Although most vendors claim a love of independents, the fact is many would rather sign big contracts with big carriers. How the relationship is changing faster than ever.

Huawei Technologies, the Hong Kong-based vendor that has piqued the interest of the biggest traditional telecom manufacturers, is showing up in some very odd places — such as on the doorsteps of some independent telcos.

Despite its history of providing gear and services under multimillion dollar deals with the likes of China Telcom and BT, Huawei is still considered a newbie on the American telco scene.

And before signing any big deals with any of the Bell companies, the company would like nothing more than a reference customer, according to Johnny Ku, Huawei's vice president of sales for next-generation wireless and wireline networks, who has been trekking across some very non-urban landscapes for about a year to talk to independents.

Five years from now, if Huawei lands a couple of contracts with a Verizon or an AT&T, the company likely will be as scarce in the independent community as sushi at an NTCA Expo. For now, though, Huawei (or FutureWei, its Plano, Texas-based North American subsidiary) is taking what can be viewed as a traditional route into the U.S.

Launching a company or a technology with independent telcos is a safe, prudent and proven strategy. Fiber to the premises (FTTP), IPTV and a host of other technologies now in vogue with RBOCs made their debuts in small towns across the country. Out of the glare of the big city media spotlight, vendors have been free to run technology through its paces in real-world environments without fear of widespread public embarrassment if something goes wrong. Likewise, independents traditionally have been more receptive to start-ups, in part because the vendors have been willing to spend the time to establish direct relationships.

It's hard to imagine a company like Nortel Networks even existing in the U.S. market if not for its independent telco relationships. And, in fact, there are plenty of examples of vendors that have been content in the role of providing equipment and services to independents, instead of reaching for that big deal with BellSouth that might be just around the corner. Indeed, many an executive at those companies admits it would be impossible to provide for “the care and feeding” of an RBOC without major expansion, which in and of itself can be too risky.

But what happens when vendors start breaking into the Bell world? Do the relationships built with independents always fall by the wayside? In some cases, the answer is clearly yes. In other cases, it depends on whom you ask. Bring up the name Nortel with smaller incumbent carriers, and the reaction rarely includes any shades of gray.

“With Nortel, we don't see anybody coming around here,” said Lonnie Peterson, president of Telephone Service Co., a small telco in Wapakoneta, Ohio, which despite the lack of face time, continues using Nortel switches.

Not every carrier is so charitable, though. “If I could rip out their switch today, I'd do it in a heartbeat,” said one general manager of a Midwest telco who didn't want to be identified because he still must rely on the vendor for support and updates.

At the other end of the spectrum are telcos like Empire Telephone, which is using Nortel's latest DMS-10 software download as part of a migration to voice-over-IP service.

“We're on our sixth patch for Nortel, and as they've gone and found different problems, they've been great,” said Joe Gottwald, central office engineer at Empire Telephone.

Likewise, J.R. Brumley, CEO of South Slope Cooperative Communications Co. in North Liberty, Iowa, said he opted for Nortel's 601 software on his DMS-10 largely for technical reasons.

“I had different choices that I could have gone with on my migration path to softswitch,” he said. “As far as Nortel is concerned, I'm not even sure who our sales rep is. I went that way because of our history; I went that way because of their reliability; and I went that way because of their pricing. They bent over backward to make things happen for me, and I have the utmost respect for what Nortel did.”

Nortel, for its part, said it rarely hears negative reaction from independents and points specifically to the DMS-10 development program as proof that it's dedicated to the market.

“Some vendors come into a solution with the rural market and then move on when they get a big customer,” said Rob Scheible, senior manager of carrier voice and multimedia marketing for Nortel. “The DMS-10 has had a two-pronged strategy, and one is to have products that are focused on the smaller carriers. We don't sell it to the huge carriers on a regular basis. This is a product that Nortel has added to and developed. We're not moving out of that market.”

In some ways, Nortel has had a unique role as the dominant provider of switching to independents. In fact, many carriers don't necessarily feel a need to have a close relationship with every vendor. Jason Neumeier, chief technology officer of TSC, said he doesn't mind buying equipment like batteries, cabinets and cable through distributors. Even more technical gear, such as routers, is easy enough to buy through third-party vendors. With newer technology, though, particularly access equipment, he wants to have a finger on the pulse of the vendor behind it.

“Some vendors that actually go through channels, the only time you see them is when you go through the evaluation,” he said. “That hurts a lot because you want to build that relationship. With the big items, you need a direct relationship with the vendor even if they go through channels.”

To be fair, serving the independent community can be taxing, particularly when compared to dealing with Bell companies. With potential customers often located hours from even regional airports, the time required to build relationships via face-to-face meetings is high. Moreover, because most independents have miniscule buying power compared to a company of Verizon's size, many large vendors simply don't see enough payback to dedicate significant resources to the market.

Scientific-Atlanta, for example, is just starting to make its mark in the telco world with the likes of SBC and Verizon. And although the company is happy to provide set-top boxes and transmission gear to independents, it likely won't be showing up in every rural town, said Todd Waters, director of business development for SA's IP Subscriber Networks Group.

“If they're only buying analog products from us and the dollar amount is small, we'll go through distribution,” he said.

Whether that alienates potential customers depends on which carrier you ask. Some carriers clearly want to put a face to a company. Others say it's a benefit to buy from vendors supplying the RBOCs because the larger carriers have been able to wring out much of the cost. The question seems particularly topical in the access market.

When Tellabs acquired AFC, a traditional independent supplier, several competitors predicted that AFC would exit the independent world to focus on Tellabs' larger-customer base. Even before the acquisition, several were using the vendor's major contract to provide Verizon with FTTP gear against it. Tim Doiron, group marketing manager for Tellabs, said the company can target both segments with similar technology and not ignore either.

“Tellabs is committed to providing deep-fiber access solutions,” he said via e-mail. “We continue to evolve our product line with multiple deep-fiber initiatives, including FTTC, BPON and GPON. We believe this approach is both necessary and appealing to meet the needs of RBOC and IOC customers alike.”

Depending on the vendor, though, targeting independents brings with it a certain safety. Mory Ejabat, CEO of Zhone Technologies, said that while the company does generate some revenue from the Bell companies, there's significant risk in focusing too much at the upper end of the market. Not only does a company risk alienating its existing base, it's become increasingly difficult to break the stranglehold incumbent vendors have on the RBOCs.

“We got burned when [BellSouth, SBC and Verizon] came out with the RFP for the next-generation fiber-to-the-premises project,” he said. “We spent a lot of time and money, and at the end of the day, they gave it to their existing vendors and said, ‘Here, make us a system that looks like this.’”

Other vendors also play off the perception that some suppliers will flit in and out of the independent market. Mitch Flemming, vice president of sales at Calix Networks, which use Nortel as a channel for the largest carriers, said the company doesn't attack that model. However, it does focus on the fact that independents want suppliers that can be trusted to follow through on their commitments.

“The whole basis of our sales model is to create a frictionless environment,” he said. “We want to be a very consistent vendor.”