VENDORS SCRAMBLE TO SIZE UP, COMPETE FOR BELL GPON DEALS

With a Gigabit passive optical networking request for proposals expected to be issued jointly by three Bell companies next month, equipment vendors are jockeying hard for position, hailing new GPON products and deployments, forming partnerships for the bid and trying to differentiate their gear amid some already narrow requirements. Sources say the GPON bid will be much more competitive than the joint fiber-to-the-premises RFP of 2003, with less room for differentiation, more price competition and fewer entrants given serious consideration.

While Alcatel, Wave7 Optics and Hitachi Telecom USA have all named early customers for their new GPON gear, Tellabs — with arguably the most to lose from the Bell GPON RFP in light of its current position supplying broadband PON (BPON) to Verizon — has been noticeably quiet about GPON. In a Sept. 7 speech to investors, Tellabs Chief Financial Officer Tim Wiggins said, “BPON is stable and meeting [customers'] needs,” pointing out that widespread GPON deployment won't occur until 2007. A company spokesman said Tellabs is targeting mid-2006 for GPON availability.

But sources familiar with the Bell RFP say it includes a first-quarter 2006 deadline for submissions, which has some vendors still scrambling to shore up bid partners. Optical Solutions Inc., the leader in U.S. GPON deployment, won't say whether it is rekindling the partnership with Cisco Systems that led to an unsuccessful bid for the Bells' 2003 FTTP RFP. OSI, whose current gear offers 1.2 Gb/s of downstream traffic, is meanwhile racing to develop a 2.4 Gb/s version, which its competitors have introduced lately in accordance with the Bells' preference.

Nortel Networks, which is returning to access markets after several years, is expected to chase the Bell GPON business with its partner, Calix. Entrisphere and Fujitsu Network Communications, which partnered for the 2003 fiber RFP, are not reuniting for GPON, sources said. Don McCullough, Entrisphere's director of product marketing, said his company has a GPON “program” but no GPON product. As for the Bell RFP, which is shielded by nondisclosure agreements, he said, “We don't admit there is one.”

Observers are highly skeptical that small vendors have a chance at the GPON RFP, even with big-brother partners. The Bells may have learned a lesson watching AFC (now Tellabs) stumble in supplying Verizon's FTTP build, incurring financial penalties for missing milestones.

“If [Cisco CEO] John Chambers walked up to [Verizon CEO] Ivan Seidenberg and said, ‘If you go with us, I'll buy OSI,’ maybe,” said Mark Abrams, director of marketing for chipmaker Passavé. “Otherwise, [partnerships] are just paper.”

One vendor with enough muscle and PON experience to fit the bill is Hitachi Telecom USA, which is shipping its new GPON gear to an Oregon CLEC in December, perhaps the earliest shipment of 2.4 Gb/s GPON to a U.S. customer. A PON powerhouse in Japan, Hitachi boasts well over 1 million homes lit with its PON gear. However, with only a few hundred people in North America, some say Hitachi must partner with a large system integrator to handle large-scale GPON installations here.

Unlike the FTTP RFP, in which a variety of access technologies (BPON, GPON, EPON) were submitted, the GPON RFP requirements are much more specific, based closely on the ITU's full service access network specifications. That could leave relatively little room for vendor differentiation, said Telechoice CEO Danny Briere, and price could become a major factor.

One area in which vendors may differentiate is in intelligent features. Tellabs is employing its 8800 edge router to bestow GPON with quality of service and intelligent routing. OSI recently added voice-over-IP capabilities to its customer premises gear. And Lucent Technologies is offering what it termed “SmartPON”.