AT&T extends Avici contract

AT&T has agreed to extend its backbone IP router contract with Avici Systems another five years.

Avici declined to immediately discuss details of the arrangement.

According to Avici’s second-quarter 2004 earnings report, the initial term of its non-exclusive AT&T contract, originally announced in December 2000 and comprising both products and services, continued through December 2003 and remained in effect since it had not been terminated by either party.

AT&T and Qwest Communications are Avici’s biggest customers in the U.S. AT&T has long represented more than 10% of Avici’s revenue, though how much more is unknown. Avici reported $12.1 million in revenue for the second quarter of 2004, making AT&T’s contribution at least $1.2 million for the quarter.

Avici has occupied a distant third place in the global core IP router market behind Juniper Networks and market leader, Cisco Systems, which introduced a new core IP router, the CRS-1, in May. A partnership with Nortel Networks announced in January was expected to give Avici a leg up, especially in North America. Huawei Technologies also sells Avici’s products in China.

The AT&T contract could be a blow to Cisco, since that vendor built the much-heralded CRS-1 with large carriers like AT&T in mind.