FTTH Council Europe 2008

ECI Expands its Fiber Access Portfolio with FTTB ONUs

| Feb 29, 2008 | Broadband Infrastructure| Show Update

| Analyst: Erik Keith

Current Perspective: Positive/Neutral Vendor Importance: Moderate Market Impact: Very High

Event Summary

February 27, 2008 – ECI Telecom announced new optical network units (ONUs), specifically targeting fiber-to-the-building (FTTB) market. The G-PoweRAM 48V, which features GPON network uplink connectivity to the building and VDSL2 within the premises, supports up to 48 subscribers. The MiniCAB 8V supports up to eight subscribers and can be deployed with either a GigE or GPON uplink, along with VDSL2 subscriber interfaces. Both platforms will be available in Q2 2008.

Analytical Summary

• Current Perspective: Slightly positive on ECI Telecom’s introduction of the two new FTTB ONU boxes, as the market for FTTB solutions is reaching an inflection point of operator demand for these types of platforms, especially in Europe and Asia, where high-density, multi-dwelling units (MDUs) are pervasive and the vast majority of populations live in MDUs (e.g., in Germany, 70% of the population lives in MDUs).

• Vendor Importance: Very high to ECI, as the company needs to make every effort to broaden its customer presence in the next-generation (FTTx) access market, because despite its success in the DSL market during the last five or six years, ECI is in danger of becoming marginalized as a competitor in this sector due to both: 1) the consolidation of most of its direct rivals, and 2) corollary and continuing revenue erosion/margin compression in the wireline access space. The FTTB sector may be one of ECI’s best bets for remaining competitive in the broadband market moving forward.

• Market Impact: Moderate on the overall fiber access market, because while ECI has generated notable success in the wireline broadband access market with customers including Deutsche Telekom, France Telecom and Telecom Italia (as well as ChungHwa Telecom in Taiwan), the battle for retaining its market presence will not get any easier. ECI has generated some recent success in the GPON market with announced customers in Norway (Fibra Networks) and in France by Tutor, supporting the city of Nancy (CUGN – “Communauté Urbaine du Grand Nancy”).

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Current Perspective

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