Nortel: Joining the GPON Race?

(NYSE/Toronto: NT), of all companies, has responded to the major GPON request for proposals (RFP) in the United States, according to one analyst report.

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

Mark Sebastyn 12/5/2012 | 2:50:31 AM
re: Nortel: Joining the GPON Race? Not a big surprise considering you see them selling the 6500 platform to Comcast. It's only a matter of time until people want these hybrid SONET/SDH/Ethernet boxes to speak to the last mile. They already have GE/10GE ports to connect up to IPDSLAMs, why not put a 2.5G GPON OLT port on as well?
Physical_Layer 12/5/2012 | 2:50:30 AM
re: Nortel: Joining the GPON Race? Schmitt - good point. I think Bell Canada is using the OME 6500 to connect to Stingers in teh field. I guess if they eventually wanted to do FTTH why not do it right from the same equipment in the CO.

Does anyone have any thoughts on the following: When a provider decides to do FTTH instead of DSL, does it make sense at all to "upgrade" the DSLAM in the field (assume it's not a CO-based DSLAM)?

A bit more detail: it seems that if carriers do a FTTN deployment now, they are doing it so that they can shorten the copper distance. They put DSLAMs closer to the home. Eventually they will probably use that same fiber run and split it via PON architecture for the last mile. So the DSLAM is basically garbage at that point right? Any "upgrade" really just means putting some totally passive splitter in place of active DSLAM, right? So do incumbent DSLAM vendors have any kind of advantage? I'm curious.

ragho 12/5/2012 | 2:50:25 AM
re: Nortel: Joining the GPON Race? When a provider decides to do FTTH instead of DSL, ...

The truth of the matter is, RBOCs are not just rolling out FTTX in place of DSL. They are continuing to [complimentarily] rollout DSL deployments, but the technology used (VDSL1/2 versus ADSL2/2+) is changing.

So the DSLAM is basically garbage at that point right? ...

Well, not really :-). A PONSLAM (my term) has to do just as much as a traditional DSLAM (whether in the CO or a cabinet)--it isn't just a passive device. Also, there are "IP" PONSLAMs with VoIP capabilities (SLIC to subscriber, VoIP over PON) coming out--the IP DSLAMs will just look a little different, with PON as the uplink instead of Gigabit Ethernet.

Physical_Layer 12/5/2012 | 2:50:21 AM
re: Nortel: Joining the GPON Race? ragho - I appreciate your comments. I think you may have changed my question a bit though. Imagine a scenario in the FUTURE where a carrier has deployed FTTN with fiber to a remote DSLAM using ADSL2+ into the home. Then say that the carrier decides to move to a full FTTH deployment using PON. Question: Is the DSLAM garbage, and is there any upside in having won that footprint as a DSL vendor in the first place?

ip_power 12/5/2012 | 2:50:09 AM
re: Nortel: Joining the GPON Race? from a carrier side: Actually it depends (rural/metro), but either way then you have the question what copper plant was built to (18K,15K, 12K,10K).

If rural, then usually video can only be provided to about 75% reliably, but has a High take rate. Therefore to reach more people the plant needs to be cutdown. But if the correct DSLAM was originally selected. then the DSLAM can be upgraded and provide the FTTx to 92/95%.

In the metro, since I consider in this area, traditional Vox also has to be moved over to th e Fiber and copper is left for specials - the DSLAMs that where deployed simply can not provide the port count, throughput, QOS to be able to be used.

Upside - actually yes on both, if "in having won that footprint" and you won it with a competitor that had already upgraded, and your Customer service has not lagged, and you havent got a big head and jacked the prices, and finally youve reinvested into and delivered the services (VOIP, VOD, Gaming)

From a Vendor side: I would have said no, but seeing all these IOC's giving nortel another chance (601/602 VOIP) after turning their noses and running to the RBOC, I would say, if your DSLAM is in there - make a promise - just keep calling them once a week and checking in, year after year, keep giving marketing information and its yours.
hamburger 12/5/2012 | 2:50:08 AM
re: Nortel: Joining the GPON Race? Nortel's decision proves that Calix Platform is
not ready for TIER-1 Market and so is Optical
Solutions Architecture.

For sure, Nortel must be developing its product
for past few years.

Any thoughts / insights........
ragho 12/5/2012 | 2:50:01 AM
re: Nortel: Joining the GPON Race?
Interesting point, hamburger. I did also hear that Calix was in the running with NT. Calix seems to have a good story for DSL, but not for PON. Maybe this is why NT didn't pursue Calix fully.

But, I hadn't heard of NT doing their own GPON gear. It may be a paper tiger, and they may be positioning themselves to get a shoe-in, as opposed to having anything in the lab yet.

Keebler 12/5/2012 | 2:49:49 AM
re: Nortel: Joining the GPON Race? Truly an overwhelming RFP, even in comparison with the BPON RFP from a few years ago. Any company that managed to respond in any way to this monstrosity should be congratulated - and the responsible employees given an extra week to recuperate.

somedumbPM 12/5/2012 | 2:49:43 AM
re: Nortel: Joining the GPON Race? From my limited knowledge of the 6500 I can only imagine it to be used as aggregation/switching at a CO or remote, for the existing or newer DSLAMs due the card slot layout of high cap slots vs low cap.

With rel 2 bringing RPR into the box it fits this application perfectly.
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