Nortel Nabs $65M Cable Deal

While traditional telephone companies are spending slowly and with great deliberation, equipment vendors are turning to cable MSOs for a ray of sunshine. Case in point: Nortel Networks Corp.'s (NYSE/Toronto: NT) announcement this week that Cox Communications Inc. (NYSE: COX) has awarded it a three-year, $65 million contract to provide next-generation Sonet equipment and other telecom gear (see Nortel Wins at Cox).

Cox has been buying Nortel gear for several years now. In 1996, Nortel announced a $65 million deal to supply Cox with its DMS-500 switches so Cox could provide local telephony services. Cox has more than 650,000 residential telephony customers to date, served by 15 Nortel DMS boxes, according to Elaine Smiles, director of cable marketing for Nortel.

Last month, Nortel announced that Cox was using its OPTera Metro 3500 box to provide high-speed Internet access, virtual LANs, and other services to Cox's enterprise customers (see Cox Picks Nortel for Metro). The deployments announced then included gear for four metro rings in San Diego.

The additional supply agreement announced Tuesday includes Nortel's OPTera Metro line, which will be used to aggregate traffic, transport traffic, and provide Ethernet services. "Cox saw the value in converging their traffic onto a metro optical backbone," says Smiles.

Cox did not respond to requests for comment.

Nortel's OPTera Metro products compete with similar offerings from Cisco Systems Inc. (Nasdaq: CSCO), Ciena Corp. (Nasdaq: CIEN), Lucent Technologies Inc. (NYSE: LU), and Fujitsu Network Communications Inc. (FNC).

Nortel says its gear provides service to more than four million cable telephony lines globally, though most of that is TDM telephony, not voice-over-IP. The number is still significant, since there are only a little more than eight million cable telephony lines in service, according to market research firm In-Stat/MDR.

In-Stat/MDR predicts the line count will reach 11 million by the end of this year, but it did not provide a per-vendor breakout.

With this in mind, cable spending may serve as at least a short-term haven for cash-starved equipment providers. Citing a September report from RHK Inc., Smiles says that capex for cable MSOs declined by 12 percent last year, versus the 43 percent to 53 percent capex decline for wireline service providers, such as RBOCs.

— Phil Harvey, Senior Editor, Light Reading
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Belzebutt 12/4/2012 | 9:21:26 PM
re: Nortel Nabs $65M Cable Deal The 'RPR like' cards consist of a two WAN interfaces that simply map Ethernet into SONET STS's, and small packet fabric that manages the add/drop plus any other VPN features.
The Cisco (Cerent) does a simple mapping of ethernet into a number of STS's.

Based on your description, it sounds like they do roughly the same thing.

Does the Cerent box require another box to work as an RPR, in what some other poster referred to as "two box solution", or was he talking about another Cisco product?
BobbyMax 12/4/2012 | 9:21:23 PM
re: Nortel Nabs $65M Cable Deal It is unforunate that a tier 1 telecom equipment vendor is compared with a router company. In fact, Cisco is not a telecom company in any sense of the term.
jamesoid 12/4/2012 | 9:21:06 PM
re: Nortel Nabs $65M Cable Deal "Will they get a good return on all this spending?"

If they can deliver CATV/BroadbandISP/telephone to my neighborhood, I will contract their service. If I am not the only one who wants a similar bundle, I would say the answer to your question is yes.
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