BellSouth: The IMS SuperBowl?
The BellSouth deal is important not just for its size, but because it marks the most significant commitment by an RBOC to a long-term IMS (IP Multimedia Subsystem) strategy, from which residential VOIP is just the first service to be rolled out. The winner of the deal may appear to be the vendor most committed to, and perhaps most thoughtful about, delivering on the promise of IMS.
It looks to be coming down to a fight between (NYSE: LU) and (Nasdaq: SONS), with Lucent now seen as the favorite.
Both Lucent and Sonus have been furiously working on their IMS technologies and strategies in preparation for the RFP. Light Reading reported in June that Sonus had won a big softswitching component of the BellSouth network, thus positioning it as a favored supplier, but it appears our sources may have jumped the gun. Lucent's heavy push into IMS has been paying some dividends, and it is now seen as the favorite for the IMS deal, say several sources familiar with it. (See Source: Sonus Has BellSouth Deal.)
But there is little consensus. On Wednesday, two analyst briefs surfaced -- one from Credit Suisse First Boston Corp., the other from UBS Investment Research -- predicting different winners in the deal. CSFB analyst Paul Silverstein said, with “less than 75 percent” confidence, that Sonus had won, while UBS analyst Nikos Theodosopoulos said “a decision has been made,” and Lucent is the “likely” winner.
BellSouth spokesman Todd Smith took the question upstairs to CTO Bill Smith himself, who says the winner of the RFP has absolutely, positively “not been announced.” (See BellSouth Q2 Profits Down.)
The contract winner may also find itself well positioned for similar IMS and VOIP deployments at (NYSE: SBC) and Cingular Wireless LLC, analysts say.
As CTO Smith said in a speech here Tuesday, the RBOC plans on launching a residential VOIP offering by the end of this year, and a core IMS strategy to deliver new converged services in the future. (See IMS Could Push Carriers Toward VOIP.)
Lucent and Sonus management at the VON show were tight-lipped on the matter, saying a “quiet period” is in effect.
The ultimate winner of the deal will provide an integrated VOIP and converged services delivery architecture that will likely include softswitches, gateways, and IMS platform software.
No one’s discounting the possibility that the deal could be split between a primary and secondary supplier. But some industry observers believe service providers are becoming less interested in "vendor diversity” and more interested in avoiding the costs of making different flavors of gear and software talk to each other in the network.
UBS valued the BellSouth contract at between $200 and $400 million, or $20 to $35 per BellSouth customer. The contract may yield even more revenue as the IMS architecture grows and evolves within BellSouth, UBS’s Theodosopoulos says. (See IMS Guide.)
“We believe they will first do a residential VOIP offering, then ultimately go to IMS to foster an environment where they can do wireline/wireless convergence and maybe even video,” Theodosopoulos told Light Reading Thursday.
— Mark Sullivan, Reporter, Light Reading