Motorola acquires Quantum Bridge

Motorola announced today its intent to acquire Quantum Bridge Communications, a vendor of passive optical networking (PON) gear for fiber-to-the-premises (FTTP) applications, for an undisclosed amount of cash.

Motorola and Quantum Bridge began partnering last year to pursue the FTTP request for proposals issued jointly by BellSouth, SBC Communications and Verizon Communications. Quantum Bridge designed the optical network terminal device, and Motorola manufactured and sold it along with its own video head-ends and set-top boxes.

Though so far only Alcatel and Advanced Fibre Communications have been named as PON equipment suppliers for the Bells’ joint RFP, Quantum Bridge will continue to pursue Baby Bell customers even after it is acquired by Motorola, said the vendor’s senior vice president of marketing and business development, Jeff Gwynne. In the mean time, the duo has collected at least four customers, a mix of municipalities and independent telcos including independent cable and broadband provider QCOL, which is deploying triple-play services in Pennsylvania, Maryland and West Virginia.

"The international strategy is forming," Gwynne added.

If the acquisition is successful (both companies expect the deal to close in the second quarter), Quantum Bridge will become part of Motorola’s broadband communications division, whose customers include cable providers Comcast, Cox Communications and Charter Communications and whose net sales last year exceeded $1.7 billion.

"We can develop strategically a more robust product for our customers by owning the technology and the products and [better] incorporate [them] into the other products that Motorola Broadband already owns," a Motorola spokesperson said when asked why Motorola chose an acquisition over a continued partnership with Quantum Bridge.

As a private company, Quantum Bridge would not disclose its annual revenue, though an analyst at Infonetics Research suspects it fell between $10 million and $20 million per year. The vendor has more than 70 employees and about half are engineers, Gwynne said.

At the end of 2003, Motorola reported about $7.9 billion in cash and equivalents.

Quantum Bridge has claimed in the past that its focus on ATM-based PON (also called APON, BPON or, by Infonetics, "the PON technology gorilla for the next few years") gives it an advantage over competitors with Ethernet-based solutions because Baby Bells, with their preference for APON, should drive down the cost of that technology with large deployments.

In December, Infonetics predicted worldwide PON equipment revenue would grow 91% to $102 million in 2003 and top $531 million in 2006, most of it coming from North America.