Calix, Nortel partnership wanes

Broadband access equipment vendor Calix today announced a joint marketing agreement with Nortel Networks that will supplant the three-year reseller agreement between the two that was due to expire this year.

The new partnership is in some ways a looser version of the previous one. It gives Calix, rather than Nortel, direct control of order fulfillment, meaning customers now place orders directly with Calix. And what was a three-year contract is now a one-year contract.

Calix had conjectured in the past that it may outgrow the need for a big-brother partner to assure potential customers of its corporate stability. But the company’s chief executive officer, Carl Russo, has said he would let customers decide if they want to work with Calix and Nortel as a team.

However, Calix still sees particular value in Nortel’s voice expertise and customer footprint.

“We don’t do voice switching,” said Kevin Walsh, Calix’s vice president of marketing. “[Nortel] still has a very large presence of DMS voice switches in tier-two and tier-three carriers in North America that are being migrated from circuit-switched [networks] to voice over IP.”

Nortel’s interest in the partnership is based on its desire to be a major presence in the IPTV sector. The vendor has even hinted recently at the possibility of making acquisitions in that space. Calix, a major provider of gigabit passive optical networks (GPON), would theoretically be a candidate.

Calix won’t say whether it is pursuing a GPON contract at AT&T, which has yet to name its chosen GPON suppliers despite expectations that it would do so last year. Some analysts believe the prospect of an AT&T GPON contract led Ericsson to acquire Entrisphere earlier this month, arguing that AT&T would be less likely to work with a small vendor.

But unlike Entrisphere, Calix wouldn’t need Nortel to help it win AT&T’s GPON business, Walsh said. “We’re big enough as a supplier that we can deal directly with almost any size service provider. There may be instances where it’s advantageous to partner. But it’s certainly not the case that we’d need to partner because we’re too small.”

In less than three years as a team, Nortel and Calix won 26 North American customers who deployed more than 2300 of the latter’s C7 multiservice access platforms. In all, Calix now claims to have shipped more than 15,000 C7s to more than 400 customers.

The two-year contract for broadband access gear that Embarq (then Sprint) awarded jointly to Calix and Nortel in October 2005 (due to expire later this year) was replaced last month with one that excludes Nortel, Walsh said. However, Embarq’s IPTV plans are unclear, as the carrier’s chief executive officer has said recently the company is in no hurry to offer video.