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NXTcomm: GPON Wrap-Up

Raymond McConville
NXTcomm News Analysis
Raymond McConville
6/22/2007

AT&T Inc. (NYSE: T)'s GPON selection certainly set the tone for a frenzy of fiber-fed discussions at NXTcomm this week. (See AT&T Picks GPON Players.)

And with so much GPON gear already on the market, vendors are having to go to great lengths to make their offerings stand out. Some examples include:

ZTE
ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) VP for broadband products Jess Li says that the key differentiator for some of his new products is "bandwidth mining" -- the ability to let carriers provide only what consumers are requiring at any given moment. (See ZTE Unveils GPON Gear.) It sounds a lot like oversubscription, and that might be appealing to carriers selling to consumers. They're used to buying promises of high bandwidth rates with no guaranteed quality of service.

Zhone
Even though it's not a popular idea yet, Zhone Technologies Inc. (Nasdaq: ZHNE) says new interoperable ONTs attracted a fair amount of buzz at the show, so we stopped in for a closer look. (See Zhone Debuts Line-Powered ONT.) Hitachi
Scott Wilkinson, VP of Hitachi Telecom (USA) Inc. , says Hitachi's pitching GPON as a way to feed the wireless home. He says people want a high-speed connection in every room, and getting the fiber from the ONT to all those places is tough. (See Hitachi Shows GPON.)

So Hitachi is developing a wireless ONT that can transmit an HD-quality picture to any TV in the house. The unit on display in Chicago had a separate receiver plugged into a TV, but Hitachi is working on a TV that will have the transmitter integrated.

Wilkinson says wireless ONTs will be a hit, but some aren't convinced. "We've seen no interest from our customers to develop any wireless products yet," said Don McCullough, VP of marketing for Ericsson AB (Nasdaq: ERIC)'s Entrisphere group.

More notes and news
The GPON-related announcements came fast and furious this past week. Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA), for one, showed off its latest ONTs at its booth. Ericsson, too, was worth a look, as the company announced its GPON upgrades. (See Ericsson Upgrades GPON.)

Finally, here's a list of other noteworthy GPON-related happenings during the week that was NXTcomm 2007:



— Raymond McConville, Reporter, Light Reading

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mtrehearne
mtrehearne
12/5/2012 | 3:06:18 PM
re: NXTcomm: GPON Wrap-Up
I bet Luminent's GPON transceivers are in most of those ONT's shown here. They are in TLAB's and ALU's for sure - ALU has the lion's share of the GPON market now as evidenced by their statement on almost every press release:

Alcatel-Lucent is also engaged in more than 60 FTTx projects around the world, more than 30 of which involve GPON.

I believe every ALU ONT has a Luminent transceiver inside.
^Eagle^
^Eagle^
12/5/2012 | 3:06:16 PM
re: NXTcomm: GPON Wrap-Up
hahahahaha...

many of the luminent optical assemblies (OSAs) are actually made by someone else in asia and private labeled for Luminent.

Luminent's business is at risk due to this. the asian CM could make a relationship directly with ALU, Tellabls, etc. and cut out Luminent.

LOL, and even more to the point.. I believe that eventually the carriers themselves will buy directly from this and other CM's and cut out companies like Tellabs and ALU from the customer premise terminal business entirely. I believe that a few years from now.. best guess is between 3-7 years from now... Tellabs, ALU and others in the "PON" business will be relegated to only the OLT systems side of the equation and the ONT will be "generic" white label.

The same thing happened in DSL. When is the last time you saw a DSL modem at a home with an Alcatel or Tellabs (AFC) or other big company label on it?

The diplexor and triplexor business is a race to the bottom in terms of selling price and profits. The company who has largest scale, and who can "do china cheeper" and live off the narrowest of margins will win in the customer premise side of PON.

Luminent and those others who think there is long term value here are going to have difficulty in a few years. Unless they become the "generic" white label leader in ONT boxes.

back to Luminent.. dig deeper into their numbers and dig into where they actually source their PON transceivers. They are only a middle man in the distribution channel. This was different a couple of years ago when they made their own ONT transceivers. However, they could not keep up with the ramp and so turned to an asian CM to make the transceivers and private label them. There is nothing preventing the CM from coming to North America and first selling directly to the OEMs like Tellabs and ALU and then later sell directly to the carriers. Only barrier is the asian CM does not have the relationships with the OEM's that Luminent has and has minimal contact with the carriers.

Unless Luminent can find a way to ad real value to the product, or lower their own internal costs, they are at risk. Carriers easily switch from one customer premise vendor to another.

sailboat
Physical_Layer
Physical_Layer
12/5/2012 | 3:06:11 PM
re: NXTcomm: GPON Wrap-Up
Sailboat - that was a fantastic post. Just wanted to say that.
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