AT&T Edge Deployment Slips

AT&T Corp. (NYSE: T) has delayed a deployment of important multiservice edge equipment until 2005, but Alcatel SA (NYSE: ALA; Paris: CGEP:PA) officals are denying a report that their router is to blame. A report yesterday from UBS AG analyst Jeffrey Schlesinger predicted the deployment would be postponed, citing technical problems with the 7750 Service Router, the product garnered in Alcatel's acquisition of TiMetra Networks (see Alcatel & TiMetra Seal the Deal).

Alcatel confirms that the 7750 has won the job and that the deployment is postponed until next year, but officials insist the router isn't having problems. An Alcatel spokesman notes that the 7750 was "technically certified" for the multiservice edge project last month, "in accordance with agreed timelines and roadmap," adding that the 7750 is the only product certified for the project so far, and that "Alcatel and AT&T are continuing to work together on field trials." The multiservice edge buildout is a first step in AT&T's shift to a converged IP/MPLS network. AT&T calls it the "Concept of One," a network where multiple types of network traffic would be collected by edge routers -- Alcatel's 7750, for example -- and funneled through a single network core. A year ago, AT&T said it had narrowed the multiservice edge candidates to two and was preparing for early 2004 deployment (see AT&T Closer to 'One' With Itself).

Delays in the project aren't surprising to those familiar with AT&T's request, because the carrier reportedly asked for lots of functions mashed into one router, a kind of "God Box."

"We understand Alcatel had been forced to make some very serious commitments to win the business," says one source familiar with the project.

AT&T wouldn't comment on its multiservice edge plans or the UBS report, but an Alcatel spokesman said budget priorities were a factor in the delay.

Schlesinger likewise flagged AT&T's capital expenditures as one of a few potential roadblocks, noting that the carrier had lowered this year's capex expectations to $1.8 billion, less than half the level of 2002: "The company's uncertain outlook and declining market share in the U.S. market make us question how aggressively AT&T may look to deploy this technology next year."

As for the 7750, Schlesinger's report says Alcatel missed a May milestone in AT&T's trials and was on the brink of missing a September target as well. He also thinks the MSE contract will be reopened, with Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR) again looking like prime candidates.

Alcatel officals wouldn't comment on those specifics, issuing a statement that "the UBS report does contain several factual inaccuracies regarding the AT&T MSE project."

Schlesinger pegs the AT&T multiservice edge deal at $60 million per year, about half of which of which would be headed Alcatel's way. But Alcatel has more than money at stake here.

"The ramp of this new product cycle would have been an important one from a psychological standpoint," Schlesinger writes. "Arguably, the AT&T contract would have been Alcatel's most high profile win," especially considering the company says it beat out Cisco and Juniper.

Alcatel can fall back on 30 other wins for the 7750, company officials say, including big names such as BT Group plc (NYSE: BTY; London: BTA), China Telecommunications Corp. (NYSE: CHA), and Hutchison Global Communications Ltd. (HGC). (See BT Picks Alcatel Router , China Telecom Selects Alcatel 7750, and Hutchison Picks Alcatel Router.)

— Craig Matsumoto, Senior Editor, Light Reading

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jwrbarnes 12/5/2012 | 1:16:59 AM
re: AT&T Edge Deployment Slips "Alcatel can fall back on 30 other wins for the 7750, company officials say, including big names such as BT Group plc"

It's worth emphasising that Alcatel's BT activity is only a trial network model for the 21C project: no vendor has been awarded contracts for this business yet.

With this type of marketing smoke blowing around, how many of Alcatel's other announced wins are genuine?

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