Calix buys Ericsson Access


The deal: In August, Calix saw an opportunity to gather in more PON assets as Ericsson moved forward with its plan to de-emphasize fixed broadband. The provider signed a deal to purchase all of Ericsson's fiber assets, including its EDA 1500 GPON (Gigabit passive optical network) OLT (optical line terminal) and complementary ONTs (optical network terminals), for an undisclosed amount.

The move was a smart one in that it put Calix on an equal footing with ADTRAN, which purchased Nokia Siemens Networks' access portfolio late last year. It also broadened the provider's U.S. and global reach as the vendor became Ericsson's preferred global partner for broadband access applications.

Why it's significant: Calix gained momentum throughout the year, signing agreements with a number of major telcos including CenturyLink, Frontier, and Malaysia's Symphonet to provide Ethernet or fiber-based access platforms and equipment. But the Ericsson deal was probably its biggest move in a PON market that's beginning to overtake traditional DSL and seeing an increase in consolidation.

Ovum reported in September that this ongoing transition led to mixed results for fixed asset technologies and products in terms of shipments during Q2 2012. PON OLT shipments declined year-over-year, for example.

"The conversation in fixed access tends to be around shipment volumes, but the focus should really be on revenues and profits," said Kamalini Ganguly, analyst, Network Infrastructure Practice for Ovum, in a article. "The PON price wars in China and elsewhere are not sustainable. Revenues are not keeping pace with growth in volumes. Vendors--even Huawei--are being pickier about projects and markets. If price pressures continue, there may be more vendor consolidation like that of Calix's acquisition of Ericsson's PON portfolio."