Summary
1. Adding capacity to the 3G network is AT&T’s primary concern right now. 2. In the recent past, Adtran has taken a hit on optical products when wireless spending was put off by the RBOC because there was less expenditure on backhaul gear. 3. It seems logical that purchases of backhaul equipment from the supplier should be significant in 2009.
Analysis
Adtran has frequently said that it has trouble disaggregating the backhaul percentage of its equipment sales. The RBOCs buy certain products from the vendor, which are used across all of the networks. They are sent to a centralized site and so there is no good way of knowing exactly what the breakdown would be between wireline and wireless.
Guesses on the range over the last several years have been anywhere from 5 to 25% of Adtran’s HDSL and optic businesses together. It seems only when there is a big swing in one direction or another on backhaul that it is clear that particular application is having a significant effect. With AT&T desperately needing to build out its 3G wireless network, one can assume that there will be a noticeable increase in the sale of Adtran’s solutions for backhaul – whether it is HDSL, the OPTI-6000 – and maybe even still M13 muxes. In addition, the activity at Verizon Wireless regarding Alltel is also expected to spur more sales for the supplier.
To whatever extent the OPTI-6000 installations have been used in backhaul, it should facilitate purchases of the attractively built TA 5000 for that purpose as well. The latter is a fairly natural extension of the former for implementation and they both share the same EMS.
