DZS intends to use a new, high-capacity PON system to take aim at opportunities to switch out Huawei optical line terminals (OLTs) in certain global markets and secure deployment deals elsewhere as telcos look to future-proof their fiber networks.
DZS's new PON system, called the Velocity V6, was initially designed as a higher-capacity replacement for Huawei PON gear deployed in markets and regions such as North America, Western Europe, India and other areas where there is government pressure to swap out Huawei over fears the equipment can be used for spying – an accusation that the Chinese vendor has long denied.
Debates aside, DZS created the V6 to mimic the form-factor of Huawei's six-slot OLTs that were being deployed in traditional, seven-foot cabinets around the globe, DZS CEO Charlie Vogt explained.
Figure 1: DZS says the Velocity V6 form-factor is a compatible, higher-capacity alternative to Huawei OLTs, but will also focus on opportunities beyond rip-and-replace.
(Source: DZS)
"As we were talking to a lot of the tier 1s across Canada and Western Europe and India, they were saying, 'If I put in Adtran or I put DZS in our cabinet and we're pulling out Huawei OLTs, we're really giving up a lot of density and a lot of capacity in that chassis, [where] space in a central office is pretty precious'," Vogt said. "All of those things, when you do the ROI [return on investment] on it, just seems a lost opportunity."
Those discussions led DZS to develop the V6 form-factor. But in order to get the most out of that space, the company also equipped it with about ten times the capacity of the product that's being yanked out. Vogt says such switch outs will put those operators on an upgrade path for XGS-PON and beyond.
Among the technical specs, DZS said the new product is a 6-RU (rack-unit) platform that scales to 800 Gbit/s of non-blocking switching capacity per slot, able to bring 10-Gig XGS-PON services to more than 24,000 subs. DZS also claims the new system initially target speed upgrades in the range of 50 Gbit/s to 100 Gbit/s.
'Hundreds of millions' up for grabs
"It's pretty transformational," Vogt boasted. "It certainly fills a gap from our 2-u to our 14-u [OLTs] and a sweet spot that we're seeing not just where Huawei is, but around the world."
DZS has yet to announce wins for the V6, but intends to enter large telcos' RFP (request for proposal) processes as the supplier gears up to start shipping the product in Q1 2023. But clearly, DZS has dollar signs in its sights.
Vogt estimates that Huawei has sold "hundreds of millions of dollars of OLTs" in those targeted countries. "It's probably in the billions over the last decade."
He also notes that many of those accounts over the years had Huawei come in as an alternative to suppliers such Alcatel, Nokia or Lucent.
"It's really about how can [the operator] best augment and cap and grow and replace the Huawei [product] that's not Nokia. It really is a unique opportunity for us," Vogt said. "We think there's hundreds of millions of dollars that are going to be replaced over the next couple of years and we're finding that more and more of these countries are accelerating the pace because their governments are really forcing the timeline to get Huawei out of the network."
Not solely for Huawei swaps
But DZS stresses that the V6 has a place to play outside of Huawei swaps as telcos upgrade or seek ways to future-proof their fiber networks, particularly as data demands rise and operators need systems that can serve 20,000 subscribers and above.
"It's not just about Huawei replacement. We see the V6 being a solution that we'll deploy all over," Vogt said. "We've got a lot of North America carriers very interested in it. We've got customers in Asia that are very interested in it."
The V6 form-factor is a compatible alternative to Huawei, but also represents a "change in direction" for carriers as they explore how to ramp up capacities to support future, high-bandwidth, low-latency services, said DZS CTO Andrew Bender.
Supply chain update
DZS plans to hit its anticipated shipping timeline for the V6. But the company, like others, is still grappling with supply chain constraints.
"Bending metal" in the V6 chassis is not one of those constraints, but the general supply chain continues to focus around certain subcomponents and chips, Vogt said.
"We're certainly seeing an easing of supply chain," he added. "I think all of us are going to continue to have to navigate supply chain challenges throughout 2023. I think we get to a more normal state, in my opinion, by 2024."
But demand is there. Vogt said DZS, which is scheduled to report Q3 2022 results on Tuesday, November 1, entered the fourth quarter with its biggest ever backlog in the company's history.
"This industry has never seen a fiber based demand curve like we're seeing right now," he said, noting that DZS has added more than 200 customers, primarily in North America and Europe, since Vogt took the helm in August 2020.
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— Jeff Baumgartner, Senior Editor, Light Reading