Start-up lands an RBOC

It’s what all telecom start-ups founded (and shuttered) since 1999 wanted: The Big Deal.

SBC has awarded WaveSmith Networks a three-year, multimillion-dollar contract to supply the regional Bell operating company with multiservice edge switches for DSL aggregation. SBC is the largest DSL provider in the U.S. with 2.2 million subscribers. The carrier has experienced four consecutive quarters of DSL subscriber growth, and another 24 million customers across 13 states are potential subscribers.

WaveSmith’s DN 7100 switches will be deployed in 200 SBC central offices and points of presence. Each CO and POP will have more than one DN 7100.

The win is a coup for start-up WaveSmith and would be for any start-up. More are failing than succeeding during the now three-year telecom slump as spending among service providers decreases, alternative carrier customers go out of business, and incumbent carriers generally shun the risk of dealing with unknown, untested and financially-challenged young companies.

In an effort to attract attention from incumbents, start-ups are aligning with established vendors with which carriers are familiar and already have relationships. WaveSmith, for example, has $5 million in funding from, and a distribution and service and support pact, with Ciena.

The SBC deal, however, was a direct negotiation between WaveSmith and the carrier, a WaveSmith spokesman says. SBC, however, was encouraged and convinced to engage WaveSmith due to its Ciena backing, he says.

WaveSmith replaces SBC incumbent ATM/frame relay switch vendor Lucent. WaveSmith says it was selected because of price/performance, ease of provisioning, footprint and virtual circuit density advantages.

Lucent ‘s multiservice switches, obtained from its acquisition of Ascend Communications in 1999, are at least five years old. Lucent has been slow to refresh the line due to its sagging financial fortunes, which have canceled projects aimed at developing next-generation multiservice switches and cost tens of thousands of employees their jobs.

Analysts say the WaveSmith/SBC deal shows incumbent vendors that they have to prove themselves, even against a start-up. And it also shows that with the right backing (in this case, Ciena), an RBOC, incumbent local exchange carrier or any incumbent carrier will accept the risk of purchasing from a start-up.