Broadwing invests in optical equipment firm Corvis
The company announces a $44 million stake in the optical equipment maker it has already contracted with for $200 million worth of networking gear.
Broadwing, the carrier created by the merger of Cincinnati Bell and IXC Communications, said it has exercised its right to purchase about $44 million in Corvis stock, having bought 8 million shares over the past three months. Corvis went public last month, raising more than $1 billion.
The contract highlights the necessity of new networking equipment makers to quickly sign rich contracts with big-name network service providers to gain credibility and the capital to develop next-generation technologies. Optical gear makers are racing to lock down long-term deals with communications carriers, so as to continue supplying them in the long term.
Corvis competitor Ciena, for example, is reportedly close to a major contract with Williams Communications, a company also working with Corvis.
But the investment also continues a trend in which carriers serve both as customers and investors for many networking equipment start-ups.
Broadwing plans to purchase up to $200 million in optical equipment from Corvis, a two-year deal announced in May. Having successfully completed a field trial of Corvis gear, Broadwing plans to buy Corvis' optical transmission equipment and install it in its fiber-optic network.