As expected, Ericsson this week announced its acquisition of Entrisphere, a privately held fiber access company.

Terms of the all cash transaction were not disclosed but previous reports pegged it at $290 million. Ericsson and Entrisphere have had a partnership for the past few years to address carrier fixed broadband access requirements.

The acquisition gives Ericsson a gigabit passive optical network (GPON) fixed broadband access portfolio essential for High Definition IPTV and other IP-based services. North American carriers such as Verizon and AT&T plan to deploy GPON as part of their respective fiber-to-the-premises (FTTP) and fiber-to-the-node (FTTN) buildouts to deliver high-speed Internet access and video services to homes.

Some analysts believe Ericsson acquired Entrisphere to gain a more significant presence in these projects.

“The Entrisphere deal may have been a move to gain a firmer foothold at AT&T,” states Ittai Kidron, an analyst at CIBC World Markets, in a bulletin to investors. “Note that [they] were partners in a lost bid for Verizon's GPON contract [which Motorola, Tellabs and Alcatel won]. We believe the loss was in part due to uncertainty regarding Ericsson's commitment to the PON business. The deal now adds credibility to Ericsson’s wireline access/IPTV strategy.”

The market for IPTV services is as big as the fixed-broadband market - which, in another five years, will be approaching 600 million access lines, Ericsson says.

Other analysts believe Ericsson could have made a bigger bang to fulfill its North American fixed broadband access aspirations.

“If Ericsson is serious about becoming a major player in the N.A. wireline space, the Entrisphere acquisition is a little puzzling,” says Ken Twist, Vice President, Technology Consulting and Broadband Networks Practices at Ovum-RHK. “This certainly gives them a shot at some AT&T GPON business, but the volume is not guaranteed and you still have Tellabs, Motorola, Alcatel, and perhaps Calix to contend with. A more aggressive acquisition for Ericsson might have been Tellabs. While this would have been a lot more expensive, they would become the largest N.A. FTTP supplier right away.”

Entrisphere, which was founded in 2000, first deployed its fiber access system in 2003. Its GPON system is already in service in North America and is being evaluated for deployment by other global telecom carriers, Ericsson says.