Nortel puts stamp on broadband return

Nortel and Huawei Technologies today announced they are creating an Ottawa-based joint venture that plans to develop broadband access products.

The as-yet-unnamed venture, to be set up by the third quarter of this year, is part of Nortel’s latest effort to re-enter the access market, which it exited in 2001 with the sale of its broadband group to Zhone Technologies. In the short-term, Nortel will begin reselling Huawei broadband access products, including its IP-DSLAM, ATM-based products, fiber-to-the-x line and its digital loop carrier. The venture will be more focused on specifically developing IP-based products and what the two are calling “ultra” broadband. It will not, however, have any customer-facing role, said Walt Megura, general manager of Nortel’s broadband networks group.

“The point of the joint venture is that it’s a research and development product house,” he said. “The two companies are the channels. This is a step to demonstrate Nortel’s commitment to the market.”

Because the venture hasn’t been finalized, the companies wouldn’t detail exactly how those channels will be divvied up, but it can be safely assumed that Nortel will have almost exclusive rights to products for the North American market. Nortel also will own the majority of the venture. Also undetermined is how the JV will impact Nortel’s bid for the joint RFP for GPON platforms put out by BellSouth, SBC Communications and Verizon. Nortel is bidding on the deal, but Megura wouldn’t say whether any venture-backed products would be part of that effort.

“Huawei has a very good technology platform; we have a footprint, deep customer relationships and key market knowledge,” he said.

One effort that won’t change because of the venture is Nortel’s relationship with Calix. The two companies signed a strategic alliance last June, which has since won a two-year deal to provide Sprint with access products for its broadband buildout.

“I’m not announcing an end to the Calix relationship,” Megura said. “We have a good relationship with Calix, and we’ve done a fair amount of business with them. That stays in place. I think over time what we see is an opportunity to bring customers innovative alternatives.”

Megura said one of the initial goals from a product perspective for the Huawei-Nortel venture would be to develop a multimedia access gateway.

“From a sequencing standpoint, we’re focusing on the wire line side first,” he said. “The move to IP based access, whether its GPON or IP DSLAM, is a multi-billion [dollar] opportunity. We’ve got a lot to do.”