Calix acquires rival Occam for Ethernet expertise

Calix (NYSE: CALX) this morning announced it has acquired access technology rival Occam Networks (NASDAQ: OCNW) for $171 million, picking up Occam’s Ethernet expertise in particular to accelerate its opportunities in that growing area, Calix executives said.

While both vendors have been pushing GPON and active Ethernet capabilities into access networks – in particular at tier 2 and 3 service providers – Occam has been at the Ethernet game longer and will give Calix welcome experience with that technology, said Carl Russo, president and CEO of Calix, in a conference call this morning.

“The team at Occam has being doing it for ten years; I suspect there are a ton of things we are going to learn [from them]. Not just active Ethernet, they’ve been doing pure Ethernet access for ten years as well,” Russo said, adding that when it comes to any new network technology the real learning “is not in a manual or spec sheet, you learn by going out and deploying it.”

While both companies are aiming to meet carrier demands for all-IP access networks, service providers do have technology options, in particular the decision of whether to go with a gigabit passive optical network or active Ethernet approach to the fiber access network (see: For small telcos: Ethernet or GPON?). While Verizon led the passive optic approach with its FiOS network, Ethernet seems to be winning the day everywhere in the network, including active Ethernet in the access network.

Calix CEO Russo compared the deal to his company’s 2006 acquisition of Optical Solutions Inc., which kick-started Calix’s entry into the fiber market. While Calix had already entered the passive fiber market at that time “and was making good headway,” Russo said, “the acquisition of [the OSI talent] was a dramatic acceleration. It’s the same thing here [with Occam and active Ethernet].”

At a high level, the Calix and Occam product lines have many similarities. Both focus on fiber-to-the-premises infrastructure and both companies support GPON as well as active Ethernet FTTP configurations.

But Occam Director of Solutions Marketing and Strategy Juan Vela told Connected Planet  he doesn’t expect to see products from either company’s line discontinued.

“What we’ll be able to do now is leverage the same talent to do more,” Vela said. “We’ll be able to look at what we were missing and figure out how to add those things. Occam was not doing as much on the business or mobile backhaul side of things. This enables us to focus on a wider range of applications in access and do it in a better way so that our customers, the telcos, can benefit.”

Specifically on the product front, Calix intends to rename Occam’s BLC 6000 multiservice access platform (MSAP) – which has been deployed recently in carrier wins at Marquette-Adams and Spencer Rural Telephone Co-op -- in its own product parlance as the “B-Series.” Overall, its product integration plans include:

- integrating the BLC6000 or B-Series platform into the Calix Unified Access portfolio, allowing the B-Series to reside on the same Ethernet ring with C- and E-Series platforms

- combining the two companies respective ONT portfolios, supporting that portfolio across all three Calix access platforms

- integrating the Occam “B-Series” platform into the Calix Management System, or CMS

- using technology acquired from Occam to support a broader set of voice protocols, including SIP, H.248, MGCP, as well as legacy TDM protocols

Calix expects the Occam acquisition to close in the fourth quarter of this year or the first quarter of next, depending on stockholder and regulatory approval. The combined companies are slated to have combined revenues of greater than $400 million next year, with more specific guidance and details coming after the deal is closed, the companies said.

Combined, the companies serve service providers in North America (largely tier 2 and 3) as well as in the Caribbean, Latin American and a few other global markets. The companies’ access platforms for both fiber and copper networks help carriers deliver broadband and video services to both residential and business customers, including high-speed Internet, IPTV, VOIP, Ethernet business services, and other advanced broadband applications.