Broadband stimulus working, Adtran says

The federal broadband stimulus program is already churning up activity among lower-tier carriers that had previously fallen into malaise, according to Adtran, the access equipment vendor that reported first-quarter earnings exceeding Wall Street expectations today.

On an earnings call this morning, Adtran Chief Executive Officer Tom Stanton reported seeing a “change in tone” among tier-two and tier-three carriers attributable to anticipation over broadband stimulus funds. “The amount of activity in that space has gone up dramatically,” Stanton said. “I’m not saying orders. I’m saying planning.”

Initially the passage of broadband stimulus legislation put a chill on the market as carriers mulled how their existing and future plans could be affected by the program. “That’s easing to some extent,” Stanton said. “Every month it gets better.” When the government further clarifies the terms and criteria it will use to award funding, he added, activity should increase further.

Because broadband stimulus funds won’t be awarded to projects that would have proceeded without federal assistance, carriers were initially much more careful about how they talked about their existing broadband plans for fear they might jeopardize their chances of winning grants or loans, Stanton said. But that’s changing.

“The uncertainty is easing,” Stanton said. “It’s not where anyone would like it to be. But we did see it easing as people started to understand the [stimulus] rules better.”

Outside the broadband stimulus sphere, he said, “Some activities that have been planned for some time are continuing to move forward as we expected. Nobody’s pulling back any more [than they previously had].”

Though Adtran met its own predictions of flat to slightly down revenue in the first quarter, the company predicted second-quarter revenue growth in a mid to high single-digit percentage. And this year, as in any typical year, Adtran expects the first quarter to be its weakest.

Adtran expects to receive approval for its Total Access 5000 fiber access platform from some tier-two carriers this week, with their deployment plans influenced noticeably by the broadband stimulus effect, Stanton said. “I believe they’ll move forward in a more aggressive manner with this [stimulus] package in place than they would have moved before that.”