x
Optical/IP

SBC, Verizon Mull Metro Buys

Several top equipment vendors hope to win spots in two upcoming network equipment buys from SBC Communications Inc. (NYSE: SBC) and Verizon Communications Inc. (NYSE: VZ). The problem: Neither company is in a hurry to make a decision, and there is increasing speculation that Verizon is about to undergo another capital spending cut.

For startups, the news is even worse. None of the new Sonet transport or MSPP (multiservice provisioning platform) startups out there has come up as a possible finalist in these two significant requests for proposal (RFPs). Indeed, the incumbent carriers continue to appear more comfortable buying from incumbent equipment vendors.

UBS Warburg analyst Nikos Theodosopoulos says Verizon's RFP is to supply between $750 million to $1 billion of next-generation Sonet gear a year for its metro networks. SBC's RFP, valued at between $500 million and $750 million a year, is also for next-generation metro Sonet gear.

In the SBC race, Fujitsu Network Communications Inc. (FNC) and Nortel Networks Corp. (NYSE/Toronto: NT) are incumbent providers, with Lucent Technologies Inc. (NYSE: LU) and Cisco Systems Inc. (Nasdaq: CSCO) being the main challengers, according to Theodosopoulos. "Our opinion is that the longer the carriers put off the decision, the more it favors the incumbent equipment providers," he says.

Analysts expected SBC to have a final decision sometime in 1Q02. With the delay, however, they are less sure. "We have no idea when a decision will be made," Theodosopoulos says.

In the Verizon race, Cisco and Marconi PLC (Nasdaq/London: MONI) have been dropped from a bakeoff that now includes Lucent, Fujitsu, and Nortel, according to George Notter, an analyst at Deutsche Banc Alex Brown LLC. Notter says the decision on that RFP was supposed to have come late last year.

He says the Verizon RFP may be put off a while, thanks to a coming capital spending cut of between 15 percent and 25 percent, mainly focused on wireline spending. (As of January 31, Verizon said it expects to spend $15 billion to $16 billion in capex this year.) Some in the industry are saying Verizon has discovered additional network capacity and is in the process of deciding how deep their capex cuts should be, according to a note Notter sent to clients on Monday.

Spokespeople for Verizon and SBC declined to comment on the RFPs in play. "We don't comment on those things until there's a contract signed," says a Verizon spokesman. He says the company only comments on its capex plans during earnings calls or special announcements.

Calls to Fujitsu were not returned by press time. Cisco declined to comment for this story.

— Phil Harvey, Senior Editor, Light Reading
http://www.lightreading.com
Page 1 / 3   >   >>
mpl 12/4/2012 | 10:40:29 PM
re: SBC, Verizon Mull Metro Buys With Avanex supplying mux/demux and other parts to both Nortel and Fujitsu, I beleive Avanex is in a win/win situation with the current RFP decisions by Verizon and SBC. This also explains their recent revenue rise last quarter despite continued revenue shortfalls by their main competitors.

As the other incumbents join the build out later this year, companies with the right product and the right OEM partners will see revenue growth and EPS gains.
Joeboo 12/4/2012 | 10:40:28 PM
re: SBC, Verizon Mull Metro Buys Gee an unbiased comment from an unbiased industry observer. Gosh Marsha, this Avanex company sure is groovy.
StartUpGuy1 12/4/2012 | 10:40:26 PM
re: SBC, Verizon Mull Metro Buys Problem with ALA is that they are not in the hunt for this deal. ALA sells cross connects to SBC (actually the old Ameritech). Southwestern Bell does little with them. And nothing on the SONET side.

Astral Point is a decent box and works but SBC will not buy from ALA on this contract.. It is too late...
sg38 12/4/2012 | 10:40:26 PM
re: SBC, Verizon Mull Metro Buys Don't know if their box is ready. Today they officially belongs to Alcatel, so maybe the question is: Is ALA ready to bid for next-gen SONET RFP at VZ and SBC?

sg

bitdropper 12/4/2012 | 10:40:25 PM
re: SBC, Verizon Mull Metro Buys WOW!!! What a shocker. The two biggest RBOCs are going to buy from incumbent vendors, and no start-ups are going to get a sniff. Gosh, who could have seen that coming?
owl-light 12/4/2012 | 10:40:23 PM
re: SBC, Verizon Mull Metro Buys mentioned in the article. Surely their a contender.
bitdropper 12/4/2012 | 10:40:22 PM
re: SBC, Verizon Mull Metro Buys "Don't know if their box is ready. Today they officially belongs to Alcatel, so maybe the question is: Is ALA ready to bid for next-gen SONET RFP at VZ and SBC?

sg"
--------------------------------------------------
With no disrespect to Astral Point/ALA, as this could apply to any of the acquired start-ups, but just because they are now part of a larger operation doesn't mean that they suddenly expanded their manufacturing capacity, brain trust, feature development dates, and service/support capability. If anything, the last three could possibly suffer due to the exodus that is bound to occur. On top of that, like many of their contemporaries, they are a one-trick pony with a box that was essentially intended for greenfield deployment. Just because that market sublimated, doesn't necessarily mean that it will fit neatly into legacy infrastructures. RBOCs are not without their faults, but risk-fraught stupidity isn't one of them. On the other hand, the RBOCs are smart enough to pretend to be serious about a new ALA product, in order to create the illusion of competition for LU, NT,and FUJI (read: price pressures). Is ALA willing to spend a ton of money chasing what could turn out to be red herring?

Again, not to single out Astral Point, because the battlefield is littered with the cadavers of acquired start-ups, but it's not an unrealistic assumption to believe the acquisition had more to do with price and timing than it had to do with a killer product or technology suited for the RBOC world.

Just my unqualified 2 cents worth.
layer3 12/4/2012 | 10:40:22 PM
re: SBC, Verizon Mull Metro Buys I think everyone is missing the point here. With CAPEX reductions all the wave, it's highly unlikely either ILEC will switch vendors- so the currently installed ADM vendor has a HUGE advantage.

Start-ups weren't even considered for this business because none of them have the money to get OSMIME certification- a show stopper in both bids.

It's a pretty sad statement of our industry that two delayed RFPs is making news...

L3
StartUpGuy1 12/4/2012 | 10:40:22 PM
re: SBC, Verizon Mull Metro Buys Until they acquired Occular, Tellabs did not have an MSPP box to bid at SBC.. They are the main supplier of Cross connects to SBC but have no presence in the SONET OADM infrastructure at SBC.
pigglywiggly 12/4/2012 | 10:40:20 PM
re: SBC, Verizon Mull Metro Buys Opticaluser wrote : "Astral Point is a decent box and works but SBC will not buy from ALA on this contract.. It is too late..."

__________________________________

AP's box being good or not is beside the point, I don't think Astral Point is OSMINE compliant yet, which locks them out of SBC and Verizon. They didn't start with Telcordia until mid-last year so they probably have at least a few more months before they make it. Has anyone heard otherwise?
Page 1 / 3   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE