10/28/2008 -- It's been a rough half-decade for Cisco Systems Inc.'s arch-competitor Nortel Networks. Over the last 30 months, especially, Nortel has taken steps to right itself -- chiefly under the direction of CEO Mike Zafirovski, who brought a steady hand to a Nortel helm that had been rocked by executive instability.

On Zafirovksi's watch, Nortel has flexed its SMB muscles, bolstered its already credible telephony stack (and aggressively expanded into unified communications), and -- most importantly -- gotten its financial reporting straight.

One thing Nortel hasn't yet done is successfully challenge Cisco in any of its entrenched markets. That's why the company has high hopes for the new Ethernet Access fixed broadband offering it's developed -- and brought to market -- under the auspices of its LG-Nortel brand. (LG-Nortel is a joint venture between LG Electronics, natch, and Nortel.) The new LG-Nortel entry is one of the first fixed broadband offerings to use a Wave Division Multiplexing Passive Optical Network (WDM-PON) architecture.

Concomitant with that technology, which Nortel trumpeted last month, it also announced a high-profile customer win: UNET, a large service provider based in the Netherlands, plans to tap Nortel Ethernet Access to deliver fiber to Dutch homes and businesses starting this year.

It's an important win for Nortel, according to industry watchers, who note that while Nortel isn't necessarily first out of the gate with WDM-PON, it's among the first vendors to tout a bona-fide customer adoption. And with any bleeding-edge technology, that kind of thing matters.

"While several vendors have announced WDM-PON and other next-generation PON...or next-generation optical access...solutions recently," said Erik Keith, an analyst with consultancy Current Analysis, "Nortel is one of the first to announce an actual customer win/deployment of a WDM-PON-based access system."

Keith thinks WDM-PON might help Nortel grow its share in greenfield or non-traditional market segments, too. "The WDM-PON/Ethernet Access solution set represents Nortel's best bet for generating new non-OEM customer and market traction within the fixed access market in a long time," he said. "[I]t will be interesting to see what Nortel decides to do with this technology given the company's recently announced plan to explore divestiture options for its Metro Ethernet Networks (MEN) portfolio."

On the other hand, Keith pointed out, Nortel's coup came two weeks after a fixed broadband nadir of sorts: In early September, Nortel announced plans to divest itself of its MEN business line. That divestiture, coupled with Nortel's less-than-spectacular success in the fixed broadband segment, could take the wind out of its WDM-PON product introduction and UNET customer win.

"Nortel has a checkered history in the fixed broadband access market," Keith said, adding that Nortel's MEN divestiture includes its optical and Carrier Ethernet portfolios. "While this sale may be structured to not include the Ethernet Access/WDM-PON solutions...the divestiture announcement will not likely inspire customer confidence moving forward." --Stephen Swoyer