Chip Startup Claims NTT Coup

Passave says it'll supply chips to the mystery winners of NTT's Ethernet PON RFP

December 18, 2003

2 Min Read
Chip Startup Claims NTT Coup

Winners of an NTT Group (NYSE: NTT) fiber-to-the-premises request for proposal (RFP) aren't being announced, but one chip startup is claiming victory anyway.

Passave Inc. has landed exclusive design wins with the two firms chosen to build NTT's Ethernet-based passive optical networks (PONs), CEO Victor Vaisleib says. Regardless of how NTT parcels the work to the two, Passave will be getting business that could exceed 2 million units per year, he claims.

NTT launched the RFP in August (see NTT Calls for Ethernet PON). The company chose winners in November and plans to begin deployment in the summer of 2004, according to Vaisleib. NTT officials could not be reached for comment.

The wins would give Passave a nice trophy to wave in the faces of competitors BroadLight Inc. and Teknovus Inc. And for all three, it would validate the model of aiming at PONs based on Ethernet rather than Asynchronous Transfer Mode (ATM). The latter are standardized by the International Telecommunication Union (ITU), but the Ethernet variety is more likely to win jobs in Asia, Vaisleib says.

"You see ATM only in places with legacy networks," -- North America and Europe, in other words. Moreover, he believes Chinese and Korean carriers are attracted to Ethernet's promise of low costs.

Passave builds chips for both the central office and customer premises sides of an Ethernet PON. Its central office chip, the PAS6001, has a price of $27 according to a previous news release, so Passave might collect more than $50 million on its 2 million units.

That windfall might take a while to arrive, however. Such high-profile contracts often get a price cut. Moreover, it's unclear how quickly NTT plans to deploy.

Vaisleib says Passave has been concentrating its efforts on Japan, which has 900,000 homes hooked up with PONs, more than the rest of the world combined. Elsewhere in Asia, Passave is pursuing possible Korean business but has found China to be more of a puzzle. "The dynamics are not as well understood as in the U.S. or Japan or Korea," he says. "It's very hard to understand who is controlling what, and there's not a single force that dominates the market."

— Craig Matsumoto, Senior Editor, Light Reading

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