March 4, 2004
Carrier RFPs are drawing plenty of attention, but other sectors of telecom are showing increased demand as well, namely the utility companies that want to build their own fiber networks.
Metro WDM player Meriton Networks Inc. made its first customer announcement yesterday, a small deal with utility spinoff Telecom Ottawa Ltd. Separately, ECI Telecom Ltd. (Nasdaq/NM: ECIL) announced a deal with Rede Eléctrica Nacional S.A. (REN), a utility in Portugal (see Telecom Ottawa Picks Meriton and ECI Wins Euro MSPP Deal). Terms of the deals were not disclosed.
Such utility telcos could become a good source of revenue for optical equipment vendors. What's particularly promising is that, unlike the CLECs, the utility companies didn't spend themselves into oblivion. "Due to their utility heritage they run a tight ship, so when the bubble popped they did quite well," says Mike Gassewitz, president of Meriton.
Similar to the municipalities building networks, utilities are free from regulations and have launched fiber-to-the-premises (FTTP) buildouts more aggressively than the RBOCs (see Grass Roots Fiber Booms and Utilities Key to Euro FTTH). Here's a smattering of the contracts doled out in the past year:
It's true that utilities are considering the use of power lines to carry data (see Electrical Access: Dream On?). But by building fiber networks, they can get into the game more quickly, tapping some immediate business prospects. "Lately, some utility companies are showing interest in building a network to be a carriers' carrier and also to offer data services," says Ido Gur, vice president of marketing for ECI.
For companies such as Meriton, utilities and municipalities provide a more receptive audience than traditional carriers, which remain uneasy about working with startups.
"I liken them to the small IOCs [independent operating carriers]. Certainly the smaller the company, the more likely they are to buy equipment from a startup or a small private company," says Michael Howard, president of Infonetics Research Inc. "There are much fewer people in the decision process. A lot of times, there's one tech guy who makes all the decisions. You only have to sway one person."Meriton's deal with Telecom Ottawa won't knock anyone's mucklucks off. It involves just three sites, to be populated with one 7200 OADX and two 3300 OSUs along with Meriton's network management systems. Gassewitz claims Meriton has more than four unannounced customer wins, all larger than this one.
Telecom Ottawa wants to expand its Ethernet service offerings into eastern Ontario, where it doesn't have the fiber to carry the number of Gigabit Ethernet feeds it needs. Rather than spend on 10-Gbit/s Ethernet, which would have required amplifiers to span the necessary distance, the company decided to go with Wavelength Division Multiplexing (WDM). Meriton's job is just a first-phase deployment; ultimately, Telecom Ottawa wants "to put in place a wavelength network as they expand across eastern Ontario," Gassewitz says.
Utility interest aside, WDM in general may be heating up as the telecom market thaws. Movaz Networks Inc. has begun joint product development with Lucent Technologies Inc. (NYSE: LU), an arrangement supposedly spurred by North American carriers demanding WDM (see Lucent & Movaz Seal Deal).
ECI's win, meanwhile, involves multiservice equipment for a regional network. Power utility REN, which is competing against incumbent Portugal Telecom Group, plans to use ECI's XDM platforms in more than 30 sites for a network based on SDH, DWDM, and Ethernet.
REN will offer its own data services on the network but also hopes to provide services to other carriers. Deployment is expected to begin within two months.
— Craig Matsumoto, Senior Editor, Light Reading
For more about fiber-to-the-premises, see the Light Reading Webinar, Access Technologies: Fiber to the Future.
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