XO Marks the Spot for Hatteras

Hatteras Networks Inc. landed an exclusive deal with service provider XO Communications Inc. to provide mid-band Ethernet gear for XO metro networks. (See Hatteras Lands Deal.)

The agreement has XO deploying Hatteras gear to expand the reach of its Ethernet Services footprint to copper-fed locations where Ethernet services were previously unavailable. Under the multimillion-dollar deal, Hatteras will provide its HN4000 and HN400 Ethernet-over-copper platforms for deployment in all metropolitan areas where XO does business.

XO says it went with Hatteras after the companies had a successful product launch and volume rollout in 2006. (See XO, MTS Pick Hatteras.)

Gary Bolton, VP of marketing at Hatteras, says the rollout was launched last spring to deploy mid-band Ethernet in 30 XO markets. The former partnership included more than 100 installations on a success-based basis.

The service was so successful, Bolton said, that XO decided to go into pre-deployment mode, ordering equipment upfront and expanding from 30 to 60 of its metropolitan markets.

In addition to providing gear, Hatteras will also collaborate with XO on joint marketing initiatives and training to ramp up deployments.

"Hatteras has been cranking out Ethernet-over-copper boxes for XO for the past year, so the announcement of follow-on business is really no surprise," says Heavy Reading senior analyst Stan Hubbard. "But it is quite a coup and a big vote of confidence to get an exclusive deal, especially given that XO has made mid-band Ethernet a key point of service differentiation in an increasingly competitive market."

XO is looking to capitalize on the deal by bolstering its enterprise-focused Ethernet Services business, which enables businesses to connect local area networks between metropolitan areas and to provide high-speed Internet access.

Matt Alexander, XO product manager for Ethernet and private line services, says that the deal will increase its market from 40,000-50,000 potential Ethernet customers to 190,000.

Alexander sees other carriers adopting the same strategy as a way to extend Ethernet services to enterprise customers. "The rest of the market is going to follow the advice of Ethernet over copper," he says.

Both companies declined to comment on the potential size of the deal, although Bolton says, "It's probably the largest award of its kind to date."

"Folks should keep in mind that we’re not just talking about XO delivering services to its own enterprise customers," writes Hubbard in an email. "It is also providing Ethernet connections for other service providers who need the help of partners to reach locations off of their networks."

— Ryan Lawler, Reporter, Light Reading