Sky Buy Could Boost Lucent

Lucent Technologies Inc. (NYSE: LU) looks well positioned to bolster its European DSLAM sales following today's announcement that British Sky Broadcasting Group plc (NYSE: BSY) plans to invest up to $124 million in a mass broadband rollout in the U.K.

Sky is buying British broadband ISP (London: ESY) and plans to ramp up the U.K. operator's local loop unbundling (LLU) plans by investing between £60 million (US$106 million) and £70 million ($124 million) installing DSLAMs in 1,200 of 's (NYSE: BT; London: BTA) exchanges, adding to the 232 in which Easynet has already installed its own electronics. (See Murdoch's Sky Takes on BT.)

And Easynet says it's been sourcing its DSLAMs exclusively from Lucent so far, following an agreement signed in March 2002. A Lucent spokesman confirms that Easynet "has been a valued customer for our Stinger DSLAMs, and we look forward to working with them in the future." Lucent has just announced an enhanced access product set to become available in 2006. (See Lucent Unveils Access God Box.)

But with Sky's plans for Easynet now so extensive -- the new unbundling plan will cover the vast majority of the U.K.'s homes and business -- isn't it likely that the operator will seek at least one other source for its DSLAMs?

Not necessarily, says Tim Johnson at broadband research firm Point Topic Ltd. "I'm sure they'll put that possibility to Lucent... But if Easynet went with another supplier in addition to Lucent it would incur the extra costs associated with managing another relationship and managing the equipment in its network."

Johnson's also slightly skeptical that Sky will follow through on its grand plan. "A lot of companies have said in the past that they'll unbundle extensively, but once they start they realize just what it involves," he says. "And BT has a very competitive wholesale offer that's cost effective in many instances. The target for unbundling lines in the U.K. is set at 4,000 per day, but we're only managing 4,000 per week at the moment and there are only 120,000 lines unbundled in total, and I don't think that's BT's fault. It's just taking a long time to happen."

Sky's management, though, has proposed an aggressive target of having 1,000 exchanges unbundled "in the near term," and if a decision to dual-source is made, Lucent will face plenty of competition from vendors already supplying U.K. broadband operators.

Those vendors include global DSL leader Alcatel (NYSE: ALA; Paris: CGEP:PA), Huawei Technologies Co. Ltd., and Marconi Corp. plc (Nasdaq: MRCIY; London: MONI), while Ericsson AB (Nasdaq: ERICY) is in trials. (See UK ISP Uses Alcatel's MSAN, Tiscali UK Unbundles With Huawei, Marconi, Italtel Score at C&W, and NTL Trials ADSL2+ With Ericsson.)

Other vendors that Sky/Easynet can expect to hear from include Allied Telesyn International Inc., ECI Telecom Ltd. (Nasdaq: ECIL), Fujitsu Ltd. (Tokyo: 6702; London: FUJ), Iskratel Telekomunikacijski sistemi d.o.o., Keymile AG, PacketFront AB, Siemens Communications Group, UTStarcom Inc. (Nasdaq: UTSI), and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763). (See ECI, Keymile Debut IP DSLAMs.)

— Ray Le Maistre, International News Editor, Light Reading

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