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Verizon Expands MPLS Plans

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News Analysis
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11/21/2003

Verizon Communications Inc. (NYSE: VZ) is quietly ramping up plans to bolster its national data network with the addition of as many as 300 MPLS routers in addition to the 87 it has already deployed.

The expansion plan, dubbed "Enterprise Advance," follows the RBOC's success in signing up enterprise customers for its national data services. The carrier claims that in the past year it has closed 900 contracts with 550 large corporate and education customers, including J.P. Morgan Chase & Co., the Securities Industry Association, and Rutgers, The State University of New Jersey (see Verizon Touts Enterprise Wins).

Now Verizon wants to invest an unspecified but significant sum to expand its range of data services and capture further business, particularly lucrative government contracts. Only this week, the U.S. General Services Administration (GSA) announced it had authorized Verizon to compete for a range of contracts in the mid-Atlantic area worth more than $330 million in total.

Verizon currently offers Frame Relay, ATM, Sonet, and Ethernet-over-Sonet services, but is keen to offer IP VPN services nationwide during 2004 to compete with the likes of AT&T Corp. (NYSE: T), MCI (Nasdaq: WCOEQ, MCWEQ), and Sprint Corp. (NYSE: FON).

To achieve that, Verizon is to add another 170 routers to the network in 2004, according to a spokeswoman at the carrier, with the remaining planned additions to follow later. She adds that the cash required for the initial expansion is part of the current 2004 capital budget of "billions" of dollars, but she could not provide a separate figure for this project. Verizon's 2003 wireline spend will total between $6.8 billion and $7.3 billion.

She says the 2004 rollout will involve Verizon's existing major IP router suppliers, Cisco Systems Inc. (Nasdaq: CSCO) and Juniper Networks Inc. (Nasdaq: JNPR). However, an additional RFP is due to be issued for some of the remaining network expansion, though no further details are available at present, she adds.

Analysts at Lehman Brothers this morning issued a note saying they believe the investments will offer a big boost to Cisco and Juniper. Lehman estimates that Verizon will direct much of its investment towards broadband aggregation and edge routers from both vendors, but that the carrier's core network buildout, using Juniper boxes, is all but complete.

However, the analysts also note that Verizon has a multivendor strategy, and while Juniper will likely be the principal supplier for the broadband aggregation portion of the buildout, the carrier is also due to add some Cisco edge routing equipment, most likely the uBR series that is already deployed in its network.

The Lehman team also believes Verizon might favor Juniper's ERX edge routers for low-end edge routing in lieu of incumbent provider Redback Networks Inc. (Nasdaq: RBAK).

For its regional IP routers, Verizon is likely to focus on Cisco's 12000 Series products, though also use Juniper's M-Series router to maintain its dual-source approach.

— Ray Le Maistre, International Editor, Boardwatch

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BobbyMax
BobbyMax
12/4/2012 | 11:14:03 PM
re: Verizon Expands MPLS Plans
It is big concern of shareholders that Verizon keeps making arbitrary decisions causing the stock price to go down and down. Every year it comes out with different reasons for not being profitable. It makes rash decision regarding recruitment porocurement.It hides its RFPs and not distributing to all vendors that would like to participate. It has oversized management that has nothing to do withg business. Every Tom, Dick,and Harry have becomes with huge benefits in terms of retirement and insurance. With its illegal acquisition of New York Bell, its way of doing business has changed.

Ciscco 12000 series routers are very very old product. It is hard to say why Verizon would buy routers from Cisco. It has shut out Nortel, Lucent, Alcatel, Siemens and many other vendors from consideration. It did not make its RFP public.

The company has been unable to cut capex and opex.
The company has not disclosed how much it is paying for the Cisco routers. The Cisco's 12000 series routers are so old that the company cannot maintain the same price level that it had 12-14 years ago. The PUCS have lost control over Verizon. This neglect permits Verizon to take arbitrary decisions.
kampar
kampar
12/4/2012 | 11:14:02 PM
re: Verizon Expands MPLS Plans

You know, after reading that post I was almost moved to write a message defending Cisco (I managed to overcome the desire) .... what a powerful effect BM's rhetoric has on us mere mortals ... Shakespeare move aside ...

kampar
solver
solver
12/4/2012 | 11:14:02 PM
re: Verizon Expands MPLS Plans
Hahahahaha. That was a great post. Beautiful way to wrap up the week.
I'll be thanking BM on turkey day for delivering all the laughter through out the year.

Gea, I hope you can be as funny.

imref
imref
12/4/2012 | 11:14:01 PM
re: Verizon Expands MPLS Plans
Maybe I'm missing something - but who is the "She" in this article that is mentioned. Nowhere does it give the name of the Verizon contact for this project.
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