Cisco Systems is set to bring in over $100 million after the company announced it secured a contract to migrate Telstra's high-speed cable modem services to the Data Over Cable Service Interface Specification (DOCSIS) standard. However, excluded from the deal is the channel, which looks like it won't even pick up the scraps from Cisco's table.
DOCSIS has become a default standard for the networking industry and the lucrative contract will see Cisco provide high-end switching and routing products for Telstra's Cable Modem Termination System (CMTS), Internet Protocol (IP) infrastructure and related back-end systems, a statement released by Cisco claimed.
Cisco fought off competition from other networking heavyweights such as Nortel for the three-year contract and Kurt Hansen, general manager of telecommunications and service provider's business for Cisco, claims the direct nature deal was unavoidable.
"If we could do the whole project through our partners we would, but there are two things at work here. Firstly, Telstra wanted a close working relationship with the vendor, and secondly, a lot of this project involves some pretty new technology. So it's up to Cisco technicians with the skills to be able to implement it," professed Hansen.
Hansen added that while the vendor will continue direct or "high-touch" deals with large service providers, the majority of substantial agreements would go through the vendor's channel partners, such as its Gold Partners including Com Tech, NetStar, Equant Integration Services, Logical Networks and PC vendor Compaq.
"We've got a good history that if we win something, we like to pass it off to our resellers, I mean, that's our model. If I could have passed this over to resellers I would have in a flash," claimed Hansen.
But a former reseller turned networking vendor told ARN Cisco has a history of going direct for large accounts and only using the channel when it suits.
"That's not a strong channel strategy," the source ventured.
As it stands, Telstra's cable network currently passes 2.1 million homes in Brisbane, the Gold Coast, Melbourne and Sydney, with plans to offer its services in Adelaide and Perth in 2001. In addition, Telstra is looking to bring its Big Pond Advance Powered By Cable service to 500,000 SOHO and SME customers within five years.
The tender was put out late last year, with Cisco signing a Heads of Agreement to commence construction of the new network in May this year. Cisco has since received the first significant orders, in the vicinity of $5 million, claims Hansen.
According to Hansen, the basis of the Cisco technology is to give Telstra a lower-cost, standards based network, which will enable it to roll out new IP services including streaming media, voice over IP, virtual private networks and a range of SOHO and telecommuter services.