FTTP RFP Countdown: One Week Until the Short List

One week from today BellSouth Corp., SBC Communications Inc. and Verizon Communications, through what they’re calling the Joint Procurement Consortium, are expected to issue the short list of suppliers for the group’s fiber-to-the-premises project.

The companies have not yet indicated they might push back the Aug. 8 “short list” date, although the FCC still has not issued its Triennial Review report, which had been expected to come out weeks ago. The FCC’s Triennial Review of network interconnection regulations is expected to include provisions that more clearly set forth the FCC’s policy regarding new network technologies, including the extent to which unbundling and pricing regulations, such as those imposed on traditional copper technologies, will apply. General consensus is the ruling will not require the RBOCs to unbundle elements in new fiber access networks for competitors. The RBOCs have made clear that the extent to which they’ll invest in new fiber-to-the-premises technology will relate directly to the rulings made in the FCC’s review.

Since late May the industry has been buzzing about the fiber-to-the-premises RFP issued by the RBOC consortium. The companies issued the formal 41-page document request in late June, after sending select vendors letters in late May that generally described what was to come. Following the issuance of the short list, supplier evaluations are expected to be completed by mid-September.

Danny Briere, CEO of research and consulting TeleChoice Inc., believes the total RBOC order for the equipment will be at least an $800 million to $1 billion order per year. “We’ve heard several talk about 100,000 units per year being easily absorbed in the greenfield developments in their territories — there are between 500,000 to 1 million planned homes built each year in the U.S. — and 3 x 100,000 = 300,000,” writes Briere. “We don’t think that is coincidence. So, we truly think that 300,000 is a no-brainer low-end unless the pricing is unexpectedly high and obscene. (However, we don’t think that is going to be the case.)”

Briere notes that “this RFP for fiber is the first major tacit acknowledgement by the RBOCs involved that their networks — including the DSL services — won’t cut it against cable. Cable can throw sheer bandwidth at the problem because they have it. DSL has to beg for bandwidth and is erratic at that, based on the loop length, line conditions, etc. Fiber will provide a more reliable services platform because of the upside on the bandwidth. And it’s a big vote for PON.”

The PON-based fiber-to-the-premises infrastructure would give the RBOCs more bandwidth for services like video, possibly enabling the telcos to compete better with cable companies that already have rolled out voice services in addition to high-speed cable and video. Although Qwest Communications International Inc. and SBC just announced plans to resell DBS services as part of their service bundles, the FTTP infrastructure would allow the telcos to deliver video in addition to voice and data services all over a single infrastructure. Fiber also is much less expensive to maintain on the long term than is copper.

Alcatel is the favorite to win at least a good portion of the FTTP business from the RBOCs, which are looking for a solution based on broadband passive optical networking (BPON) technology. Alcatel is far larger than the other FTTP PON vendors in the field, and has the ability to scale up manufacturing easily, if demand warrants, and to offer the RBOCs other related support services. Several years ago, Alcatel won a similar RFP issued by a RBOC consortium related to DSL. In fact, Verizon recently extended its DSL contract with Alcatel through the end of 2005. And if the RBOCs elect to take fiber to the curb rather to the home, some form of DSL likely would be the final link to the user. As if that wasn’t enough, Alcatel also is the equipment supplier for SBC’s greenfield PON deployment in a San Francisco community called Mission Bay.

But many companies are vying for the business. Look for smaller vendors to partner with larger suppliers like Cisco Systems Inc., Lucent Technologies Inc. and possibly Nortel Networks, which can offer them the manufacturing scale, integration services and other support required by the RBOCs.

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