FEBRUARY 12, 2007 By Meghan Fuller -- Ericsson (search for Ericsson) today announced it has finalized its acquisition of Santa Clara, CA-based Entrisphere (search for Entrisphere), developer of GPON equipment. Financial terms were not disclosed.
Ericsson says it did not necessarily acquire Entrisphere to become a new player in broadband access. Instead, the acquisition strengthens the company's previously announced Full Service Broadband Initiative, which combines both fixed and mobile broadband capabilities in a converged, next-generation network architecture to provide service connectivity to any device, says Peter Linder, director of network strategy for Ericsson's Broadband Networks Business Unit.
And, of course, television is emerging as a key service for many operators, which is the impetus behind Ericsson's Entrisphere acquisition. "The moment you say that TV is an important part of your value proposition and you believe that you need to deliver more than one standard-definition TV channel into someone's home, you're talking about bringing fiber closer to the subscribers, either going to the curb and delivering VDSL2 or going all the way to subscribers with technologies like GPON," says Linder. "Everything we do in the fixed broadband access arena is very much driven by the TV agenda."
When Ericsson representatives evaluated the company's existing portfolio, they determined that the internally developed VDSL2 offering was sufficient, and they were satisfied with the multi-service access development they were pursuing in the wake of the Marconi acquisition, recalls Linder. But the company felt it was missing a critical piece of the puzzle in the form of a GPON offering.
For his part, Linder believes a GPON offering will be critical for Ericsson going forward. He believes EPON, which has established a strong foothold in Asia, will "more or less stagnate," while the worldwide market growth shifts in GPON's favor. The European market holds tremendous upside potential for GPON, he says, assuming the municipalities and utility companies begin to adopt the technology in lieu of active Ethernet architectures. He also mentions that cable companies with long loop networks may decide to push fiber to the user via GPON as well.
Among the Tier-1 telcos, there should be no lack of business going forward, as France Telecom, AT&T, and Qwest all are rumored to have a GPON RFP on the table.
Without commenting on specific business opportunities, Linder notes that both VDSL2 and GPON are gaining momentum. "We think the year 2007 is when many operators are going to make their decisions on which route they are going to go," he says.
Once the decision was made to add a GPON offering to its Full Service Broadband portfolio, Ericsson representatives weighed the option of integrating GPON into an existing platform or somehow adding a purpose-built GPON platform. The company opted for the latter, determining the purpose-built alternative would be superior for large-scale deployments.
To that end, the company acquired Entrisphere, which has been an Ericsson partner since 2005. Linder confirms that Entrisphere was selected because it has the best product on the market and because it is "the only player in the market that fits both ETSI and ANSI requirements," he says.
Linder indicates that the move was also proactive on Ericsson's part; he believes the market is only big enough for three or four strong, global players. "We're making sure no one else gets a hold of this technology," he says.
As far as an integration strategy, Linder says Entrisphere's products are pretty well integrated with Ericsson's portfolio already. Any operational integration has yet to be determined.
Linder summarizes the day's announcement by reiterating that Entrisphere's GPON portfolio fits nicely into the bigger picture of Full Service Broadband. "Our idea for where things are going is that broadband in the future will not be so heavily associated with the laptop and Internet surfing," he says. "It's delivering whatever service to whatever type of device, be it a 2-inch screen sitting in your pocket or a 42-inch screen hanging on your wall. I think you'll see more and more things coming out of the company going in that direction," he reports.
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