Alcatel Cancels New Litespan DLC

The Alcatel SA (NYSE: ALA; Paris: CGEP:PA) next-generation Digital Loop Carrier (DLC), the 7201 Litespan Multiservice Access Platform, has made a quiet exit as the company shifts development to its latest IP DSLAM effort.

As carriers move increasingly toward fiber and IP-based solutions to deliver the triple play, the Litespan, with its roots in the ATM and TDM world, wasn't cutting the mustard. "The Litespan 7201 product is no longer squarely hitting the demands of the marketplace," says Alcatel spokesman Charlie Guyer. "Folks like Verizon and SBC are moving more toward the IP-based solutions."

The human impact of Alcatel's decision is significant. About 130 jobs are affected as Alcatel let some folks go in Petaluma, Calif., and Plano, Texas, while redeploying others to work on the company's 7330 IP DSLAM.

The 7330 is Alcatel's remote IP DSLAM for use in fiber-to-the-node (FTTN) deployments. The product is a major component of SBC's Project Lightspeed plan (see Alcatel Wins $1.7B SBC Deal).

Guyer told Light Reading on mid November there had been a "minor reduction" in workforce, announced at a "town hall" meeting held in Petaluma. Though Guyer said that the 7201's demise was "old news," Alcatel had been promoting the product as recently as October 11 at United States Telecom Association (USTA)'s Telecom '04 in Las Vegas.

Perhaps the old news is that Alcatel is coming around to the limitations of the Litespan product in a world where RBOCs want fiber-fed access networks delivering IP services.

"The 7201 product was never going to get to the multiservice access point," says Graham Beniston, Heavy Reading analyst at large. "The Litespan architecture is only cost effective up to about 25 percent DSL take rate; for 50 to 100 percent DSL broadband uptake, you need Alcatel's 7302 or the Catena [Ciena] CNX 1000 or Calix Networks or Occam Networks or Entrisphere.

"This is Alcatel playing catchup again," Beniston says of the vendor's shift to the 7330 IP DSLAM.

"Alcatel has convinced SBC that they are the supplier for fiber-to-the-node; they sold SBC the 7330… but the product isn't exactly all done yet," says Kermit Ross, principal of Millennium Marketing. "I'm putting two-and-two together here and saying that they are taking people from the 7201 product in order to finish the 7330 for SBC."

Guyer disputes that claim; he says the 7330 is a finished, shipping product.

Interestingly, like the 7201, the 7330 hasn't been introduced with much élan. In mid 2003, an Alcatel spokeswoman told Light Reading that the product was still in development and was not to be discussed with the media. The only mention of the 7201 in press release and press coverage during the past two years was during the October USTA conference.

Likewise, the only mention of the new 7330 in press releases and coverage during the past two years was in Alcatel's SBC win announcement.

Alcatel's shift of focus from the 7201 DLC to the 7330 IP DSLAM doesn't necessarily spell doom for third-generation DLC vendors, nor does it mean Alcatel is abandoning the DLC business (see Alcatel Tops DLC Ranking). Large service providers are preparing their networks for the most cost-effective delivery of voice, data, and video, and the migration toward a DSLAM approach is a dominant theme, says Millennium's Ross. Smaller carriers, however, will continue to leverage DLC solutions.

Indeed, the decision for Alcatel to abandon the 7201 product may have had more to do with the 7201 falling behind its DLC peers than with the superiority of a DSLAM approach for multiservice access, says Heavy Reading's Beniston.

— Mark Sullivan, Reporter, Light Reading

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JohnyDoe 12/5/2012 | 3:05:58 AM
re: Alcatel Cancels New Litespan DLC Maybe he's only angry he didn't get hired :-)

LiteSpan was outed cause it was a technical failure. All other reasons Alcatel gave are only bla-blas. The thing was unable to pass the lab tests!

Calix has put on the market a viable product. They just did it too late to max it with an IPO.
paolo.franzoi 12/5/2012 | 1:01:35 AM
re: Alcatel Cancels New Litespan DLC
Other way around Stuart. The Calix box was engineered by the team that was working on the Millenium project inside Alcatel...which became the 7201.

stuartb 12/5/2012 | 1:01:35 AM
re: Alcatel Cancels New Litespan DLC The Litespan 7201 was essentially a ripoff of the C7 - a high-capacity ATM based BDLC with IP multicasting capabilities. It's obvious that Alcatel determined that this IP/ATM architecture can't compete economically with the pure IP based products. What does this mean for Calix with their ATM based X-fabric? Will they be able to accomplish anything other than taking over for AFC in the IOC space?
stuartb 12/5/2012 | 1:01:34 AM
re: Alcatel Cancels New Litespan DLC You're right brooks. Regardless, the effect on Calix will be interesting to see as time goes on.
paolo.franzoi 12/5/2012 | 1:01:32 AM
re: Alcatel Cancels New Litespan DLC
Personally, I think they will not make it. Even with the amount of deployment you have given, they are faced with the following challenges:

1 - The Calix box is poorly organized for Ethernet based access for DSL. The video over DSL they are doing has a lot of warts.

2 - The Calix box is late and low functionality for FTTP.

They built a next generation box of boxes that are going to slide into the sunset. It strikes me that they will not crack the large carriers so will be limited. Could Nortel possibly pick them up? Perhaps, but Nortel has lots of problems right now.

ATMRules 12/5/2012 | 1:01:32 AM
re: Alcatel Cancels New Litespan DLC With 2500 C7's deployed and 120 customers announced, they are 5 yrs old, does anybody think they will eventually go IPO or get acquired?

Just wondering?

IBanker19 12/5/2012 | 1:01:29 AM
re: Alcatel Cancels New Litespan DLC "...IPO or acquired?"

Trust me, its only a matter of time. They'd love to get to the public market but appetite is questionable. I think the M&A route seems more viable in the near-term. I know for a fact that there have been numerous discussions and there certainly is no lack of interest. The issue has been price expectations. Buyers reportedly suggest that management's valuation requirements for an M&A out are too rich. It'll happen though...
tguch 12/5/2012 | 1:01:25 AM
re: Alcatel Cancels New Litespan DLC A reminder, Nortel signed a strategic alliance with Calix earlier this year to "re-enter" the broadband access market. I believe this alliance was constructed with the option for Nortel to buy Calix in the future, if it wanted to. Of course, I don't think Nortel is in such a position these days...
ATMRules 12/5/2012 | 1:01:23 AM
re: Alcatel Cancels New Litespan DLC Actually I did'nt give those numbers, Calix did in a press release last summer, it's on their website....one thing for sure, they have done well to be still around, they started in 1999, as you probably know most of those startup's are history, so I would imagine they are doing something right....I wonder if they have any SBC, Quest, Verizon or Bellsouth penetration?

Truelight1 12/5/2012 | 1:01:07 AM
re: Alcatel Cancels New Litespan DLC Okay here's the the real scoop.

- Mike Hatfield is out, IP is most def. out
- Product is ATM, TDM and more ATM, Video sucks
- Product costs high, Engineers are done
- Market is Bought by Calix management team

Buy-out likely as they cannot survive alone it all Carl GAS. A lot of customers and deployment will attract buyers but the resulting acqusition will be a disastor. $75M in revenue this year, valuation $210M - Nortel buyer.

Fact not fiction

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