More Missives on AT&T's Long Haul

Another firm has weighed in on the fate of AT&T Corp.'s (NYSE: T) long-haul network upgrade. A research note from analyst firm RHK Inc., obtained by Light Reading, suggests that Siemens AG (NYSE: SI; Frankfurt: SIE) did win the whole lot of AT&T's long-haul DWDM business.

This potential contract from AT&T -- probably the largest purchasers of DWDM gear in North America -- has long been closely watched. So far, it's dashed startup hopes and frustrated many (see AT&T DWDM Hope Dwindles and Corvis Deletes Message Poster).

For its part, AT&T has already dismissed the Siemens chatter as "rumor," though it didn't go so far as to deny that some sort of deal was in place (see AT&T Smacks Siemens Rumor).

RHK says Siemens has nailed down the deal in exchange for some of its telecom services.

"The real surprise was that AT&T has selected Siemens for its ultra-long-haul (ULH) project -- setting aside the rumored selection of Ciena Corp. (Nasdaq: CIEN), Corvis Corp. (Nasdaq: CORV), or Lucent Technologies Inc. (NYSE: LU)," wrote RHK's analysts less than a week ago. The note suggests that the real winner of the deal is AT&T. "AT&T will receive a steady revenue stream from Siemens, as the German firm moves its global telecom and network services to AT&T, and AT&T gets low-cost pricing for next-generation ULH gear."

Previously several Wall Street analysts close to the long-haul equipment vendors said that AT&T did give some kind of nod to Siemens in the long-haul space, but that it hadn't made a decision regarding its much broader long-haul network upgrade. At this point, RHK seems to be the only firm saying there was only one AT&T long-haul deal and Siemens won it all.

"An interesting data point we learned was that the oft-talked about AT&T ultra long-haul DWDM contract has not yet been awarded, and in fact, has not entered trials," wrote J.P. Morgan Chase Bank & Co. analyst Ehud Gelblum in a June 4 note to clients. "It will be at least 9-12 months before a contract is awarded." In emails to Light Reading Gelblum adds that the anticipated contract is low-margin, thanks to the pricing pressure AT&T is applying to vendors, and that the whole deal is expected to be worth between $50 million and $100 million.

— Phil Harvey, Senior Editor, Light Reading

zettabit 12/4/2012 | 11:53:42 PM
re: More Missives on AT&T's Long Haul It's interesting that the touted contenders for the AT&T ULH network are the oft-mentionned Ciena, Corvis and Lucent. And funny that the presumed winner is Siemens.

But what about Alcatel and Nortel? I assume they also were interested.

Does anybody have any information as to why neither of these players was a "finalist" and never even seems to get mentionned as a contender for this business. I am especially interested as to why Nortel was never a finalist as, unlike Alcatel, Nortel has traditionally been an extremely strong player in long-haul DWDM in N. American IXC's
fiber_r_us 12/4/2012 | 11:53:39 PM
re: More Missives on AT&T's Long Haul The RFP was for ULH... Nortel and Alcatel do not have ULH systems...
ecipo 12/4/2012 | 11:53:39 PM
re: More Missives on AT&T's Long Haul Yoo are correct about Nortel. Concerning Alcatel, the company is losing significant market share in optical networking. Its competitors are signing a lot more deals in that area around the world, so ain't gonna be any better in the near future. Alcatel also lost its leading position in Europe to Marconi.
fiber_r_us 12/4/2012 | 11:53:37 PM
re: More Missives on AT&T's Long Haul At the time, the LH1600 only went 600km... longer distances were achieved through the release of the new DT terminal with transceivers that included FEC, but I suspect that this was too late for AT&T.
zettabit 12/4/2012 | 11:53:37 PM
re: More Missives on AT&T's Long Haul fiber_r_us wrote:

"The RFP was for ULH... Nortel and Alcatel do not have ULH systems... "


Nortel's LH1600 system is minimally different than the Ciena Corestream. In addition, AT&T's ULH network is not so ULTRA long-haul that so that the maximum distance between the nodes generally is never such that you'd need more than 1500km reach.

Are you speaking from actual knowledge that Nortel was disqualified due to lack of an ULH system, or is it inference?
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