Analyst: Copper Is BellSouth's Gold

RBOC is set to award major access kit deals in the coming months, reckons analyst George Notter

October 11, 2004

4 Min Read
Analyst: Copper Is BellSouth's Gold

BellSouth Corp. (NYSE: BLS) is set to award contracts for its planned new triple-play access infrastructure before the end of this year, and the RBOC will opt for an IP-over-Ethernet approach, according to Jefferies & Co. analyst George Notter.

Notter says vendors have responded to BellSouth's 260-page request for proposal – dubbed the IPTV RFP and issued in late August – and that suppliers are due to be picked in the next three months, with initial deployments starting in the second half of 2005. Notter's contacts say that by 2010, about 80 percent of the households in the carrier's turf (about 9.5 million lines) will be covered by the new infrastructure, which will carry voice, video, and data services – including broadcast TV, video on demand, VOIP, gaming, and high-speed Internet access – over a single broadband connection.

But before video delivery vendors get too excited by the RFP's name, the analyst notes that BellSouth is due to issue separate RFPs for specific video-centric delivery systems, such as video servers, and that this process covers the underlying infrastructure needed to deal with bandwidth-intensive, real-time services.

The key to BellSouth's approach, and the potential for a relatively swift deployment, is the carrier's copper plant, says Notter. It is generally shorter than other carriers', and much of it is newer and comprises two or more copper pairs. As a result, BellSouth can use a technology known as "bonded" DSL to provide very high data capacity over its existing cables. Bonded ADSL2+ technology, for example, can deliver up to 20 Mbit/s over 9,000 feet, says Notter, compared with 6,000 feet over a single copper pair.

This means BellSouth can deliver the speeds it needs for the new services over much of its installed copper (covering about 70 percent of its residential lines, reckons the analyst), and won't have to lay much new fiber, something SBC Communications Inc. (NYSE: SBC) is planning to do (see SBC RFP Refreshes Remotes). This will save BellSouth money and time.

But BellSouth will have to upgrade its DSL equipment, replacing the gear in its central offices and remote cabinets with IP DSLAMs that can support Gigabit Ethernet and multiple flavors of DSL. Notter estimates the RBOC will spend between $500 million and $700 million on DSL equipment alone.

So who's in line for a slice of the action? Alcatel SA (NYSE: ALA; Paris: CGEP:PA), as the incumbent DSLAM provider, is a firm favorite, and that company launched its latest DSLAM with an eye toward triple-play hopefuls (see Vendors Claim DSLAM Breakthrough). Notter marks the French giant as the frontrunner, but he believes multiple vendors stand to win a slice of the action over time, including Adtran Inc. (Nasdaq: ADTN), Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI), Calix Networks Inc., Entrisphere Inc., Lucent Technologies Inc. (NYSE: LU), Ciena Corp. (Nasdaq: CIEN), and Pedestal Networks Inc.The RBOC will also need B-RAS (broadband remote access server) gear to help support the bandwidth demands of video and broadcast TV streams, and Notter sees Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (Nasdaq: JNPR), and Redback Networks Inc. (Nasdaq: RBAK) as being best placed to win out. Cisco and Juniper are likely to pick up any edge router action too, the analyst believes.

Among the vendors likely to deliver the Ethernet switches needed to multiplex and aggregate the multiple connections from the DSLAMs are Cisco, Extreme Networks Inc. (Nasdaq: EXTR), and Foundry Networks Inc. (Nasdaq: FDRY), Notter believes.

There's also the matter of the CWDM equipment BellSouth will likely deploy between its remote DSL locations and the central offices, and while ADVA Optical Networking (Frankfurt: ADV), Ciena Corp. (Nasdaq: CIEN), and Nortel Networks Ltd. (NYSE/Toronto: NT), among others, will be in the hunt, Notter believes Lucent, as an incumbent optical equipment supplier, is "well positioned" to win here and pick up some services work in the bargain.

BellSouth had not responded to requests for additional comment as this article was published.

— Ray Le Maistre, International News Editor, Light Reading

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