Alcatel-Lucent GPON Goes Mobile: China Mobile, That Is

| Jul 23, 2009 | Broadband Infrastructure | Competitive Update

| Analyst: Erik Keith

Current Perspective: Positive
Vendor Importance: High
Market Impact: High

Event Summary

July 21, 2009 – Alcatel-Lucent has been selected as China Mobile’s sole supplier for the deployment of a FTTH network in ten cities across the provinces of Guangdong and Anhui. Guangdong Mobile and Anhui Mobile will build on Alcatel-Lucent’s 7342 ISAM FTTU platform, the company’s flagship GPON solution to deliver high-revenue, user-centric broadband services over distances of up to 20km. The contracts were secured through Alcatel-Lucent Shanghai Bell, Alcatel-Lucent’s Chinese flagship company.

Analytical Summary

• Current Perspective: Positive on Alcatel-Lucent’s GPON deployment with China Mobile, as it demonstrates that the vendor remains at the forefront of the global fiber access market, winning customers not only in its traditional strongholds of Europe and North America (e.g., with France Telecom and Verizon, respectively), but also within the critically important Chinese market. This highlights Alcatel-Lucent’s ability to win substantial contracts at the expense of the home market vendors (Huawei and ZTE).

• Vendor Importance: High to Alcatel-Lucent, because with the initial deployment in ten cities across both Anhui and Guangdong provinces, Alcatel-Lucent is very well-positioned for further success in both the China Mobile network and within the overall Chinese fixed access market. This early, high-profile traction may prove to be critical to Alcatel-Lucent’s long-term success in China, especially since almost all rival GPON/FTTP systems vendors are either in trials or full-on commercial deployments in China at present.

• Market Impact: High on the GPON and overall FTTP markets, as the China Mobile win highlights Alcatel-Lucent’s positive and increasing momentum in the quickly-evolving, very high potential fiber access market in China, which promises to be one of the world’s most important (not to mention largest) next-generation access markets moving forward. Again, winning on the “home court” of Huawei and ZTE provides Alcatel-Lucent with a compelling endorsement of its 7342 ISAM FTTU platform as well as its overall GPON service activation/delivery proposition.

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Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Rival vendors can spin the Alcatel-Lucent GPON deployment with China Mobile as unsurprising given the reasons mentioned above, i.e., the vendor’s Shanghai Bell joint venture in China, as well as its longstanding relationship with China Mobile, to which it has supplied DSL systems for many years running.

• Huawei and ZTE both need to provide additional data/proof points that highlight their success in both the global FTTP/GPON market as well as the Chinese market. For example, Huawei has made bold claims of being “number one in the global GPON market” (North America excluded) and ZTE has cited its number one standing in the Chinese EPON market, in conjunction with a recently-announced win at China Unicom.

• Cisco needs to highlight its own success in the global FTTP market, in terms of both total subscribers supported (i.e., well over 4 million) and key operator customers, such as Hong Kong Broadband, which is using the Cisco Ethernet FTTH solution set to deliver 100 Mbps and even 1 Gbps of symmetric bandwidth to end users, which current GPON systems are not capable of supporting in typical mass-market residential configurations.

• Ericsson needs to convert more of its GPON trials into full-on customer wins. For example, several weeks ago, Ericsson announced that its GPON solution set had won contracts with China Mobile, China Unicom and China Telecom to provide GPON-based services in nine Chinese provinces; however, there was no distinction of which deployments are trials, and which are live commercial deployments.

• All other GPON vendors with designs on winning business in the highly competitive Chinese FTTP market need to “get in the door” via trials, demonstrate the mass-market viability of their systems, and convert these trials into commercial deployments. While this may seem to be a tall task, there is certainly opportunity.

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Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Broadband Infrastructure | More information

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