Tiscali Heads South With Infinera

With its financial woes largely behind it, alternative Italian broadband service provider Tiscali SpA is to extend its transport and access infrastructure into the southern region of the Mediterranean country, and is giving optical equipment firm Infinera Corp. (Nasdaq: INFN) an early customer reference for its recently launched metro platform as part of its rollout plans. (See Infinera Wins at Tiscali and Infinera Makes Its Metro Move.)

Tiscali has had a tumultuous 2009. Faced with crippling debts, it sold its U.K. operations, restructured its finances, and replaced its management. (See Tiscali Reports Q3, Tiscali Completes UK Sale, and Tiscali Takes Next Step to Survival.)

Now, with just its domestic Italian fixed-line operations (consumer and business) to manage, it's looking to build on its subscriber base of about 600,000 voice and broadband customers, of which 553,000 are DSL customers (as of the end of September), and annual revenues of around €300 million ($447 million).

The operator is targeting revenues of €370 million ($551 million) in 2013, by which time it hopes to have 1 million customers, including 200,000 mobile subscribers from its MVNO (mobile virtual network operator) deal with national operator Telecom Italia (TIM) . (See Tiscali Plans MVNO.)

Part of its new plan is to build its own network infrastructure in southern Italy, where it currently relies largely on buying capacity from the incumbent carrier.

Tiscali's CTO, Andrea Podda, tells Light Reading that the operator plans to install its own MSANs (multiservice access nodes) in an additional 200 local exchanges to add to the 486 exchanges where Tiscali has unbundled the local loop. The move will give Tiscali greater control over its services and customers, and dramatically reduce its wholesale costs: Currently, 387,000 of Tiscali's broadband customers are connected to its own access gear, while the rest are hooked up to lines wholesaled from the incumbent.

In fact, Podda says the money it will save from wholesale payments to Telecom Italia will cover the €20 million ($29.8 million) it will spend on rolling out its new infrastructure -- MSANs from UTStarcom Inc. (Nasdaq: UTSI) for ADSL2+ services, and optical transport gear from Infinera.

The CTO says Tiscali had two projects: To expand its transport backbone into southern Italy, and to link its backbone to the 200 new unbundled exchanges. It decided to link the two, and source transport gear from one company.

So Tiscali evaluated equipment from a range of vendors, including backbone optical supplier Nortel Networks Ltd. -- soon to be Ciena Corp. (NYSE: CIEN) -- and chose Infinera because its PIC (photonic integrated circuit) is "the best technology... it will allow us to roll out new services in a flexible manner," says Podda, who adds that having a single management platform for the core and edge platforms was also an attraction. (See NSN Hopes Dashed as Ciena/Nortel Deal OK'd.)

He adds that Infinera is also suitable because it can "follow our requests" and perform quick changes to software releases "to suit our needs. With other vendors this can be difficult," states Podda, who says he talked to other Infinera customers to get their feedback. (See Infinera Bolsters COLT's Backbone, Viking Victory for Infinera , Interoute Deploys Infinera, Oteglobe Selects Infinera, and Infinera Wins DT, Loses the Day.)

Tiscali is using Infinera's long-haul DTN platform in about 20 nodes to light 9,000 kilometers of fiber with 40 Gbit/s or 60 Gbit/s of capacity (maximum capacity of 100 Gbit/s). To hook up its new MSANs collocation points, the Italian operator is deploying about 300 ATNs. The new rollout should be completed by the end of the first quarter of 2010, after which Tiscali can start migrating wholesale customers onto its own network.

Podda says the new capacity will help Tiscali meet the capacity needs of its broadband customers, who are using increasing amounts of over-the-top video services, and help roll out its Unica fixed/mobile convergence service, which enables its mobile customers to make voice calls over WiFi connections. The operator doesn't have any plans to reenter the IPTV market, though it is developing plans for a fiber-to-the-curb broadband rollout. (See T Italia Set to Take IPTV Crown.)

As for Infinera, chief strategy officer Dave Welch notes that Tiscali is the vendor's largest European customer so far for the metro edge ATN product, and believes his company had stiff competition from the likes of Alcatel-Lucent (NYSE: ALU), Ciena, Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY), and Huawei Technologies Co. Ltd. , as well as incumbent supplier Nortel, to land the deal. (See Infinera Adds Metro System.)

"Tiscali is a new customer for us -- they've bought into our capabilities. What we find is that if we can get a beachhead customer [in a particular region], then you can build from that," adds Welch, who says the ATN is currently being evaluated by a number of Tier 1 European carriers.

Infinera says it currently has 66 customers for its long-haul DTN platform and six for its metro ATN product.

— Ray Le Maistre, International News Editor, Light Reading

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