SBC Picks Alcatel for FTTP
The deal is a good endorsement for Alcatel's gear, but observers say it's not as a strong as the Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) victory at Verizon Communications Inc. (NYSE: VZ), the incumbent carrier that seems the most serious about embracing FTTP (see How Big Is FTTP for AFC? ). All things being equal, FTTP is the premier method of residential bandwidth access, as it offers more bandwidth per user than most flavors of DSL and cable access. Fiber maker Corning Inc. (NYSE: GLW) told Light Reading Insider in November that singlemode fiber has 31 times the capacity of coaxial cable on 100-meter links, and over 250 times the capacity of high-end twisted-pair copper over those lengths.
Unfortunately, all things aren't equal and it's unclear how committed SBC really is to FTTP (see SBC Ratchets Up PON Politics). For Alcatel, which is already a key access equipment supplier to SBC, this win may be more symbolic than substantial.
"Alcatel's already got most of the [third generation] DLC business in SBC," says Millennium Marketing founder Kermit Ross. "And, SBC doesn't appear to be nearly as fired up about doing FTTP as Verizon."
Alcatel's FTTP success in SBC will also depend on the carrier's devotion to DSL. In 2004, 80 percent of homes and businesses in SBC's territory will be passed by DSL. The company added 365,000 DSL subscribers during the third quarter, giving it 3.1 million subscribers in all. With growth like that, it's easy to see why SBC itself is blowing cold on FTTP (see Broadband Growth Is Brisk).
SBC has more copper in its network than many of the other RBOCs, according to Ross. "They will have to put a lot more fiber infrastructure in place to do anything significant with FTTP," he says. That would put a lot of money at risk for an uncertain return (see IDC Sees Modest FTTP Growth).
The FTTP activity in SBC's network to date has been isolated. SBC uses Alcatel's gear in its only FTTP network, San Francisco's Mission Bay community. That development now has 175 residential subscribers and will someday include nearly 6,000 residential units.
Something has to be said for Alcatel not losing the business to another vendor. Mike Quigley, president of Alcatel North America is calling the four-year primary agreement a "significant win," according to a company spokeswoman. Alcatel says SBC has shared its deployment plans with the vendor, but they're not allowed to discuss them.
Even if SBC's FTTP deployment plans are tough to nail down, the choice of Alcatel as a primary supplier could mean additional revenues for Alcatel's voice partner General Bandwidth Inc. and its CPE partner Carrier Access Corp. (Nasdaq: CACS).
All Alcatel can say for sure is that in-depth lab testing of its gear will begin and field trials of the technology are set to begin in the first half of 2004.
Oh, and that it was an honor just to compete for the crown.
— Phil Harvey, Senior Editor, Light Reading