Lantern Deal Lifts RPR

Today, startup Lantern Communications Inc. is announcing a new partnership with Asian reseller, Network Value Components (NVC). Lantern already has a reseller agreement with NEC Corp. (Nasdaq: NIPNY).

News of the deal provides further evidence that Lantern and the entire RPR movement are still alive and kicking.

Lantern, which once employed more than 100 employees, is now down to about 30. It has raised $84 million since 2000 in three rounds of funding, and is now out looking for more cash to keep it alive. Earlier this year it had been rumored to be on the sales block (see Lantern Flickering?). Some sources said that it had offered itself to NEC, but the offer was rejected. Others suggested that Ciena Corp. (Nasdaq: CIEN) was looking at the company. But that didn’t happen. Ciena recently announced a partnership with Luminous Networks Inc. (see Ciena Links Up With Luminous).

But now it looks as if there could be some light left in the Lantern. Kshitij Kumar, director of technical marketing for Lantern, says it’s getting some traction in Japan and other parts of Asia and Eastern Europe.

In general, carriers seem more interested in RPR lately. AT&T Corp. (NYSE: T), which deployed pre-standard RPR gear from Nortel Networks Corp. (NYSE/Toronto: NT) in a pilot network in New York City last year, is talking about expanding deployments to other cities, says a Nortel spokesman (see Who Knew? Big Carriers Like RPR).

“We’ve been hearing a pretty steady drumbeat of interest,” says John Hawkins, marketing manager for optical Ethernet at Nortel and chairman of the Resilient Packet Ring Alliance. “But I think the technology has matured over the last few months, and there’s a better level of understanding of what the technology can be used for. Carriers seem to have gone beyond just conversation to really understanding the technology.”

Other Nortel RPR customers, including Bell Canada (NYSE/Toronto: BCE), KDDI Corp., and MCI (Nasdaq: MCIT), are also talking about expanding their packet ring services.

Some of the U.S. regional Bell operators seem to be showing interest, too. Rumor has it that BellSouth Corp. (NYSE: BLS) is talking more seriously about deploying RPR to build a metro Ethernet service. The carrier announced in June that it selected optical gear from Cisco Systems Inc. (Nasdaq: CSCO), which now offers an RPR service blade (see BellSouth Chooses Cisco (and Lucent)). SBC Communications Inc. (NYSE: SBC) is also believed to be getting more serious about the technology.

“In the last three to four months carriers have been a lot more serious in their conversations about RPR,” says Scott Clavenna, chief analyst at Heavy Reading. “The standards didn’t move as quickly as everyone thought they would, and a lot of the big carriers were just waiting for a standard to be finished.”

After two and a half years of debate, the Institute of Electrical and Electronics Engineers Inc. (IEEE) standard for RPR is in its final stages. In July, the group approved the latest Working Ballot of the standard, and the entire organization will likely ratify it in the first half of 2004.

Even with the increased momentum and interest for RPR, startups like Lantern will still have a difficult time. Nortel and Cisco, which have each been shipping pre-standard technology for at least two years now, have a big headstart in the market. Nortel says it’s shipped more than 20,000 RPR ports, and Cisco boasts over 250 customers.

Other large companies also are developing RPR strategies. Siemens AG (NYSE: SI; Frankfurt: SIE) now has a product it’s selling. And Ciena now has an RPR story through its partnership with Luminous.

But Clavenna says that Lantern and Corrigent Systems Inc., another surviving RPR startup, could find a niche for their products. Once the standard is complete and companies have demonstrated interoperability, these companies could get second-source contracts. Clavenna says he also expects the smaller players to win business in emerging markets like parts of Asia, Eastern Europe, Latin America, and Africa.

Light Reading would like to get your feedback on RPR. Check out this month's research poll and tell us what you think: Resilient Packet Ring.

— Marguerite Reardon, Senior Editor, Light Reading