Ericsson lands second major Crown fibre deal, this time with Northpower

Ericsson has signed a deal to supply Layer 2 electronics to Whangarei Crown fibre contract winner Northpower – the second major win for the Swedish company under the government’s $1.35 billion Ultrafast Broadband (UFB roll-out).

Layer 2 electronics “light” dark fibre, making it usable for services like internet access and TV delivered by fibre.

The Swedes have also grabbed a chunk of Northpower's Layer 1 business, supplying the fibre itself.

Northpower spokesman Steve MacMillan said his company has used Ericsson fibre extensively for its overhead cable, and Emtelle for fibre blown through underground ducts. "In future we probably will be going more to Ericsson on blown fibre."

Around 60% of Northpower's UFB rollout is overhead, the rest underground.

US companies Cisco and Enablence were the incumbent layer 2 providers for Northpower’s fibre network laid under its own steam before it won Crown fibre funding. Earlier, the company told NBR its supplier relationship was “under review.”

Cisco will remain on the island.

"Northpower used a Cisco 7609 with EBC technology for its aggregation switch in the initial build and we are remaining with Cisco for the aggregation switch. It will be upgraded to an ASR9000 in 2012," Mr MacMillan said.

Enablence will not. 

The company's PON (passive optical networking) electronics were used for fibre laid passed 1500 homes on Northpower's network prior to the start of the UFB rollout late last year.

Now it's been dropped in favour of G-PON (gigabyte passive optical networking) Ericsson kit, chosen after an eight-month trial of five vendor's gear.

Northpower's fibre roll-out is around 20% complete, Mr MacMillan said.

The roll-out will pass 18,000 educational, healthcare, business and residential premises by June 2014.

Chorus win
Earlier, Ericsson signed a deal to provide layer 1 fibre to Chorus, which holds 74% of the UFB roll-out by premise. Chorus has yet to award its layer 2 (lit fibre) contract, but has said Telecom incumbent Alcatel Lucent is still in the running, along with other contenders.

The three other UFB contract holders are Northpower in Whangarei, Ultrafast Fibre (a Wel Networks-led consortium) in Hamilton, Tauranga and a series of central North Island towns, and Enable in Christchurch).

Wel Networks has chosen China’s Huawei to provide both layer 1 (dark fibre) and layer 2 electronics.

Enable chief executive Steve Fuller has refused comment on his company’s suppliers.

Enable’s contract with Crown Fibre Holdings has a special provision for a 50:50 joint venture with Chorus and talks between the two companies are underway, suggesting the pair may share suppliers.

Sydney-based market analyst Paul Budde said the Chorus contract alone would be worth "hundreds of millions" to Ericsson.

Continued comeback
The deal announced today represents a continued comeback in the New Zealand market for Ericsson.

While the Swedish company has enjoyed strong business across the Tasman, here Telecom has partnered with Alcatel-Lucent for the bulk of its network infrastructure business over the past few years; Vodafone primarily with Nokia Siemens and 2degrees primarily with Huawei.

It may also be a sign that Ericsson’s hard-fought lobbying efforts have had some impact. Over the past 24 months, reps for the company have made repeated visits, meeting with the MED and various companies vying for Crown fibre contracts.

In particular, the Swedes warned against the risks of creating "25 hobby networks" that "floated in space."

Ericsson lobbied Communications Minister Steven Joyce, and others, for a single national network, driven by a single public-private partnership - not unlike the arrangement that emerged as Chorus landed the lion's share of the UFB, underpinned by $929 million in the form of an interest-free long term government loan and non-voting equity.

Supplier contracts have yet to announced for the remaining UFB winners - Northpower, Wel Networks and Enable, who will be responsible for around 26% of the rollout (by premise).

Enable's UFB contract (for Christchurch) includes a provision for a possible 50:50 joint venture with Chorus.