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Nortel wins $1 billion contract with start-up

The fiber-optic equipment maker signs a four-year contract to sell telecommunications equipment to service provider Aerie Networks.

Nortel Networks has signed a four-year, $1 billion contract to sell telecommunications equipment to start-up service provider Aerie Networks.

Aerie, based in Denver, will buy Nortel's optical equipment to build a 20,000-mile nationwide network that will serve 194 cities.

Instead of selling services directly to consumers and businesses, the start-up plans to make money by carrying Internet traffic for emerging service providers. Such providers could include those that offer digital subscriber line (DSL) service or application service providers or Web sites that rent software.

Nortel is the main supplier of optical equipment for the four-year project. The company competes against Lucent Technologies, Cisco Systems and others in the exploding market for optical equipment, technology that allows service providers to send large amounts of Net traffic across their networks at fast speeds.

An Aerie spokeswoman said the start-up will spend the next four years building its network and has begun constructing its network in the Midwest, including the areas between Chicago and St. Louis. Corning is selling Aerie the fiber for the project.