5G Is Shifting the Packet/Optical Tectonic Plates

Is 5G shifting the packet/optical tectonic plates? It would seem that way given this week's announcement that Ericsson -- one of the leading mobile networking technology suppliers in the world, with hundreds of operator customers -- has chosen to team up with ECI Telecom and Juniper Networks to flesh out its 5G transport portfolio. (See Ericsson Links 5G Hands With Juniper & ECI, Snubs Cisco & Ciena.)

Those selections are significant because just 12-24 months ago, the prime candidates for Ericsson AB (Nasdaq: ERIC) to hook up with would have been long-time ally Ciena Corp. (NYSE: CIEN), for optical transport, and strategic partner Cisco Systems Inc. (Nasdaq: CSCO) for routers. But Ciena, it seems, doesn't have what Ericsson needs, while the relationship between the Swedish vendor and Cisco has gone to the dogs. (See Europe at Risk of 'Slow, Fragmented' 5G, Warns Vodafone Boss and 'Ciscosson' Aims for Future-Proof Partnership.)

Cisco likely won't be surprised not to be included, given the strained relations with its erstwhile beau, but Ciena, which is currently pumping on nearly all cylinders, would surely have been counting on being identified as the go-to metro transport partner in Ericsson's 5G package deals. (See Ciena CEO: We're Killin' It! and Ciena Bolsters Blue Planet With OSS Acquisition.)

But it's good news, then, for both Juniper Networks Inc. (NYSE: JNPR) and ECI Telecom Ltd. as the pull-through sales opportunities that could come from Ericsson have the potential to "move the needle" on their top line sales (quite how the margins might look is for the partners to know…).

And, let's not forget, both of Ericsson's main rivals in the global 5G networking sector -- Nokia and Huawei -- have their own optical and IP transport portfolios, so the opportunity to hook up with a major 5G infrastructure player to win major deals comes with the Swedish giant.

For Juniper, its MX and PTX series routers have effectively been given a "ready for 5G networks" stamp of approval by Ericsson and that can only be a positive. And with network security always high on operator "what keeps me up at night other than a double espresso at 11 p.m." lists, having its SRX Series Services Gateway network security system bundled into deals by Ericsson is another plus.

For ECI, the relationship is a significant validation for the recent focus it has put on transport SDN capabilities and developing optical network systems designed to meet the challenging traffic volume, management and latency demands of 5G networks. (See 5G Transport: Question Time, Is Your Transport Network Ready for 5G? and The 5G Connectivity Challenge.)

And it will only make the company more likely to achieve its financial ambitions -- it is growing and profitable currently -- and perhaps, even, boost its attraction as a takeover target or enhance the likelihood of a public listing. (See Eurobites: M&A Rumor Links ADVA With ECI and ECI Reportedly Planning a London IPO.)

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Whatever the outcome, Ericsson's partnership selection has shaken up the 5G foundations, right at a time when 5G transport is a red hot focus area for network capacity planners ahead of 5G service launches: Now it's up to Juniper and ECI to make the most of the opportunity. (See 5G Transport – Where Do We Start?)

And expect to see other partnerships wrapped up with a 5G ribbon -- even the very largest suppliers can't cover all the technology bases themselves, especially when it comes to building out the distributed cloud that will be needed to support bandwidth-hungry, low-latency services.

— Ray Le Maistre, Editor-in-Chief, Light Reading

Sterling Perrin 9/6/2018 | 4:00:27 PM
Coopetition Good analysis Ray!

It is very interesting that Ericsson chose ECI over Ciena as the 5G partner. Ericsson is indicating that ECI was filling a hole that Ciena doesn't address, but I don't think the decision was that simple. To me, it looks like Ciena has products to address the applications that ECI is addressing. I'm wondering if the decision is more to do with Ciena packet switching products competing head-to-head with Ericsson's own routing in North America.

It is probably not coincidental that ECI has minimal presence in North America.

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