Sprint RFP Raises Hopes

The incumbent's scouting core multiservice switches, sources say. Is this really good news? and for whom?

July 15, 2002

3 Min Read
Sprint RFP Raises Hopes

Sources close to Sprint Corp. (NYSE: FON) say the carrier's issued a recent request for proposal (RFP) on core multiservice switches, ones equipped with ATM capabilities. And rightly or wrongly, some in the industry are taking the news as a sign of hope for beleaguered telecom equipment providers.

Sprint's not officially confirming, but sources within the company acknowledge that the RFP has been issued as part of the carrier's ongoing focus on capacity improvements. No specifics are available, and the potential value isn't known.

Similar RFPs have been issued by Qwest Communications International Inc. (NYSE: Q) and Verizon Communications Inc. (NYSE: VZ). (See Verizon RFPs: More Fizzle Than Sizzle.) But so far, no decision dates or values have been set on these earlier requests, either. Indeed, some sources say one or the other may have been relegated to the back burner indefinitely, part of due diligence that may never see the light of day.

"I really think the carriers are looking at [ATM core] bids and saying 'Maybe we'll decide to do a contract, maybe we won't,' " says Sam Greenholtz, senior analyst with Communications Industry Researchers Inc. He says these RFPs aren't anything to get excited about just yet.

But some see requests like Sprint's as signs of a pending upturn. "There are a lot of RFPs out right now... The budgeting cycle for most carriers starts in October, so it will be early next year before the contracts go through and we'll see things really come back," says Bert Whyte, director, president, and CEO at Network Equipment Technologies Inc. (net.com) (NYSE: NWK), which makes service creation gear.

Whyte isn't alone. Others say 2003 is looking like the year when many incumbent carriers may have to start looking at improving their core networks. And while lots of vendors would like to see carriers consider making huge revisions to their networks then (see Vendors Aim to Cut Costs in Core), sheer economics will likely force many to consider gear that supports the aging ATM infrastructure as well.

Enter the cluster of vendors playing in the ATM core switch space, which are expected to respond to Sprint's latest RFP: Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Lucent Technologies Inc. (NYSE: LU), Marconi PLC (Nasdaq/London: MONI), and Nortel Networks Corp. (NYSE/Toronto: NT).

The RFP is also likely to attract Cisco Systems Inc. (Nasdaq: CSCO) with new core ATM products, including the MGX 8950 switch (see Cisco Makes Multiservice Move ). And judging by word on who's responding to other incumbent core switch RFPs, Équipe Communications Corp. is almost certain to place its bid.

While Équipe's not commenting on its participation in any industry RFPs, rival vendors acknowledge the newbie has been shortlisted at Verizon -- at least so far. A Sprint RFP would likely give Équipe yet another shot at winning that requisite big customer. What's more, its ongoing relationship with Ciena Corp. (Nasdaq: CIEN) (see Équipe Announces Third Round Funding, Partners with Ciena) may help overcome any aversion to startups that may otherwise have hindered Équipe. Ciena's own relationship with Sprint may help Équipe as well (see Vendors Aim to Cut Costs in Core).

But here again, pundits warn of getting too excited too soon. "Carriers usually include a guy like [Équipe] on their shortlist to goad the major players into adding features or making priceconcessions, but buying from them for a key procurement would raise Wall Street concerns," says Tom Nolle, president of consultancy CIMI Corp.

Given all the caveats, it's clearly too soon to hope that Sprint's new RFP will have a major impact on either the industry or a particular vendor in it. Still, it's probably not too soon to add it to the roster of watchables that might eventually signal a turning tide.

— Mary Jander, Senior Editor, Light Reading

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