Cash in hand, Alloptic awaits market expansion

18 April 2003 Livermore, CA Lightwave -- Fresh from landing $35 million in Series D funding, Alloptic Inc. President and CEO Mike Moone is keeping one eye on today's passive optical network (PON) customers -- rural and competitive carriers and real estate developers -- and another on what he hopes will be tomorrow's -- U.S. incumbents. Meanwhile, his company has new products in the pipeline.

18 April 2003 Livermore, CA Lightwave -- Fresh from landing $35 million in Series D funding, Alloptic Inc. President and CEO Mike Moone is keeping one eye on today's passive optical network (PON) customers -- rural and competitive carriers and real estate developers -- and another on what he hopes will be tomorrow's -- U.S. incumbents. Meanwhile, his company has new products in the pipeline.

While Alloptic has built its strategy on an Ethernet foundation, as opposed to the ATM common among first-generation PON devices, Moone says that customers are less interested in whether a company is offering ATM or Ethernet devices than they are in matching system capabilities to their requirements. The ability to upgrade the network painlessly on a pay-as-you-grow basis also represents a primary requirement.

Moone says that his customers typically focus on either fiber-to-the-home (FTTH) or to the business (FTTB), which has led his company to develop products targeted at either one market or the other. A new termination device for multiple dwelling units (MDUs) should appear this summer, while a new FTTB product should ship within the next two months. While Alloptic offers a common central office optical line unit for FTTH and FTTB applications, optical network terminal (ONT) systems vary by application. ONTs for FTTB are designed to service a higher number of customers than those for FTTH, he says.

While customers vary in their target applications, the desire to provide multiple services is common. Moone says that few if any single-service carriers are interested in PON architectures. However, FTTB providers generally emphasize data, while Alloptic's FTTH customers find video to be their primary service driver.

Alloptic has enjoyed some success overseas, particularly in Asia. However, the United States remains its principal market -- which means the wait for the RBOCs and their fellow incumbent carriers to adopt PON technology puts a drag on the company's growth potential. Moone says he expects Qwest and BellSouth to begin limited field trials of PON technology this year, with "some" deployment following in 2004. He doesn't see the Federal Communications Commission's Triennial Review having much effect on the use of fiber in access networks this year. He believes the recent commission ruling and broadband recovery legislation in Congress may spur the incumbents to action eventually. However, he says that fiber proponents within the RBOCs still haven't assembled a convincing business case that would lead to quick deployments.

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