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AFC/Verizon Glitch Alleged

Is Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) experiencing technical difficulties at Verizon Communications Inc. (NYSE: VZ)?

That’s what one analyst is saying in a note sent to clients this morning. And the mention of AFC having trouble at Verizon, where it has an agreement to supply equipment for the carrier’s fiber-to-the-premises (FTTP) buildout, helped send AFC’s shares down $1.40 (5.68%) to $23.23 in mid-afternoon trading on Tuesday (see AFC Finalizes Verizon FTTP Contract).

“We believe AFCI is experiencing difficulties meeting Verizon’s technical specifications, causing dissatisfaction among some of Verizon’s employees,” writes Pacific Growth Equities Inc. analyst Joe Noel. “We believe this current dissatisfaction with the AFCI solution has caused Verizon personnel to ask Alcatel SA (NYSE: ALA; Paris: CGEP:PA) to update and reissue its bid for this lucrative FTTP contract.”

Verizon's initial FTTP deployment plans involve passing about 1 million homes with fiber this year and potentially doubling the deployment pace in 2005 (see How Big Is FTTP for AFC? ).

Noel didn’t say specifically what the technical problems are, but he goes on to make two points regarding AFC’s arrival at Verizon. First, he says it’s widely believed that AFC designed its FTTP solution over the period of a few months -- “a very short and potentially inadequate product development cycle, in our view.” (See AFC Comes Clean on FTTP .)

Also, Noel notes that competitive pricing helped AFC rise above Alcatel in the initial product consideration (see FTTP Bidders Slashing Prices?).

Noel concludes that AFC hasn’t lost the spot as Verizon’s top supplier, but the possibility is there if it doesn’t resolve its technical troubles soon.

Verizon declined to comment. So did AFC, but more verbosely:

“AFC doesn't comment on rumors or 'possible scenarios' regarding our business and our relationships with our customers,” wrote an AFC spokesman in an email to Light Reading. “The facts are these: AFC is Verizon’s provider of central office and premises electronics for their network upgrade to FTTP. We have signed a five-year agreement with Verizon and, as publicly stated, we are in lab trials now and expect field trials to begin in the coming months.”

— Phil Harvey, News Editor, Light Reading

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technonerd 12/5/2012 | 2:17:32 AM
re: AFC/Verizon Glitch Alleged You mean Advanced Fibre still has nothing but its 10-year-old next-generation DLC? Say it ain't so, Joe!!
optoslob 12/5/2012 | 2:17:32 AM
re: AFC/Verizon Glitch Alleged From what I hear AFC is having a hard time convincing quality component suppliers drop their prices, this is forcing them to use cheap competitors, so for AFC this is a case where you only get what you pay for!

Even though PON is "simple stuff" it is not trival because it relys on burst mode up-stream operation. This puts a lot of unique constraints on the ONT lasers and the OLT receiver circuit.

optoslob



truelight 12/5/2012 | 2:17:32 AM
re: AFC/Verizon Glitch Alleged AFC has an ideal platform for the PON business given its access experience and customer base. Lets face it PON is "simple stuff" compared to other technolgies. Its all about who can go the lowest. These are just bad rumours.
Road Trip 12/5/2012 | 2:17:31 AM
re: AFC/Verizon Glitch Alleged Lets [sic] face it PON is "simple stuff" compared to other technolgies.

----------------

Keep telling yourself that, Jim.
truelight 12/5/2012 | 2:17:30 AM
re: AFC/Verizon Glitch Alleged I'm going to "sack" you "man" - LOL
DarkStrand 12/5/2012 | 2:17:29 AM
re: AFC/Verizon Glitch Alleged If you think a five 9's reliable BPON solution that is NEBS3 compliant is "simple stuff", then you must also be saying AFC is not terribly proficient, since they are too "simple" to get it right.

From what I've heard, AFC had and idea and a prototype, but hadn't gone through any testing or troubleshooting.

I don't own AFC stock, nor Alcatel stock. I don't work for either company. But I am quite familiar with all of this.

I find it frustrating when a less qualified company wins a contract based on misrepresentation of what they really have, and then uses the first year of the contract to come up to speed.

I'm not saying that is what is happenning here, but it sure seems like it.

DS
technonerd 12/5/2012 | 2:17:28 AM
re: AFC/Verizon Glitch Alleged I find it frustrating when a less qualified company wins a contract based on misrepresentation of what they really have, and then uses the first year of the contract to come up to speed.

I'm not saying that is what is happenning here, but it sure seems like it.

A common misperception of RBOC procurement practice is that a contract award is somehow an assurance of purchases. Nothing could be further from the truth. A "contract" simply sets the terms of purchases IF they happen to occur. If AFC has been blowing smoke, they are going to find Verizon to be rather fireproof indeed.
truelight 12/5/2012 | 2:17:24 AM
re: AFC/Verizon Glitch Alleged AFC will make good on its promise to deliver PON, not sure about BPON.

The CEO has his career on the line he has made public committments to investors that he would bring an RBOC to the table this decade ;-)

Big Red 12/5/2012 | 2:17:23 AM
re: AFC/Verizon Glitch Alleged This is no surprise other than it took a half year for the news to make it out of the companies. Anyone close knows that product was not available when the RFP was issued, was not available when the selection was made, and a year later, is still not available. Looks like a money losing low price and no product have caught up to them.

And if you really think the Access Max is a good FTTP platform then THINK AGAIN.

Inaxs 12/5/2012 | 2:17:22 AM
re: AFC/Verizon Glitch Alleged This is no surprise other than it took a half year for the news to make it out of the companies. Anyone close knows that product was not available when the RFP was issued, was not available when the selection was made, and a year later, is still not available. Looks like a money losing low price and no product have caught up to them.

And if you really think the Access Max is a good FTTP platform then THINK AGAIN.

Big Red:

All I know is that the Access Max SHOULD be a good FTTP platform, doesn't mean that AFC is there yet, and sounds like they're not.

I'm just curious as to what Alcatel has to offer that would somehow be superior to what AFC has. Don't tell me a kludged up "FTTP capable" Litespan whose architecture dates back to the late 80s.

So let's hear some technical details for both AFC and Alcatel from those of you out there that are up-to-date with them (which I'm not anymore).

Inaxs
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