Cisco Spurns Channel to Bag $53M Telstra Contract

Networking vendor Cisco Systems Inc. is set to bring in over A$100 million (US$53.4 million) in additional revenues over three years, after the company announced it secured a contract to migrate Telstra Corp.'s high-speed cable modem services to the DOCSIS standard. But left out of the deal is the channel, which looks like it won't even pick up the scraps from Cisco's table.

Data Over Cable Service Interface Specification (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, according to a statement released by Cisco.

Cisco fought off competition from other networking vendors such as Nortel Networks Corp. for the contract and Kurt Hansen, general manager of telecommunications and service provider's business for Cisco, claims the direct nature of the deal was unavoidable.

"If we could do the whole project through our partners we would, but there are two things at work here," Hansen said. "Firstly, Telstra wanted a close working relationship with the vendor and the other thing is, 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," he professed.

He added 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.

"We've got a good history that if we win something, we like to pass it on 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 said that 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," he ventured.

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 A$5 million, claims Hansen.

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