Adtran gets Luminous RPR for ‘next to nothing’

Adtran has acquired the intellectual property and product rights of Luminous Networks, a defunct vendor of resilient packet ring (RPR) equipment. The cash acquisition cost “next to nothing,” according to Jay Wilson, Adtran’s vice president of product marketing.

Wilson wouldn’t be more specific, but he hinted that Adtran paid less than $1 million for the remains of Luminous, which collected a total of $173 million from investors in its six-year life.

Luminous fizzled late last year after attempts to revive the company with a new chief executive officer didn’t pan out. The company sold equipment based on RPR, a technology created to combine the resiliency of Sonet networks with the efficiency of Ethernet. Luminous introduced an RPR-over-Sonet platform in late 2003 after having some success in Asia selling RPR over fiber.

Ciena began a reseller agreement with Luminous that year, helping to lead the company’s last investment round, which totaled $25-million. But a year later, hardly any sales had resulted from the partnership.

“The RPR market never really materialized,” Ciena CEO Gary Smith told Telephony in late 2004. “It did in places like China to some extent but not in Western markets as most people predicted. It really has not come to bear in North America, and I think it’s unlikely to in the near term.”

In a survey conducted by Infonetics Research in late 2003, 63% of service providers in Europe and North America expressed an intent to deploy RPR within a few years. Last year, Infonetics predicted the North American RPR equipment market would grow 14% annually to $246 million by 2007. In 2003, the domestic market was worth $146 million.

Part of the reason Luminous failed, according to Wilson, was that the company was ahead of its time, selling RPR gear before the technology was standardized. The Institute of Electrical and Electronics Engineers didn’t ratify its RPR standard, 802.17, until June 2004. Luminous was predictably unable to persuade major carriers to take a chance on non-standard gear, so it had to make do with smaller customers. The vendor also had another problem, according to Wilson.

“They were pure-play RPR,” he said. “That’s all they had to offer. RPR as a standalone technology didn’t make a lot of sense. It’s become more of a tool in the tool bag rather than the whole tool bag.”

While Adtran intends to support Luminous’ existing customers and products in the near term, it also plans to integrate the former vendor’s RPR technology--and its acclaimed management software--into the Adtran access products. Adtran gear will probably include RPR later this year, while the Luminous software probably will be integrated into Adtran’s management system early next year.

“RPR was on our roadmap six months ago,” Wilson said. “This [acquisition] short-circuits that timeline.”

Adtran will inherit Luminous’ roughly 50 or 60 customers, Wilson said, which won’t noticeably contribute to the access vendor’s revenue. And it will employ a dozen or two of Luminous’ former engineers.

In the spring of 2004, another RPR startup, Lantern Communications, was acquired by C-COR for less than twice its annual revenue.

When Fujitsu Network Communications added RPR to its Flashwave 4500 multiservice provisioning platform in January, the company’s director of market development, Ken Morris, said most RPR applications today involve large private enterprise networks. But Wilson said major carriers are interested in RPR, too.

“Even among RBOCs, there’s a move afoot to implement RPR over Sonet,” he said.