Nortel Buys Network Startup for $3.25 Billion

Grabbing a ring in the optical technology market, Nortel Networks Wednesday bought ultra-long-reach optical network startup Qtera Corp. in a $3.25 billion stock deal.

Nortel (NT) expects that the new optical technology will greatly enhance Internet performance, with a network capable of sending signals as far as 2,500 miles (4,000 kilometers) in optical form. The Qtera technology operates at 10 gigabits per second and Nortel believes it will cut costs and offer scalability to its long-range networks.

Qtera boasts that its disruptive technology cuts as much as 75 percent of optical-electrical-optical conversions in data transmission, conversions which were considered necessary to keep the signal from fading over distance. Nortel is expected to get six times the signal distance travelled from the improved network.

The new solution was already trialed last month by Nortel client Qwest Communications (QWST), a test that represented the longest unregenerated transmission at OC-192 over a service provider’s existing fiber plant. Beta trials using live traffic are in the works.

“The addition of Qtera’s capabilities enhances Nortel Networks ability to deliver to customers the greatest capacity, the highest speed and, now, the longest reach Optical Internet solutions in the market,” said John Roth, Nortel Networks’ president and chief executive officer.

In order to win the maximum acquisition figure, Qtera must meet certain goals. The deal is expected to close in the first quarter of next year.