Light Reading
Having failed to negotiate a revised deal, Tellabs has pulled the plug on its Verizon GPON activities

Tellabs Kills Its Verizon GPON Efforts

Raymond McConville
News Analysis
Raymond McConville
4/2/2008
50%
50%

Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) has decided to cease all of its GPON (Gigabit PON) activities focused on its biggest customer, Verizon Communications Inc. (NYSE: VZ).

The company cited "economic reasons" for its decision, saying the move "serves the best interests of both companies and their respective stakeholders." (See Tellabs Ceases GPON.)

Tellabs stressed, though, that it is not abandoning the GPON market altogether. In its official statement today, the vendor noted it will continue selling BPON (Broadband PON) and other products to Verizon and will continue its GPON efforts elsewhere.

The vendor tells Light Reading it will now focus its GPON efforts on independent operating companies (IOCs) and the international market.

The news pleased investors, many of whom have had concerns about the viability of the Verizon GPON engagement: Tellabs saw its share price rise by $0.17, more than 3 percent, to $5.65 in early trading Wednesday.

A Verizon spokesman said Tellabs had been looking to renegotiate the price and deployment details of the GPON deal, first announced in July 2006, but the two sides could not reach an agreement. (See Alcatel Joins Verizon PON Party.)

"We couldn't reach a middle ground. We'll keep using Alcatel-Lucent (NYSE: ALU) and Motorola Inc. (NYSE: MOT)," said the spokesman, referring to Verizon's other two GPON vendors.

The decision comes as Tellabs finds its access business on thin ice. It lost its fiber-to-the-curb (FTTC) business in the BellSouth territories when AT&T Inc. (NYSE: T) scrapped the project, and has seen its BPON orders with Verizon slip as the company shifts towards GPON. (See Tellabs's Access Biz Under Fire.)

With most of Verizon's GPON business going to Alcatel-Lucent, Tellabs has decided that trying to sell GPON to Verizon was doing more harm than good.

Not everyone thinks that chasing Verizon GPON is a lost cause, though. Tellabs' decision comes just as Adtran Inc. (Nasdaq: ADTN) announced it is entering the GPON market with a view to winning a significant portion of Verizon's GPON business. (See Adtran Adds GPON.)

— Raymond McConville, Reporter, Light Reading

(12)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Page 1 / 2   >   >>
rahat.hussain
50%
50%
rahat.hussain,
User Rank: Light Beer
12/5/2012 | 3:44:26 PM
re: Tellabs Kills Its Verizon GPON Efforts
This is probably the best move TLAB has ever made.

Wonder how long it will take for other vendors to follow suit. ALU, MOT, are you taking cues?

About time someone stood up for positive gross margins!

odo
Raymond McConville
50%
50%
Raymond McConville,
User Rank: Light Beer
12/5/2012 | 3:44:25 PM
re: Tellabs Kills Its Verizon GPON Efforts
I agree and clearly so does wall street. TLAB was up 5 percent today on a day where all the majore market indices were down
hyperunner
50%
50%
hyperunner,
User Rank: Light Beer
12/5/2012 | 3:44:25 PM
re: Tellabs Kills Its Verizon GPON Efforts
Hi odo,
I'm with you buddy.

I think service providers sometimes get carried away with squeezing the last ounce of margin out of their suppliers. There's such a thing as a sustainable relationship.

hR.
ponguy
50%
50%
ponguy,
User Rank: Light Beer
12/5/2012 | 3:44:24 PM
re: Tellabs Kills Its Verizon GPON Efforts
I agree with the view here and in Phil's Blog that it was a bold move, if you can not see a path to make $ and are in poor product position then maybe it is best to walk away.

What I wonder is how Tellabs took the winning AFC solution, 3+ years of almost 100% market share, plus the head start and customer insight that comes with that position and managed to lose it all?
Raymond McConville
50%
50%
Raymond McConville,
User Rank: Light Beer
12/5/2012 | 3:44:23 PM
re: Tellabs Kills Its Verizon GPON Efforts
The loss of the Bellsouth business was less Tellabs' fault and more just another example of SBC doing what it always does and imposing its incumbent technologies and vendors on its new territories.
busted
50%
50%
busted,
User Rank: Light Beer
12/5/2012 | 3:44:23 PM
re: Tellabs Kills Its Verizon GPON Efforts
So, does this provide leverage to the remaining GPON suppliers? Will this market become healthy again (from a cost perspective)?
paolo.franzoi
50%
50%
paolo.franzoi,
User Rank: Light Beer
12/5/2012 | 3:44:23 PM
re: Tellabs Kills Its Verizon GPON Efforts

ponguy,

That was on top of the loss of the BellSouth business.

seven
rahat.hussain
50%
50%
rahat.hussain,
User Rank: Light Beer
12/5/2012 | 3:44:22 PM
re: Tellabs Kills Its Verizon GPON Efforts
One should not expect any GPON suppliers to be giddy at the demise of TLAB. All of them should be introspective and wonder about the grand revenue plans they sold to their boards and take a real close look at whether VZ will ever let them turn profitable.

Which brings me to the real issue at hand: Large Tier-1 carriers has always squeezed their vendors on pricing but there was a semblance of a chance that with aggressive cost-reduction, the OEM could turn some profits in Y3-5.

The carriers now continue to squeeze upfront and then dump their loyal suppliers around Y3-5! Now if they did that because of the emergence of a radically new technology, or lack of performance or support from the incumbent, one can understand the business rationale. But simply to squeeze out the last dollar and switch to an unknown supplier?

The carriers will feel the impact of their procurement strong-arm tactics only if other suppliers learn their own, i.e., walk away from loss-making opportunities.

Otherwise this growing oligopsony will eat away at the profits of the entire food chain.

odo

p.s. I guess I didn't say anything new, but feels good to vent anyway! :-)
rjmcmahon
50%
50%
rjmcmahon,
User Rank: Light Beer
12/5/2012 | 3:44:20 PM
re: Tellabs Kills Its Verizon GPON Efforts
This isn't a market force at work. This is a force of FCC "deregulation" combined with the fantasy of facilities based competition hitting a stone cold reality. This fantasy is about as legitimate as the 1996 Telco Act.

Reminds me of Yann Martel's book Life of Pi. We all ultimately pick our stories in which contain our beliefs. Many times the story can be more fun than reality (and drive some LR page views to boot!) Like Pi, I'd prefer to pick my own story rather than have the FCC and a bunch of free market ideologues shove some nauseating bullshit down my throat. The bullshit ultimately just gets us sick and the Doctors wonder why are breath smells so bad ;-)

What's the next story we'll choose? My preference is that we pick one that actually motivates behaviors which modernize our access networks.
rs50terra
50%
50%
rs50terra,
User Rank: Light Beer
12/5/2012 | 3:44:19 PM
re: Tellabs Kills Its Verizon GPON Efforts
With VZ deploying video using RF overlay, one may wonder why would they need GPON at all? BPON seems to be a good enough solution for data services. Could that have been a ploy to get ALU in?
If cost was the main consideration and Ethernet services are the main driving feature, they could have used EPON. Any thoughts?
Page 1 / 2   >   >>
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
LRTV Interviews
TWC Business Looks Beyond $3B

12|10|14   |     |   (0) comments


TWC Business Services chief Phil Meeks explains how his unit has reached $3 billion in annual revenues and what its plans are for next year.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
T-Mobile Lights Up 27 Wideband LTE Cities
Sarah Reedy, Senior Editor, 12/15/2014
Like Us on Facebook
Twitter Feed
Webinar Archive