Cost reduction was hard and prices had climbed a bit. That started the ONT business in the right direction. Tellabs took another step by buying Vinci Systems for their lower cost ONTs.
I had first met with Vinci when I was asked about doing interoperability work in the Spring of 04. It was not a great call as we were in the middle of a development crisis around FiOS. I saw no way to add yet another bunch of work on people’s plates by including Vinci ONTs in the offering. Making ONTs interoperable was a lot more work in those days as their was lots of work to do on the Network Management side. ONTs were provisioned through the OLT over a channel called the OMCI. That meant that OLTs needed to be aware of what ONTs were plugged into them and treat each one to meet its needs.
Verizon was unhappy with my stance on Interoperability. I pointed out to Mark Wegleitner (Verizon’s CTO at the time) that we wanted Interoperability, just not right now. Given the pressure that he put on us to get everything working, he relented.
Now AFC/Tellabs was working on a cost reduction plan over the summer of 04. The goal was to get us at or just beyond break even on the ONTs. Tellabs met with Vinci and found that they planned to produce even lower cost ONTs than the AFC plan. Of course, Vinci had not yet understood all the electro-mechanical requirements put on AFC by Verizon. Vinci felt it could get many of the more costly requirements waived.
So, the Vinci deal closed and those ONTs became the focus of all cost reduction. Of course, none of the costly changes were waived and the Vinci ONTs ended up within single digit dollars of the cost of the planned AFC ONTs. On the surface this meant that the Vinci deal was a bad one. My take is otherwise. The Vinci CEO had a great relationship with the Verizon Technical team. Having a dedicated ONT team meant that each development group could have clarity of mission.
These were the ONTs that became available with the release that created stability in the Verizon network and were the mass deployment vehicle for FiOS. Over time we built many ONT variants, but what was known as the SFH ONT (Single Family Home Optical Network Terminal) became the only ONT that was deployed. The “business” ONTs had many problems that had nothing to do with Tellabs. Verizon could not figure out how to manage their deployment, so it just did not happen. This specification and disuse of capability happened in all aspects of FiOS. Verizon would specify a feature, Tellabs would develop it, and the Operational Teams could not use what was developed. More on this later as it had a signficant impact on the outcome of GPON.
I hope everyone has a Happy New Year! I will be posting something related to the New Year on Thursday and then a more general business topic on Friday. Back to ONTs on Monday.
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