Nortel Gets Back Into Broadband
Nortel quit the broadband access market when it sold its digital loop carrier (DLC) business to Zhone Technologies Inc. (Nasdaq: ZHNE) in August 2001 (see Zhone Acquires Nortel's Access Gear). Now it appears to have decided to get back in, via partnerships with existing players.
Calix makes a "multiservice broadband loop carrier," which enables carriers to migrate their telephone services from circuit- to packet-based infrastructure, so they can roll out triple-play services, incorporating voice, video, and data (see Could VOIP Boost DLC Market? ). Broadband loop carriers also provide a stepping stone towards carriers rolling out fiber-to-the-premises (FTTP) technology.
Rumors of a possible deal between Nortel and Calix were reported by Light Reading a few weeks ago (see M&A's New Currency). Today's news will heighten speculation that Calix will stage an IPO or will end up being acquired by Nortel.
"Calix isn't a desperate company seeking an out. This will help them with distribution and increase their visibility on Wall Street. I'm betting IPO rather than acquisition," says Scott Clavenna, Chief Analyst at Heavy Reading.
Keymile offers the European and Asian equivalent of the Calix equipment, which targets North American markets. Keymile, headquartered in Vienna, was formed from Ascom Transmission AG and Datentechnik AG in 2002 (see Keymile Launches). It since acquired a third European equipment vendor, Kommunikations-Elektronik GmbH (see Keymile Acquires Germany's KE).
The European and Asian market for triple-play services and DLCs might be bigger than the North American one (see DLCs Gain Foreign Currency. In other words, Keymile may be an even hotter property than Calix.
ECI Telecom's specialities include FTTP gear, DSLAMs, and optical line termination equipment. It's already working with Nortel on a couple of VOIP-over-DSL projects, for Telecommunications Services of Trinidad and Tobago and Cable & Wireless Cayman Islands.
Walt Megura, Nortel's general manager of broadband networks, says the alliances aim to extend Nortel's "leadership of the packetization of the core to access networks." He says it's more than Nortel needing a VOIP-over-DSL story. It's promoting an "ultra broadband" concept that emphasizes higher bandwidths than DSL (10 to 20 Mbit/s), emphasizes service control and intelligence, and emphasizes applications embracing video as well as voice.
— Peter Heywood, Founding Editor, Light Reading