Nortel Networks has been chosen as one of the telecom equipment makers that will supply new technology for BT Group's high-speed Internet network, the companies said yesterday.
Nortel, the biggest maker of telephone equipment in North America, will provide network backbone technology to BT, which will allow the UK-based carrier to handle growing demand for broadband with better quality and at a lower cost, it said.
Nortel, along with its competitors, is betting that a boom in online video, games and music, as well as increased traffic from big companies, will strain existing networks and force carriers like BT to invest in new technologies.
"I'm as excited by this win as probably anything which we've done to this point in time," CE Mike Zafirovski told Reuters in a telephone interview.
"This is a very important growth market for us, and of course winning somebody with BT's background and visibility adds so much more credibility to our story."
BT is a global carrier with operations in Europe, the Americas and the Asia-Pacific region. In the UK, it serves more than 20 million business and residential customers.
Nortel's metro Ethernet networks unit, which sells network backbone or infrastructure technology such as the equipment being provided to BT, had about $1.4 billion in revenue last year, excluding services. Zafirovski described this win as "a significant part of that business".
Broad turnaround
While the deal isn't huge one in terms of dollar value for Nortel - the company had total revenue of $3 billion in its latest quarter alone - it's a five-year commitment from a top-tier carrier that could help Nortel sell its technology to other customers.
The company expects that the market for metro Ethernet - which it views as a combination of optical network and carrier Ethernet technologies - could be as large as $13.5 billion within the decade. Ethernet is the most widely used local area network standard.
At the same time, Toronto-based Nortel is in the midst of a broad turnaround, working to transform itself from a moribund giant still smarting from the tech meltdown, into a successful telecom equipment vendor.
New technologies such as metro Ethernet and WiMax, a Nortel offering aimed at cellphone networks, are poised to play a big part in that effort.
Last month, Nortel signed a $2 billion supply deal with Verizon Wireless to help the company cope with an explosion in demand for mobile broadband Internet access.
As in BT's case, the strain on Verizon's network is largely driven by demand for online video and other multimedia.
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