Nortel Appears to be Aggressively Protecting its Long-Haul SONET Business

Implications: 1.      Nortel has seemingly been quite proactive in making sure that it does not lose its high-end SONET interexchange business. 2.      It’s attractive, next-generation SONET gear is being offered at very competitive prices. 3.      Nortel’s proposals to service providers for its new ROADM are also appealing.  

Analysis:  Some telco engineers view Nortel’s OME 6500 as being very similar to the very successful FLASHWAVE 4500 from Fujitsu.  IXCs can do a direct launch of the 6500s into their base of Nortel 1600 MOR Plus gear.  Nortel’s amplifiers use a proprietary AM1/AM2 overhead byte in the SONET payload.  Even if the carrier uses the FLASHWAVE 4500, it would still have to buy Nortel transponders before it can launch the OC-192 into the DWDM.  So, it is cheaper and simpler in some cases to go with the 6500 instead.  Perhaps Nortel should be given credit.  It is about the only vendor that ever came up with a single fiber, high-density, DWDM to ensure its transponders are bought along with the SONET gear to use it.  Of course that is also the reason most of the large players dislike the box, since it requires them to buy from Nortel only.

Nortel’s ROADM is unique in that the carrier does not have to worry about Dispersion Compensation Modules (DCMs).  Its system has an electronic DCM.  Once the device is turned on, it just talks across the hops and automatically does the dispersion compensation equalization.  So, itdoes not matter whether, for example one adds a 2-mile piece of cable -- or is cutting a new node in -- it will automatically adjust. 

While Nortel's approach seems to be working, they are still struggling to get the RBOC's interested in their products again. This is one time that incumbency doesn't mean an automatic win-back.