Cable Tech

Quantum Bridge Wins Over Utility

Today Quantum Bridge Communications Inc., which makes telecommunications equipment designed to provide access to fiber optic networks, announced a deal with Sigecom LLC, a service provider based in Indiana that was formed by a joint venture between utility Vectren Corp. and Utilicom Networks. The company partners with utilities to build and operate data, voice, and cable TV services (see Quantum Bridge Enlightens Indiana).

The news comes less than a week after Quantum Bridge withdrew its initial public offering filing with the Securities and Exchange Commission (see Quantum Bridge Withdraws IPO).

No dollar amount was detailed in the contract, and Utilicom, Sigecom’s corporate parent, would not discuss any other specifics. But Dan Hanssel, vice president of sales and marketing for Utilicom, says he expects the Quantum Bridge gear to be running live traffic in the next three months. The plan calls for the QB5000 optical access switch to be deployed in various points of presence in Evansville, Ind., the first and only fully operational market that Sigecom/Utilicom is currently in. The company expects to add two to three new markets per year, Hanssel says.

“We’ve already begun construction in Dayton [Ohio] and Indianapolis. And if things with the Quantum Bridge deployments continue to be successful, I don’t have any reason to believe that we wouldn’t use them in these markets, too.”

Quantum Bridge's line of passive optical networking (PON) equipment is designed to deliver relatively inexpensive fiber optic access and switching for businesses and residential areas.

This is the third customer that Quantum Bridge has announced, and the first in the utilities industry. Comcast Corp. (Nasdaq: CMCSA, CMCSK), a cable operator, and Advanced TelCom Group Inc., a California-based competitive local exchange carrier (CLEC), were named in the company’s S-1 filed in December with the SEC as the only two customers that had contributed revenue as of September 2000.

As for repositioning for an IPO, the new customer helps, but it certainly won't propel Quantum Bridge right back to Wall Street.

"The market just isn't very good for an IPO right now," says Jeff Gwynne, vice president of marketing and a founder. "We're going to wait for things to improve and we'll see what happens."

The fact that Sigecom/Utilicom is a utilities-based customer is significant and represents an important, and relatively untapped, market for Quantum Bridge and other PON vendors, says Michael Kennedy, managing partner of Network Strategy Partners LLC:

“Utilities provide an answer to the last-mile question. Their strength is in winning access and rights of way to fiber. They generally serve the small and medium-sized businesses in smaller markets, and that is the same place where PONs can be most useful. This is an important win for Quantum Bridge.”

Hanssel says Quantum Bridge and its PON technology have helped Sigecom solve a key problem in providing services to customers. In the small office/home office (SOHO) business market, he says, the utility uses hybrid fiber coax (HFC) to serve customers seeking a T1 (1.5 Mbit/s) or less of capacity. For larger business customers, Sigecom/Utilicom offers Sonet solutions. But for those businesses in the middle, with between 25 and 400 employees, that need more than a T1 of capacity, but less than a T3 (45 Mbit/s), Sigecom wasn’t able to offer a cost-effective solution.

“For our mid-sized customers, HFC didn’t give them enough bandwidth,” he says. “And Sonet is just too expensive. Quantum Bridge with its PON architecture was the only solution that would reduce implementation costs and allow us to provide an affordable solution to customers.”

Unlike many CLECs, Sigecom/Utilicom has taken a prudent approach to building out its network. Utilicom partners with gas and electric utilities like Vectren to form joint concerns that provide data and voice services to regional areas. The utility puts up a significant portion of the capital and Utilicom runs the company. So far, in its first market, Sigecom has been successful in capturing 35 percent of the cable TV market and 25 percent of the local and long-distance market. This contrasts with CLECs, which generally only capture about 4 or 5 percent of these markets, says Hanssel.

- Marguerite Reardon, Senior Editor, Light Reading

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