In November, Verizon (New York City) tapped Advanced Fibre Communications (AFC—Petaluma, CA) as its fiber to the premises (FTTP) supplier; the following month, SBC (San Antonio, TX) announced an agreement with Alcatel (Paris). While Verizon has gone public with its ambitious plans to pass one million homes by the end of this year and possibly another two million homes by 2005, SBC is hesitant to commit to any long-term rollout schedule. The carrier will only say that it has reached a four-year primary-supplier agreement with Alcatel.
"It's difficult to talk about the scope or extent of the contract with Alcatel because we don't really know," admits SBC spokesman Jason Hilary. "We're moving forward with final lab testing, and we anticipate the field-trial process will be concluded later this year. But until we get to that point, we're not ready to really look seriously at any sort of potential widespread deployment."
Lab testing of Alcatel's 7340 FTTU (fiber to the user) equipment will be conducted at SBC's applied research facility. The field trial will encompass FTTP configurations for single-family residences, apartment and condominium complexes, and small businesses.
While SBC contends that its decision depends on successful completion of the trials, the carrier is also looking for further regulatory clarification from the Federal Communications Commission. "A lot of the clarifications that we're seeking are specifically on how fiber networks would be treated as far as sharing requirements," explains Hilary. "Certainly, the early indication was that the Triennial Review would be positive in the way of supporting next-generation network development. In getting to the details, some clarifications are needed to make sure that we fully and completely understand what the regulatory scenario would be."
When the BellSouth/SBC/Verizon joint RFP was released last summer, many in the industry believed the carriers were using the project as a tool to lobby the FCC on an ongoing basis for favorable rulings. Given SBC's reluctance to make a commitment and its public demand for clarification from the FCC, some observers doubt the carrier's enthusiasm for actual FTTP deployments.
"At this point, it's difficult to say how serious their deployment plans are," says Anna Reidy, senior analyst, optical infrastructure at Current Analysis (Sterling, VA). "The fact that they are hedging is certainly an indication. Their public statements are not that strong, and they are continuing to make a strong commitment to DSL at the same time."
Even Verizon's plans may not be as ambitious as they appear, at least when it comes to new systems. The carrier has an existing base of AFC AccessMAX platforms in its network, and any AccessMAX platform can be made FTTP-capable with the addition of a passive-optical-network (PON) plug-in card. "They'll equip those chassis with FTTP cards when it's time to actually deploy the service," says Reidy, "so in some respects, Verizon has a head-start just with the AFC deployments it already has in place."
Reidy does not believe there's anything particularly significant to the carriers' selection of different primary suppliers. "With FTTP, you have the issue of how to get fiber into the last mile," she says, "and that issue will to some extent dictate the economics and type of gear you use."
For Alcatel, the supply agreement is a reaffirmation from SBC that the carrier is still happy with the Alcatel equipment installed in its Mission Bay project. Initiated in July 2002, the multiyear trial features Alcatel's FTTU platform running live traffic to the businesses and nearly 6,000 residential units in the San Francisco community.
That said, in a "FlashNote" released after SBC's announcement, Merrill Lynch analysts assert that SBC may still have AFC gear in its evaluation labs. SBC specifically describes Alcatel's contract as "nonexclusive." (Merrill Lynch believes Verizon's selection of AFC is exclusive at least through the end of 2005.) Moreover, AFC's recent acquisition of Marconi's North American Access business unit puts the vendor "in a pretty good position," says Reidy, as Marconi counts both BellSouth and Verizon as customers. "If it goes through, the acquisition will put AFC in BellSouth's network as well as in Verizon's network for FTTX," she notes.
While BellSouth remains the quietest of the three carriers on the FTTP front, it also has the widest deployment of deep fiber in the access network. The carrier has been deploying fiber to the curb (FTTC) for some time, using DSL lines to connect to subscribers. At press time, BellSouth had yet to announce a contract award, partly because it too is waiting on the FCC. According to UBS Warburg, BellSouth favors its FTTC architecture over a PON-based system and has petitioned the FCC to expand its definition of FTTP to include FTTC.
"As the FCC has yet to rule on BellSouth's petition on FTTC, this could delay both BellSouth's choice of an FTTP vendor and future FTTC rollouts," reasons UBS Warburg's Nickos Theodosopoulos, senior communications equipment analyst. "The FCC decision may be delayed until the DC Appeals Court rules on the Triennial Review, which may come as early as [next month]."