Communications Industry Researchers, Inc., an industry analyst firm based in Charlottesville, VA, has released a market report that outlines the optical networking strategies of the Incumbent Local Exchange Carriers (ILECs): SBC and Verizon. The report examines the approaches that each company is pursuing for networking build-out and their perspectives on the vendors that supply them such as Alcatel, Adva, Ciena, Cisco, Fujitsu, ONI, Lucent, Nortel, Tellabs and others. The study also provides insights into how Telcordia's OSMINE process is preventing the advancement of the optical networking market. Lastly, the report compares and examines the issues affecting each carrier's CAPEX and competitive position.
CIR states that it will be difficult for most companies to generate significant metro revenues without OSMINE certification given the stringent requirements that ILECs have for software interoperability. OSMINE is a process conducted by Telcordia where vendors are certified that their equipment can integrate with existing operations systems within "Bell" networks. The fees for the certification can cost a vendor up to $16 million and the process can take up to 18 months to complete thus creating a high barrier to entry for start-ups or small companies.
CIR's report also notes that the financial community has been slow to grasp the importance of OSMINE citing the amount of Venture Capital money that has been issued to metro-targeted vendors which have business plans that do take into account the cost and timeline of the certification process.
According to Mark Lutkowitz, CIR's Vice President of Optical Networking Research, "While some vendors have made the absurd statements that they either do not need OSMINE to sell to the RBOCs or will start the process after receiving an order from said phone companies, without at least starting the OSMINE process, a vendor will automatically be dismissed by an RBOCs network operations group and therefore, be disqualified from major sales opportunities." As such, CIR believes that most of the vendors looking to break into the RBOCs will ultimately fail and most likely, fold.
CIR's report states that companies such as Tellabs and Cisco are in prime position to grab large portions of Verizon and SBC's metro business with familiar faces like Nortel and Lucent remaining viable competitors simply because of installed base and familiarity on the part of the operations people. Ciena, the latest Wall St. casualty, faces serious challenges given some product feature set and pricing shortcomings with its metro DWDM ring product that recently caused it to lose out on some business. Fujitsu has recently had fundamental problems with software and reliability with its latest products thus opening the door to other competitors. CIR points to Mahi Networks and ONI as companies to watch for in the future based on conversations with the carriers.
CIR is an industry analyst firm specializing in the areas of fiber optic networking systems, software and components. The report is available from CIR at a cost of $495.00. For more information, visit www.cir-inc.com.