Through acquisitions and new product development, big-name DSL vendors are striving to deliver end-to-end broadband solutions to their customers. The reasoning is clear: Incumbents and CLECs don't want to spend their resources and time making sure the equipment they purchase is interoperable.
But not all vendors believe that they must own the entire plug-and-play solution to be viable in the DSL vendor game. Startups like Copper Mountain Networks Inc. (www.coppermountain.com), Orckit Communications Ltd. (www.orckit.com) and others say that innovation is a critical missing element in the big vendors' offerings. And standalone companies just need to form interoperability alliances to make their gear work with the other company's products.
So far the best-of-breed strategy has worked for Copper Mountain. According to research firm Dell'Oro Group Inc. (www.delloro.com), Copper Mountain was the market share leader in synchronous DSL (SDSL) DSLAM revenue for the second quarter of 2000, garnering 33.2 percent of the market. Lucent Technologies Inc. (www.lucent.com) came in second with 21.5 percent of the market, and third place went to Nokia Telecommunications (www.nokia.com) with 18.3 percent. Alcatel USA (www.alcatel.com) was in fourth place with 13.3 percent of the market, and Nortel Networks Corp. (www.nortelnetworks.com) came in fifth with 5.9 percent.
DSL 'Specialists' | |
| Company | Product Line |
| Copper Mountain Networks Inc. |
|
| Efficient Networks Inc. |
|
| Interspeed Inc. |
|
| Netopia Inc. |
|
| Orckit Communications Ltd. |
|
| Redback Networks Inc. | Subscriber management systems for automated provisioning |
Compiled by the author from company information | |
According to Keith Higgins, Copper Mountain's assistant vice president of product marketing, big vendors like Lucent, Nokia and Nortel may own all the parts to create an end-to-end solution, but because they have acquired these solutions from different companies, they haven't necessarily gathered gear that is interoperable. "These large companies are now spending money on integration, not innovation," Higgins says.
Instead, Copper Mountain believes that it can maintain its SDSL leadership by focusing on IP. "IP enables us to provide an end-to-end solution for everybody," Higgins says. "Companies like Copper Mountain have a niche that is large enough to sustain as a standalone company. We have a long way to go before being a best-of-breed player limits our upstream," Higgins adds.
International DSLAM vendor Orckit also prefers to focus on its DSLAM solutions instead of moving toward an end-to-end solution. "The difficulty with having to do everything is that you become a jack-of-all-trades, and the master of none," says Orckit general manager Larry Keith.
Orckit has found that by focusing on its DSLAMs, it can react to customers more quickly than larger players and be very creative in pricing. In the United States, Verizon Communications (www.verizon.com), formerly Bell Atlantic and GTE, uses Orckit's DSLAMs.
Considerable Consolidation
The rampant consolidation among the big equipment vendors is evident at industry conferences. At the September DSLcon Fall show in Boston, many of the former startups made their debut as part of new parent companies.
Lucent Technologies entered the DSLAM arena through its acquisition of Ascend Communications in January 1999 and now reports it has shipped more than 10,000 Stinger DSLAMs in its first year of production. Lucent senior product manager Bruce Miller believes an end-to-end solution is a definite draw for potential customers because it is cost efficient. "Only a few carriers can preach the [end-to-end] story."
Likewise in February 1999, Nokia acquired DSLAM vendor Diamond Lane and recently acquired DiscoveryCom, a young loop provisioning and management company.
Covad Communications Co. (www.covad.com) uses Nokia's gear in its DSL network. Nokia senior vice president of broadband systems Olli Oittinen says customers definitely want fewer vendors and that this trend is emerging all over the world.
Nortel Networks entered the DSLAM arena through its acquisition of Promatory Communications last March, forming the Nortel Networks Broadband Accesssubsidiary. Nortel vice president of business development Timothy Waters says customers find that if a company can integrate all the components of the network, it will ease provisioning and help speed deployment. Since most service providers say provisioning DSL service is a huge impediment, anything that can help this process is viewed as an advantage.
At DSLcon, Nortel announced three new programs designed to help service providers deliver DSL. These programs go beyond just providing equipment, and act as models for provisioning and deploying services. Nortel's QuickStart program is targeted at CLECs and emerging service providers and includes practically all the elements needed to launch its DSL network, including collocation planning and network operations center support. For networks focused on business customers, Nortel's WorkDSL program includes a network-based firewall service, virtual private networking and database management tools. In addition, the company will help startups plan their collocation space, staff their offices and even help with brand awareness. The company also is providing interoperability testing between Nortel's access products and third-party CPE.
Money Talks
Of course, end-to-end solutions are not the only advantage the big boys of the DSL equipment world bring to the table. When these heavyweights go after service providers, they also bring money to the table. Vendor financing is a big advantage, and only the biggest players can offer it.
To circumvent this issue, Copper Mountain formed an alliance with Marconi plc (www.marconi.com). Copper Mountain provides the DSLAMs, and Marconi provides the network provisioning gear and vendor financing. "There were many synergies between the two companies, and it helped us to come out with an end-to-end solution," says Copper Mountain's Higgins. Marconi's ability to offer vendor financing just solidified the deal. Chicago-based CLEC NewPath Communications (www.newpathdsl.com) will use gear from the two companies in its 14-state network in the Midwest.
Sue Marek is a Denver-based free-lance writer. She can be reached at smarek@earthlink.net.
