Centillium Communications targets broadband optical access market with launch of new business unit

March 22, 2004 Fremont, CA--Centillium Communications, Inc., a provider of broadband access solutions, unveiled its plans to enter the broadband optical access market with the launch of the company's Optical Business Unit.

March 22, 2004 Fremont, CA--Centillium Communications, Inc., a provider of broadband access solutions, unveiled its plans to enter the broadband optical access market with the launch of the company's Optical Business Unit.

Under the leadership of General Manager, Armando Pereira, former co-founder, president and chief executive of optical access equipment pioneer Alloptic, Inc., Centillium's Optical Business Unit is leveraging the company's expertise in mixed-signal system-on-chip (SoC) technology to enable point-to-point and point-to-multipoint optical broadband networks with products that target the emerging fiber-to-the-premises (FTTP) market.

The parent company, which was founded in 1997, and had its initial public offering in May 2000, reported $125 million in revenue for fiscal year 2003. A multinational with 361 employees, Centillium reports it has over 20-million ADSL ports deployed worldwide.

The Optical Business Unit, which was established in 2002, will try to leverage Centillium's broad customer base in the DSL market including Advanced Fiber Communications (AFC), Huawei Technologies, Lucent Technologies, Marconi, NEC, Samsung, Siemens, and UTStarcom, among others.

The Optical Business Unit will deliver infrastructure solutions that offer higher integration, broader functionality, smaller footprints and lower power consumption for both central office (CO) and customer premises equipment (CPE). These products include optical transceivers to control the bi-directional traffic on a fiber cable; FTTP chipsets to manage the high-speed protocols between the CO and the CPE terminals; and broadband service processors to facilitate in-premises networking and delivery of voice, video and data to the end-users.

The burst mode transceivers will support BPON, EPON, and GPON (selectable on the same chip). The protocol chipsets, designed for EPON and BPON/GPON, will incorporate dynamic bandwidth allocation, forward error correction, and security algorithms.

"The launch of our new Optical Business Unit is a significant step in Centillium's overall diversification strategy and complements our leadership position in DSL and VoIP to include next-generation optical access solutions," said Faraj Aalaei, chief executive and co-founder of Centillium. "Armando and his team are well positioned to participate in the emerging optical network buildouts."

Pereira added, "The Optical Business Unit has been successful in attracting an outstanding team of optical experts and has been working to develop differentiated products that are unique in the market. Our products will not only support equipment designers to meet the desired feature and performance specifications but also enable these optical access companies to finally push the market to critical mass with the necessary pricing per line of service. We plan to roll out a family of both CO and CPE solutions throughout 2004 to address FTTP opportunities worldwide."

Centillium announced the appointments of three optical industry veterans to the Optical Business Unit: Babu Jain, vice president of engineering; Dr. Katsuhiko Kurumada, chief architect; and Bernd Hesse, director of product line management. In total, the optical division has roughly 100 employees. Technology development is split into two location: The system architecture and advanced IP design engineering is located at the company's headquarters in Fremont, CA, and the digital design, evaluation boards and software development is in Bongalore, India.

FTTP market opportunity
Widely anticipated to be the early adopter of FTTP solutions, the Japanese market has seen a rapid increase in NTT's capital expenditures (capex) budget for optical access. As recently as this month in a public filing, Japan's national incumbent operator NTT Group announced plans to spend U.S. $2.56 billion on expanding its fiber access networks during its 2004 fiscal year. According to the company's published plans, this is expected to account for more than one-third of the carrier's total planned capex outlay for the year. The investment indicates a dramatic step up in FTTP activity, expanding NTT's fiber footprint to upwards of 80% of its total number of subscribers and adding about a million new broadband subscribers.

Centillium's Optical Business Unit has already demonstrated some of its technology for NTT in Japan.

In North America, the FTTP opportunity is also gaining momentum empowered by the Federal Communications Commission's (FCC) Triennial Review of the network unbundling rules. The decisions within the Triennial Review included significant relief from the unbundling rules for investment in first-mile broadband access facilities. As a direct consequence of these developments, several U.S.-based regional Bell operating companies (RBOCs) cooperated in a joint procurement contract in 2003. At a press conference in December 2003, Verizon's Chief Technology Officer Mark Wegleitner said the carrier would spend between $600 million and $800 million (at least 10% of its roughly $6 billion wireline capex budget) on FTTP during 2004.

Organizations such as the Telecommunications Industry Association (TIA) and the Fiber-to-the-Home Council (FTTH Council) have been laying the regulatory groundwork for the deployment of these new high-speed optical access networks. TIA President Matthew J. Flanigan adds, "In the United States, we believe the FCC's August 2003 ruling concerning the unbundling obligations of incumbent local-exchange carriers has lifted the clouds of uncertainty, clearing the way for new investments and creating incentives for carriers to invest in FTTP broadband access. When you combine this ruling with FCC Chairman Michael Powell's recent statements on the importance of broadband and the momentum created by the joint procurement contract issued by carriers for passive optical networks (PONs), the future of FTTP in the U.S. looks bright."

More in Business