Optical/IP Networks

Sources: SBC Multiservice RFP Killed

SBC Communications Inc. (NYSE: SBC) has put the brakes on selecting multiservice gear for the edge, say sources.

If the sources are right, the big RBOC spender has cancelled the selection process for a request for proposal (RFP) it sent out to equipment vendors earlier this year. The carrier had been in the final stages of evaluating multiservice gear from three vendors: Redback Networks Inc. (Nasdaq: RBAK), Copper Mountain Networks Inc. (Nasdaq: CMTN), and Juniper Networks Inc. (Nasdaq: JNPR) / Lucent Technologies Inc. (NYSE: LU). Network Equipment Technologies Inc. (net.com) (NYSE: NWK) alluded to the RFP, and the fact that it had not been selected as a finalist, during its second quarter conference call in October (see Net.com Hits Rough Road).

This obviously comes as bad news to equipment companies looking for new projects to generate revenues -- and demonstrates the perils of working on long-range RBOC RFPs that can fall through at the last minute. SBC’s decision to put the multiservice buildout on the back burner is yet another sign that Bell operating companies are in no hurry to consolidate their networks. It could be another few years before incumbents start actually deploying gear to make this a reality.

The carrier declined to comment on the status of its RFP activities.

“SBC has been the most aggressive RBOC when it comes to DSL,” says Joanna Makris, an equities analyst with Adams Harkness & Hill. “They were the ones that were expected to really get the ball rolling in the service switch market... Long-term, I am a believer in this technology, but it’s clear that SBC views it more as a discretionary project, and those are the ones that tend to get cut.”

Indeed, SBC was one of the carriers that helped write the new specifications for broadband aggregation devices (see Carriers Want a Little B-RAS on the Edge). Makris says the company will likely revisit the project sometime next year.

The original RFP asked vendors for a solution that included ATM, Frame Relay and Ethernet switching, IP routing, and B-RAS functionality. Ideally, the carrier was looking for something that came in one box, but it did not specify this as a requirement. And to top it off, SBC wanted something cheap. It is a tall order to fill, and none of the products submitted fulfills every requirement.

“Most carriers are looking for a Frame Relay, ATM, and Ethernet over IP/MPLS solution,” says Scott Clavenna, chief analyst at Heavy Reading. “But few products can deliver what’s needed. The problem with these RFPs is that they ask for the moon, and vendors' responses inevitably tend toward over-engineering and a broken cost model."

Most carriers believe that IP routers don't have sufficient Layer 2 support. And the multiservice switches based on ATM technology have poor MPLS support. The problem is not necessarily a technical issue, but rather a design problem, says Clavenna. In order to get the right densities at the right price points, a product need to be designed from scratch. It’s difficult to do this by simply adding a blade to a router or a multiservice switch.

But there were other issues that likely caused SBC to delay the project. Makris says that Redback’s financial problems could have spooked the carrier (see Redback Closes a Chapter).

“SBC really liked the Redback box,” she says. “I know they were doing due-diligence on Redback’s financials, but I think they were concerned with the Chapter 11 restructuring and the company’s eventual reemergence from that.”

Even though the project has been tabled, some sources say SBC is preparing to relaunch the RFP in the next few months. The news has several vendors, who didn’t make the cut in the first round, salivating. The original short-listed vendors will likely compete once again for the business, in addition to others like Alcatel SA (NYSE: ALA; Paris: CGEP:PA), Cisco Systems Inc. (Nasdaq: CSCO), CoSine Communications Inc. (Nasdaq: COSN), Laurel Networks Inc., Nortel Networks Corp. (NYSE/Toronto: NT), and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA).

— Marguerite Reardon, Senior Editor, Light Reading

Kevin Mitchell 12/4/2012 | 11:14:19 PM
re: Sources: SBC Multiservice RFP Killed This article seems to be talking about 2 things. Is this a RFP for the convergence of FR/ATM over MPLS or about a new DSL aggregation network that brings IP and BRAS closer to the end user (+á la the whole DSL Forum WT-081 document).

Copper Mountain ain't got no router and would never be considered for a MPLS convergence play. Judging from the companies mentioned, it must be for the DSL aggregation network and not general multiservice convergence.

Multiservice appears to the overused once again!
ftthexpert 12/4/2012 | 11:14:17 PM
re: Sources: SBC Multiservice RFP Killed One of lessons learned from Verizon FTTP project, is that are not going to increase their overall $ spending, but rather move budget from other project to FTTP. Is this the direction of SBC ?
sigesux 12/4/2012 | 11:14:16 PM
re: Sources: SBC Multiservice RFP Killed I think your right about the budget reallocation but wrong about where the money is going. My bet is SBC spends heavy on wireless, including WiFi hotspots and allocates any money left to DSL and ADSL2+ build-out. Sorry no $ for FTTU at SBC!!

Even if they were to go ahead with FTTU, SBC wants to deploy Alcatel's solution, unfortunately with Verizon breaking ranks there is insufficient volume to justify Alcatel's redesign of their current solution. Catch22, there is no way that SBC starts a major deployment of $800 ONT's and insufficient volume to justify the development of a $150 ONT to compete.
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