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Optical/IP

Behind Kestrel's RBOC Contract

Earlier this week Kestrel Solutions Inc. announced it had signed a contract with an unnamed Regional Bell Operating Company for its optical transport product, the TalonMX (see Kestrel Wins RBOC Contract ).

The company has refused to release any details about the deal including the name of the RBOC, but Light Reading has learned from sources close to the company that the RBOC in question is SBC Communications Inc. (NYSE: SBC).

The news should come as little shock since it was well known in the industry that the company had been in trials with SBC. Kestrel had been working for a long time to complete the Osmine certification program and had been rumored to be working closely with SBC on this effort.

The company has also remained tight-lipped about the financial details of the deal. No amount was given in the press release, but sources estimate it to be valued $10 to $20 million. Kristin Foss, director of product management for Kestrel says that products have already shipped and revenue has been recognized this quarter.

The TalonMX is a 10Gbit/s optical transport system that uses frequency division multiplexing instead of wave division multiplexing. This technology crams multiple streams of traffic into a single optical wavelength, enabling the optical network to use lower grade fiber and a single laser.

Another company, Centerpoint Broadband Technologies Inc., also markets FDM technology.

“This should be a boost for Centerpoint since it’s the first time someone has actually bought this technology,” says David Gross, an analyst with Communications Industry Researchers Inc.. “Ultimately, I don’t think the technology will be all that significant. WDM deployments will certainly far outnumber FDM, but it shows at least someone is using it.” Kestrel has been going through a transitional period recently (see Kestrel Quietly Reconfigures). A deal to acquire a small 7 person startup collapsed last month, workers were laid off and the company talked about changing its product direction (see Kestrel Takes Another Turn).

"I think that Kestrel needs to make an effort to clarify their strategy,” says Gross. “There are a lot of people who aren’t sure what is going on there. Are they going to compete with these companies or sell them subsystems?” Kestrel’s Foss says the company’s product road map hasn’t stopped even though the company is still looking to develop subsystem components. “We are looking at the possibility of developing subsystem relationships with other companies that do not compete with our 10 Gbit/s product,” she says.

-- Marguerite Reardon, Senior Editor, Light Reading
http://www.lightreading.com

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