Optimism growing for Tellabs GPON

After a seemingly late start, optimism appears to be growing around Tellabs' chances of being named a supplier of gigabit passive optical networking products to the Bell companies next year.

In a Dec. 16 research note, UBS Investment Research analyst Nikos Theodosopoulos predicted Tellabs would win part of the Bell GPON RFP, which was issued in November and for which vendors are expected to be chosen early next year.

That sentiment is consistent with other recent comments from equipment vendor executives predicting the Bells will favor incumbent suppliers like Tellabs, which supplies Verizon Communications' current BPON deployment, and Alcatel, which supplies AT&T's fiber-to-the-node rollout. Zhone Technologies CEO Mory Ejabat told Telephony earlier this month, "I can guarantee [the Bells] are not going to select anyone new. We spent a lot of time and money [on the 2003 Bell PON RFP], and at the end of the day, they gave it to their existing vendors and said, 'Here, make us a system that looks like this.' They're going to do the same thing on GPON."

Also this month, in a quarterly earnings conference, ADC Telecom CEO Robert Switz said, "The [major carriers] are looking to consolidate their [fiber access] business at this point around a couple of reliable vendors. They've got products from vendors now that they like. They'd like those vendors to work very aggressively in partnership with them, to standardize and to drive further cost out of future generations of those products. We're getting to a stage in most cases where, at this point, if you're in, [the business] is kind of yours to lose around certain of those products."

If these signs suggest bright prospects for Tellabs' chances in the Bell GPON race, it represents a change from the doubts surrounding Tellabs in the previous few months, as rivals Alcatel and Hitachi Telecom USA touted their new GPON products while Tellabs remained silent, vowing to introduce a GPON blade to its 8800 edge router but not formally unveiling any GPON gear.

In November, Joe Chiasson, a financial analyst who covers Tellabs for the Susquehanna Financial Group, questioned whether Tellabs would have its GPON gear ready in time for the Bells, which expect to receive volume shipments of the new gear in the first half of 2006.

"To bring a GPON product to market is a two- to three-year endeavor," Chiasson said last month. "It's unrealistic to think [Tellabs] got much start on the 8800-based GPON platform until at least [this year's first quarter]. It leads one to question…when this thing is going to get to market."

In October, Infonetics Research analyst Michael Howard called Tellabs' 8800 central-office GPON solution "an interesting quick fix."

Marketing materials distributed by Tellabs this month provided a peek at two previously unannounced GPON products. The winter issue of the company's "Emerge" newsletter included a picture of its 1600-712 single-family GPON optical network terminal (which sits at the side of the home) and described its 8865 optical line terminal (which sits in the carrier central office). At press time, however, neither product was included among the product lists on Tellabs' Web site.

"Those are planned future products," a Tellabs spokesperson told Telephony last week, referring to the 8865 and the 1600-712.

Though incumbent suppliers have an edge in the GPON RFP race, some say Tellabs' missteps in supplying Verizon's BPON rollout may hurt the vendor's chances of winning a GPON contract. (Before Advanced Fibre Communications was acquired by Tellabs last year, it incurred financial penalties for missing Verizon's deadlines.)

"I'm going to give the edge to [vendors that] have had [GPON] platforms out there the longest," said Danny Briere, president of industry consultancy Telechoice. "[Verizon] took a bet before on the guy who didn't really have [a product] fully developed yet, and it didn't pan out so well. That was Tellabs. With everything at stake now, I don't see that there's a need to take those types of risks this time around."