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Ultra-Broadband

Calix to Buy OSI

Calix Networks Inc. today announced its first acquisition, as the company said it is buying fiber access gear maker Optical Solutions Inc. (OSI) for an undisclosed sum. (See Calix Buys Op Solutions.)

The deal gives Calix an entry into the GPON (gigabit passive optical network) market -- and a stronger position in fiber access overall -- while giving OSI a graceful exit as a standalone company that had raised more than $122 million by May 2002, but hadn't announced any new funding since September 2003.

Calix CEO Carl Russo told Light Reading today that the transaction is an acquisition, and Calix will be the brand going forward. But he also said that the combined company, though based in Petaluma, Calif., would make an effort to keep the talent that Minneapolis-based OSI has amassed over the years. The combined company will employ around 300 people.

To date, Calix says it has shipped more than 1.2 million DSL, Ethernet, and other ports on more than 6,500 C7 platforms. The company says it has 190 service provider customers in North America. But it has only just begun taking on the fiber access market, and it hasn't made much noise about GPON.

"The Calix C7 was built from the start with ample bandwith to handle GPON," said Kevin Walsh, Calix's VP of marketing, in an October conversation with Light Reading. "But ADSL 2+ and BPON are both viable for our customers today."

Even with newish BPON (broadband PON) capabilities and no shipping GPON product, the Calix's C7 has made a big splash in the Tier 2 and Tier 3 multiservice access space. "Most of the C7's innovation is in the merging of the NGDLC (next generation digital loop carrier) and the extensive transport capability," according to the latest Heavy Reading report on multiservice access platforms. (See HR: FCC Spurs MSAP.)

Calix, after winning a key deal with Sprint Corp. (NYSE: FON), had started to develop some GPON capabilities and had even approached OSI to do a joint development deal because it found the development process tough -- and the customer demand heavy. (See Nortel, Calix Get Access at Sprint.) "While everybody talks about fiber to the prem as just a commodity sort of thing, it's actually not trivial," says Russo. "And when you go and talk to customers about what they deploy, they'll tell you OSI and the reason is because it works."

OSI began shipping its central office GPON device -- the FiberPath 590 OLT+ -- in June. But the company has been concentrating on fiber access since it was founded in 1994, quite a bit longer than most players in the space today. (See Optical Solutions Ships GPON Platform.)

And, while fiber access networks are just catching on in a lot of places, OSI says it already has more than 140 customers serving "close to" 100,000 FTTP subscribers, an average of just a little more than 700 FTTP customers per network served.

Combined Calix and OSI say they'll have more than 70 IPTV deployments working right now -- though not all are live with customers -- and more than 300 total service provider customers, about 175 of which are doing fiber access deployments. Amazingly, the two companies only have about 17 overlapping customers, one of which is Sprint, Russo says.

Russo says Calix will continue to support OSI's products and there will be joint development for the C7 as well, including a GPON blade that will ship sometime in mid 2006.

Finally, though a major GPON-related carrier RFP is slated to drop this week from the nation's three largest phone companies, Russo says that's not what is causing Calix and OSI to combine -- but he does note that Calix will be "better positioned because of it."

— Phil Harvey, News Editor, Light Reading

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chengjinzhu 12/5/2012 | 2:54:37 AM
re: Calix to Buy OSI It was time for Calix to get serious about PON and it was time for OSI to find a way to another level. I'm happy for both of them. Just a couple of questions? Is either profitable yet? And 100,000 subs with an average of 700 per account - that might be the leading position in Tier 2 and 3 but it's about a quarter's worth of footprint at one of the big boys (NTT, VZ, etc.). I suspect it must have been for less than the VCs have put into OSI.
paolo.franzoi 12/5/2012 | 2:54:36 AM
re: Calix to Buy OSI
OSI was not profitable. Calix is close to profitable, not clear if they are or are not.

They will have to keep both platforms alive plus Calix's new platform. Seems like a lot of R&D dollars.

seven
optical Mike 12/5/2012 | 2:54:35 AM
re: Calix to Buy OSI Your statement that OSI was not profitable is inaccurate, I would expect you should to know your facts before making a statement about something you apparently have no actual knowledge of.
That is unless your looking to pursue a career in politics
paolo.franzoi 12/5/2012 | 2:54:34 AM
re: Calix to Buy OSI
OSI has lost money from the day it was founded until today.

I stand by my statement and the financial statements they sent out as part of their package to potential buyers.

seven
optical_man 12/5/2012 | 2:54:34 AM
re: Calix to Buy OSI Optical Mike says,
"I would expect you should to know your facts before making a statement about something you apparently have no actual knowledge of.
That is unless your looking to pursue a career in politics.."


I would add to the end of that sentence:

" or as a Venture Capitalist looking to sell your little company to a bigger fish."

nwave 12/5/2012 | 2:54:32 AM
re: Calix to Buy OSI Obviously done by Calix to get OSIs customer base
and home-spun GPON technology. I would imagine some significant integration problems. I would think a better effort would be to shrink the C7 down into a Compact-BLC like Zhone has. This might have been a better use of time and money.
rs50terra 12/5/2012 | 2:54:31 AM
re: Calix to Buy OSI Can Calix add GPON to the C7? I thought the C7 is an ATM based system, whereas GPON is "not exactly" ATM. Or is Calix planning to continue the OSI platform.

In any case, I am happy for the OSI folks.
paolo.franzoi 12/5/2012 | 2:54:29 AM
re: Calix to Buy OSI
GPON runs in ATM mode, GEM mode, or dual mode (both ATM and GEM). However, nobody (except Motorola) is even thinking about doing ATM mode. Even with an ATM system, Ethernet is just a SAR away.

seven
ax-s 12/5/2012 | 2:54:26 AM
re: Calix to Buy OSI The C7 is not ATM based, it was designed with ATM interfaces to fit into legacy networks. This is something that their competitors spread ad nauseum. The core is 64 byte fixed length packet, not 53 byte cells.

It appears that Calix wants the customer base, and access to the GPON technology rather than re-inventing the wheel.

This will be psoitive for both companies.
naturalwonders 12/5/2012 | 2:54:25 AM
re: Calix to Buy OSI From the looks of this it seems that Calix purchase of OSI is a purely North American play. OSI seems to have no International customers and Calix appears to have little presence outside the US. Please comment if Im wrong on this I just breezed through press releases.

Is this a post911 American startup reality, cost reality, or am I right to suspect this is more a technological reality. These type of companie seem to play well in Peoria but not so well in Shanghai ,Stockholm or Sao Paulo. Based on the Asian and Europes rapid uptake in Ethernet services P2P and EPON it be interesting to see if
they can successfully sell GPON technology outside the confines of North America ITCOs and Telcos where legacy infrastructure structure demands it.

The article below seems capture the current Asia market reality pretty succinctly when the author says "Asian carriers are skipping, or have already skipped, the intermediate-and expensive-step of deploying large-scale ATM-based networks."

http://www.convergedigest.com/...

Any comments appreciated.
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