CISCO CARRIER STRATEGY PICKS UP STEAM

Cisco Systems' new carrier-centric worldview is beginning to bear fruit. In fact, service providers can't seem to get enough of the vendor. Cisco has announced partnerships with the biggest carriers in North America to jointly push each other's products and develop new products and technologies. It's a strategy Cisco said would elevate it to its lofty goal of dominating the carrier market.

“Most of our customers are the same as their customers,” said Charlie Giancarlo, senior vice president of switching, voice and carrier systems at Cisco. “It's only natural that we work together.”

Cisco's made its latest alliance with AT&T, agreeing to jointly market and sell 17 managed services that all use Cisco equipment and run over AT&T's IP virtual private network. While each of Cisco's carrier partners claims that its relationship with the router giant is special, the three alliances so far — SBC Communications signed on in December, as did Sprint one year earlier — all bear striking similarities. Cisco has created separate advisory boards to promote new technologies between the two companies and has merged its sales efforts for specific services.

“It's a natural symbiotic relationship,” said Jack Crowley, vice president of strategic partnerships and alliances for AT&T. “We've always worked with Cisco, but often we were working somewhat reactively. Our customers were bringing us together.”

Sprint's alliance with Cisco is by far the oldest with their partnership dating back to December 2001. And due partly to Sprint's input, Cisco developed its Layer 2 tunneling protocol, which Sprint now uses to emulate private line, frame relay and virtual LAN services over its IP core. Sprint has signed on 50 new customers using Cisco's solutions, which have generated more than $150 million since the alliance was announced, according to one Sprint estimate.

For its part, Cisco does not intend to partner with every carrier in the market, Giancarlo said. Instead, its strategic alliance program will form close bonds with a few prominent carriers. The company is most likely done seeking partnerships in the North American market, though it does plan to seek partners internationally, Giancarlo said.