Fifth GPON vendor gets on Bell ‘short list’

A month ago, UBS Investment Research maintained that AT&T, BellSouth and Verizon Communications--all jointly evaluating potential suppliers for gigabit passive optical network (GPON) deployments--had narrowed the search to four equipment vendors: Alcatel, Hitachi Telecom USA, Tellabs and Motorola.

Since then, at least two analysts--from UBS Investment Research and Lehman Brothers--have claimed that a fifth vendor, Entrisphere, is also on that list. Entrisphere is reported to be bidding for a Bell GPON contract with Ericsson as its partner, following the convention that smaller startup vendors are unlikely to win Bell contracts without backing from a large incumbent.

Entrisphere reportedly partnered with Fujitsu Network Communications when the Bells were looking for broadband PON, or BPON, vendors in 2003. But Fujitsu opted to go it alone for the Bell GPON vendor search that began last November.

After failing to win a Bell BPON contract, Entrisphere collected $75 million in new funding last year and vowed to use it to chase top-tier carriers. Entrisphere announced its entry into the GPON race last week.

Ericsson, meanwhile, has made several moves recently to gain a greater presence in wireline and broadband markets. The Swedish vendor gained some access and optical products through its acquisition of Marconi in October and unveiled an IP-enabled version of Marconi’s multiservice access node this week (though the timetable for its availability in North America is unknown). Last week Ericsson unsuccessfully tried to outbid Lucent Technologies for the assets of carrier Ethernet equipment vendor Riverstone Networks.

“Ericsson has been talking more aggressively about GPON [lately], leveraging its relationships at BellSouth and [AT&T],” Lehman Brothers analyst Tim Luke said during a conference call today in which the firm upgraded its outlook on the telecom equipment sector.

During that call, Lehman analyst Marcus Kupferschmidt reiterated his belief that Tellabs is well-positioned to win a Bell GPON contract despite the fact that the vendor’s production schedule for its GPON gear lags behind Verizon’s.

When a major carrier such as Verizon evaluates vendors for a significant deployment such as the one it has planned for GPON, Kupferschmidt said, missing a deadline by a month or two is not going to “make or break” a vendor’s chances of being chosen as a supplier. Verizon currently gets nearly all of its BPON gear from Tellabs, though Advanced Fibre Communications (acquired by Tellabs) missed some deadlines early on.

More worrisome for Tellabs, Kupferschmidt said, are concerns that its GPON products do not contain enough backplane capacity to support GPON’s high traffic volumes.

However, Tellabs is making improvements to remedy “this problem,” Kupferschmidt said. And he believes Verizon has known about it for some time.