Nortel: Joining the GPON Race?
Nortel's GPON offering is a spinoff of one of its optical systems, writes Chris Umiastowski, an analyst with TD Newcrest, in a note issued Wednesday.
The GPON RFP is a joint effort of the three U.S. RBOCs: (NYSE: BLS), (NYSE: SBC), and (NYSE: VZ). All three are working on residential fiber buildouts, primarily to deliver TV and video services to the home, and the RFP reportedly incorporates their three disparate strategies. (See GPON RFP Weighs In.)
Incumbent vendors (NYSE: ALA; Paris: CGEP:PA), Motorola Inc. (NYSE: MOT), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) were expected to respond to the RFP. (See GPON Vendors Line Up.)
Adtran Inc. (Nasdaq: ADTN), Hitachi Telecom (USA) Inc., and (NYSE: LU) are possibilities too, as some analysts have pointed out.
But Nortel? The company's latest access foray was in DSL, and that ended in 2001. (See Zhone Acquires Nortel's Access Gear and Nortel CEO: We Blew It on DSL.)
Since then, Nortel has teamed up with Calix Networks Inc. and others for access work. Calix is getting into the GPON game itself with the planned acquisition of Optical Solutions Inc., so Nortel's moves would indicate it isn't going to extend the Calix partnership to the fiber realm. (See Nortel Gets Back Into Broadband, Nortel, Calix Get Access at Sprint, and Calix to Buy OSI.)
Umiastowski doesn't find this too surprising. "Our view has always been that, if Nortel wants to be a real player in broadband access, they have to own a product line, not just partner with a small private company," he writes.
His report says Nortel's optical line terminal (OLT), the box that goes on the carrier's side of a PON connection, consists of a certain Nortel optical metro platform with a new card. To develop the optical network unit (ONU), which sits on the customer's side and has to be cheap, Nortel has enlisted the help of an electronics design company, Umiastowski writes.
Umiastowski isn't certain whether Nortel has its alpha hardware ready. That might seem a problem, given that the RFP reportedly demands equipment to be shipping in volume in the first quarter of 2006, but he says that's no big deal. "Industry talk is that nobody will actually be ready by then," Umiastowski writes. "So we figure Nortel has a reasonable chance of being more or less in line with its timing."
As for the effect on Nortel's stock price, Umiastowski is optimistic, noting that any benefit from GPON will be an unexpected bonus to Nortel's results. "The FTTH market is immature, and Nortel stands a chance," he writes.
Nortel officials were not available for comment.
— Craig Matsumoto, Senior Editor, Light Reading