Metro Battle Brews at Worldcom
The biggest loser in the deal may be Nortel Networks Corp. (NYSE/Toronto: NT): Its metro gear risks being kicked out of the WorldCom network.
Potential winners? Sycamore Networks Inc. (Nasdaq: SCMR) and Sorrento Networks Inc. are said to be front-runners in the competition. In fact, the trials at Worldcom may have led those companies to work more closely together, prompting Sycamore's alleged interest in acquiring Sorrento, a development originally reported by Light Reading last week (see Is Sycamore Sniffing Around Sorrento?).
A potential partnership between Sycamore and Sorrento could also displace Fujitsu Ltd., which, like Nortel, has a long-haul contract with Worldcom. Fujitsu says it is currently supplying metro gear to Worldcom and plans to continue to do so. Sources say Nortel's metropolitan product, Optera, also is presently deployed in Worldcom's network. But Worldcom is reportedly not fully satisfied with the setup and is seeking alternatives.
"Worldcom's definitely looking into next-generation products for its metro services," says Seth Spalding, director at Epoch Partners. He says he has not heard of the possible Sycamore/Sorrento partnership -- although he was aware of Worldcom's interest in Sycamore.
Analysts say Worldcom has also asked Lucent Technologies Inc. (NYSE: LU) and Astral Point Communications Inc. to present a joint solution for trial. ONI Systems Inc. (Nasdaq: ONIS) and Zaffire Inc. have also been mentioned as possible candidates. And it's possible Ciena Corp. (Nasdaq: CIEN), a Worldcom metro supplier in Europe, may also be considered.
It appears that Worldcom is searching for a cheaper, more practical alternative than it presently has for metro connectivity. "A regional solution plus a metro product is a lot cheaper than adapting a long-haul solution for use as a regional product," says Jeb Besser, portfolio manager with Manchester Management, a Boston telecom hedge fund.
Both Sycamore and Sorrento products make sense from a technological viewpoint. Sorrento's one-box solution for metro and regional networking is well matched with Sycamore's more sophisticated Sonet capabilities and provisioning software.
"Sorrento's most important differentiator is its combined metro/regional solution," says one industry analyst familiar with the trials, who requested anonymity. "They can slot in cheaper metro optics supporting distances up to 150 kilometers on one card, while putting regional optics supporting 150 to 600 kilometers on another card. In areas with many cities in close proximity, it becomes important to have a one-box solution."
But Sorrento lacks carrier-class Sonet routing and backup functionality, others say. "Sorrento's a quick and dirty solution," says Peter Tierney, vice chairman of Sphera Optical Networks, a startup metro service provider. "When we looked at them we felt they lacked some active lasers and routing schemes."
Enter Sycamore, whose products offer Sonet functionality along with a sophisticated provisioning capability -- part of which the company has been seeking to standardize (see Vendors Demo Signaling Synergy).
None of the companies involved in the story, including Worldcom, had comments on the situation at press time. "We're testing a lot of equipment here. Usually, we're asked to issue a press release when a trial's going well. But I haven't gotten any word about this," says a Worldcom spokesperson. -- Mary Jander, senior editor, Light Reading http://www.lightreading.com