Nokia Siemens increases bid for Nortel networking business

Battle for Nortel's optical networking and carrier Ethernet kit continues

In the battle for Nortel's optical networking and carrier Ethernet assets, Nokia Siemens Networks (NSN) has trumped rival Ciena's bid, increasing its offer by $41m (£24.6m) to $810m (£486m).

Last month, Ciena matched a combined NSN-One Equity bid, offering $530m in cash and $239m in debt for Nortel's assets.

Ciena's bid of $769m (£462m) was Nortel's preferred bid at the time, prompting NSN's response of an increased offer.

The optical networking and carrier Ethernet markets are key for telecom rollouts of next generation networks (NGNs).

The provision of next generation access (NGA) provided by NGNs is a key element of the Digital Britain report published in June by the department for Business, Innovation and Skills (BIS) under the auspices of Lord Carter.

To provide NGA, backhaul networks will need to be upgraded, especially if the move to high definition (HD) and 3D content starts to take off significantly.

To move from standard to HD video would require the capacity of the backhaul networks to be increased six fold, while a move from HD to 3D content would require a 12-fold increase in backhaul network capacity, according to Alcatel Lucent's head of segment marketing and public affairs, Simon Loe.

Mobile operators will also look to increase their backhaul network capacity as mobile broadband data is a big revenue earner for them.

Those backhaul networks will need large amounts of optical network hardware and carrier Ethernet kit. A recent survey regarding 40Gbit/s and 100Gbit/s technology suppliers by Infonetics Research showed that most service providers cite Nortel as the top vendor.

Canadian-based Nortel Networks filed for bankruptcy protection back in January, and its assets have been broken up and purchased by a slew of network vendors. Sony Ericsson picked up Nortel's GSM business for $70m (£42m) last month, while Avaya Purchased Nortel's Enterprise Solutions business for $475m (£285m) earlier in July.