Nokia scored an important fiber agreement with telecom giant AT&T, which builds on the vendor’s recent move to bolster its position in the optical networking space and keeps its foot in the door at an important telecom customer.

The agreement is a five-year deal for Nokia to provide AT&T with fiber “solutions” to support the carrier’s network footprint expansion and upgrades. This includes the use of Nokia’s Lightspan MF programmability hardware and Altiplano Access Controller platforms that can support passive optical network (PON) technologies at speeds up to 100 Gb/s (100G).

Nokia launched the Lightspan and Altiplano platforms in 2017 as part of the vendor’s efforts to boost SDN control over optical networking components. This includes software control over the configuration of physical layer parameters.

The AT&T deal also comes less than two months after Nokia moved to acquire smaller optical networking rival Infinera for $2.3 billion. That deal is set to increase Nokia’s scale of its optical network business by 75%, which the equipment vendor said would enable “it to accelerate its product roadmap timeline and breadth.”

Jimmy Yu, VP at Dell’Oro Group, noted at that time that the deal solidifies Nokia as one of the optical networking market’s big three alongside Huawei and Ciena. He explained that those two plus the enhanced Nokia will control around 70% of the worldwide optical networking space, excluding China where Huawei holds a dominant position.

“This is a pretty significant acquisition in that sense,” Yu said.

That significance will be most prominent in North America, where Infinera garners around 60% of its sales. That includes a strong presence with webscale providers, which Nokia noted is “the fastest growing segment of the market.”

AT&T’s expanding fiber plans The Nokia products and platforms as part of the latest AT&T deal are also compliant with the U.S. government’s Build America Buy America Act (BABAA), which is a program targeted at investing funds into products and services built in the U.S. Nokia earlier this year scored a “framework agreement” with the Export-Import Bank of the United States that will provide financing to Nokia’s partners in support of building telecom equipment in the United States.

AT&T has made similar arrangements on BABAA compliant equipment with vendors. This includes signing a long-term deal with optical cable manufacturer Corning in 2022, which was in support of Corning building a new facility in Arizona and the two creating a “Fiber Optic Training Program” targeted at training 50,000 people to design, install, and maintain fiber networks.

More broadly, AT&T’s deal with Nokia expands the carrier’s surging interest in fiber. Those efforts have been core alongside its 5G network to the carrier’s re-birth following the fire sale of its DirecTV and WarnerMedia assets.

AT&T’s fiber network passed 27.8 million total locations at the end of the second quarter, with the carrier stating plans to reach more than 30 million locations within its 21-state wireline footprint by the end of 2025. AT&T’s fiber efforts also included a joint venture with venture capital firm BlackRock that launched in late 2022, and is targeted at expanding AT&T’s fiber footprint outside of that 21-state wireline footprint.

AT&T CFO Pascal Desroches during the carrier’s most recent earnings call added that “the better-than-expected returns we're seeing on our fiber investments potentially expands the opportunity to go beyond our initial build targets by roughly 10 million to 15 million additional locations.”

AT&T’s management had repeatedly stated that fiber is the most cost effective way to meet surging broadband demand.

“When we take a look at the data traffic that we serve over our wireless and our fiber networks, our network itself, we’re calling for a 5x increase in net traffic,” AT&T COO Jeff McElfresh said during a Bank of America investor event in 2022. “And no matter what your last mile serving architecture is, that’s going to require a lot of fiber. We’ve made that point pretty clear.”

Nokia keeps its fiber foot in AT&T’s network door The AT&T fiber deal is also a significant win for Nokia following the vendor being excluded from AT&T’s initial multi-billion-dollar open radio access network (RAN) push announced late last year. AT&T put most of its open RAN eggs in Nokia rival Ericsson’s basket, which basically slammed the door on Nokia gaining any significant open RAN business from the carrier.

That move also signaled the end of an equipment deal Nokia initially signed with AT&T in 2021, though the vendor was able to recently pocket an accelerated $163 million payment tied to that deal.

The exclusion came despite Nokia being anointed by ABI Research as one of the industry’s leading open RAN vendors based on innovation and implementation metrics.

Nokia’s management has also remained confident on its telecom equipment future, highlighting various RAN deals in Europe and more opportunities as more Western countries look to drive China-made equipment from their telecommunications infrastructure.