SBC Edge RFP Resurfaces
SBC had requested vendor submissions last year but appeared to put the brakes on its project in November (see Sources: SBC Multiservice RFP Killed). Now Redback, which was under consideration first time around, says it's engaging with the RBOC regarding an RFP known as MSG, or Multiservice Gateway.
An industry source, who requested anonymity, says the RFP is a reissue of the edge equipment request that takes into account the DSL Forum's TR-059 specifications as issued last September (see DSL Forum Tackles Premium Services). The source says that while SBC has taken TR-059 into account, compliance to the specification is not demanded in the RFP. He adds that the RFP has just closed and that no further submissions are being accepted by the carrier.
Redback's submission has definitely been delivered. During his company's first-quarter results conference call on Wednesday, CEO Kevin DeNuccio said Redback was "pursuing" the business at SBC, which is already a major customer for the vendor's SMS subscriber management platform, and that the RFP was "not just for DSL, it's for next-generation edge [equipment]."
Basically, that means Redback has its SmartEdge broadband remote access server (B-RAS) under the SBC microscope. SBC had not responded to questions about the RFP as this article was published.
The fact that Redback even mentioned the RFP is surprising, but perhaps shows the company is confident it can take a slice of what would appear to be a very large pie. Joanna Makris, an analyst at Adams Harkness & Hill believes the SBC contract could be worth as much as $500 million to $750 million over five years, and that it'll likely be awarded in the second half of this year. In a research note, Makris describes the contract as "one of the most meaningful opportunities in the emerging broadband aggregation market segment." She adds that "the winner is likely to garner significant momentum with other RBOC opportunities in 2004."
Makris also believes that Redback is well placed to score with SBC because of its incumbency with its SMS platform, and that Juniper Networks Inc. (Nasdaq: JNPR) is also "well positioned."
Another company in the frame, according to the analyst, is Copper Mountain Networks Inc. (Nasdaq: CMTN), in partnership with LM Ericsson (Nasdaq: ERICY) (see Ericsson Mines Copper Mountain). Makris reckons the tieup with Ericsson "provides Copper Mountain with a key competitive advantage in potentially winning RFPs among U.S. RBOCs."
So who's not in the running? Makris reckons that while Ciena Corp. (Nasdaq: CIEN) is a contender in the larger North American B-RAS market through its partnership with Laurel Networks Inc., it's not a front runner at SBC (see Ciena Takes Stake in Laurel).
Another vendor on the periphery is Network Equipment Technologies Inc. (net.com) (NYSE: NWK), reckons Makris. She believes net.com is suffering from the lack of a large vendor partner that could help it win with the RBOCs.
Net.com's CEO Bert Whyte, though, said during his company's conference call yesterday that net.com is involved in edge equipment RFP activity with two RBOCs at present, though he didn't name SBC. And a company spokesman adds that recent versions of net.com's B-RAS products are "a long way towards what is required for TR-059."
As for Alcatel SA (NYSE: ALA; Paris: CGEP:PA), it's not even close to any of this action, reckons Makris, despite its significant installed base of DSL and DLC gear in the RBOCs. That could be due to the lack of a B-RAS (see Alcatel Goes Mid-Range).
Should Redback win significant business at SBC, or any RBOC, it would provide a much needed boost to the company's revenues. Redback yesterday unveiled its first-quarter figures, which showed a slight but steady increase in revenues to $30.2 million, but a net loss that was slightly higher, at $33 million, largely because of one-off charges (see Redback Reports Q1 Loss).
DeNuccio was upbeat about the rest of the year, and for SmartEdge prospects in particular. He noted the SmartEdge product line is set to provide revenue growth in 2004 and already contributes about 40 percent of the firm's product revenues -- $9.7 million from total product revenues of $25.6 million in the first quarter.
That $9.7 million is nearly double the revenues generated by SmartEdge sales in the previous quarter, and Redback claims that seven of the top 20 DSL service providers in the U.S. are now using the product. The CEO also notes a "high level of activity in Europe," where the major carriers are "very advanced in their thinking about next-generation edge [networks]."
And DeNuccio believes that "every major carrier will make a decision in 2004 or 2005 to deploy a next-generation network," and that such a trend can only be good news for his company's long-term outlook.
— Ray Le Maistre, International Editor, Boardwatch