SBC, Verizon Mull Metro Buys
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