AT&T adopts Ribbon’s Neptune platform for its copper and TDM transition

Nov. 1, 2023
The service provider will leverage the platform as a tool to continue its migration from legacy networks and reduce costs.
AT&T has adopted Ribbon’s Neptune (NPT) IP Router as a critical platform for transitioning from TDM and copper-based networks to IP-based networks, validating the vendor with a critical Tier 1 U.S. service provider.

“Following 24 months of work and investment to adapt the portfolio to fit the U.S. market better, we finally went live with our Neptune IP Router inside the AT&T network,” said Bruce McClelland, CEO of Ribbon, during its third-quarter earnings call. “We have been working with AT&T on several use cases that leverage the Neptune platform to replace older routing platforms and to transition TDM and copper networks to modern IP technology.”

Neptune combines Ribbon’s routing platform with its voice core. It allows interconnection for a solution that integrates its routing platform and functions like circuit emulation to terminate a TDM trunk and run it over top of IP. The platform is powered by Ribbon's IP Wave rNOS, which supports the integrated and disaggregated router approaches.

Ribbon’s approach poses several benefits to AT&T.

“AT&T will be able to significantly reduce costs and simplify its network, eliminating legacy transport networks and wiring centers over time while maintaining existing residential and business service offerings and helping achieve environmental sustainability goals,” McClelland said. “The solution leverages products from our voice and IP portfolios and has undergone extensive certification and system validation testing, including OSMINE certification and live network testing.”

While AT&T is the first major customer to adopt it, other Tier 1 providers with legacy infrastructure could also find utility in the Neptune platform. "It’s a unique solution in the market that is not just applicable to AT&T,” McClelland said. “It’s a broad use case for a more rapid replacement of TDM and copper links while preserving the functionality and the interface into the consumer or the enterprise.”

Tier 1 headwinds, opportunities

While AT&T is an excellent win for Ribbon, Ribbon expects the Tier 1 U.S. provider market revenues to be lower in 2023 but to pick up in 2024.

“As expected, U.S. Tier 1 service provider spending continues to be lower this year, impacting year-over-year comparisons as the rest of our customer base grows,” McClelland said. “However, early planning for 2024 with our key U.S. customers gives me confidence this will recover next year. And in fact, there’s a perfect opportunity for growth with projects such as the AT&T multi-service edge IP routing program.”

Like AT&T, Ribbon cited several service providers looking to migrate their existing TDM and copper network infrastructure.

McClelland said the company expects to secure other Tier 1 service provider opportunities to drive additional IP revenue growth in 2024. “Thousands of Class 5 wiring centers and switches are still yet to be modernized,” McClelland said. “And we’re working on how we help our customers go faster in enabling that, including the new routing solution that helps eliminate some of the legacy SONET and TDM interfaces.”

IP optical gains

Ribbon continues to see momentum in its IP optical business. The company reported $87 million in IP optical revenues during the third quarter.

Driven by sales to large U.S. Tier 1 providers, the company expects the fourth quarter to show growth. The company expects IP Optical sales to surpass $100 million for the first time since 2019 and double-digit growth for the entire year.

Ribbon plans to continue building its multi-service edge IP routing solutions portfolio, including TDM circuit emulation, 5G cell site routing and IP MPLS aggregation.

“We anticipate IP Optical sales in Europe, the Middle East and Africa to contribute most of the sequential growth across multiple market verticals,” McClelland said. “We also anticipate sequentially higher sales in North America with another strong quarter with rural broadband providers and a small amount of revenue associated with the AT&T project.”

From a regional perspective, Ribbon sees India as a hot spot. “We expect India to remain one of our strongest markets with consistent IP and Optical shipments to Bharti and Tata Teleservices,” McClelland said.

Cloud shows potential

Ribbon sees ongoing potential for its cloud and edge segment. The vendor achieved $116 million in cloud revenues during the third quarter, down from $125 million in the second quarter.

The vendor expects Cloud and Edge sales in the fourth quarter to increase sequentially from the third quarter but lower year-over-year. It expects revenue from $230 million to $240 million.

McClelland sees opportunities in the enterprise market, including the public sector, but added that the government’s review process remains challenging.

“In our Cloud and Edge segment, the work we have done to transition from perpetual licenses to renewable term licensing for enterprise customers will benefit us in the fourth quarter with several annual enterprise license agreements expected to close before the end of the year,” he said. “We also anticipate another strong quarter for U.S. federal agencies, including new projects as well as expansion for active voice modernization projects, although we have reduced our projections somewhat to account for the time it takes to evaluate and award these complex programs.”

Ribbon’s overall revenue for the third quarter of 2023 was $203 million, compared to $207 million for the third quarter of 2022 and $211 million for the second quarter of 2023.

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About the Author

Sean Buckley

Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.

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