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Tellabs: Alcatel's Silent Partner at Sprint?

Light Reading
News Analysis
Light Reading
2/12/2003
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Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) has won a metro DWDM contract with Sprint Corp. (NYSE: FON), Light Reading has learned.

In fact, this contract relates to the same RFP Alcatel SA (NYSE: ALA; Paris: CGEP:PA) announced yesterday (see Alcatel Wins Sprint Metro DWDM Deal), say several analysts and sources close to Tellabs.

As Alcatel execs were fielding press calls, Tellabs, Alcatel, and Sprint all chose to stay mum on the news that Tellabs' 7100 Optical Transport System was put alongside Alcatel's 1696 on Sprint's approved menu for metro deployments nationwide.

Sprint spokeswoman Alice O'Brien says the original announcement about Alcatel's win was meant to trumpet the implementation of a network in Las Vegas (see Sprint Picks Alcatel for DWDM). There was a second announcement from Tellabs about metro deployments for Sprint in North Carolina and Florida that was being prepared but hadn't been released at the same time as Alcatel's announcement.

Sprint won't officially say how many vendors -- or which ones -- it has on its metro DWDM roster.

Alcatel spokeswoman Jamie Horton says Alcatel couldn't comment on who else may have been involved in the RFP procedure or final selection. "It's Sprint's territory," she says, and it's up to the carrier to announce its vendors. She says the metro network Alcatel reported building for Sprint in Las Vegas does not involve other vendors.

Tellabs spokeswoman Jean Medina acknowledged the vendor "has made no announcement" but at press time couldn't address the specific questions about why or whether there might be further news. From what Sprint says, however, a press release on Tellabs' Sprint deployments seems to be in the carrier's approval process and should be out shortly.

One analyst says all this may be much ado about very little. "This may not turn out to be a highly meaningful award," says Tom Nolle, president of network consultancy CIMI Corp., who also acknowledges having heard of the joint RFP win at Sprint some time ago. "Sprint may not do very much with this RFP." When Alcatel announced it yesterday, no terms were revealed, and it seems unlikely that any will be given for Tellabs. The award seems to be more in the nature of a standing approval "in case" Sprint should need some metro DWDM gear.

Nolle thinks upcoming Federal Communications Commission (FCC) rulings that could free up RBOCs might make any large-scale involvement by an IXC in the metro space questionable. "Right now, any IXC metro investment is a horrible risk. There's just no other way to say it," Nolle maintains.

Still, the Sprint win might serve Tellabs well in other areas. It seems to have been common knowledge in some quarters that as a result of the joint Sprint win with Alcatel, Tellabs might be looking forward to even more significant awards.

Back in November 2002, Communications Industry Researchers Inc. reported in a research note that Tellabs not only won Sprint's metro DWDM RFP along with Alcatel, but that the award was likely to open the way for Tellabs to make inroads at Verizon Communications Inc. (NYSE: VZ).

According to CIR's Mark Lutkowitz, VP of optical networking research, and Sam Greenholtz, senior analyst, Verizon's been eyeing the possibility of swapping in another metro DWDM vendor to replace Lucent Technologies Inc. (NYSE: LU), whose Metropolis EON platform has suffered some technical difficulties in trials.

In an interview for a separate story last week, a Lucent spokesperson said field personnel hadn't reported any trouble with the EON product.

What's the upshot? Tellabs and Alcatel are clearly in place on Sprint's metro DWDM menu plan, but what that means remains to be seen. At the same time, though, a win at Sprint could open the doors for both of them to do interesting business elsewhere, as the North American market picks up.

— Mary Jander, Senior Editor, Light Reading

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TruthKeeper
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TruthKeeper,
User Rank: Light Beer
12/5/2012 | 12:37:14 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
I agree, I hear the 1696 is still not running on all 8 cylinders.

I also hear Alcatel is ready to put the 1677 in service, but is it ready for prime time or will it stumble on the initial release like the 1696?
gea
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gea,
User Rank: Light Beer
12/5/2012 | 12:38:59 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
Actually, I was only with Tellabs for a few months before they shut down all the east coast stuff associated with the 7100.
And I didn't even know that WhiteRock had a Chicago office!

What I can say is that if the WhiteRock stuff ends up becomming muxing line cards in the 7100, then the 7100 might have a real future.

(Actually, my Tellabs contacts told me yesterday that they've been shipping a lot more of them since they closed us down in Ronkonkoma. So maybe it's not totally mothballed after all....)
pipesoflight
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pipesoflight,
User Rank: Light Beer
12/5/2012 | 12:39:04 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
I heard their facility in Plano was to be cut all the way down to about 300 employees. Anybody heard the same rumor? After they bought DSC their headcount was in excess of 5000. wow...
beachboy
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beachboy,
User Rank: Light Beer
12/5/2012 | 12:39:18 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
Alcabash, I may be wrong here, but then so may you ..
I don't think that the Alcatel gear was designed in Italy. The optical group shut in Plano was components (AO), Richardson suffered some cuts but are still alive and well.

pipesoflight
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pipesoflight,
User Rank: Light Beer
12/5/2012 | 12:39:19 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
I think that the Chicago site started by White Rock (later closed) had a Tellabs engineer or two. Did you know any of them?
pipesoflight
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pipesoflight,
User Rank: Light Beer
12/5/2012 | 12:39:24 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
Tellabs 7100 (formerly TITAN 6100) series of optical transport systems was to be sold along with White Rock networks under an OEM. Is that the case here?
gea
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gea,
User Rank: Light Beer
12/5/2012 | 12:39:25 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
If the 7100 is now on the Sprint list, I guess the question is whether Tellabs can de-mothball it enough to actually be functional if/when it gets rolled out in Sprint territory.

As I posted on the Alcatel announcement, I don't think this contract will ever be worth more than ones-ees twos-ees for either vendor. Metro DWDM is a niche that just isn't needed most of the time.

(But I hope I'm wrong...I helped demo that 7100 to Sprint and I still have some Tellabs stocks I was planning to write off this year!!!)
alcabash
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alcabash,
User Rank: Light Beer
12/5/2012 | 12:39:27 AM
re: Tellabs: Alcatel's Silent Partner at Sprint?
Alcatel did win the Las Vegas project a long time ago but Sprint did not allow them to issue a press release until the product was succesfully deployed in the field. The 1696 was still at beta stage and encountered many issues in the field, the fact that the engineers were based in Italy did not help and also that Alcatel in the US was unable to provide proper service and support after the closure of the optical group in Plano. Most of the issues have been resolved and Sprint agreed to issue the release.

In the meantime, Sprint looked for a better and more reliable long-term metro partner, ONI was the leading contestant for DWDM but the company was unable to provide a roadmap to cost reduction and Sonet integration. On the other hand, Tellabs was giving a strong push on Sonet with evolution to hybrid Sonet/DWDM. Tellabs is now clearly number one at Sprint, Alcatel is relegated to 2nd source status and is threatened by Cisco and Nortel coming back strongly.
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