RBOC Whispers for Catena
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