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Sources: LuxN Close to SBC Deal

Startup wins with big phone companies are rare. But equipment maker LuxN Inc. has come close to winning a contract with SBC Communications Inc. to deploy optical Ethernet gear, according to sources close to the company.

The deal would be a huge win for LuxN because regional Bell operating company (RBOC) customers can make or break a company of its size. LuxN and SBC are said to be in contract negotiations now and, if all goes as planned, LuxN will be officially awarded the deal early next month.

LuxN makes DWDM transport products that service providers use to carry OC3, OC12, OC48, Gigabit Ethernet, Fibre Channel, 10/100Base-T, and T1 traffic. It targets points of presence (POPs) with its WavStation products, multitenant buildings with its WavFarer boxes, and enterprises with its WavPortal gear (see LuxN Goes Metro and Invites Go Out for Metro DWDM Test).

LuxN, along with Nortel Networks Corp. (NYSE/Toronto: NT), Internet Photonics Inc., and Ciena Corp. (Nasdaq: CIEN), were all in the final stages of bidding for the SBC deal, sources say. The contract involves a new service SBC will roll out next year -- an improvement to the GigaMAN service it launched in May 2000 [ed. note: It's a bird! It's a plane! It's... GigaMAN!].

SBC won't discuss its vendor selection process but does acknowledge that it's revamping GigaMAN, according to Ruth-Anne Renaud, director of optical networks in SBC's central product management team.

GigaMAN is a way of linking corporate campuses with dedicated 1-Gbit/s Ethernet connections within a company's local area network (LAN). With GigaMAN, as currently configured, companies can connect any buildings within 50 kilometers (31 miles) of one another. Companies pick GigaMAN to build high-speed links between their buildings without having to send data across the public Internet. Also, the price per bit is significantly less than other private-line services offered by carriers.

Renaud says the improved GigaMAN service will provide longer distances between connections and will offer simpler provisioning. SBC is also considering offering the connections as a managed service, where it would monitor and manage the GigaMAN connections on a corporate campus, she says. By doing this, SBC can at the same time remove a worry from its customers and charge a premium for the enhanced service.

Another GigaMAN improvement would be to use coarse wavelength-division multiplexing (CWDM) technology to aggregate the circuits coming to corporate headquarters from other buildings and data storage centers without using an entire dedicated fiber for each connection.

That's where the equipment vendors come in. The four finalist vendors have battled it out to see if SBC will choose their gear for what could be a more attractive service for corporate customers.

Noticeably missing from the short list is Fujitsu Network Communications Inc. (FNC), a large supplier to SBC. "The GigaMAN RFP came out last spring, right around the time we first partnered with ADVA AG Optical Networking (Frankfurt: ADV)," says Bob Laurent, manager of product marketing at FNC (see Fujitsu Brings ADVA Stateside). "If it had come out a few months later, I think we would have had a better response."

Several industry observers say Internet Photonics, a startup, may be in the running mainly to keep the more established vendors honest regarding pricing and technology features. "The question for Internet Photonics would be: Are they prepared to provide the kind of service and support SBC would need?" says Marian Stasney, an analyst with Stasney Consulting.

A spokesman for Internet Photonics declined to comment, other than to say that the company is in trials with "practically all the RBOCs and long-distance carriers as well as a few cable operators."

Indeed, LuxN could be one of two suppliers SBC will pick for the deal. The company has the right technology -- its products allow fiber-based service providers to stretch their LANs up to 250 kilometers (155 miles) between nodes. The company has 40 customers, including Time Warner Telecom Inc. (Nasdaq: TWTC) and KMC Telecom, and its customer support is provided by IBM Global Services (see IBM Supports LuxN, LuxN Wins KMC Contract, and Time Warner, LuxN Ink DWDM Deal).

And, of course, price will be a big deal here, so it's always possible LuxN might be underbid by a larger supplier at the last minute. "Price will play a large role in SBC's decision," says Stasney. "The breakeven point for some of those [managed] services is pretty high."

It's not yet clear where Ciena and Nortel stand in the bidding. Neither company would comment for this article, citing non-disclosure agreements. LuxN, too, declined to comment.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
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mplsrocks 12/4/2012 | 9:56:42 PM
re: Sources: LuxN Close to SBC Deal Hi,

Any idea what is happening to Atrica and their optical ethernet box. Guess SBC was an investor in Atrica. If that be the case why choose LuxN over a company that they themselves have backed..

or does it mean that atrica's product is not yet deployable

comments please

mplsrocks
wilecoyote 12/4/2012 | 9:56:42 PM
re: Sources: LuxN Close to SBC Deal If Luxn wins SBC that's good news for every private infrastructure company, in my view.

Alii 12/4/2012 | 9:56:41 PM
re: Sources: LuxN Close to SBC Deal Companies about to win a large RBOC contract don't so obviously "leak" this information without a reason unless they are pretty desperate. The repercussions tend to be too significant. How much money does LuxN have left is the question in my mind?
StartUpGuy1 12/4/2012 | 9:56:40 PM
re: Sources: LuxN Close to SBC Deal The Atrica box provides more than just "Physical transport". The Gigaman service is no more than point to point gigabit ethernet with no value add other than connecting the customers routers or switches together across Fiber infrastructure. The offerings from LuxN are DWDM transport only with optical managment of the wavelengths. This will replace Gigabit Ethernet transceivers that SBC currently uses from Finnisar so that they will not burn as much fiber at the main CO's.

Atrica would allow a company to offer managed Ethernet services with incremental bandwidth and QOS, ala Telseon/Yipes. LuxN provides just the physical layer transport and does not look above layer one except for managment information.
jgh 12/4/2012 | 9:56:34 PM
re: Sources: LuxN Close to SBC Deal It's typical of an RBOC prchase, spread the "wealth" around. When they buy Class 5 swithches, they would purchase them from both Lucent and Nortel and then deploy in certain areas.
What isn't spelled out, is how much will they actually buy from LuxN and where will they deploy it. My assumption is a little deployment in one of their 2nd or 3rd tier locations. It will not be located in a major city.
Jimi 12/4/2012 | 9:56:30 PM
re: Sources: LuxN Close to SBC Deal Who needs QoS? These days if you can guarantee a set amount of bandwidth the customer is absolutely fine with it. So a full Gb connection is a SIMPLE and solid means for connecting campuses. When the industry recusitates itself and fiber in the ground becomes scarce (don't hold your breath) and customers need to share bandwidth then your Atrica product with its QoS can add some value. Keeping it simple is fine.
willywilson 12/4/2012 | 9:56:26 PM
re: Sources: LuxN Close to SBC Deal Companies about to win a large RBOC contract don't so obviously "leak" this information without a reason unless they are pretty desperate. The repercussions tend to be too significant. How much money does LuxN have left is the question in my mind?

----------

LuxN will not get that business. By leaking it to the trade press they killed any chances they might have had. Real telecom vendors know that it's death to talk about a pending deal with the RBOC. The only exception is if they RBOC somehow wants them to talk about it, but in SBC's case I really doubt that's the case.

I agree, they must be sucking air now that they've sucked all the VC cash.
zhadum 12/4/2012 | 9:56:23 PM
re: Sources: LuxN Close to SBC Deal re: your message -
Companies about to win a large RBOC contract don't so obviously "leak" this information without a reason unless they are pretty desperate. The repercussions tend to be too significant. How much money does LuxN have left is the question in my mind?
.......................

please stop this negativity. here is a great piece of positive news and all you can think of is an ulterior motive.

i personally heard this same bit of news this week from a source close to the rboc, so the leak doesnt necessarily have to come from the vendor.

z
Nomoredemo 12/4/2012 | 9:55:59 PM
re: Sources: LuxN Close to SBC Deal I have to agree that creating a leak like this one has for objectives to stimulate a change in the current decision making process or to validate something.
If SBC have some intention towards a start up , that means somebody is championning them internally and is probably pushing hard for them (have no choice somebody has to put is neck on the line for a pick like this). Leaking it will just put that champion on the spot and wake up the competitors. Im sure Nortel is already calling its champion within SBC...
But ! if Luxn know that they are getting pushed aside because they are a Start up leaking some vaporous informations may get their name discussed in SBC meetings and back on the agenda.
Nothing to loose...
BobbyMax 12/4/2012 | 9:55:20 PM
re: Sources: LuxN Close to SBC Deal SBC executives are out of their minds to procure products from start-ups. This is a recipie for disaster. Risks are monumental in dealing with LuxN as the company has no established customer base. Its management do not much experience in the telecommunications and network reliability requirements. It is also not clear if LuxN would survive the recent decline of the optical networking equipment demand.

The biggest risk for SBC is that its products are not OSMINE compliant. It is also not clear if the equipment can be provisioned and managed using the corrent OSSs.

It is not clear who is advising SBC on the technical and business risks associated in dealing with LuxN. Probably SBC do not have any technical expertise within the company to think it throgh, I think it behooves SBC to hire outside consultants to give it objective advice.

SBC should also realized that it has hurt its shareholders because of its wild actions. The secrecy and internal corruption also hurt the shareholders.

SBC has not changed its military style of management. The times have changed, the company must employ well educated people to run its business. It is still overstaffed and is not doing much to reduce its staff, especially the management staff.

It is surprising that SBC has not learned any lesson from Qwest. In fact, in some ways it is repeating the history of Qwest.
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