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