Roughly two years after AT&T Corp. (NYSE: T)sent out a request for proposal (RFP) for ultra-long-haul DWDM equipment, the project looks to be delayed, again.

According to sources in the industry, the field testing portion of the RFP was supposed to begin in either the first or second quarter of 2003. But now, they say, those plans have been pushed back to at least the fourth quarter.

Michael Dickman, a spokesman for AT&T Research Labs is adamant that the project has not been halted in any way, but he confirms that the next stage of testing won't likely happen anytime soon.

"The RFP is still ongoing," he says. "We haven't set a timeframe for the trials to begin, and we don't know when a final decision will be made."Ciena Corp. (Nasdaq: CIEN), Corvis Corp. (Nasdaq: CORV), Lucent Technologies Inc. (NYSE: LU), and Nortel Networks Corp. (NYSE/Toronto: NT) have been mentioned as the top candidates on the carrier’s shortlist. Corvis has been considered a favorite for the past couple of months. The potential contract might represent do-or-die business for Corvis, whose quarterly revenues have dwindled to the single-digit millions.

It's likely that startups like Ceyba Inc., Innovance Networks, and Xtera Communications Inc. have not made it past the lab-testing phase, according to several sources. But AT&T Labs has not confirmed which vendors are still being considered.

"We are not currently looking for more vendors," says Dickman. "We feel we have a sufficient number of candidates to review for the project."

This latest news further pushes out the date that AT&T will likely deploy any of this gear. Most experts had been predicting deployments sometime in 2004. But if field testing won't occur until the end of 2003, deployments could be pushed back to 2005.

“I haven’t heard anything about the trials in a long time,” says Mark Lutkowitz, VP of optical networking research at Communications Industry Researchers Inc. “It would surprise me very much if anything got done with this ultra-long-haul RFP in AT&T’s network for a long time.”

The testing process first began in late 2000 when AT&T issued the RFP. It then received written proposals from many vendors. In 2001, the carrier began testing gear in its labs. The final stage of the selection process was to be a two-part field-testing program, in which only select vendors would be asked to participate.

Several industry sources claim that those who participated in the lab trials were asked to pay a fee of $2 million to $3 million just to get into the test. Dickman of AT&T wouldn’t confirm or deny this, saying that the details of the RFP are proprietary.

The trial has dragged on so long that even without the supposed lab testing fee, all of the vendors participating in the process have already spent hundreds of thousands, if not millions, of dollars to win this contract. But the contract that was once valued at about $50 million is likely to be worth much less than that. AT&T wouldn’t discuss details.

“Whoever wins this contract won’t likely recognize much revenue from it,” says Lutkowitz.

— Marguerite Reardon, Senior Editor, Light Reading