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Nortel Networks Corp.s recent US$2 billion contract to supply equipment and services to telecom firm Verizon Wireless is a huge shot in the arm for Nortel as well as Canadian telecommunications, according to one industry insider.

The deal will help Verizon Wireless deliver faster access to music, video and other features over cellular phones.

It may also lead other wireless carriers to bump up investments this eyar, says Roberta Fox, principal of telecommunications consultancy firm Fox Group in Mount Albert, Ont.

This is certainly a vote of confidence in Nortel, Fox said. She said Verizons plunking down of US$2 billion over the next five years for radio base stations, optical networking hardware, switches and professional services may be one of the few big deals in the industry of late.

We havent seen big deals like this in recent years, Fox said, adding that if other carriers follow Verizons lead and increase their technology spend, it would be good for the market.

The analyst noted that Brampton, Ont.-based Nortel had promised it was staging a comeback, and had delivered on that. The deal with the second largest wireless carrier in the U.S. would assure investors that the troubled company was heading back on the right track, Fox said.

The popularity of Internet services such as user generated videos, online gaming and music is driving an explosion in bandwidth demand, said Richard Lowe, president, mobility and coverage, core networks division, Nortel in a statement.