera Long Haul 1600 gear that will give the cable provider a way to offer wavelengths wholesale to other carriers. And Nortel's Reliance gig involves a slew of other gear, including the OPTera Connect DX optical switch, the OPTera Metro 4000 platform, and a range of security, system and network management, and voice products.

Bottom line? While the value of the Retecal and Reliance contracts remains undisclosed, they both seem sizeable enough to warrant a bit of boasting on Nortel's part. On the broader front, both deals offer an interesting reference point for gauging the progress of the content networking market.

— Mary Jander, Senior Editor, Light Reading