We’ve written about Free before (see “FTTH vs. VDSL in France“) but had a chance to learn more about what Free is doing while having Dinner with Benoit Felten. He consults by day and blogs by night over at Fiberevolution… What an appropriate name for a French Fiber blog.

Here’s what is interesting about Free and their FTTH offering:

• Iliad disrupted the French broadband business by offering cut rate pricing for broadband DSL and adding more free services over time like VoIP and Video. They are to Broadband in France what Southwest Airlines is to air travel. Iliad doesn’t spend a lot on customer acquisition and relies on word of mouth, high value, and low pricing. They have a cult-like user following and hold 20% of DSL market share and 45% of all unbundled lines in France.
• According to Benoit, Free pays France Telecom about 10 Euros a month, and sells DSL, unlimited VoIP, and limited pay TV for 30 Euros a month. ARPU climbs to $35 a month with a few extras.
• Iliad is NOT deploying PON, they are doing point to point fiber. This is a massive bump in the number of SFP modules needed and presents an opportunity for module makers. Free’s architecture uses almost 2x the optics of a PON install, and at least an order of magnitude more in cabling complexity. These are not FTTH modules but instead are Ethernet SFPs sold primarily by Avago and Finisar (FNSR).
• Install capex is estimated by Iliad to average 1500 Euros a subscriber in Paris. That is a lot considering one building in Paris might have multiple subscribers.
• Free is offering FTTH for the same price as DSL. 100M FTTH and all of the other features as before for 30 Euros. Their revenue model remains the same though their costs are going up.
• They can justify this (and this is the debatable point) because once the FTTH is in place, they no longer have to pay 10 Euros a month (120 a year) for copper. According to Benoit, Iliad is stringing two fibers, one for themselves, and another for open access. If a competitor such as France Telecom (FTE) or Neuf Cegetel want to use the fiber, they pay Iliad15 Euros a month.

I’ve got to hand it to Free. I slammed them hard (see Expropriation is Not Competition) because of their success by cherry picking the best customers (otherwise known as redlining here in the US). But at least they are now putting up their own risk capital for the venture (even though they still get a regulated ride in France Telecom cable ducts).

The financial reality is that spending 1500 Euros today to save 120 Euros/year in operational expenses tomorrow is a bad investment. That’s a 5% return over a 20 year investment horizon which, pardon my French, sucks. Something has to change.

Here are what I see as likely outcomes:

1. Iliad runs out of cash. The way things are set up now with razor thin return margins, this is a financial certainty in a rational market. Something has to give, or like Ferdinand de Lesseps, Free’s second act is going to be a disaster.
2. Free charges more. Free is delivering massive value. And if FTTH is really what people want, they will pay a premium.
3. They beg for the French government to guarantee bonds. This will eventually be needed to make the economics of FTTH work in areas of less density than France, unless the users themselves bear the costs.
4. Do it cheaper. This is the most likely outcome. Free can put FTTB (Fiber to the Building) and use the copper from the basement (owned by the landlord) to the apartment. They could do this to existing ADSL subscribers transparently, and could use VDSL to reach 50Mb/s in the same manner. No messy wiring, less optics, no 10 euro a month tariff, minimal new fiber, same user experience. At some point in the future they could go fiber the whole way with PON or Pt to Pt.

It should be noted that when Free first proposed using FTTH, they claimed it would cost 1B Euros to pass 4M homes. In their latest September report they indicate costs are up to 1500 Euros/subscriber. A move to VDSL is the quickest way to rein costs back in, something that would benefit incumbent Sagem and their chip supplier, Ikanos (IKAN).

Author holds positions in Finisar, Ikanos, and NTT.

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Bonus reading:

In order to understand Free’s business model we need to examine the three forms of regulation in play.

• No regulation – This is what we have in the US at this point. Verizon, AT&T, Qwest own the copper lines from the Central Office (CO) to the home. They can lease them to competitive providers at any price they wish. This applied to residences only but rulings are emerging that will continue this trend to business DSL as well. The Telecom Act of 1996 forced unbundling at set prices and led to the explosion of CLEC’s. This regulation was taken away with multiple turns of legislation and eliminated by the Brand X decision.
• Separation – Newer model that British Telecom follows as dictated by the OFCOM (British Office of Communications). BT still owns everything, but a separate, regulated subsidiary called Openreach maintains and leases the local loop copper connections to several competitive DSL providers like Carphone Warehouse (CPW) or a host of others. Or, Openreach leases it to BT itself. CPW and their competitors can choose to put their own DSLAMs in the BT CO and connect them to Openreach copper, or they can buy a wholesale DSL connection from British Telecom if they don’t have their own equipment present. Separation is the hot buzzword for Viviane Reding, who would like to use this model for the rest of the EU. We like to refer to her as the Telecom Witch Queen for her gross anti-capitalistic policies and affinity for central planning.
• Unbundling – The norm for Europe and Japan. The old PTT monopolies own and maintain the copper but are forced to lease access rights to other providers at low rates. ISP’s like Free in France or Yahoo/SoftBank in Japan pay the incumbent a regulated tariff to run their signals over the copper and use space in the CO.

From an editorial standpoint I acknowledge the shortcomings of the the no regulation model but prefer it to the others. If incumbents or new entrants don’t appear in a market, municipalities should be free to install fiber. When sufficient demand and need exists the risk capital will appear to make things happen.

By the end of 2010, Japan expects to achieve 100% Broadband coverage, 90% of which will be ultra-high speed. The country currently has 95% coverage with 80% ultra high speed. The chart to the right illustrates the shift to high speed broadband through aggressive deployment of FTTH.

The resulting plunge in DSL deployment has crimped the revenue for companies such as Centillium (CTLM) and Ikanos (IKAN) as NTT (NTT) goes whole hog with GE-PON. Incredibly, DSL is now seeing net disconnects as households move to fiber, the only nation in the world where this is happening. Verizon’s (VZ) served area is moving towards this situation and should see net DSL disconnects within the next few years.

Ikanos does still recognize some revenue from FTTH installs as approximately 1/2 of them use VDSL for the last 100m. I’ve heard conflicting stories that NTT may/may not eliminate VDSL in future installations. My gut feeling is they will not, and that VDSL will play a major role in deployments, particularly in Asia. PMC-Sierra (PMCS) continues to be the prime silicon beneficiary of the GE-PON deployment in Japan.

From a more broad perspective, Japan provides insight into the evolution of overall communication trends in an advanced technological society. What is most interesting is that fixed lines are not being eliminated – from a macro perspective they are replaced by IP telephony. While this is bad for providers that rely on fixed lines for revenue it is indicative that the concept of a ‘landline’ is not going away, just evolving technologically. This is good news for other big PTT’s and RBOCs provided they have programs in place to cannibalize their POTS lines.

Underlying the shift in connectivity technology is a shift in user behavior. Despite having nearly instant access to voice communication via mobiles, Japanese are steadily cutting back on voice calls. One can speculate on what is filling the gap (email/SMS) but it is rare event indeed when technology reverses a well worn trend.

The article outlines high level plans for the Japanese Next Generation Network (NGN) spearheaded, of course, by NTT.

NTT is known as a technology trailblazer and was the first carrier to drive widespread adoption of FTTH and 3G cellular. They also championed stillborn technologies such as PHS and ISDN - but being an early adopter has it’s downsides. Their outlook for what the network of the future is notable in that appears to heavily rely on IP Multimedia Subsystem (IMS).

IMS stands to be one of two things – Telco’s last White Elephant project prior to being forced into commodity providers of connections, or a mechanism that transitions their incumbency to the next stage of the networks evolution. NTT, as well as British Telecom’s (BT) 21CN project will be the first real world bellwethers for the commercial viability of IMS. It is a process well worth watching.

Author is long IKAN and NTT

Let’s take a quick look at the state of the photon.

• Korea – 20M homes by 2010, $5B dollar investment. The fact they are wiring up at $250 a home indicates heavy VDSL use though I have not confirmed this. Equipment supplied domestically, chips provided by both PMC-Sierra (PMCS) and Teknovus.
• Japan – 30M homes by 2010, moving away from VDSL as an access technology and going fiber all-the-way. This should substantially increase the amount of ONU chips required – up until now a large proportion of NTT’s (NTT) FTTH installs were really fiber to the basement (FTTB) with VDSL reaching the last 100m or so. Equipment still 100% Japanese, and chipset still nearly 100% PMC-Sierra (with a sprinkling of OKI ASICs and Teknovus)
• Taiwan – Chungwa Telecom (CHT) spending $1.84B to connect around 2M residences. Going GE-PON, and word is Teknovus is supplying the chips.
• China – Huge opportunity. China Telecom (CHA) indicating 20M installs initially but I feel demographics favor much larger numbers in the long run (see “The Future of FTTH in China“). It is hard to believe the equipment will be sourced from Japan, so expect to see Huawei, ZTE, UT Starcom (UTSI), and Fiberhome share in the spoils. I have heard the traditional western players like Alcatel (ALU) are out due to lack of mature GE-PON products – they all invested in G-PON.
• USA – Verizon going full guns with 6.8M homes passed already, and 18M passed by 2010. That’s about 50% of it’s installed base. Verizon projects 4M customers in 2010. Equipment supplied by Tellabs (TLAB), transitioning to Alcatel and Tellabs (maybe helloMoto too?) when they make the jump to G-PON from B-PON.
• Europe – France deploying FTTH in pockets (see “FTTH vs. VDSL in France“) and Amsterdam pursuing muni-fiber. British Telecom (BT) has ruled out FTTH, and Deutsche Telekom (DT) is going with VDSL. From my perspective, more heat than light on FTTH in Europe.

This is all not good for suppliers of G-PON equipment and components. Word on the street is AMCC (AMCC) has canceled their GPON development, something anticipated here 15 months ago (see “AMCC Demonstrates GPON MAC“). Broadlight and Freescale are the only ones with any hope of seeing substantial GPON chipset volumes in the next 3 years.

Bob Bailey, CEO of PMC-Sierra, spoke last week at the JPMorgan Tech conference. I asked him how the Chinese-flavored GE-PON (affectionately called CPON) interoperability trials were going with China Telecom. He indicated that PMC was the first to supply working silicon that met their specs, and that they had won the majority of Chinese sockets, including Huawei. He said they should be the market share leader in China. This is a bold prediction and something worth following up on.

The slide below is pulled from his presentation. Practically everything in Asia can be considered GE-PON, everything outside Asia B-PON/G-PON.

People tout the big benefits of fiber but refuse to allow those who put capital at risk to make big profits. They seem to be afraid that someone, somewhere, might actually make some money.

A report from the Broadband Stakeholder Group summarizes ongoing worldwide fiber to the home (FTTH) projects . The report highlights the need for FTTH in the UK, something BT (BT) has steadfastly refused to do.

I cannot blame BT- asking them to deploy an expensive network and then be forced to lease it out to competitors (with no downside investment protection of course) is a ridiculous thing to expect of a profit driven entity.

Matt Beal, CTO of BT Wholesale:

“You have to be ready to pay for that investment. My shareholders are not a charity. It isn’t a regulation issue, it’s a market issue – if no one wants to pay for [high definition video] streams they’re not going to magic themselves into people’s homes.”

Note three of these seven projects are fiber-to-the-node, not true FTTH. Another three of these projects (DT’s (DT) VDSL initiative, AT&T’s (T ) Lightspeed, and Verizon’s (VZ)  FiOS) were green-lighted only after a relaxation of the regulatory environment.

Another chart within the report shows penetration rates for recent communication technologies. Notice the slow penetration of wireless vs. broadband and dial-up.

This is a good example of how technologies that can leverage existing infrastructure (i.e. copper local loops) grow much faster than those that require large capex, digging, and rights-of-way (Note: ISDN failed simply because it just wasn’t compelling). Unless the regulatory environment awards the large risks inherent in big telco investments, they simply won’t happen.

As a result, I expect the FTTH curve to look much like the wireless curve, except in areas where labor is cheap and greenfield construction is plentiful, like China. This is particularly true in the OECD, where outside of the US operators who make investments in FTTH are forced to lease their assets to others. The exception is Japan because the rates NTT (NTT) can charge for this transaction make it a profitable endeavor. We’ll look at this tomorrow.

Hat Tip: Telebusillis
Full Disclosure: I own shares in NTT
Photo of Monopoly Money courtesy of Scott Willis

I pulled a very interesting slide from a presentation made by AMCC (AMCC) at a recent Linley Group seminar. The presentation was about the market opportunity for silicon as a result of upgrading the millions of T-1s and D-3s currently in service. I don’t think AMCC has a secret weapon product here, but one of their slides was an excellent summary of carrier share in the small and medium enterprise market.

A phrase heard more and more around the water cooler at work is “My Internet Access at home is faster than our connection at work“. In most cases, this is true.

Not only are home connections faster, but they are also significantly cheaper on a per bit basis. Telcos point out this is an apples to oranges comparison since (they claim) business connections have superior network engineering and reliability. The reality is that that the technology used to provide connectivity to a business is years behind the technology used to connect homes.

This is beginning to change. British Telecom (BT) is using a combination of Ethernet over bonded copper pairs (mid band Ethernet) and fiber based Ethernet where possible. They using the Adva/Covaro (ADV.DE) FSP150 to accomplish this. Antiquated ATM or PPP based services are being capped as part of the BT21CN expansion; going forward the access technology of choice is Ethernet.

It is only a matter of time until the Bellcos are forced to upgrade their antiquated copper based enterprise connectivity as well. This will be accomplished with a mix of technologies likely to include Fiber PON, Ethernet over fiber, and mid-band Ethernet.

Vendors that can help the big Bellcos transition their existing copper infrastructure will have an advantage. I feel Adtran is one such company, given it’s massive installed base of T1′s and close relationship with the Bellcos.

The success of companies like Adtran will depend greatly on the propensity for the Bellcos to pull fiber. If Verizon, AT&T (T ), or others decide to bite the bullet and pull fiber it will greatly depreciate the value of Adtran’s installed base. My greatest concern for Adtran is that the carriers worldwide are losing their fear of pulling fiber to the prem. This is good news for the world, but bad for companies who depend on leveraging an installed base of copper. Regardless, I think Adtran is one of the best run companies in Telecom and will find a way to adapt.

The other factor that makes fiber to the enterprise a virtual certainty is the rising competition from other carriers who view high margin Enterprise customers as a rich vein to mine. The Bellcos already face stiff competition in urban areas from fiber-based carriers like Cogent (CCOI), Abovenet (ABVT.pk), and Level 3 (LVLT). These companies deliver Ethernet services as advanced (if not more) than the Bellco incumbents, often at better prices.

Outside the urban areas the Cablecos have made no secret of their plans to poach the same lucrative SMB customers. I believe they are doing this because they realize growth in consumer ARPU is ending even though Comcast (CMCSA) CEO Roberts won’t admit it.

Most importantly, the service provider that wins the dumb-pipe business is in the best position to sell a truckfull of other services, everything from managed firewalls to VoIP connectivity. Win the dumb pipe, and you first rights to monetize it.

Before the incumbent Bellcos can even compete head-to-head with these new challengers they will need to deploy a technological alternative to the venerable copper based T-1 line. They need a better dumb pipe. This will be very good news for the Telecom equipment supply chain.

Author is long Adva, Abovenet, and Adtran.

There has been a lot of discussion today about Video and the explosion of bandwidth needed to carry it but Peer to Peer traffic is now the largest consumer of bandwidth on your networks. Do you view P2P technology as an opportunity or threat and why?

All four took me to task and indicated P2P, let alone P2P video, was not the biggest consumer of traffic, which would be a direct contradiction with several independent studies. Their responses tell you a lot about how the nature of their networks. (Text borrowed from Lightreading)

• “It is probably the portion of our video traffic that is growing at the fastest clip… The pressure on the upstream network is why we are paying a lot of attention to it.” — Ernie Carey, VP advanced network technologies, AT&T (T )
• “We don’t see a huge amount at the moment, but that’s going to be the major growth, and we’ve got to have the network to handle it.” — Dave Payne, manager of broadband architectures and optical networks, British Telecom (BT)
• “Yes, upstream is going up, but downstream is going up as well… [The ratio of 1:4 download:upload amounts] hasn’t significantly changed over the last three years; there is a slope to that curve, but it’s not significant.” — Vik Saxena, senior director of network architecture, Comcast (CMCSA)
• “If you can find enough uplink speed, which is what we’ve done with fiber-to-the-home, then that [question] goes away.” — Glenn Wellbrock, director of backbone network design, Verizon (VZ)

There is one exception to my stereotype. British Telecom’s (BT) 21st Century (21CN) initiative. No Victorian Bric-a-Brac here.

I’ve spent some time ripping apart BT21CN in order to understand the short and long term impact on the telecom equipment and component supply chain. So far, I really like what I see.

There is a ton of information on 21CN in the public domain. BT has stated transparency is an important characteristic of this initiative and it shows. The 21CN website is a good place to start.

MSAN – King of the Ring

Most impressive is BT’s commitment to take all voice and data services at the edge and homogenize them into IP and Ethernet. The star of the show is the MSAN (MultiService Access Node), a DSLAM-on-steroids. All protocol complexity is pushed to the extreme edge of the network and collapsed into the MSAN, which feeds an Ethernet and IP core.

Every voice line is converted to VoIP right where the copper pair is terminated. All 30 million of them. DSL services are provided from the same linecard. BT is using these systems to rollout ADSL2+ to 95% of households nationwide. There’s no separate DSLAM, POTS termination, SONET/SDH Add Drop Mux. MSAN collapses all.

Fractional TDM based Frame Relay and IP services (500k lines!) are packetized and bundled right at the POP. If it isn’t TDM leased line (E1 or bigger), it gets packetized and sent through the core using MPLS. BT has indicated that support for fractional rate leased lines after 2012 is questionable.

The Major Players

Fujitsu (FJTSY) and Huawei provide the MSAN boxes that sit at the edge of the network and act as the bridge between legacy services and an all-IP core, while providing robust support for transporting legacy TDM containers. This is a 40% share of project capex, or $2.8 Billion Dollars.

Speculation was rife several weeks ago that Huawei had lost it’s MSAN contract. I’ve subsequently learned that it is the optical transport contract that Huawei is struggling to keep. Ciena (CIEN) and Huawei are providing the optical transport equipment, though multiple people have informed me that Ciena is capturing a greater share due to problems with the Huawei solution. This is rumor, not fact, so don’t assume it is true.

It certainly was a shock to me, as I have long expected and written about how Huawei will meet initial success in western networks through it’s optical transport equipment. Regardless, I expect the optical transport portion of the contract to be the least important in both strategic and dollar terms. In the near term BT is bootstrapping all of their old transport equipment and not buying a great deal of new kit.

Cisco (CSCO), Lucent/Alcatel (ALA), Siemens (SI), Juniper (JNPR), and most recently Nortel ::ticker(“NT”) supply a motley assortment of switching and routing gear. The picture is murky but it appears to me that, as usual, Cisco wins and everyone else is invited to ensure a decent hand of poker.

Much attention is focused on all the vendors named in the 21CN contract, but the reality is one MSAN vendor is likely to capture at least 1/3 of total capex. It will either be Fujitsu or Huawei. If you have an opinion, please do share.

The Death of TDM Access

Going forward, TDM as an enterprise access technology is over in the UK. BT announced a new contract win with ADVA (ADVOF.PK) to deploy Ethernet demarcation boxes using a multitude of backhaul technologies, mostly fiber and mid-band Ethernet. This is part of their push to roll out Ethernet services.

This is a really big deal. Instead of forcing another copper TDM connection down the throats of their customers (you thought English food was bad) BT will be offering carrier grade Ethernet connectivity, fiber based in some cases.

Anyone betting on Ethernet over PDH or any native TDM as customer connectivity should be concerned. All legacy TDM based Frame Relay and PPP protocols are homogenized into IP right in the MSAN. New customers will be receiving Adva boxes using copper or fiber based Ethernet. It’s safe to assume those E1 lines used for voice will vaporize sometime shortly after.

TDM based optical transport (i.e. SONET/SDH or Ethernet over SONET/SDH) is still used throughout the network to transport both legacy TDM leased lines and IP services.

It is notable that even with a network as radically advanced as BT’s, SONET/SDH still plays a central role, Ethernet over SONET/SDH in particular. Take that, evil anti-SONET Sith Lords. I will fight you to the last.

VoIP 2.0

The other notable characteristic of BT’s architecture is they chose not to rely on TDM to VoIP conversion while using legacy copper TDM termination equipment. This choice, if a trend for other carriers, is death for companies like Sonus (SONS), who provide a solution that bootstraps existing TDM investments. The drawback to their solution is they end up adding more equipment and complexity rather than reducing it.

BT embeds the VoIP functionality right into the MSAN, and does the conversion as close to the customer as possible. This has the effect of reducing, not increasing network elements and is the only long term method for driving down operational costs.

As carriers aggressively deploy low-cost DSL and DSL penetration increases, the MSAN model makes more and more sense. There won’t be legacy TDM connections for Sonus to convert as the edge equipment itself will incorporate this function.

I believe companies like Acme Packet (APKT) are better representative of the long term future of VoIP and other connection based services yet to be invented. Once VoIP is a pervasive service, the growth will be in managing and securing the connections successfully, not converting legacy TDM connections.

Conclusion? Sonus = Carrier VoIP 1.0, Acme Packet = Carrier VoIP 2.0.

Summary

The Victorian age of Telecom is nearing an end, with it’s assortment of bric-a-brac equipment destined for retirement.

BT 21CN is a sleeker, flatter, radically modernistic alternative these Victorian networks of old. If successful, Tech historians will draw parallels between Victorian interior design of the 19th century and Telco Central Offices of the 20th century. More Gropius. Less Cruft.

I could write pages about how much I don’t like England…. somehow the country doesn’t match the fine characteristics of the people who live there.

The author is long Acme Packet.

Just as Vietnam and Afghanistan were proxy wars for the 20th century superpowers, BT’s 21CN will be the first full-blown encounter between incumbent and Chinese research, customer service, accounting practices, and cost structures.

BT (BT) is spending 10BB British Pounds to rewire the core of their network, in essence a full forklift upgrade of Britain’s transport infrastructure. It’s a big project and has been well covered in the press, particularly by Lightreading. The technology is ultra sexy (WDM, Digital Wrapper, MPLS, GFP, the list goes on and on), and while I like cool telecom technology the business match up and the way the outcome will resonate into markets is far more interesting.

We are deeply interested in the impact Chinese hardware will have on the global telecom equipment market. Huawei and ZTE make noise about their big push into overseas markets but the reality is they have yet to ship big volume into the infrastructure of any Tier One telco outside of China. The first real debutante ball for Huawei (and a proxy for ZTE) in a foreign market is 21CN.

Huawei was selected along with Ciena to supply the WDM transport equipment. Huawei was also selected alongside Fujitsu in order to supply access equipment. It’s the first time we’re going to see a match up between the high cost western suppliers and the low cost suppliers from China. The first big shock in this deal came when BT decided against using – Marconi, their incumbent supplier. Marconi went on the record as saying they simply could not hit the price targets BT wanted. They probably figured BT would pay more to use a trusted supplier and negotiated to that end. Oops.

“This is a disappointing outcome from a very competitive tender process,” said Marconi CEO Mike Parton in a statement. “Our products performed extremely well technically, but we have been unable to meet BT’s commercial requirements.”

A few months later, after two years of navigating a bankruptcy, Marconi is absorbed into Ericsson and becomes the first casualty of the new Telecom war.

Now, the ink is drying on the contracts for 21CN. Ciena is supplying the CN4200, a mash up product from one of their better acquisitions, Internet Photonics, and the WDM transport expertise Ciena built their reputation on. Products like this are defining the new future of the Ciena after the acquisition and subsequent detonation of many companies and products, particularly Coredirector. A number of expats from the Coredirector team now run Infinera, which is building a similar product to the 4200. This product area is a core competency for Ciena and was crucial for strategic validation and internal morale. They scored the deal and are now in the game.

Huawei is competing in an area that plays to their strengths. Transport equipment is the least software intensive part of the equation, so a lack of system integration experience with big Telco software isn’t a big disadvantage. The hardware engineers I’ve worked with at Huawei are technically on par with the west, except they work much harder for less cash. There is a strong nationalistic hunger within Huawei and ZTE; they don’t just want to beat the western companies financially they want to exhibit the technological strengths of their country.

The BT 21CN rollout is going to offer us a front row seat into what the future of Nortel (NT), Lucent(LU), Alcatel (ALA), Siemens (NOK), Marconi, Fujitsu (FJTSF.PK), NEC (NIPNY) and others is going to look like. What exactly is the financial impact of competing with Huawei and ZTE?

Ciena will be the best proxy yet. Whatever pricing they gave BT to win this deal has already been shared over beers with every other tier 1 carrier, and the margins in the transport business are likely to fundamentally change. 60% of Ciena’s business is expected to come from transport, any damage (or lack of it) will be readily apparent and not buried within the P&L of a behemoth like Lucent or Nortel, at least for some time.

Ciena has shown solid financial improvement over the last three quarters. They appear ready for the fight but there are two things we’re particularly interested in:

1. Gross margins on the incremental business from the BT contract
2. Share of the business Ciena wins from Huawei.

This data will be the closest thing to a crystal ball when it comes to forecasting the financial future of optical networking.

[Update 5 Feb 2006] This post was linked from a George Gilder Tech Forum. I am not a member but would appreciate someone sharing with me the context in which I was quoted.