Swedish equipment giant announces its first IPTV deal, while Nortel gets cozier with Calix to target IPTV opportunities

February 20, 2007

4 Min Read
Ericsson, Nortel Push on IPTV

Ericsson AB (Nasdaq: ERIC) and Nortel Networks Ltd. reminded the telecom world of their IPTV credentials today with a couple new deals. (See Ericsson Wins in Iceland and Nortel, Calix Cosy Up.)

Ericsson has announced a small telco TV deployment as part of a package, including an IMS core, to Vodafone Iceland , a competitive carrier offering fixed and mobile services to a total of 165,000 subscribers. (The carrier is not part of the Vodafone Group plc (NYSE: VOD), but is a service partner that has licensed the brand.)

Vodafone Iceland, formerly known as Og Vodafone, competes with incumbent Síminn for business and residential subscribers in a country with a population of about 300,000. Iceland Telecom, which has 52,000 DSL customers, launched its IPTV service in 2004 and has 27,000 subscribers. (See IPTV in Iceland.)

For Ericsson this is a small but significant start. It has trailed some of its major vendor competitors, particularly Alcatel-Lucent (NYSE: ALU) and Siemens Communications Group , in breaking into the IPTV world, and only really kicked off its telco video campaign in June 2006 when it announced a partnership with Kasenna Inc. to target fixed as well as mobile operators. (See Ericsson Brings the IPTV.)

Mikael Bäckström, President of Ericsson Nordic and Baltics, says Kasenna is part of this deal, but declined to provide any further details about other partners or any financials. For Ericsson, already a provider of GSM and 3G core and access mobile infrastructure to Vodafone Iceland, the important part of this deal is its IP Multimedia Subsystem (IMS) core, including application servers and softswitch elements, and the planning, integration, and support services that go with the contract.

Bäckström, who says this is the first announced but not Ericsson's only IPTV deployment in the Nordic region, says a soft launch of video services is due in the second quarter and full commercial launch in the second half of the year.

Ericsson has far greater ambitions in this market. While the relationship with Kasenna gives it access to some of the necessary video delivery technology, the vendor is more interested in being able to deliver a significant suite of hardware and associated integration and support services -- an ambition that fueled two significant recent acquisitions, of edge router specialist Redback Networks Inc. and FTTx vendor Entrisphere Inc. . (See Ericsson Buys Entrisphere and IPTV Drives Ericsson to Redback.)

Vodafone Iceland said it couldn't respond to questions about the deal.

Another vendor playing IPTV catch-up is Nortel, which has been revisiting its telco TV strategy of late in an effort to make a greater impact on the market. To date it has only a support role at Canadian operator Telus Corp. (NYSE: TU; Toronto: T) to its name. (See Sources: Nortel Planning IPTV Acquisitions, Irdeto, Nortel Team, and Nortel Helps Telus With IPTV.)

Today's announcement with Calix Inc. (NYSE: CALX) is just a strengthening of an existing relationship struck in early 2004. (See Nortel Gets Back Into Broadband.)

Calix says that during the past three years, the two companies have jointly won 26 carrier deals resulting in the deployment of 2,300 Calix multiservice access platforms.

Now, though, instead of a strategic alliance, the two companies have struck a joint marketing agreement (JMA), a relationship that, according to the Calix press release, "allows the companies to continue working closely to help service providers deploy advanced packet-based broadband access infrastructure."

Nortel says the previous relationship was a classic OEM deal, with Nortel selling Calix into carriers, while the new agreement involves close collaboration and sales initiatives involving both companies' sales and marketing teams.

Like Ericsson, Nortel knows it needs a strong access infrastructure story if it is to be a significant player in the IPTV market, and will likely need to do more if it is to meet its own competitive criteria: CEO Mike Zafirovski is only interested in competing in markets where Nortel can be one of the top two players, or command a 20 percent market share.

Other than with Calix, Nortel hasn't had much luck with its broadband access partnerships since it decided to abandon the DSL market. Its relationship with ECI Telecom Ltd. ended in tears, while a partnership with Chinese vendor Huawei Technologies Co. Ltd. broke down before it even got going. (See Nortel, Huawei Kill JV, ECI: Nortel Didn't Deliver, and Nortel CEO: We Blew It on DSL.)

— Ray Le Maistre, International News Editor, Light Reading

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