SBC picks Alcatel for FTTN in $1.7B deal

SBC Communications Wednesday named Alcatel its primary supplier of network infrastructure and services for its recently announced fiber-to-the-node (FTTN) project in a deal that Alcatel said could be worth $1.7 billion to the vendor over the next five years. The deal involves SBC’s recently announced Project Lightspeed initiative to use FTTN deployment to deliver triple-play services to 18 million households by the end of 2007. As part of that deployment, SBC will deploy Alcatel’s remote 7330 IP DSLAM, its 7750 service router and its 7450 Ethernet services switch. Alcatel will also perform end-to-end integration of the Lightspeed network and its video services. In a conference call Wednesday evening, Mike Quigley, president of Alcatel North America, cited Alcatel’s 2003 acquisition of TiMetra as a key element in winning the contract (the 7750 service router came from that acquisition) and in establishing Alcatel’s presence in the market for IP equipment. “We really are a true competitor in the IP domain,” Quigley said, adding that the win has also further established the vendor’s position as a supplier of integration services. According to Quigley, Alcatel will be the exclusive supplier of the above-mentioned equipment for the life of the contract. “We’re it,” he said. Quigley would not divulge much detail about the nature of the expected $1.7 billion revenue, including how much of it would pertain to services rather than equipment and how much would be success-based rather than guaranteed. Quigley did say that Alcatel would not begin to report revenue from the contract until 2005. Vendors for other products required by the deployment--such as video middleware and set-top boxes--have not been announced, though Quigley hinted that Alcatel is vying for the optical equipment portion of the project as well.

Alcatel did not bid with vendor partners for products it does not provide itself, Quigley said. SBC will choose the other vendors, and Alcatel will work with them in the integration process.

This summer SBC CEO Ed Whitacre announced FTTN plans but said regulatory policies would need to change to allow them to proceed. Last week, in response to a decision from the Federal Communications Commission freeing carriers from having to provide voice channels to competitors in FTTN deployments, SBC said it had begun the project, and replaced earlier predictions of a five-year deployment with one taking two or three years.

Though Alcatel was named SBC’s fiber-to-the-premises equipment supplier some time ago, Quigley clarified that the Lightspeed project involved FTTN and DSL, not FTTP.

Quigley would not say whether the business would require Alcatel to hire additional personnel, but he did say more Alcatel employees would need to be focused on SBC than are now.