Cable & Wireless has appointed Nortel Networks as systems integrator and prime contractor for its global network expansion.
But a senior analyst has questioned the merits of using an equipment vendor to act as an independent systems integrator, which has to install its rivals' equipment.
Cable & Wireless said it would decide what specification of equipment to install and Nortel would be accountable for selecting the equipment and putting the components together.
The integration contract, worth $400 million over two years, is the second major deal C&W has awarded to Nortel. In February 1998, C&W awarded Nortel a $300 million contract as systems integrator for the creation of it UK IP network, Network 2000.
However, Neil Rickard, senior analyst at the Gartner Group, said telcos appointing equipment vendors as systems integrators should be careful to ensure they are getting a fair deal.
"How separate can vendors like Nortel and Lucent - who service multiple vendors at the same time as selling equipment - be? How arms length is the equipment business from the services business," said Rickard.
"The risk is that Nortel is now trying to compete with all the people whose equipment it is trying to manage. There's going to be a temptation of trying to make people chose its equipment," he said.
Telcos are already experiencing problems from using equipment vendors as systems integrators, according to Rickard. Cases of integrators bad mouthing other vendors' products and encouraging customers to replace rival products with their own have been reported.
Michael Winslow, commercial director of global networks at Cable & Wireless, said: "We agree together which is the best technology to meet our needs. We then make them accountable for putting the network parts together. We'd agree whether brand x was right or wrong."
Winslow added that Nortel has already done a large amount of integration work on C&W's European IP network, where there has been no Nortel equipment involved.
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