These FTTP contracts are important, as they underpin the beginning of the move to fiber last-mile connections for the mass market served by the Bell operators. For consumers, FTTP will offer more bandwidth per user than do most flavors of DSL and cable access -- singlemode fiber has 31 times the capacity of coaxial cable on 100-meter links, and over 250 times the capacity of high-end twisted-pair copper over those lengths, according to Corning.
The four suppliers announced today -- Corning Cable Systems (CCS), a subsidiary of Corning Inc. (NYSE: GLW); Preformed Line Products Co; ADC Telecommunications Inc. (Nasdaq: ADCT); and Tyco Electronics -- will provide fiber optic cabling and other outside plant equipment (a.k.a. "passive" elements, a.a.k.a. "widgets") for the FTTP system.
They join four other companies that Verizon selected and announced last month: Advanced Fibre Communications Inc. (AFC) (Nasdaq: AFCI) for the central-office and CPE electronics; and outside plant suppliers Sumitomo Electric Lightwave Corp., Pirelli Cables and Systems North America, and Fiber Optic Network Solutions Corp. (FONS) (see AFC Signs Verizon FTTP Letter and RBOCs See Three Ways to FTTP ).
Verizon network services group president Paul Lacouture said the latest vendor selection completes the second phase of the project, begun earlier this year when Verizon, BellSouth Corp. (NYSE: BLS), and SBC Communications Inc. (NYSE: SBC) adopted technical standards and issued a joint RFP to equipment suppliers (see RBOCs Agree on Access Specs).
While it’s great to see an RBOC announcing something other than declining revenues for a change, Legg Mason Inc. analysts highlight in a note to investors today that these contracts are “non-exclusive pacts that guarantee no certain volumes.”
The note continues: “These vendors have been invited to participate in the start-up phase of a long-term last-mile-of-the-network conversion that is, in our view, likely to take several twists and turns as standards evolve, bandwidth requirements increase, and the competitive landscape shifts. How it will all play out and which vendors will be the big winners in the FTTH build out five to ten years down the road, we believe, is impossible to know at this stage of the game.”
Verizon spokesman Mark Marchand says that, with its vendor selection complete, the next major step is working out how legacy operations support systems (OSS) will have to be upgraded or replaced to support the new network.
“Internally, we have to reinvent the wheel in terms of OSS, as we need an entirely new system that supports the new network and still interacts with our existing OSS infrastructure,” says Marchand. It’s likely Verizon will build most of this new software in-house, he adds, although there could be smaller contacts farmed out to external OSS vendors.
Verizon is keeping its lips sealed on the services it anticipates running over its new network. “It’s a voice, data, and video network, but we aren’t revealing the specific product sets for competitive reasons,” says Marchand.
Verizon sketched out its deployment plans as follows:
- Two FTTP trials in the first half of 2004
- Additional deployments in 100 central offices across nine states
- Deployments to consist of both "greenfield" (new residential construction) and overbuild (deploying fiber to existing subscribers now served by copper) projects
- Total homes passed in 2004: 1 million
- Deployment pace may "potentially" double in 2005
- Verizon will not increase total capital expenditures but will rather shift funds from copper to fiber.
— Jo Maitland, Senior Editor, Boardwatch