The Future of FTTH in China - Part I

Fiber to the Home (FTTH) and Passive Optical Networks (PON) in particular have received an inordinate amount of attention from the financial community in the last year. Attention has been focused at every level of the value chain, from component companies that make chips and optics to Telecom Equipment and Set-Top box makers to Carriers who are deploying services like IPTV over a new fiber infrastructure. The resurgence in the market performance of optical stocks was (incorrectly we believe) attributed to FTTH and other broadband services.
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Bookham CEO on Optical Industry Models

In a stroke of timing that a few people have pointed out cannot be a coincidence (and I can assure you it is) Bookham Inc (BKHM) CEO Giorgio Annania pens an article for CompoundSemiconductor.net about the future business models of the optical component industry and what role he intends for Bookham to play. I recently published my thoughts on the impact Chinese manufacturing might have on the business, and the benefits and risks of Bookham’s vertically integrated model when applied to lower volume telecom businesses.

The article revisits the well known fact that there are too many suppliers in the optical component business and that there needs to be consolidation.

Hat tip to FiberDeviceBlog

Vonage - Lipstick on a Pig

Unless you’ve been under a rock you have probably heard that Vonage (VG) went public Wednesday. It’s off 25% as of right now.

Seeking Alpha summarizes the recent opinions here.

I wrote back in February what I thought about Vonage. Nobody liked it then, nobody liked it Wed. morning, yet Deutsche Bank and Citibank managed to rally the throbbing VoIP masses to get this deal done.

This is a case where they certainly earned their fee with a spectacular sales job.

I’ll be the first to call it - the class-action attorneys are going to try and monetize the Vonage customer class of shareholders that took 13.5% of this deal. Vonage used tactics of a bucket-shop, pitching yours truly by email, voicemail, and snail mail. Fair? No. Reality? Yes.

Bookham, China, and the Optical Component Market

Recently, I sat down with Giorgio Anania, CEO of Bookham Technology (BKHM). We discussed a number of things, including the emerging competition of Asian optical component manufacturers. My conversation with him was about the industry in general, and not specific to Bookham.

We like to identify macro technology trends and disruptions then determine the best way (if any) to invest in them by following up with individual technical (as in technology, not charts) and financial analysis. Discussions with gentlemen like Giorgio Anania help me start this process. At this time I’m far from finishing it.

One trend I see unfolding is the emergence of Chinese optical component companies. Every company is moving their labor intensive component manufacturing to Asia (including Bookham) either through outsourced manufactuing or directly owned facilities in low-cost labor areas.
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Seattle RFI for FTTH

Seattle has issued an Request for Information for a large municipal fiber to the home/business build out. Requirements are sparse other than a minimum speed of 25Mbs with easy scalability to 100Mbs, 100% citywide coverage, and a target completion date of 2015.

This is the first big US municipality with such an RFI. Seattle has a broadband penetration rate well above the national average.

Website with more info and RFI .pdf here.

$50 says Qwest submits a bid. What odds do you want?