BroadLight Inc., a three-year-old access chip startup, is betting the farm on the ascendance of passive optical networking (PON).

Broadlight, which will be displaying its wares at the upcoming OFC Conference, has created a series of chips designed to help system vendors easily build PON equipment, which uses passive splitters to siphon bandwidth to multiple users. Broadlight sees growing demand for more economical high-speed fiber links to homes and businesses.

"Most companies in DSL are looking into PON," says Broadlight CEO Amnon Presler, who formerly was president of RAD Data Communications Ltd. To help the cause, Broadlight offers a three-part PON solution that includes transceivers, media-access-control (MAC) chips for key PON elements, and software that conforms to specs adopted by the International Telecommunication Union (ITU).Presler says Broadlight's ability to offer all three PON elements sets it apart from other players. He also stresses the chips Broadlight's selling are geared to the very latest ITU specs that incorporate so-called Broadband PON (BPON), which adds wavelengths to PON architectures based on Asynchronous Transfer Mode (ATM) to better handle multimedia traffic (see Optical Access, page 3).

Presler says Broadlight is in trials with five companies, though he won't name them.

Broadlight's strategy seems an exercise of raw nerve, considering the competition, which includes the likes of NEC Electronics Corp. and Oki Optical Components Inc. Word has it that even more big chipmakers with Asia/Pacific connections are eyeing PON in the wake of market reports that sales are up and startups are getting funded (see Optical Gear Rising, Report Says and FlexLight Bags $3M More). There also are signs that the possibility of a PON surge hasn't escaped Intel Corp. (Nasdaq: INTC) (see Intel Invests in Optical Solutions and Intel Invests in Passave).

But will tiny Broadlight, with just 30 employees, get attention from customers? Presler is convinced Broadlight's timing couldn't be better. Government-subsidized fiber builds in Japan and Korea are leading to PON deployments not matched in the U.S. or Europe -- even though Presler has hopes for a larger stateside market by 2004. Carriers in these countries are open to ATM PONs, not Ethernet ones, Presler says. And they're ready to spend.

Indeed, Presler claims to be readying a bid for one of Japan's largest system vendors, a contract for parts that could bring in hundreds of thousands of dollars annually for many years.

Presler's got other big plans. His company is investigating ways to reduce the cost of PON components by integrating them and making them more efficiently. The startup is partnering with a Korean maker of optical transceiver parts that would give Broadlight the means to mass-produce cheaper PON parts in Asia.

"We're close to signing a contract for a joint venture that will include our electronic intellectual property and their mass production capabilities," Presler says. But he won't divulge any names.

It's an ambitious plan, and a challenging one. On the downside, the competition is fierce and the market in flux and unpredictable. The siren song of PON continues to fascinate and elude startups (see PON Pushers Huff and Puff). On the upside, funding's in the works, Presler says, to build on the $10 million the startup's already gleaned. A third round, including strategic investment from a major U.S. customer, should materialize before midyear, he says.

Bottom line? If PON prospects improve, it's likely to stimulate the market for parts like Broadlight's. But whether the recent flurry of positive PON news reflects a solid and global trend remains to be seen.

— Mary Jander, Senior Editor, Light Reading

For up-to-date information about the coming OFC Conference, please visit Light Reading’s Unauthorized OFC Preview Site.