Broadcom to Expand Its Horizons With Nortel Deal for Chips

Canadian phone giant Nortel Networks has agreed to use Broadcom Corp.’s chips to send high-speed Internet, phone and video services over traditional copper phone lines, the companies are expected to announce today.

The deal would help Irvine-based Broadcom straddle the fence between telephone carriers and its traditional customer base--cable TV companies and set-top box makers. It also would allow Nortel, the multinational telecommunications firm based in Ontario, to be the first to offer so-called VDSL--”very-high-data-rate digital subscriber line” service--on a wide scale.

Broadcom’s VDSL chip, developed jointly with Nortel, uses a turbo-charged version of DSL technology, which allows consumers to download data and images much faster than with commercially available modems.

VDSL reaches much higher speeds--up to 52 megabits per second--which lets phone carriers deliver digital video to consumers just like cable companies.

“Clearly, Broadcom is staking out the [telecommunication companies] as their turf,” said Cynthia Brumfield, principal analyst with Broadband Intelligence Inc., a Bethesda, Md.-based research firm. “Other telephone companies have dabbled in VDSL. But Nortel’s plan is the first we’ve seen of a large-scale [VDSL] roll-out.”

US West Communications last year jumped into the VDSL market. In a residential trial in Phoenix, the phone company began offering consumers integrated digital television and high-speed Internet access. The set-top boxes that residents used for this service use Broadcom chips.

Nortel plans to offer a similar service in Canada later this year, officials said.