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Optical/IP

Redback and ECI Buddy Up

Redback Networks Inc. (Nasdaq: RBAK) has added to its list of resellers today as it announced an agreement with ECI Telecom Ltd. (Nasdaq/NM: ECIL) to jointly provide triple-play (voice, video, and data) equipment for IP networks (see Redback Partners With ECI).

The deal is similar in structure to what the edge routing and B-RAS vendor Redback already has in place with Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Nokia Corp. (NYSE: NOK), Redback says. It's not exclusive on either side, but it is global in scope, so Redback may find itself reaching into some networks where it hasn't had previous sales success.

The two companies have been in talks regarding a partnership of some sort since at least January, according to sources familiar with the situation. It's not clear that the discussions ever heated up to the point of merger talks, however, even though rumors were hot and heavy toward the end of 2003 (see Redback's Ready to Rise Again). A Redback spokesman says the talks were always "focused on sales, products, and technology."

ECI officials could not be reached comment.

ECI has become an enviable partner among international broadband equipment suppliers, due to its incumbent status in key international accounts, which include Belgacom (Euronext: BELG), Bezeq, BT Group plc (NYSE: BTY; London: BTA), Chunghwa Telecom Co. Ltd., and France Telecom SA (NYSE: FTE), among others. ECI has been broadening its strategic partnerships of late, as it also has a significant relationship with Nortel Networks Ltd. (NYSE/Toronto: NT). (See Nortel Gets Back Into Broadband.)

ECI's Hi-FOCuS 4 platform -- an all-in-one access gateway that serves DSL and fiber connections -- was among the gear that BT Group plc (NYSE: BTY; London: BTA) selected for its 21st Century Network trials (see Vendors Detail Gear in BT VOIP Trials). That could be a good fit with Redback's routing and subscriber aggregation products.

Redback's partnering likely won't stop with ECI. So far, its strategic reseller arrangements have worked out well as the company has the ability to fill key product holes for big vendors, but doesn't have the size to bid on some deals by itself. In the past two quarters, both of Redback's current partners, Nokia and Alcatel, accounted for between 5 and 10 percent of Redback's revenues.

Sources close to Redback say the company was also in talks with Korean access vendor Corecess Inc. at the beginning of 2004. It's not clear whether the talks covered product integration or a reseller arrangement, but the talks did revolve around the needs of a common carrier customer: KT Corp. (see Redback Wins at Korea Telecom). Nothing involving Corecess and Redback has since been announced.

— Phil Harvey, News Editor, Light Reading

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