RBOC Whispers for Catena

Is Catena Networks Inc. is hiding its light under a bushel? The startup maker of new-fangled digital loop carrier (DLC) access gear is said to have business coming from three different regional Bells.

Catena has acknowledged it is supplying gear to the major RBOCs, but it won't speak of particular carriers.

"Catena has received orders from the three largest RBOCs and major independent operating companies (IOCs)... As of mid-June, major carriers had deployed more than 1,500 of Catena's integrated broadband access systems -- including the CNX-5 Broadband DSL System and the CN1000 Broadband Loop Carrier," says a Catena spokesperson, via email.

A report distributed earlier this month by Deutsche Bank AG says Catena is supplying gear to BellSouth Corp. (NYSE: BLS), Verizon Communications Inc. (NYSE: VZ), and SBC Communications Inc. (NYSE: SBC). These also happen to be the three largest RBOCs by revenue, so it meshes with Catena's story. Deutsche Bank analysts George Notter and Cobb Sadler authored the note.

The BellSouth relationship was first reported in Boardwatch some time ago (see Catena Cozies Up to RBOCs), but the other two customers appear to be recent developments. That said, it's no surprise this is just coming out -- RBOCs are very selective when they talk about their equipment suppliers and usually don't announce anything until after the gear has been installed and is running.

The carriers are likely upgrading their old POTS line cards in traditional Lucent Technologies Inc. (NYSE: LU) SLC (subscriber loop carrier) systems with combined ADSL and POTS interfaces that Catena sells, the Deutsche Bank report says. "We believe that Catena is also a preferred method for RBOC upgrades of DLC systems for DSL support."

Catena's line-card upgrade business is nothing to sneeze at. The company says it sees that there are about 20 million access lines served by DLCs that could be upgraded with its line-card solution.

But two important barriers remain before the startup can really claim it has conquered the RBOCs. First, not all of the 20 million DLC lines will be upgraded. Those that can could also be upgraded by a Lucent SLC replacement system from Adtran Inc. (Nasdaq: ADTN) or a mini-DSLAM add-on, such as those sold by Allied Telesyn Inc.

The second big issue for Catena is that a line-card upgrade doesn't guarantee any systems sales. Catena sells both a line-card upgrade and an entire system upgrade.

An analyst who wishes to remain anonymous puts it more bluntly: "I would imagine that most new chassis sales are going to go to Alcatel SA or Advanced Fibre Communications Inc., not Catena."

— Phil Harvey, Senior Editor, Light Reading

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rbkoontz 12/4/2012 | 11:51:00 PM
re: RBOC Whispers for Catena 1500 "systems" deployed?

Do they define a linecard upgrade to a SLC5 a system? I assume so. That reads as 1499 CNX-5 cards (with 2 lines each) shipped and 1 CN1000 system. That's a grand total of less than 4000 lines. I do believe the SLC-5 retrofit could have been a nice little niche business for them if only they stuck to that.

Problem is they need a bigger market to get much of a valuation and they are pouring all their money into developing the new CN1000 system. It is not really working anywhere than a few experiments in the IOCs - particularly not in any RBOC network! Then there's the problem of 20 other startups all developing new broadband loop carriers.

Alcatel is getting the lion's share of this business. AFCI is getting some table scraps. For the rest of us, it's back to some other industry when the VC money runs out in access.
ThurstonHowell3rd 12/4/2012 | 11:50:50 PM
re: RBOC Whispers for Catena Most excellent post Gilligan my boy!!

Very insightful... you make excellent points. I've been a bit curious myself regarding the new DLC systems they were pushing at Supercom. I thought it a bit of reach from their first product line which was reverse engineered line cards to go into existing RTs.

My question on the new DLC platform is with respect to remaining real estate in the RT network? Is there room for yet anouther access system? I fear not...

The best boxes in the world can't do squat w/o space and power...

firstmile 12/4/2012 | 11:50:50 PM
re: RBOC Whispers for Catena Most,
Your comment is on the money! Selling the new line cards into SLC5s is a very cool little business. Unfortunately, it has almost nothing to do with displacing Alcatel and AFC with a new, better NGDLC.
jbhollen 12/4/2012 | 11:50:48 PM
re: RBOC Whispers for Catena A "system" is a dual channel bank SLC-5, each capable of 192 DSL and POTS lines. A line card is a line card, not a system.
rbkoontz 12/4/2012 | 11:50:41 PM
re: RBOC Whispers for Catena JB,
If a "system" is a dual channel bank SLC-5, then is Catena shipping new SLC-5 channel banks? I think not! Who in the world would buy an obsolete 15 year old product? And I am confident that Catena has not shipped 1500 of the new CN1000 systems!

So somebody is lying... I mean marketing!
firstmile 12/4/2012 | 11:50:36 PM
re: RBOC Whispers for Catena Most,
I think that they shipped 1500 small cards that can fit into "obsolete 15 year old products"
jbhollen 12/4/2012 | 11:50:34 PM
re: RBOC Whispers for Catena A system refers to a legacy SLC-5 dual channel bank that has has been upgraded with Catena Common Cards to enable it to be equipped with dual POTS/DSL cards. So a "system" is potentially 192 lines of Catena POTS/DSL in a SLC-5 that already exists in the network. In reality the number of lines will depend on the take rate from that system. 1500 systems is at least 1,500 sets of common cards and possibly 288,000 lines (144,000 line cards) but in reality it is probably 10+ % of that number or about 30,000 lines.

Now on a more editorial note, do you really think that 3 RBOCS are all going to sign contracts that are worth only 1,500 cards between them? Is there some reason you have a problem with a start-up getting a little press for having a reasonably well accepted product? I am going to venture a guess that you are one of the marginally tallented that rode the start-up swell to the top and back down again and now you see any success by a start-up as what "you should have had". You now seem content to sit on the sidelines and snipe at other successes.

This will be my last post on this article as I do not have enough time to coninute to tell you what you don't know.
alcateldude 12/4/2012 | 11:50:30 PM
re: RBOC Whispers for Catena jbhollen,
I agree with you. Its not worth wasting your time responding to people that can't even grasp the concept of "traffic aggregation", or lack a basic understanding of where the access business is headed.
OSPGuy 12/4/2012 | 11:50:12 PM
re: RBOC Whispers for Catena For those of us with an interest in scrappy little start-ups, lightreading is not the only source of information in town.

One of our little secrets is to check the hometown newspapers. They periodically contain tantalizing snippets of information that pompous blow-hards who rely exclusively on light reading just might miss.

Here's one. If you want more, learn how to use google.

tspoon 12/4/2012 | 11:50:11 PM
re: RBOC Whispers for Catena Occam Networks also plays in the same space. They have announced a number of small wins, but have also talked about 20, or so trials including ILECs. A Wall St analyst was talking about a win for Occam in California. This was heard at Supercom (Nasdaq, OCCM) OCCM could be the less expensive acquisition for an ALCATEL, ADC, etc. lets face it market share is king and Catena does not have a big brother. Both Catena and Occam will win. cool t4chnology. PS
I am an SBC user, and there is no sign of any swap outs at all at this point. I work with their priority services group as a consultant.
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