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Lucent Wins DMX Deal at AT&TLucent Wins DMX Deal at AT&T

AT&T adds another next-gen Sonet vendor to its network. Hint: It's not Ciena

September 9, 2003

3 Min Read
Lucent Wins DMX Deal at AT&T

ORLANDO, Fla. -- NFOEC 2003 -- AT&T Corp. (NYSE: T) has signed a multiyear agreement to use Lucent Technologies Inc.'s (NYSE: LU) Metropolis DMX Sonet add/drop multiplexers (ADMs) and its smaller DMXtend ADM to help increase the capacity of its metro networks, the companies said today (see Lucent Wins AT&T Sonet Deal).

The contract win is a nice feather in Lucent's DMX cap, widely regarded as one of Lucent's strongest products. Neither side would discuss the deal's particulars, but some on the show floor here at NFOEC say the deal is rumored to be worth in the ballpark of $100 million over several years.

Here's why the deal is not a surprise: Lucent is one of AT&T's incumbent equipment providers, and AT&T's network is chock full of DDM-2000 and FT-2000 systems, Lucent's legacy Sonet ADMs. Convincing a carrier -- even AT&T -- to upgrade to a newer system from an already established vendor is easier than having to sell from scratch. Still, Lucent must have done something to impress AT&T, given how many Sonet ADM vendors there are to choose among.

Some attribute the choice to the strength of the DMX product, which has many added data features to support its basic transport functionality.

"The DMX is a much more flexible platform than a lot of people give it credit for," says Scott Clavenna, chief analyst at Heavy Reading. "And when you think of how hard it is for a large carrier to predict what kinds of services it will need, that flexibility comes in handy."

The reason AT&T is refreshing its equipment, according to Lucent, is to take advantage of several aspects of the DMX that are an improvement over its legacy gear. The DMX is smaller, for instance, and it has Ethernet-over-Sonet capabilities and an upgrade path to OC192.

AT&T contends that the award to Lucent, while not trivial, is simply a matter of course. "We're evolving the AT&T network to become a multivendor environment," observes AT&T spokesman Dave Johnson. "Vendor competition gives us better products at better prices."

The vendor Lucent was competing against, in this case, is Cisco Systems Inc. (Nasdaq: CSCO). Johnson says AT&T plans to start deploying Lucent's gear by the end of the year.

Here's where the Lucent deal is a bit of a surprise: Even though AT&T is diversifying, the choice of Lucent showed that, yet again, Ciena Corp. (Nasdaq: CIEN) may have been passed over for some next-gen Sonet ADM business. Back in late 2001, AT&T chose the Cisco ONS 15454 Sonet ADM to provide multiservice functions at the edge of the network such as aggregating lower-rate customer traffic up to high-speed OC48 (2.5 Gbit/s) or OC192 (10 Gbit/s) pipes.

Ciena, at the time, had been chosen as AT&T's optical switch vendor, but its K2 product was evidently bested by Cisco in the Sonet ADM side of the network (see AT&T Boosts Ciena, Cisco).

Even though it admits having a reputation as a "hard-nosed" carrier when it comes to evaluating new equipment vendors, AT&T insists it's open-minded when it comes to new Sonet technology. "We have an open door policy and we're talking to all the vendors all the time," says Johnson.

"Our Sonet network is like a teenage kid – it's always growing and expanding."

— Phil Harvey, Senior Editor, Light Reading

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