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AT&T opens the door on its copper network shutdown
As AT&T pursues regulatory approvals to shutter its aging copper-based network across the country, the operator is offering regulators a view of falling demand in Oklahoma.
DZS aims to complement and broaden its mobile transport portfolio by acquiring Optelian, an Ottawa, Canada-based optics company that will tack on coherent technologies and provide DZS with a path toward 200-Gig and 400-Gig transport capabilities.
The deal for Optelian marks the first acquisition for DZS since Charlie Vogt took the helm of the edge network specialist formerly known as Dasan Zhone Solutions in August 2020.
"It was very complementary to what we're doing in our own play in the mobile xHaul and mobile transport part of our portfolio," Vogt said, noting that Optelian has already made it through the certification phase with some tier 1 and tier 2 North American service providers that aren't yet being named.
He expects the deal to accelerate DZS's time to market in the US and Canada and offer help to DZS in other regions as well.
"We don't see this as a North America-only play, even though Optelian has had success in North America," Vogt said. "We see it as a global offering that would complement our existing fiber-to-the-home as well as our mobile Anyhaul portfolio."
DZS also believes the deal will help it expand a backhaul business that stopped at 100-Gig, with an eye toward opportunities driven by 5G deployments, RAN (radio access network) virtualization and open RAN projects now being embraced by customers such as Japan's Rakuten.
"We see the densification of mobile networks, the deployment of 5G and new frequency bands [and] the backhaul requirements and capacity requirements in mobile networks ... increasing by leaps and bounds," Andrew Bender, DZS's chief technology officer, said.
Potential cable play
Bender also expects Optelian to provide help to DZS as coherent technologies, typically used in long haul and backbone networks, start getting stitched into the access network amid the growing demand for speed, capacity and densification in mobile networks.
The addition of coherent optics might also play a role in cable as operators start to gravitate toward the technology for use in their widely deployed hybrid fiber/coax (HFC) access networks. In 2018, CableLabs completed the first two specifications focused on point-to-point coherent optics technology that aims to squeeze out more capacity from installed fiber.
But, boiled down, the deal is about an access vendor expanding further into transport and taking advantage of access and edge technologies to support 5G xHaul, Julie Kunstler, senior principal analyst at Omdia, explained in an email. "5G xHaul is a major concern for operators – cost and topology – access vendors are expanding their product portfolios to support the transport market," she added.
"I think the addition of Optelian to beef up their transport and middle-mile credentials will help them land similar Xhaul opportunities," Jeff Heynen, VP of broadband access and home networking at Dell'Oro, noted.
Competition concerns
The deal might also alter the competitive positioning of DSZ. Optelian's main competitors in North America include major suppliers such as Ciena, Cisco Systems, Fujitsu, Infinera and Nokia, as well as smaller players such as Adva, Ekinops and Ribbon Communications, according to Jimmy Yu, a VP at Dell'Oro Group that specializes in microwave transmission and mobile backhaul and the optical transport market.
"The WDM Metro market is sized at about $8 billion. However, as a small private company, Optelian's share of the market is very small," Yu noted in an email.
Yu views the deal as complementary, with DZS now in position to add Optelian's optical transport equipment to DZS's historic focus on access equipment. That combination could likewise benefit DZS when bidding for business coming out of the Rural Digital Opportunity Fund (RDOF), he added.
Vogt, however, doesn't expect DZS to collide head-on with traditional optical transport players such as Ribbon, Ciena and Infinera once Optelian is added to the portfolio. He views them as more synergistic, stressing that DZS plans to retain its focus as an edge access network specialist from a transport standpoint rather than in the core of the network. He also believes a move toward open standards will allow DZS to be part of a mix that includes other players.
"The whole mobile transport space, especially with the emergence of 5G and open RAN, is evolving," Vogt said.
Financial terms of the deal were not disclosed, but it's expected that employees of Optelian, including current CEO David Weymouth, will join DZS following the closing.
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— Jeff Baumgartner, Senior Editor, Light Reading
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