Nortel scraps alliance with Avici

Nortel has terminated its distribution and technology agreement with terabit routing firm Avici, leaving the telecoms equipment giant without a product in the carrier networking market.

Signed in April 1998, Nortel secured an OEM deal with Avici for its terabit switch router line, when it also acquired a 22.6 per cent stake in the firm.

But the deal was dropped so that Nortel could concentrate on adding terabit routing capabilities to the gigabit switches it inherited with its purchase of Bay Networks - two months after the Avici agreement.

A representative for Nortel said would retain its stake in Avici. 'Bay has some great routing technology and we will be relying on that.

We brought out the Versalar 25000 switch router in June, which will be developed to terabit routing scale.'

But analysts said Nortel's split with Avici leaves it with a big gap.

Paul Strauss, senior analyst at IDC, said: 'Nearly all the big telecoms equipment providers do not have terabit systems, and neither does Cisco, but to go from having a terabit product to not having one is embarrassing.'

Terabit routing has become the latest battleground for carrier equipment vendors spurred on by growing demand for high speed internet applications.

Last week, Lucent gained a huge head start over its rivals by announcing its intentions to acquire Avici rival and startup, Nexabit, for $900 million.

See News, page 8.