Alcatel, Tropic Could Boast First Big Metro Roadm Win

Alcatel, Tropic Could Boast First Big Metro Roadm Win

Ed Gubbins

Byline: Ed Gubbins

Less than two weeks after a slew of equipment vendors announced the addition of reconfigurable optical add/drop multiplexing technology to their product portfolios, half the current U.S. market for metro ROADM gear may have been stolen by a start-up.

A highly prized request for ROADM gear by SBC, said to have been chased by Cisco Systems, Fujitsu, Movaz Networks (with Lucent Technologies), Meriton Networks, Nortel Networks and Photuris, has been won by Tropic Networks, working in partnership with Alcatel, according to RBC Capital Markets.

An SBC spokesman said that no contract is “in place” and that the carrier’s search for a vendor continues. Alcatel and Tropic declined to comment, but an Alcatel spokeswoman hinted that the company could have big news in the ROADM space very soon. A source close to Tropic said it pulled back from a planned formal announcement of its Alcatel partnership at Supercomm.

RBC estimated the SBC contract would be worth $500 million to $700 million over the next three years or so – $300 million to $400 million of that for equipment – but RBC doesn’t expect the vendors to see any of that revenue until next year. SBC’s spokesperson called those numbers “substantially overstated.” And RHK analyst Ron Kline said the value of the contract probably won’t exceed $80 million per year.

SBC will use the gear to lower interoffice transport costs through the use of DWDM and shared wavelengths capable of handling a range of different data services, RBC said. ROADM gear lets carriers add and drop wavelengths remotely via software without visiting the site of the adjustment or installing new equipment.

The worldwide market for metro ROADM gear is likely to be less than $150 million next year, according to RHK, an amount that seems small when compared with the number of equipment vendors at Supercomm, including Cisco, Tellabs, Movaz and Meriton, that announced new ROADM functionality.

“There’s 10 guys doing this now,” Kline said. “Clearly there’s not a market for that.”

However, some analysts believe that if SBC’s deployment proves the economic benefits of the technology, it could convince other carriers to deploy ROADM as well, especially as traffic rises in metro networks. RBC believes BellSouth is now expressing interest in the technology.

Geographically, the highest demand for metro ROADM gear is in the U.S. But beyond SBC, the current U.S. market for metro ROADM gear is limited, to say the least. “There are only two opportunities,” Kline said. “Verizon’s the other one.” And any vendor interested in winning a ROADM contract with Verizon Communications (expected to select a vendor next year for an interoffice deployment comparable to SBC’s) will have trouble beating the team of Movaz and Lucent given the strong ties between Lucent and Verizon.

The early timing of SBC’s equipment search may have affected its choice of vendors, as Tropic had an earlier start on 32-wavelength ROADM gear than most competitors. But Movaz Chief Technology Officer Zouheir Mansourati said his company will leapfrog Tropic later this year or early in 2005 when Movaz’s gear gains the ability to support four rings instead of just one. A Tropic spokeswoman said the company is also “on track to support multiple rings,” but wouldn’t be more specific. Speaking more generally about Tropic’s standing, she said, “I think other vendors may be playing catch-up.”

Recent ROADM Warriors

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