So, I need to take a bit of a step back to bring the story forward. It was never a secret that the PON technology used by AFC and Tellabs in BPON was created by Broadlight. This relationship created some of the GPON issues that would occur later so I need to explain it.
I was looking around at PON technologies and had to make some choices before we began our skunks works. The first of these was to implement a standard: ITU BPON. Most of the other systems players were small and built products that were similar to BPON or sort of BPON but were not BPON. The Asians (particularly NTT and KT) had decided to go with EPON. I made this decision for two reasons: I concluded that the large US Carriers (if they ever deployed) would deploy a standard and that this standard would be an ITU standard. EPON was an IEEE standard and there was Carrier/IEEE tension at the time. I am fully aware of several choices that would actually be less expensive than what we did, but I wanted to go with a standard. This is against AFC tradition, which was to implement the lowest cost mechanism.
I talked to two different systems companies about acquiring technology: Terawave and OSI. Both wanted $10M to license their technology. This was in the time of our skunks works, which predated any significant RFPs. I didn’t want to spend the money and lucked into a meeting with Broadlight. Didi Ivancovsky made his pitch and I concluded that we should go with them after some due diligence. There were 3 reasons for this:
– We could save the $10M and if we had to we could spend something like that finishing the Broadlight technology.
– They were implementing BPON per the standard and we wouldn’t have to get updates from the systems vendors (who were competitors after a fashion)
– If FTTH was going to take off, we needed a merchant technology market to drive costs down.
Broadlight was a start-up and was always trying to present a larger image than was real. I expected that and wasn’t to concerned about it. Things slowly came together with them and there were only 2 significant technical problems with them when FiOS deployed.
There was a serious financial problem however. We ran some numbers in 2003 and concluded that Broadlight would go out of business before FiOS started rolling. So, we led a round and became an investor in Broadlight. I did lots of diligence calls with VCs to help them raise that round. It ended up being oversubscribed and they brought in $17M. AFC put in $2M and it was one of the simplest decisions ever. That $2M was much cheaper than any alternative (like buying Broadlight). The toughest bit of it was trying not to be in “effective control” which would have made us report Broadlight as a subsidiary.
In any case, the primary thing that went right was the choice of an International Standard. The choice of Broadlight was both good and bad. Next I will post about the first spot of real trouble.
FocalPoint Business Coaching
We Focus On Your Business – Time, Team, Money, Exit
Business Coaching, Sales Training, Web Marketing, Behavioral Assessments, Financial Analysis
Lunch and Learn Tickets! 2/13/14 @ Noon