Feds Announce Global Network Contract Winners

In a windfall for telecom equipment and transport companies, the federal government this morning awarded lucrative contracts to build a global optical network.

After months of review and testing, the Defense Information Systems Agency (DISA), the organization heading up the project, chose Ciena , Cisco , Juniper Networks , Qwest , Sprint and Sycamore to participate in the project.

Dubbed Global Information Grid Bandwidth Expansion (GigBe), the initiative will establish an optical network providing high-speed Internet protocol services to approximately 100 facilities in the United States, the Pacific and Europe.

GigBe will operate at 10 gigabits per second (Gbps), supporting voice, data, video, and transport services. It will require large orders for core and edge routers, multi-service provisioning platforms, optical transport systems; and optical digital crossconnects.

“The Gig-Be program expects to purchase an estimated $260 million of equipment to support Gig-Be implementation over the next two years,” DISA spokeswoman Betsy Flood told internetnews.com.

While today’s contracts represent the bulk of the GigBe awards, some requests for proposal for fiber for the system are still out, Flood said.

The deals come as the networking industry is slowly rebounding after more than two years of slow spending by cash-conscious corporations and service providers.

What each company will reap is difficult to break down. Earlier this year, analysts at Deutsche Bank Securities estimated that long-haul front-runner Ciena could collect up to $150 million over two years for the contract.

Susan Ursch, a spokeswoman for Juniper, declined to say how much Juniper’s could expect for contributing routers for the project.

The contract will be especially helpful to Sycamore, a maker of optical switching equipment that has been hard hit by the slowdown.

In addition to pumping up revenue in the next two years, the deals are also thought to help the companies compete for additional contracts with other government agencies because of the tough vetting process required for GigBe. In early trading this morning, Ciena and Sycamore shares received a boost from the contract award news.