AT&T Inc. (NYSE: T) announced Alcatel-Lucent (NYSE: ALU) and Ericsson AB (Nasdaq: ERIC) as its GPON vendors late Friday. (See AT&T Picks GPON Partners.)
Alcatel-Lucent's inclusion isn't a surprise, considering the company is an incumbent in fiber deployments by AT&T and the former BellSouth, since acquired by AT&T. (See FCC Welcomes 'Ma Bell' Back and AT&T, BellSouth Merge.)
For Ericsson, though, this is a major breakthrough. The Swedish giant wasn't considered a front-runner for AT&T GPON business last year, but that changed when it acquired its GPON partner Entrisphere in February this year, saying part of its interest was a share of the North American GPON buildout. (See Ericsson Buys Entrisphere and Ericsson Spells Defense G-P-O-N.)
"Ericsson's acquisitions are beginning to pay off quite handsomely… within a few months of assimilation, Entrisphere has been chosen by AT&T for widespread deep-fiber deployment," writes Dresdner Kleinwort analyst Per Lindberg in a research note issued today.
"The breakthrough heralds the long-awaited North American comeback for Ericsson's wireline operations. It offers a resounding endorsement of the recent acquisition of Entrisphere… That Ericsson in the space of two years is beginning to establish itself as a top provider of state-of-the-art broadband access solutions should make waves across the industry. We expect several more IPTV/triple play breakthroughs," adds Lindberg.
For Alcatel-Lucent, "market share losses seem inevitable" now that AT&T has decided to source from two vendors, notes Lindberg. But "the news nonetheless cements Alcatel-Lucent's position as the top provider of GPON gear. Unlike many rivals, it possesses real field experience."
While no financial details have been released, the value of the deals looks to be limited, as AT&T is only using GPON in new home developments, something that cable companies are also doing as more and more housing developers demand fiber-to-the-home. (See SA Pitches Cable PON.)
AT&T's U-verse IPTV project relies largely on a fiber-to-the-node (FTTN) strategy, with DSL used to make the last-hop connection to homes. GPON would be used to hook up new home developments. Cable companies are using a similar strategy, as they're finding some developers are demanding fiber-to-the-home.
AT&T expects to begin general deployment of GPON next year. "Both suppliers will soon begin lab testing and certification by AT&T Labs before field testing, which will include configurations for general deployment in single-family residences, apartment and condominium complexes," notes the carrier in its press release. "Pending successful resolution of testing and certification, general deployment of G-PON is expected to begin in 2008."
Last year, Verizon Communications Inc. (NYSE: VZ) chose Alcatel-Lucent -- as well as Motorola Inc. (NYSE: MOT) and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) -- for its own GPON buildout. (See Alcatel Joins Verizon PON Party and Verizon Deploys GPON.)
Verizon hasn't given a timetable for its GPON buildout, although some sources in the industry believe it will be 2008 before there are any large-scale deployments.
Between them, AT&T and Verizon aim to hook up 10 million customers with GPON connections by the end of 2011. And it's not just those two giants that are whetting the appetite of the GPON vendors, as deployments in Europe have also been announced and there are signs of a swing towards that flavor of PON in Asia/Pacific. (See RBOCs Aim for 10M GPON Subs, Bright Prospects for GPON, and Video Impact: DSL Out, PON In.)
— Craig Matsumoto, West Coast Editor, Light Reading