Alcatel-Lucent's Broadband Products Win Recognition For Technology Leadership

Dec.11.13 | About: Nokia Corporation (NOK)

My positive outlook for Alcatel-Lucent (ALU) is strongly influenced by the company's cutting-edge technological achievements. The hard work of the engineers and scientists at Bell Labs was recognized by Gartner, Inc. on their 2013 Magic Quadrant for Fiber-to-the-Home Equipment. Gartner has elevated Alcatel-Lucent as one of the "Leaders" among the top 12 technology providers for the implementation of ultra broadband services.

Gartner 's endorsement of Alcatel-Lucent is a strong confirmation that the French telecom company has the necessary technology and the capability to make a big turnaround starting next year. ALU's impressive run this year, up 228% since January, means more and more investors see a rosy future for Alcatel-Lucent. The bulls are betting that the worst is over for Alcatel and the company's top notch wired broadband products are strong reasons for this verdict.

Based on the assessment by Gartner, Alcatel has the "Ability to Execute" its plans to become a successful leader in the fast-growing ultra broadband services. It also has the "Completeness of Vision"- marketing & product strategy, to effectively promote and install Alcatel-Lucent's broadband products.

Here are the two solutions that give Alcatel an edge over other providers of wired ultra fast broadband connection:

VSDL2 Micro-Nodes

Alcatel-Lucent's new micro-nodes fixed access product is perfect for delivering cost-effective super-fast ultra broadband services to any location. VSLD2 Micro-Nodes are easy to deploy and more cost-efficient especially when implemented in locations where there are a few end-users.

Unlike before, telecom service providers can now afford to extend their broadband service to communities with less than ideal subscriber numbers. Alcatel's micro-nodes is also very flexible. It allows seamless integration of different technologies so it can be efficiently deployed in any configuration to meet the need of end-users.

VSLD2 Micro-Nodes allows installers to mix and match broadband solutions like Fiber to the Node with vectoring to FTTN and to Fiber to the Home (FTTH) and other technologies. Micro Node ultra broadband installations can be done more cheaply because they can be deployed on existing electric/telephone posts, manholes, through walls, and underground tunnels.

Telecom companies can avoid deploying FTTH or VDSL2 cabinet just to serve a small number of end-users by using Alcatel-Lucent's micro-nodes.

Ethernet Passive Optical Networking (EPON) Solution

Legate's Shift Plan also includes an aggressive specialization in IP networking. The company's EPON strategy is an excellent move to help cable operators upgrade infrastructure. Cable operators, or also known as Multiple Systems Operators, are keen to deliver high-bandwidth services for cloud computing, video conferencing, data center operation, and more. However, the high cost of building a new high-speed DOCSIS network that's capable of supporting 100 Mbps - 1Gbps bitrate requirement,is one reason why not many MSOs can afford to upgrade their fiber network.

Alcatel-Lucent's new Ethernet Passive Optical Networking (EPON) fiber technology offers a cost-effective solution to cable operators. The Alcatel-Lucent 7350 ISAM FX is the highest capacity fiber platform on the market today. It has a 1 gigabit-per-second (1G) to 10G capacity that DOCSIS provisioning for EPON. Budget-limited MSOs can avail of Alcatel's EPON product so they can provide a cost-effective high speed fiber-based connectivity to their corporate clients.

CableLabs has released a document showing that a DPOE - DOCSIS Provisioning of EPON is an economical option for MSOs looking to upgrade their DOCSIS enterprise network to EPON bandwidth speed. EPON is already the fiber networking technology that is preferred by cable operators in North America, Europe, South Korea, and Japan.

Strong Focus on Ultra Broadband

Alcatel-Lucent's strong focus on making it an ultra-broadband service company is further emphasized on the 'Metro Network Traffic Growth: An Architecture Impact Study' report published by Bell Labs. The said document predicted that growing demand for streaming video and the rapid rise of data centers will increase data demand in metropolitan area by 560% within the next four years.

By 2017, streaming video traffic is predicted to increase by 720% while data center and cloud computing traffic will surge by 440%. Alcatel-Lucent has launched its Metro Cell Express Site Certification Program to help speed up the deployment of metro cell sites.

The company believes that small cells are the best solution to meeting the expected surge in data traffic. Alcatel's Metro Cell deployment is 20% cheaper and promises a 40% faster time for installation. Telecom companies, by using Alcatel-Lucent's small cell express service, can upgrade their data traffic infrastructure without incurring gargantuan expenses.

Conclusion

ALU is a good long-term investment. Its ultra broadband technology is better than existing products. Once the new broadband products gain enough market acceptance, Alcatel-Lucent can finally show a profit. The revenue stream from future high-speed data infrastructure is very promising and Alcatel-Lucent is on the forefront of this technology shift.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.