Marconi Corp. plc (Nasdaq/London: MONI) today announced a deal with British Telecommunications plc (BT) (NYSE: BTY; London: BTA) under which it will become a supplier of broadband access equipment to the U.K.'s incumbent carrier (see Marconi Wins BT Broadband Order ).

The deal, worth "tens of millions of pounds," according to a BT spokeswoman, is part of the carrier's "21st Century Network" plan, which envisions boosting its number of DSL (digital subscriber line) customers to 5 million by 2006, from 1 million now.

Winning the deal is quite a coup for Marconi because it helps establish the company as a serious supplier of next-generation DSLAMs (DSL access multiplexers) capable of supporting "triple play" voice, video, and data services with quality-of-service guarantees. Incumbent carriers like BT see this as the key to being able to boost revenues in the future.

Up until now, Marconi hasn't been considered a big player in the DSLAM marketplace. Its Access Hub has only been deployed by one major incumbent carrier, Telecom Italia SpA (NYSE: TI), and a bunch of smaller operators. So getting the BT contract is quite a breakthrough. "It's a huge endorsement," says Martin Harriman, Marconi's chief marketing officer.

Under its 21st Century Network plan, BT envisions replacing 100,000 existing remote concentrators, DSLAMs, and data multiplexers with 30,000 multiservice access hubs, according to Harriman, who claims the plan was drawn up with the Marconi Access Hub in mind.

Marconi's Access Hub is more than a DSLAM. Its chassis can be populated with line cards supporting POTS (plain old telephone services) and various forms of DSL as well as fiber connections. It has a high capacity (40 Gbit/s) ATM backplane and also boasts optional IP and softswitch modules. The bottom line is flexibility; it can be used in a wide variety of environments and allows carriers to keep all their options open as their broadband infrastructures evolve.

BT's current DSLAM suppliers, Alcatel SA (NYSE: ALA; Paris: CGEP:PA) and Fujitsu Telecommunications Europe Ltd., have been slow to roll out equivalent equipment, according to Graham Beniston, principal of Beniston Broadband Consulting and author of a report on the B-RAS (broadband remote access server) market in the current issue of Light Reading Insider, Light Reading's subscription research service. "That's probably why BT decided to bring in Marconi as a competing supplier," says Beniston.

Marconi, however, will have its work cut out to compete with Alcatel, which recently announced a "bigger, better" DSLAM that brings it up to speed in this field (see Alcatel Unveils 'Better' DSLAM). The 7301 ASAM promises to enable BT to build on its existing Alcatel investments rather than rip stuff out and replace it with Marconi gear.

Harriman counters that Marconi has less to prove on the technology front. Its Access Hub is already handling voice in Telecom Italia deployments and is handling video in trials with a French operator. Alcatel has yet to prove that its 7301 ASAM can deliver on its promises.

"Fujitsu is a bit of a pinprick in terms of deployment," adds Harriman.

Mark Curtis, Fujitsu's director of business development, says it's the opposite way around. Fujitsu supplies half of BT's DSLAMs and is probably the fourth largest DSLAM supplier in the world, he says, so Marconi is the one who's DSLAM deployments amount to a bit of a pinprick right now.

All the same, Fujitsu doesn't yet offer the equivalent of Marconi's Access Hub. It plans to add POTS interface cards and voice capabilities to its FDX "second generation" DSLAM later this year, according to Curtis. Curtis also points out that Fujitsu is BT's exclusive supplier of SDH access equipment and that this can be used in conjunction with its FDX DSLAM to offer a wide range of services.

Harriman plays down the significance of some other news in today's press release -- that Marconi is no longer BT's exclusive provider of core optical networking equipment, as it was under its original multiyear, multibillion-dollar frame contract awarded in July 2000 (see Marconi wins $3+ Billion Contract). It's now guaranteed at least 70 percent of BT's DWDM and SDH supply contracts, and the overall value of these contracts is likely to be much smaller.

The original contract "was all about DWDM, and it just never happened," says Harriman. BT is likely to spend much more money on SDH equipment, he adds, noting that the carrier recently said that its SDH infrastructure was now 65 percent utilized. BT uses Marconi equipment for its core SDH network and Fujitsu equipment for its metro and access SDH installations.

Harriman plays down the significance of the BT contract won by Ciena Corp. (Nasdaq: CIEN) recently (see Ciena's BT Coup: How Big?). It represents 10 percent of BT's DWDM spending in the next three years, which is itself small, according to Harriman.Nick Critchell, Ciena's senior director of marketing for EMEA sees things differently. He believes that other BT contracts will follow. "It's more than a foot in the door," he says.

— Peter Heywood, Founding Editor, Light Reading