"We believe privately-held Innovance Networks responded to the long-haul optical transmission subcontract. It appears Innovance used a partnership approach, and a service provider bid the Innovance equipment in its response," write Levy and Luke.
Innovance CEO Peter Allen confirms that Innovance is in field deployments with the carrier. Beyond this, he won't comment. "Obviously, it's a very exciting time," he says.
Background: The GIG BE request for proposal (RFP) was released last month (see DISA Deal D-Day Approaches and Corvis Spikes on DISA Talk ). Subcontracts are being tendered for optical transport, optical crossconnects, MSPPs (multiservice provisioning platforms), and IP routers. The project's expected to draw $800 million to $900 million over two years.
Though the Lehman note says one service provider has responded to the RFP, narrowing the range of possible Innovance partners is tough. "AT&T, MCI, Sprint, and Qwest have been Innovance's key targets, mainly because of their size," says Brian Van Steen, principal analyst at PointEast Research LLC. But he won't speculate further.
Levy and Luke's predictions about GIG BE take into account vendors' ability to meet the newly revealed fine points of the proposal. These include the need to support both SDH and Sonet in the MSPP contract, and both edge and core for the IP router portion. It also appears that ATM won't be used for switching. Here's the analysts' latest predictions:
Table 1: Lehman's Updated Snapshot of GIG BE
|GIG BE RFP subcontract||Est. size over 2 years||Potential bidders||Probable winner(s)|
|Optical transport||$200M to $300M||Alcatel, Ciena, Cisco, Corvis, Fujitsu, Innovance, Lucent, Nortel||Ciena, Corvis, Nortel|
|Optical crossconnect||$100M to $150M||Alcatel, Ciena, Cisco, Corvis, Lucent, Nortel, Sycamore||Ciena, Lucent|
|MSPP||$150M to $200M||Alcatel, Cisco, Fujitsu, Lucent, Nortel||Cisco, Lucent, Nortel|
|IP router||$150M to $200M||Cisco, Fujitsu, Juniper, Tellabs||Cisco, Juniper|
|Source: Steven Levy and Tim Luke, Lehman Brothers Equity Research|
One determinant of the RFP outcome, the analysts say, looks to be vendors' ability to get an "in" with the government or Science Applications International Corp. (SAIC), which is overseeing the selection process for DISA.
"Relationships could play a much more influential role in vendor selection than originally thought -- we are referring to relationships between equipment vendors and SAIC and the U.S. government, as well as partnerships among the vendors," the analysts write.
The situation apparently has vendors tugging the strings of government relationships with renewed fervor. Lucent Technologies Inc. (NYSE: LU), for instance, is "using its solid relationship with its unionized workforce to help influence the government's decision," the note says. The analysts say they've confirmed this in talks with the Communications Workers of America.
Contracts for the RFP probably won't be announced until late September 2003, the analysts say, following a shortlist selection by SAIC and an interoperability test at the AT&T labs in New Jersey.
— Mary Jander, Senior Editor, Light Reading