Optical/IP Networks

Verizon Wrangles Remote DSLAMs

Fiber-to-the-premises (FTTP) might be the most-watched activity in Verizon Communications Inc.'s (NYSE: VZ) access strategy, but the company hasn't ignored broadband in the hinterlands.

Light Reading has obtained parts of an RFP the carrier issued in February in which it asked vendors for a stand-alone DSLAM that can deliver services "directly from the small remote terminal."

By putting remote DSLAMs in smaller plants, the carrier is looking to build an overlay solution where the existing digital loop carrier would provide voice service and the DSLAM would provide the data services.

"There are still opportunities at the smaller and more difficult to serve remote locations. The purpose of this RFP is to select a small DSL remote terminal to help fill some of these gaps," the document states.

Suddenly, remote DSLAMs seem to be getting lots of play. For example, earlier this week there was speculation that SBC Communications Inc.'s (NYSE: SBC) fiber-to-the-node initiative could pump up demand for remote DSLAM as the vehicle to deliver triple-play services (see SBC Plan: Upside for Adtran?). But rather than being part of some grand architectural expansion, Verizon's RFP appears to be focused on simply getting connectivity to those customers that aren't close enough to a central office.

The catalyst is simple: cable. The advanced services offered by Cablevision Systems Corp. (NYSE: CVC), Time Warner Cable, and other MSOs that compete with Verizon have increased the chance of the carrier losing more access lines and future sources of revenue.

The RFP calls for an "environmentally-hardened" DSLAM with a small footprint. Most scenarios would require the DSLAM to be housed in a weather-tight case. The document also asks for bids for an ATM aggregation device, if available. That device would combine the data traffic from several remote terminals onto a single DS3 or OC3c.

Adtran Inc. (Nasdaq: ADTN) is widely believed to be the lead dog in this hunt, with Pedestal Networks Inc. and others bringing up the rest of the short list. Though no dollar amount is pegged to the RFP, the deployment projections hint that the contract isn't huge.

"When you win RFPs like this, they're more of a hunting license than anything else," says Kermit Ross, principal of Millennium Marketing, a telecom consultancy.

Table 1: 2004 Forecast
Remote Terminal Configuration (number of lines) Number of Remote Terminals Subscribers Served
12 50 600
24 150 3600
48 50 2400
Total Possible Subscribers 6600
Source: Verizon, Light Reading sources

Table 2: 2005 Forecast
Remote Terminal Configuration (number of lines) Number of Remote Terminals Subscribers Served
12 90 1080
24 270 6480
48 90 4320
Total Possible Subscribers 11880

Table 3: Projected Services Levels
Consumer ADSL Service Level 1 Service Level 2 Service Level 3
Downstream 768 kbit/s 1.56 Mbit/s 1.56 Mbit/s
Upstream 128 kbit/s 128 kbit/s 384 kbit/s

Still, with only a handful of line-powered, weather-proof DSLAM vendors out there -- including Adtran, Pedestal, Allied Telesyn Inc., Extel Communications Pty. Ltd., and Zhone Technologies Inc. (Nasdaq: ZHNE) -- the smaller companies appear to be getting a decent shot at winning a marquee customer.

Others that may have been in consideration include mini-DSLAM vendors such as Paradyne Networks Inc. (Nasdaq: PDYN), Conklin Corp., ECI Telecom Ltd. (Nasdaq/NM: ECIL), and others. Verizon may have been mulling DSL-extention solutions, too, such as those made by Critical Telecom Corp. and GoDigital Networks.

The carrier won't comment on its vendor short-list, saying a contract award is still pending. "Nothing has been finalized on the deal yet," says a Verizon spokeswoman.

— Phil Harvey, News Editor, Light Reading

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