Benvenuto al Futuro, Milano: Telecom Italia Selects Huawei for FTTB Broadband Build-out

| Apr 22, 2008 | Broadband Infrastructure | Competitive Update

| Analyst: Erik Keith

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

Event Summary

April 18, 2008 – Huawei Technologies has announced that it will provide access network components to help Telecom Italia deploy a next generation network in the Milan area. Huawei will provide Telecom Italia with its fiber to the building (FTTB) solution, comprising SmartAX MA5600Tand MA5606T, which incorporate GPON and VDSL2 technologies, enable broadband connection speeds of up to 100 Mbps, and features a Terabit architecture, providing a platform for Telecom Italia to roll out additional ultra broadband services.

Analytical Summary

• Current Perspective: Positive on Huawei’s FTTB deployment with Telecom Italia in Milan. Last fall, Telecom Italia’s short list of the vendors selected for its GPON trial became semi-public knowledge, with Huawei and ZTE making the final cut. Six months later, the announcement of Huawei as a designated supplier for Telecom Italia’s FTTB network build-out – which leverages both GPON and VDSL2 access technologies – is a strong follow-up for Huawei, highlighting its ability to meet the escalating “ultra broadband” service delivery requirements of Tier 1 operators.

• Vendor Importance: High to Huawei, because despite its presence at the sharp end of the next-generation wireline access market, Huawei is still behind a number of its closest rivals in terms of non-Chinese Tier 1 telco customers. With the Telecom Italia deployment, Huawei adds another European incumbent operator to its customer roster (others being BT and KPN), demonstrating its ability to win additional traction in this highly competitive region, against strong odds.

• Market Impact: Moderate to high on the next-generation access and FTTP/x markets, as Huawei has already made its presence felt in the global access market, and with the Telecom Italia FTTB deployment, Huawei adds another European Tier 1 operator to its customer list. However, the impact of this announcement is tempered by the lack of homes passed/subscriber count targets for Milan, not to mention the potential for FTTx network upgrades by Telecom Italia in other cities (e.g., is Turin next?).

Recommended Competitor Actions

• ZTE needs to highlight any new customer deployment proof points within the European next-generation access market, especially with Telecom Italia (if possible), as ZTE was the second vendor selected by Telecom Italia for the GPON lab trial, and is still a front-runner for FTTx deployments with the operator.

• Alcatel-Lucent, Ericsson and Nokia Siemens, as leading contenders in the European and global access markets, need to highlight their own respective GPON and FTTx deployments as proof of their competitiveness in this market. For example, Alcatel-Lucent can point to its more than 60 GPON deployments worldwide, while Nokia Siemens can cite more than 50 FTTx deployments and trials, globally.

• ECI Telecom, which was selected by Telecom Italia for an FTTx deployment in Rome (announced last summer in the Italian press), also needs to follow through with customer proof points for its own Hi-FOCuS solution set and related access gear. For example, ECI can highlight its GPON deployments with Fibra (Norway) and Tutor (France), as well as the fact that it has sold its access gear to established optical customers.

• Cisco and PacketFront, which have both established solid customer bases in the EMEA region, also need to point to their respective customers and installed bases as validation for their FTTP systems. Both vendors have generated strong traction in the Nordic region with Ethernet FTTP platforms which leverage active or point-to-point (p2p) Ethernet connections instead of PON systems.

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Competitive Positives and Concerns

Recommended Vendor Actions

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